The Federal Trade Commission estimates that one out of every five workers in the United States are bound by noncompete clauses in their employment contracts – but (barring successful legal challenges) that’s about to change.
Noncompetes are, for all practical purposes, about to go the way of the horse-drawn carriage. They won’t be enforceable in all but a few rare situations. You still have a business to protect, however, so what can you use instead to protect your intellectual property, trade secrets and client relationships?
Non-disclosure agreements
NDAs are legal contracts that prohibit partners, employers, contractors and others who may have access to your company’s confidential information from sharing what they know with outsiders. They focus specifically on protecting proprietary information without restricting an employee’s future employment opportunities, so long as they’re narrowly tailored.
Non-solicitation agreements
These agreements are designed to keep disgruntled business partners and well-placed employees from starting their own firms and “poaching” either clients or workers who are key to your operations – at least for a while. Again, so long as they are reasonably limited, they should not broadly limit someone’s ability to move on with their career.
Intellectual property agreements
These should already be in place to protect your company when any employee with access to your proprietary information ends their tenure – but now is a good time to review them. Clear clauses in your employment contracts can protect your ownership rights and discourage would-be IP theft by serving notice that you’re serious about protecting your interests.
As the legal landscape for employment contracts shifts, it’s always wisest to seek experienced guidance.