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Noncompete agreement considerations

On Behalf of | Jun 17, 2015 | Contract Disputes

Many industries operating out of New York are highly aggressive, and rely upon the loyalty and discretion of current and past employees to not provide valuable information to competing businesses. Beyond that, many companies feel that implementing noncompete agreements and other contractual obligations encourages employee retention overall. It is important for businesses to understand, however, that there are restrictions to when and how noncompete agreements can be enforced.

The Huffington Post discusses current trends regarding the implementation and enforcement of noncompete agreements in industries across the country, and explains that their use is becoming increasingly widespread and controversial. Traditionally, noncompete agreements are used in companies and industries involving sensitive proprietary information and/or trade secrets. Lately, however, people applying for a huge range of low-wage positions are being presented with noncompete contracts. As a result, legislators and business experts alike are raising concerns over whether and how these types of agreements impact employees and the labor market as a whole.

According to investopedia.com, legally sound and effective noncompete agreements typically meet several standards. Noncompete agreements should set reasonable expectations and limitations on employees. Therefore, an employer should be able to illustrate that the noncompete agreement is necessary and relevant for the position and industry in question. The contract should also stipulate realistic boundaries for any prohibited competing territory or time period. For instance, it may be reasonable to prohibit employees from working with any competing business within 10 miles, but it might not be reasonable to prohibit an employee from working with a competitor for up to three years. Beyond that, in most cases a noncompete agreement should not negatively impact the commercial market or compromise the employee’s livelihood.


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