It’s standard for middle to large businesses to include a non-compete agreement in an employee’s exit package or onboarding. The goal is to restrict competitors from hiring former employees who have proprietary information or trade secrets. While it is seemingly at odds with the employee’s right to earn a living, a well-drafted non-compete can help protect a business’s interests.
Not all conditions are enforceable
A poorly worded agreement will probably not hold up in court, which makes it useless. So it is essential for companies to zero in on valid business issues as the basis for a binding contract. Circumstances will vary by company, but successful agreements often focus on:
- Trade secrets involving proprietary practices, products and services
- Use of special training provided by the employer
- Proprietary information that is not a trade secret
It’s best to be reasonable
Contracts that are not overly restrictive in scope, territory or length have the best chance of standing up in court. Clients may not realize how much business practices change and update over time, so they should feel minimize their discomfort with a short sunset to the agreement (a few years is often viable). Geographic concerns may be unique here in Alaska, but former employers should avoid overly broad range that is outside the state or the worker’s territory. Depending on the business and competition in the state, the client should limit their scope to direct competitors.
Different jobs will have different restrictions
Those with questions can discuss the specifics of a situation with an attorney who handles these kinds of contracts. But overall, a good rule of thumb is to protect the company rather than punish the employee for leaving.