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Protecting business interests with non-compete agreements, P.1

Employees in the right position stand to gain a lot from an employer, as is well known in the business world. Training, access to business secrets, connections to new customers and markets—all of this can make an employee a potential competitor when he or she concludes his or her time with the company.

While it would be nice to believe that employees would honor their employer by not becoming an unfair competitive threat after leaving the company, this just doesn’t always happen. In some cases, an employee or former employer will engage in behavior that is clearly at odds the interests of a company.

Take, for example, the case of a former employee of a financial services company here in Louisiana, who has been accused of stealing client lists and marketing to clients after joining a competing firm. In that case, the financial services company actually took precautions by requiring the former employee to sign a non-compete agreement, as well as nondisclosure and confidentiality agreements which prohibited him from soliciting customers and using proprietary information within two years of leaving the company. Now, the former employee is being sued for breach of contract and violation of his non-compete agreement, in addition to other charges.

Non-compete agreements can be an effective way to protect a company’s interests, but it is important for companies to draft these agreements carefully to ensure they will be effective in court. Part of drafting an effective non-compete agreement is to make sure the limitations placed upon employees after leaving the company are reasonable.

We’ll speak about this issue in our next post. 

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