Business Disputes: It’s What We Do
  1. Home
  2.  — 
  3. Executive Employment
  4.  — How do non-compete agreements need to be restricted?
Photo of attorneys E. Kelly Conway, Michael E. Gehring and Stephen G. Harvey

How do non-compete agreements need to be restricted?

On Behalf of | Aug 22, 2023 | Executive Employment

As of now, businesses can still use non-compete agreements. These agreements stipulate that employees who leave the company can’t just go directly to the competition, thus taking their trade secrets and insider information with them. It is a way for a business owner to protect their company by limiting where employees can go.

But these agreements do need to have some restrictions, or they could create a significant hardship for the employee. For instance, if a restaurant owner says that the person who signed a non-compete agreement can never work in a restaurant again, that person has no career options unless they entirely change their profession. This would clearly create a significant hardship and is not allowed. So how are these limits used?

Geographical limits

It starts with limits in geography, which means that an employee can only be restricted from working for the competition in the same area. The non-compete agreement cannot say that the employee can’t work for any similar employers in the whole country or something of that nature. Even if it does say that it would never stand in court if the employee did get another job and the employer tried to sue them.

Time limits

Additionally, a non-compete agreement cannot last forever. They are usually restricted to a relatively short time limit, such as a year or two. Some may be set up to only prohibit worker activities for a few months. These short time frames mean that employees can’t intentionally jump to the competition just because they got a big contract offer, but they do have mobility within their field.

If you are an employer who is using non-compete agreements, it’s very important to make sure you do everything properly and that you understand what legal steps to take.