Is a Non Compete Contract Enforceable?

Companies are bound by laws and rules designed to ensure that they protected from unfair competition. One of the ways that businesses must protect themselves is by making sure company secrets, confidential business information, and private data does not fall into the hands of the competitors. In an effort to remain competitive, many businesses require employees and others to signs a non-compete contract. Some people wonder, is a non compete contract enforceable?

Restrict Employees from Negative Behaviors

Many different types of employee behaviors can hurt your business. These actions may be intentional or unintentional but the results are the same. In order to keep employees or former employees from taking your customers, using your trade secrets, or using your client lists you must have them sign a non-compete agreement. The agreement should be signed immediately upon employment and updated regularly.

When Do You Need a Non Compete Agreement?

Not all situations call for a non compete agreement to be implemented. However, many companies fail to protect themselves and find later that they have little recourse to take action against an unfair employee. A simple, yet effective approach is to have a standard non-compete agreement drafted by a reputable commercial law attorney. Make it part of your company policy that all employees and sub-contractors are required to sign the agreement.

Enforcement of Non Compete Agreements

The main purpose of a non compete agreement is to prevent employees from stealing customers or information that is vital to your company’s existence. The enforcement of the agreement can be difficult and time-consuming. You must be able to prove that the former employee not only took customer lists or secrets, but also that he used them to your detriment. In other words, you must show that your company lost business, money, or reputation due to the actions of the employee.

Employee Refusal to Sign Non-Compete Agreements

Employees or sub-contractors may occasionally refuse to sign a non-compete agreement. How you handle the situation is up to your company and the policies that you have put in place. There may be some changes that could be made that will satisfy both parties. If so, these changes should be done through your attorney to make sure they are binding. Sometimes a former employee will challenge a non-compete agreement. Because this is a contract it is best to seek guidance from your lawyer before moving forward with a decision.

Most companies will benefit from the use of non-compete agreements. Call the skilled legal team at Udall Shumway to schedule a consultation today.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Non Compete Contract, or any other litigation matters, please feel free to contact Roger C. Decker at  480.461.5343, log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.