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Non-compete agreements should have limitations

On Behalf of | Jul 29, 2022 | Employment Litigation

As you onboard new employees, you may be tempted to use non-compete agreements. These are designed to protect your company. They will essentially say that workers are not allowed to leave to go to the direct competition and that they cannot start their own businesses that would become that competition.

That said, your non-compete agreements should have some limitations. If they do not, they may not hold up and actually limit what your employees can do after leaving your company. After all, non-compete agreements should not create a hardship for former employees.

Geographical limitations

First of all, there should be some geographical limitations that show that the non-compete agreement is only valid in a specific location. It makes sense that you wouldn’t want one of your employees to leave and start a competing business in the same city, for instance. But you can’t prevent them from leaving your company and starting a similar business in a different state. That would limit them too much without having an obvious negative impact on your company.

Time limitations

Most non-compete agreements also will have a limitation on time, saying that the agreement doesn’t last forever. It may simply indicate that the person can’t work for the competition for a year or two after leaving your business. But you can’t create an agreement that says they can never work in that industry again.

It’s very important to get all the details right, so make sure you know what legal steps you’ll need to take.