Protecting your business with sound noncompete agreements

Texas employers may work diligently to protect the information that differentiates them from competitors. However, to successfully and efficiently run your business, you may need to share such key, sensitive information with employees. What can you do to protect this information in the event that those employees leave your company?

Noncompete agreements provide employers with peace of mind in knowing that key employees leaving the company cannot immediately go to work for your competitors. However, these agreements must be carefully worded and constructed to avoid the potential for a future dispute.

What do noncompete agreements protect?

Noncompete agreements essentially protect your intellectual property by prohibiting key employees from immediately working for a direct competitor in a similar market after leaving your company. Intellectual property can include trade secrets like proprietary information, customer lists, meeting notes, future business plans and more.

Components to creating a sound agreement

According to The Balance, Texas employers should consider incorporating the following components into noncompete agreements:

  • A specified duration. Noncompete agreements can be strengthened by detailing a specific period of time in which the agreement will be valid.
  • Reasonable limitations. In some cases, noncompete agreements may not be legally valid if the restrictions are too broad or unrealistic for the employee.
  • Specified locations. The agreement is more likely to be valid when it specifies a geographic area in which employees cannot work for competitors in.
  • The reason behind the agreement. Disclose why your company requires the noncompete agreement, such as to protect critical company information.
  • The benefits for the employee. Your agreement should benefit both parties. Include how you will compensate the employee in exchange for their compliance.

Depending on the size and structure of your company, such agreements may apply to senior-level employees or those with regular access to sensitive and valuable information.

Your options to enforce the agreement

Unfortunately, there may come a time when you need to consider your options to enforce a noncompete agreement. While your options may depend on whether the agreement contains terms for dispute resolution, consider first alerting the employee and possibly their future employer to the possibility of a legal battle. When this fails to solve the issue, discuss your options with an attorney to determine how to protect your company’s valuable information and enforce your agreement.