Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Non-Compete Agreements: What Every Corporate Attorney Needs to Know

By Monica L. Goebel and Thomas M. Stanek
January 03, 2006

Successful businesses want to protect their proprietary information, whether it is a “secret ingredient” or a customer list. Many companies seek to achieve this goal by requiring that all employees sign a uniform “non-compete” agreement in an effort to reduce the risk of economic harm when the employment relationship ends and an employee goes to work for a competitor. Businesses often are surprised, however, to learn that the agreements that they were counting on for protection will not be enforced by a court. This unpleasant result can be avoided through careful drafting up front. The key to drafting an enforceable agreement is to remember that there is no “one-size-fits all” document. The laws governing non-compete agreements vary from state to state, and understanding the nuances among the states will help attorneys with the drafting process.

Most non-compete agreements are comprised of several different provisions, each with a particular purpose.

  • A non-competition provision, by its very name, is intended to prevent an employee from engaging in activities that actually or potentially compete with the employer, such as opening a competing business or going to work for a competitor.
  • A non-solicitation provision attempts to restrict an employee from soliciting the company's employees or customers to end their relationship with the company.
  • A non-disclosure provision is aimed at limiting an employee's unauthorized use of confidential, proprietary or trade secret information.

General Principles Applicable to
Non-Compete Agreements

Agreements that restrict competition are disfavored in Anglo-American jurisprudence. Such agreements are enforced ' if at all ' only to the extent that they are: 1) ancillary to an otherwise valid agreement or relationship (most often, employment); 2) necessary to protect a legitimate interest of the employer; and 3) reasonably limited (generally, both temporally and geographically).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models Image

Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.

Hyperlinked Documents: The Latest e-Discovery Challenge Image

As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.

Identifying Your Practice's Differentiator Image

How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.

Risks and Ad Fraud Protection In Digital Advertising Image

The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.

Turning Business Development Plans Into Reality Image

This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.