Houston employers know that non-compete agreements are a crucial aspect of ongoing business success. While it’s natural for employees to eventually move on from an enterprise, lacking the proper legal protections can result in valuable information falling into the hands of direct competitors. Here at The Jackson Law Firm, we’ve seen the fall out that can result when a non-compete agreement is not present or deemed unenforceable. That’s why we urge business owners to take a cautious approach when creating these essential contracts.
Entrepreneur offers some common-sense tips that employers must keep in mind when creating a non-compete agreement. So-called “ordinary competition” is typically not enforceable, which is why employers should look at standards within their industry for guidance. One example entails an employee that has a close working relationship with his or her customers. In this case, a customer-base may feel a sense of loyalty to the employee in question rather than the company as a whole. A non-compete agreement could be implemented that prevents a worker from drawing on a previous employer’s customer lists.
Taking a light touch when adding in provisions is also recommended. Any provisions that are considered too harsh (and therefore unenforceable) might put the entire agreement in jeopardy. The time period in which a former employee is held to a non-compete is often cause for concern. While some employees are under obligation to a contract for up to five years, in most cases a two-year period is considered realistic.
It’s suggested that employers cite relevant laws to serve as a basis for the provisions included in their agreements. In the event of a hearing before a court, business owners have a better chance of their agreements being validated when they have foundation in existing laws. If you have questions regarding contract law and your business, please feel free to visit us online.