1. What Is a Non-Compete Agreement?
2. Buying and Selling a Company
3. Buying From an Entity
4. Employees and Independent Contractors
5. Elements of a Non-Compete Agreement
6. Limitations in a Restrictive Covenant

A non-compete agreement Missouri can be enforced in certain situations in the state. Work contracts typically include a non-compete or non-solicitation agreement, which puts limitations on an employee once he or she leaves that workplace. A non-compete agreement is any limiting contract between an employer and employee that limits the undertakings of that employee after he or she leaves the employer.

What Is a Non-Compete Agreement?

  • A non-compete agreement can also be referred to as a restrictive covenant or a covenant not to compete.
  • Employers use these agreements to restrict employees from taking customers or confidential information and using it to compete with their previous employer.
  • In order to be valid, non-compete agreements need to defend the employer's business from an unreasonable competitive edge.
  • Non-compete agreements also need to protect the employee's entitlement to work in an area for which he or she has been trained.
  • Typically, courts make a decision on what is fair or unfair by investigating the kind of business involved, the size of that business, the length and geographical area of the limitations, and whether the employee was given proper consideration when the contract was signed.

Buying and Selling a Company

Restrictive covenants are a standard part of the sale of any business. If you own a corporation or an LLC, then you will need to sign one as the primary employee and owner or stakeholder. If you are purchasing the business, then you are entitled to receive a firm restrictive covenant from the stakeholder or the owner of your seller's business. In the case of a big, complex sale, the seller's most important staff members could also be asked to sign a non-compete agreement.

In a company sale, the restrictive covenant must be bought independently. This means the party who accepts the non-compete agreement is entitled to payment for that arrangement. As a result, if you are purchasing, be careful that an individual check is sent to each person who has agreed to the restrictive covenant.

Buying From an Entity

  • In the case of buying from a business entity, such as a corporation or an LLC, be aware that the stakeholder, owner, or staff member who commits to a non-compete clause is not the seller.
  • Consequently, there must be a different restrictive covenant between you and each of those individuals.
  • This is true even if the buying agreement is with the owner or only the shareholder.

Employees and Independent Contractors

  • You are completely entitled to use a restrictive covenant to safeguard your clients.
  • A non-compete agreement can give you a lawful and unrestricted entitlement to maintain a positive relationship with your clients and to protect them from any former staff member trying to take them.
  • In the sale of a company, the restrictive covenant has to be bought individually.
  • Therefore, the person who accepts the agreement is entitled to payment for that responsibility. However, for staff members or independent contractors, a purchase is not required.
  • The best procedure is to get a signature when a staff member is initially employed or when a performance review is conducted.
  • It is important to highlight the fact that the employment or bonus is an element of the consideration for the restrictive covenant.

Elements of a Non-Compete Agreement

Non-compete agreements are frequently misconstrued and seen in a negative light, as though they are intended to make it difficult for people to find work. However, they can be straightforward and just. It is important to note that the reason for these agreements is simple — it is to stop a former worker or a contractor from stealing clients.

The covenant should be created in a way that provides you with space to make any necessary changes and to maintain your relationship with your clients, without any intrusion from an angry former worker. However, if you end a staff member's employment contract without a reason, the non-compete agreement will not be upheld. Moreover, it is difficult to win financial compensation for a violation of a non-compete. Therefore, the main advantage is your right to stop the employee.

Limitations in a Restrictive Covenant

A restrictive covenant might contain the following limitations:

  • Solicitation of current clients is prohibited.
  • No vying for clients in the non-compete realm.
  • Hiring by a rival employer is prohibited.
  • Solicitation of your staff members is prohibited.
  • Trade secrets must not be revealed.

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