Posts Tagged ‘non-disclosure’

Non-Compete Agreements with Employees

Wednesday, December 15th, 2010

When employees leave your business, they take with them all the know how you gave them. They can go to work for your competitor or start a competing business. The same is true for the former owner of your business. This exodus of information can cause your business significant harm. You can protect yourself from this type of unfair competition by requiring that your employees and former owners enter into non-compete agreements with you.

A non-compete agreement is a contract in which a person agrees not to engage in a designated type of business for a certain length of time within a defined geographic area. In Colorado, all non-compete agreements are invalid unless they fall within one of several categories, and are reasonable in their duration and geographic scope.

Non-compete agreements can be used to prevent your executives, management and professional staff from leaving and going into competition with your business. However, a non-compete agreement cannot be used to stop other types of employees from going to work for your competitors.

A non-compete agreement that is part of a contract to buy a business can be used to stop a former owner of your business from competing with you. Such an agreement is valid if it is necessary to preserve the good will and value of the business. The right to enforce such an agreement, however, ends when the purchased business is terminated or abandoned.

Nondisclosure and confidentiality agreements can be used to protect your business= trade secrets from falling to the hands of your competitor. (A trade secret is any information relating to your business that is secret and of value that is not known by competitors or is not readily ascertainable elsewhere.) These agreements must be narrowly tailored to protect only the trade secret information acquired by an employee or former owner during their course of employment. They cannot be used to protect general knowledge of your business operations.

Non-compete agreements can play an important role in protecting a business from unfair competition and help retain key employees. However, to make sure you have an agreement that will be enforced when you need it, be sure that your non-compete agreements are drafted by someone knowledgeable and experienced in this area.

The Author, Jay E. Fernandez is an attorney and shareholder of the Fernandez Law Firm, PC. The Fernandez Law Firm is an established full service law firm offering high quality cost effective legal services to Colorado’s businesses, professionals, and individuals.
728 Coffman Street, Longmont, CO 80501. Telephone: 303.772.8900.

DISCLAIMER: The above article is intended for informational purposes only, is not intended to be legal advice, and does not create an attorney-client relationship with the reader.