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Put a noncompete clause in every employee contract

On Behalf of | Mar 11, 2024 | Business Law |

Companies go to great lengths to protect their trade secrets, long-term plans and intellectual property. One common tactic for doing this involves putting noncompete clauses in employee contracts.

Some employer agreements do not include these passages. In those instances, the ventures can suffer.

Defining noncompete clauses

A noncompete clause prevents an employee from working with or starting a similar business within a certain period after leaving that company. These binding passages also usually define a geographical area where the restriction applies. The goal is to stop workers from gaining knowledge, skills and connections at one business, then turning around and using those advantages against their former employer.

Protecting business interests

The purpose of noncompete clauses is to shield ventures from those who would do them harm. Commercial entities invest significant time and money into operational concerns such as training employees. They also invest precious resources into developing innovative products and building a customer base. Without noncompete clauses, former workers could use insights from their time inside the business to benefit competitors. Another possibility is they might start a competing operation, thus hobbling the original company’s market position and profitability.

Such clauses also help ensure that sensitive information does not fall into unwanted hands. At stake are matters such as customer lists and business strategies. In ruling out staffers joining competing organizations, companies prevent any loss in their competitive edge.

Noncompete clauses protect businesses from former employees joining or starting rival corporations. Hiring departments should be extra diligent about confirming that all staff members put their initials next to one of these binding mandates.


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