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A Business’ Best Friends - The Restrictive Covenants: Non-compete, Non-solicitation, And Confidentiality

Published February 25th, 2019 by Devteam

Businesses of all shapes and sizes and across all industries contend with two realities. The first, technology is changing how they run their business. The second, employees come and go with a greater frequency than they used to. Gone are the days of employees whose careers start and end with the same employer. Here to stay is a workforce of ever-increasingly specialized nomads whose skills or technology or ability to work from just about anywhere allows or requires them to change jobs often. Without adequate protection, the intersection of these realities can let departing employees remove vital business information and deliver it to the next employer. The consequences are potentially devastating – loss of valuable customer data or trade secrets that, delivered into the hands of a competitor, can be used against a business to wreak havoc on market share or, worse, drive it out of business altogether.

Enter the employee agreement that includes confidentiality, non-compete, and non-solicitation provisions. Generally, the law is that contracts in restraint of trade are prohibited. But narrowly drafted contracts that protect legitimate business interests and meet a host of other legal technical criteria can be enforced. If drafted correctly, an employee who signs on is required to keep information confidential indefinitely, cannot be hired by any competing business for a period of time, and cannot solicit a business’ employees or clients for a set interval of time.

Such agreements should not be confused with employment contracts. By having employees execute these agreements, businesses are not creating rights to employment or expectations other than those that the employer and employee originally bargained for. In fact, in the preparation of such agreements, it is important to point out that a contract including restrictive covenants like these stands on its own and separate from any other bargained for employment arrangement. Even at-will employees who have no employment contracts can be subject to confidentiality, non-compete, and non-solicitation agreements.

A huge benefit of such an agreement is that, unlike most contracts, even a threatened violation of the terms gives the employer the right to seek immediate and temporary remedies from a court to keep the matter from getting worse or allowing the continued misuse of one’s confidential data, including return of company property and termination from a competitor’s business. The law even allows an employer to go into court without notice to the former employee if there is a demonstrated possibility that notice could create a scenario in which the situation could be worsened, such as destruction of data, removal of the employee from the jurisdiction, or placing assets or information beyond the court’s reach.

Each agreement, however, is different and different industries and situations allow for different terms, as well as the duration of the period of restriction. If you are interested in learning or knowing more, please contact us at 305-768-9846 or kj@kaijacobs.com.  


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