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How long can a non-compete be for?

On Behalf of | Jul 13, 2022 | Business Law |

As a business owner, you want to do anything you can to protect your business and your bottom line. One of the things you would like to have any new employee sign is a non-compete agreement. This agreement would prevent them from working with your major competitors, which, in your mind, would prevent any risk of your competitors getting ahold of your trade secrets or learning about how your employees worked with you.

Non-compete forms can be an excellent protective measure, but you have to make sure they’re legally binding. If they are too extreme, there is a chance that a court could throw them out as unreasonable.

What could make a non-compete agreement unenforceable?

There are a few things that could hurt the enforceability of a noncompete agreement. The first is making the noncompete too broad, and the second is making it too long.

Here’s an example. If you work in the food industry, stating that your employee can’t work in the industry for five years after leaving their role at your company would likely be seen as extreme and unfair. They’d have a good chance of contesting it as overly broad and excessive.

On the other hand, a limited non-compete agreement that states they cannot work at a specific competitor’s restaurant for two years may be completely enforceable, since it’s one competitor (not the whole industry) and is for a shorter amount of time.

How do you build the right kind of non-compete agreement?

You may want to discuss your legal options before trying to draw up a non-compete agreement, because they can be tricky. You’ll want to know exactly how long you can make it and how specific you need to be before having anyone sign one.

You should think about a non-compete agreement as one that helps you avoid having time-sensitive secrets get out. After one or two years, will that information that the person learned be applicable in the industry? If not, then the agreement is probably long enough at that time. Think about that and other risks to your business, and you should be able to find a good balance.

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