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What should a non-compete agreement include?

A non-compete agreement is an effective tool if you are looking for a way to protect your business. According to The Daily Record, the number of such agreements in Nevada and across the country is on the rise, as is contract litigation surrounding the documents. Understanding the components of these agreements will help ensure that you will be protected in court.

From the business perspective, a non-compete can protect intellectual property and prevent valuable employees from leaving. Further, the agreement could discourage competitors from trying to recruit workers away from the business.

In Nevada, these agreements are enforceable as long as its terms are considered reasonable. To ensure a non-compete is solid, you, as an employer, should consider the following three factors:

  •        The scope: Contracts should define the employer’s competition, but getting too broad with that definition could be considered unreasonable.
  •        The timeframe: A reasonable timeframe is typically six months to two years.
  •        The geography: The agreement should only restrict employees from going to another organization in the geographical area where the existing company does business.

Fortune magazine reports that employees have the right to try to negotiate the non-compete, but employers often reject the idea. Challenging the document in court would be difficult if the agreement abides by the above principles.

Lastly, it is important to point out that Nevada law permits a former employer to list a worker’s current employer if a non-compete has been knowingly violated. Therefore, before hiring new employees, you should make sure they are not bound by a restrictive covenant with a prior company.

While this information may be useful, it should not be taken as legal advice.

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