It’s Business, And It’s Personal

Can your noncompete agreement stand up to a legal test?

On Behalf of | Nov 4, 2015 | Business Litigation |

North Carolina businesses have an understandable desire to protect intellectual property. That includes the information that departing employees take with them by virtue of just their experience. The last thing you want to do is find out that something proprietary to your operation is now in the hands of a competitor.

One of the strategies for preventing such leaks takes the form of a noncompete agreement. Many employers use these tools regardless of their size. And very often the restrictions companies want to impose apply to hourly workers as well as those higher up the organizational structure.

This begs an important question. Will the language you have in place stand up to any potential legal challenge that might be made if a former employee decides to fight it?

If it isn’t properly crafted in accordance with state law, and if it isn’t updated to reflect changes in the laws as they occur, it is possible that a legal claim that could result in time and money consuming litigation. And if you think it’s not possible, consider that specialty insurer Hiscox recently released results of a new study that predicts that almost 12 percent of small and medium sized companies across the country can expect to face some sort of employment legal claim at some point in time.

To have an enforceable noncompete agreement, the best rule of thumb is to apply common sense. Courts expect to see that the employee has been provided some level of consideration for signing the agreement. It’s also important to be able to show that a clear business interest exists for requiring the restrictions. If any of the provisions of the agreement might be construed as being overbroad, it could be deemed unenforceable.

Establishing equitable noncompete terms and enforcing them depends on proper knowledge and experience about the applicable law. Consulting with a skilled attorney is always advised.