How Does A Non Compete Agreement Work?

A non compete agreement is a contract that is agreed upon by an employee when he or she signs on to a company to work. The agreements that if the employee ever leaves the company, or while they are with the company as an employee, that they will not enter into or start a similar profession or trade in competition with the employer.

This is primarily due to the fact that the employee is thought to have enough experience or ability to be a serious threat to the employer, plus he or she might be able to divulge secret or proprietary information that could give the competitor a competitive advantage.

The non compete agreement cannot be to broad, however, or it might prohibit the employee from working anywhere, and thus would not be affordable in any court. The definition of the duties and restrictions that are in the agreement must be specific enough in order to define what the terms would be so that the agreement will be enforceable. As long as the agreement has reasonable limitations pertaining to the geographical area and a time period, then in most cases it can be enforced.

Most of the states in the US do recognized some form of protection against a former employee who discovers the company secret, and then spirits it off into his own company, and most of the situations are judged on their own merits. Differences will vary from industry to industry, because some industries just don’t get hurt too much with an employee leaving, while a radio station with a popular personality might be more likely to be hurt, because the audience of the personality will just follow him to the new station.

So about non compete agreements: Can be enforceable depending upon the state, the laws, and how much damage actually applies to the principle.


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