Non-compete agreements are a common element to employment contracts that sometimes catch a prospective employee off guard. Is it ethical, and even legal, for a contract to state that the employee is not allowed to work in a specific field after he or she has left the company? The simple answer is that yes, non-compete agreements are a normal part of many Houston companies’ operations, and it is legal to uphold the terms of these agreements as long as they have been drafted correctly. At The Jackson Law Firm, we understand how a non-compete agreement can be beneficial to your company, as well as the proper way to word such an agreement so a former employee cannot hold it against you.
Even so, a potential employee might bristle at the idea of a non-compete agreement restricting his or her business prospects in the future. The employee might be taking the job in your company to increase experience in a field that he or she has a passion for and a desire to start up a similar business later on. Under many circumstances, this can take business away from your own company. Non-compete agreements are meant to prevent too much competition undermining your business, or to keep former employees from changing your customers’ loyalties.
It is still possible to create a non-compete contract that’s fair to both sides, states Entrepreneur. A prospective employee might be more amenable to the idea if the agreement limits the geographic area or the time period after he or she leaves your employment. For example, you could specify that your employee refrain from starting a related business in the Houston area or within two years after leaving your company. It would also be fair to specify that if the former employee started a business, he or she would be prohibited from soliciting your customers.
Properly executed non-compete agreements can protect from lawsuits. For more information on non-compete agreements in employment contracts, visit our page.