When starting a new job or entering into a business partnership, it is common for companies to require their employees or partners to sign a covenants non compete agreement. This agreement is designed to protect the company`s interests by preventing employees or partners from working for or starting a similar business for a specific period of time in a particular geographic area.
Covenants non compete agreements are legal contracts that can vary in terms and conditions depending on the company`s needs. Typically, the agreement will include a description of the geographic area and the duration of the non-compete clause. It will also outline the type of work that is prohibited during the non-compete period.
There are several reasons why a company may require employees or partners to sign a covenants non compete agreement. One of the main reasons is to protect the company`s trade secrets and confidential information. For example, if an employee has access to a company`s proprietary information, such as customer lists or product formulas, the company may want to prevent that employee from using that information to compete against the company.
Another reason for a non-compete agreement is to prevent employees from taking clients or customers with them when they leave the company. This can be especially important for salespeople, who may have established relationships with customers that could be harmful to the company if the employee leaves and takes those relationships with them.
There are some limitations to covenants non compete agreements. They must be reasonable in duration, geographic scope, and the type of work being prohibited. The courts may deem an agreement to be unreasonable if it restricts an employee`s ability to find work or if it is too restrictive in the type of work being prohibited. Additionally, the agreement must be signed voluntarily, and the employee must receive some form of consideration in exchange for signing it.
It is important for companies to carefully consider the use of covenants non compete agreements. While they can be an effective tool for protecting the company`s interests, they can also be a source of legal disputes if they are too restrictive or unfair. Companies should consult with legal counsel to ensure that their non-compete agreements are reasonable and enforceable.
In summary, a covenants non compete agreement is a legal contract that can prevent employees or partners from competing against the company for a specific period of time in a particular geographic area. These agreements are designed to protect the company`s interests and trade secrets but must be reasonable in terms and conditions to be enforceable. Companies should consult with legal counsel to ensure that their non-compete agreements are reasonable and enforceable.