Introduction

For many employers, non-competition agreements are shrouded in mystery. Employers know that such agreements can be a valuable tool to protect their business. However, employers are sometimes unsure how and when to effectively utilize noncompetition agreements. Additionally, since non-compete agreements are reviewed by the courts on a case-by-case basis, the law on these agreements is always changing. This edition of The Employment Counselor provides an in-depth updated analysis of non-competition agreements that, we hope, will provide a valuable resource for employers.

In the first article, we examine the factors to consider in deciding whether an employer needs to use non-compete agreements, as well as how to institute these agreements. In the second article, we examine what makes a covenant not to compete "reasonable," and therefore enforceable by the courts. Finally, in the third article, we describe the various forms of relief available to those with enforceable covenants.

All employers should consider whether a non-competition agreement should be implemented to protect their business. We hope this edition of The Employment Counselor is informative and helps employers understand this important area of law.

Covenants Not To Compete: When Do You Need Them, How Do You Implement Them?

It would be devastating for a Coca-Cola executive to jump ship to Pepsi Co. and spill all of his or her accumulated knowledge about how Coca-Cola does its business to its longstanding competitor. The same may be true of your company. Your business may be based on the workings of a particular patent, or may depend on a carefully developed client list-information that must be kept secret if you are to maintain your competitive edge. An employee with access to these assets could be seen as an asset to your competitors, or could decide to start his or her own version of your business. One of the best ways to protect your business from this potential threat is through a covenant not to compete. READ MORE

The "Reasonable" Covenant Not To Compete

While courts are willing to enforce covenants not to compete, judges will construe the terms of those covenants strictly, against the employer. Only "reasonable" provisions will be enforced since covenants not to compete inhibit the freedom of trade. Therefore, it is important to carefully craft any covenant with the assistance of legal counsel so that it will withstand scrutiny of the courts.

The most important consideration in drafting a covenant not to compete is to identify what the particular needs of your business are. Where do you compete for business? What is the exact nature of your business? What are the duties of the employee who will be signing the covenant, and what kind of trade secrets or other private information does he or she have access? This is important because the courts will only enforce "reasonable" covenants, and will ask these three questions to determine if a given covenant is reasonable: READ MORE

When a Competitor Hires Your Former Employee: Enforcing Your Rights

Your worst fear has been realized: a former employee with access to your trade secrets or confidential client information has joined a competitor, or has started a new firm in direct competition with yours. What can you do to protect your business from this threat? If you act swiftly, with the assistance of legal counsel, there are a host of legal remedies available that may immediately stop the former employee from continuing to harm your business, recover monies lost due to unfair competition, and even sanction the competitor that hired your former employee. Which remedies are available to you will depend on the factual circumstances of each case and the terms of your covenant not to compete. READ MORE

General Counsel, P.C. provides full service legal representation to businesses and non-profit organizations throughout Washington, D.C., Maryland and Virginia. To best serve our clients, we have the following practice groups: Corporate; Government Contracts; Labor/Employment Law; Litigation; Intellectual Property; Estate and Business Succession; Probate and Estate Administration; and Non-Profit Organizations.

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