Employers are often apt in protecting their businesses from employees who would want to take undue advantage of them or those who come to spy out information from them and use it to their own benefits and to the employer’s demerit.
Most employers require employees to sign “noncompete” and “nonsolicitation” covenants as a measure of checkmating this danger. The employee agrees in the covenant not to be involved in similar business or one competing with the company within a stated geographic region in a defined period of time after leaving the job.
Such contract, however, may offer an imaginary protection. This is usually because of the nature of such covenants and also the approach in which they are handled by the court. The court does not handle them as they do other contracts. Thus, employers need to know what they should expect from such covenants.
Below are some reasons why such covenant may not really offer you what you want:
You are not really sure that they will be implemented
When considering the covenant, the court examines two policies. These include the right-to-work policy and the policy involved in the covenant. As a result of this, the court therefore examines whether or not the employer has a legitimate business interest with respect to the covenant. If this is the case, the employer wins the argument as the court will consider it worthwhile to protect the business interest.
The terms of the covenant can always be changed by the court
Conditions enlisted in the covenant like what the employee is or is not permitted to do, the geographic coverage of the covenant and the duration of the covenant. These modifications might go a long way in weakening the covenant to an extent that it may not achieve the real purpose for which it was made.
You are likely not to know what the court will do
The court has to offer just judgment of course but you need to know that they are tasked with the responsibility of determining the outcome of the case. You may not be able to go through the appellate even if you deem the outcome of the case unjust. This is usually because of the time, expense and fees that may be involved.
The good news is that employers can still protect themselves by ensuring the enforcement of the covenant. These are how it can be achieved.
- There is no need of having every employee sign the noncompete covenant. To make it stronger, only ensure that employees you think that have the potential to hurt your business should sign the covenant. This makes it even easier for the court to determine your legitimate business interest with respect to the covenant and hence your might win the argument.
- Direct the covenant to point hands to those areas the employee has the potential to harm you. Try as much as possible to make the geographical coverage reasonable else the court will strike it down. Also direct the covenant towards checkmating his relationship with those he had contact with.
- It is vitally important to keep your confidential information protected. Protect your contact list and ensure that they are password protected. Provide employees only the information they require to do their jobs.
- To make it stronger, your covenant should be an independent one. Use specific language like “the covenant is independent and enforceable irrespective of other breaches of the covenant”. This will help you annul every claim the employee may bring up.
- Act as fast as possible if the covenant is violated. This will help the court to see the issue as real emergency and therefore give it attention and due consideration.
May 18, 2017