Whether your company’s daily business involves the use of trade secrets or you have a host of competition in your company’s industry, you may want to consider having your employees sign a non-compete agreement. Acting as a contract between the employer and employee, a non-compete agreement prohibits employees from sharing certain company information once they no longer work for the business. It also bans employees from working for competing companies for a certain amount of time after they quit or lose their jobs.
What are trade secrets?
Trade secrets encompass any type of information that could harm your business operations if it got into the hands of a competing company. This includes information involving clients, technology, pricing, salary, formulas, operations, ideas for future products, strategies and marketing plans.
What to include in your contract
In order to ensure your non-compete agreement is legally binding and fully protects your business, there are some items you should put in the contract. These items include the following:
- The type of protected information
- The amount of time after an employee leaves before they can seek employment with a competing company
- The date the contract will take effect
- The reason the non-compete agreement is in place
- Any compensation arrangements for the employee in turn for signing the agreement
- The geographic area where the employee cannot seek employment in after leaving
It is important that the terms of the contract are clear and concise and that employees understand exactly what they are signing.
Keep in mind that the legalities regarding non-compete agreements vary, as some states do not allow them at all. Pennsylvania, however, recognizes these contracts, however, and they are generally enforceable if they include the right information.
