A non-compete agreement is an agreement or a contract made between two parties that include an employee and an employer, and the employee agrees not to get involved or start any kind of competition with the employer even after the employment contract. This agreement is also referred to as a restrictive contract by some courts.
In this agreement, the employee promises not to reveal any information to another competitor during and after employment. In most cases, this agreement specifies the time frame in which the contract is valid.
A non-compete agreement is mostly used in cases where the employee terminates the employment contract, and the employer fears that the employee might have plans to start a competitor business. It is also used in cases where the employer fears or wishes to protect their business from former employees providing sensitive information about the company to other competitors.
Types of a non-compete agreement.
- Independent contractor non-compete agreement: It is a document used by a business or firm to protect its sensitive information that it had shared with another company or party.
- Employee non-compete agreement: It is a document used by an employer to protect his/her company’s sensitive information after hiring an employee and teaching him/her confidential information.
- Release of Non-Compete Agreement: It is a document that permits the escape of a non-compete individual from the confinement of the business working.
Alternate Names of a non-compete agreement:
- Restrictive contract.
- Non-Compete Clause.
- Covenant Not to Compete.
Is a Non-Compete Legally Binding?
The legal binding of a non-complete agreement is determined by the state laws and not the federal laws hence vary from state to state. A non-compete deal can be classified into four types.
Confidentiality: This is a type of agreement where a person is restricted not to share relevant information, including the trade secrets, specific details about the company, among others.
Non-solicitation of employees: This is an agreement where a person leaving a company is restricted not to lure any of their coworkers to their new company.
Non-solicitation of customers: This is an agreement where a person leaving a company is restricted not to lure any of their customers to their new company or sell to them.
Non-compete: This is an agreement that restricts a person not to work for a competing business or start a competing company with their previous employer.
Do you have a challenge with or want to create your non-compete agreement? We offer free non-compete agreement templates that can help you create your document. Using our free templates involves downloading your favorite template among the many free templates and printing it.
A person with a non-compete agreement may choose to review their non-compete agreement, to make sure that no clause would allow their employee to terminate the contract. But despite this action by the employer, if the employee agrees to sign a non-compete agreement that is legally binding, then he/she is must follow the agreed terms and conditions. In cases where the non-compete agreement is so imprecise, the employee can discuss with the employer to terminate the deal instead of following a court proceeding.
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Why can an employee go to court to challenge a non-compete agreement?
- When the non-compete agreement has an unreasonable duration for the non-compete.
- When the agreement covers an unreasonable geographical location for the non-compete.
- When the non-compete agreement covers an unreasonable field of profession, that is not related to the employer.
- A non-compete agreement can be challenged in a court of law when the contract is discriminatory.
- It can also be challenged in cases of deceitful inducement.