Effective restrictive covenants are harder than ever to draft

Are you considering asking employees to sign a confidentiality or nonsolicitation agreement? If so, have you carefully considered just what you’re trying to protect? Before creating an agreement with postemployment restrictions, you must understand what you’re seeking to cover and keep that legitimate interest in mind as you prepare the agreement. Trying to include more than what is legitimate and protectable may not survive legal challenges in an area that’s proving to be increasingly difficult for businesses to enforce.

Why do you need restrictive covenants?

Restrictive covenants are needed to protect a company from a former employee taking the training he received, the customer base he fostered at your expense, or confidential information he learned and providing it to a competitor. They prevent a competitor from “purchasing” business by offering an employee an “over-market salary” to bring your business with him.

Unfortunately, courts don’t like restraints on trade. Therefore, you must carefully draft the restrictive agreements.

Noncompete agreements

Noncompete agreements prohibit an employee from working in a competitive business for a set period of time and within a specific geographic area after separation from employment. Use noncompetes sparingly because courts frown on them as a restraint on trade.