It’s every business owner’s nightmare. You have a bright young employee, in whom you have made a significant investment. For three years, you’ve nurtured him, encouraged him, taught him everything about the business, paid him — and now he wants to quit and open a competing business to take away your customers and your revenues!
In an effort to prevent this scenario, and protect their business interests and trade secrets, business owners will have employees sign non-compete agreements and/or non-disclosure agreements.
Owners of corporations think that this document is enough to protect their interests, but there are several pitfalls to be avoided — or that agreement will prove to be unenforceable. For non-compete agreements to be valid there are several requirements that must be met. The agreement must be designed to protect a legitimate business interest and it must not be overbroad. In other words, the agreement must be narrowly tailored so as to protect your legitimate business interest without unnecessarily restricting the employees from working elsewhere in similar fields.
Common sense applies here. You can’t tell your ex-employee that he can never work in your industry, anywhere in the world, forever. The agreements must be reasonable in length of time, activities limited and the geographical area protected. The ultimate question for the Court to decide is whether the agreement is reasonable in nature.
Generally, North Carolina law does not favor non-compete agreements. However, they are enforceable if drafted properly.
In today’s information economy, where knowledge is priceless, the use of non-compete and non-disclosure agreements continues to rise as business owners try to protect their business interests. If your business could be at risk and you’d like to protect yourself with the use of non-compete agreements, please feel free to contact us.