The Top 5 Things to Consider When You Make a Non-Compete Agreement
Non-compete agreements are binding contracts that restrict an employee from competing with their former employer2 min read
Non-compete agreements are binding contracts that restrict an employee from competing with their former employer. They can be used to protect a company’s confidential information, customer contacts, and business operations from competitors. While non-compete agreements can be beneficial to a business, they can also be risky for employers.
Because non-compete agreements can affect an employee’s rights, it’s important for businesses in Los Angeles to consider the following five things when making a non-compete agreement.
1. Choose the Right Language
Non-compete agreements should be written in language that is clear and easy to understand. The language should be such that an employee can easily comprehend the parameters of what is prohibited. The language should also be concise and should include the date and duration that the agreement will last.
2. Follow State Guidelines
Non-compete agreements should always comply with the laws in California. To ensure that the agreement is legally valid, employers need to be familiar with California’s non-compete laws and regulations. Additionally, employers should be aware of any variations within county or local regulations as well. It is important that the restrictions within the agreement are reasonable and not overly broad.
3. Be Fair
Non-compete agreements must be fair to both the employer and the employee. Employers should ensure that the restrictions placed on the employee are not too narrow or too broad. Restrictions that are too broad can be deemed unreasonable, and if that is the case the agreement may not stand up in court. It is also important that the restrictions are proportional to the value that the company seeks to protect.
4. Review On a Regular Basis
Businesses should always review non-compete agreements on a regular basis to ensure that they are up-to-date with the current employment laws and regulations. Employers should also be aware of any changes in their industry that may necessitate a need to update or amend an existing agreement.
5. Consider Expert Legal Advice
Given the complexities involved with non-compete agreements, employers should consider consulting with experienced business attorneys before drafting any agreement. Experienced attorneys can advise on the legal requirements and best practices for a non-compete agreement in Los Angeles.
Non-compete agreements can be beneficial to employers, but there must be a conscious decision to ensure that the agreement includes the right language, complies with relevant laws, and is fair to both the employer and the employee. Employers should also regularly review their agreements and consider expert legal advice before they draft a non-compete agreement.
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