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Should you build a noncompete agreement into your employment contracts?

On Behalf of | Apr 20, 2021 | Business law |

You’re a business owner who wants to be fair to your employees. Something that you’ve been looking into is how long you should ask them not to work for competing companies following their termination or choice to leave your company. You don’t want to overburden them, but you also want to protect your business processes and intellectual property.

Some companies, especially those with trade secrets or processes that give them an edge over the competition, do use noncompete clauses to make sure that their employees don’t go to another company in the same industry too quickly after leaving. This helps protect trade secrets, encourages employee loyalty and may even prevent them from starting a competing company.

Having a noncompete clause in your employment contracts could be a smart move, but you should be aware that some potential employees could turn down the job because of it. This is particularly true of individuals who want to be free to work with any company in the industry or who intend to gain experience with your company before moving on.

That said, from your angle, keeping the employees you train is helpful to your bottom line. Doing so helps you save money and build a team that you can rely on.

How can a noncompete agreement help employees?

While it might seem like all the benefits of a noncompete agreement are for your business, that’s not entirely true. The employee has some power because of this agreement. If you want them to stay with the business, they may want to negotiate training or schooling for advancements in their career while working with you, for example. It also means that if they leave, their expertise could be eliminated from the industry, so you’re more likely to provide benefits, raises and perks to keep them with your company.

If you believe that a noncompete is necessary for your employment contracts, talk to your attorney about including them. You’ll want to have the correct terminology included and to think carefully about the terms of the agreement that you put into place. The right noncompete could be beneficial to both parties, so it’s worth taking the time to structure it well.