Non-compete agreements are under fire lately, raising several questions about whether they go too much in restricting employees. The Massachusetts Senate advanced a bill in July that could limit the period of time of a non-compete agreement to just 90 days. The bill also redefined “garden leave,” meaning the practice where a worker leaving employment is directed to remain away from work through the notice period, while still remaining on the payroll.
How exactly to Draft a Non-Compete Agreement That’s Actually Enforceable
The Masachusetts bill would require companies to pay a departing employee her or his full salary in this non-compete period.
Non-competes, which ban workers for a time frame from taking jobs with competitor companies, certainly, aren’t uncommon. A May 2016 report from the White House cited research estimating that 30 million American workers (18 percent) were included in non-compete agreements. A lot more U.S. workers, in line with the research — roughly 37 percent — been employed by under a non-compete agreement at some time throughout their career.
So, why the normal usage of these contracts? Some employers see them essential to protect their company from potential damage — especially the leaking of trade secrets. Yet opponents of non-competes consider them unfair to employees and say they impose harsh restrictions on competition and innovation.
In the event you consider ditching your own non-compete contract? Consider these three questions:
How common could it be for employees to get access to trade secrets, anyway? Overall, only 24 percent of workers, in line with the White House report, said that they possessed trade secrets. Yet that’s not stopping today’s organizations from furnishing non-compete contracts. In terms of employees who’ve signed non-competes, less than half report access trade secrets.
New Bill Seeks to Ban Noncompete Clauses for Low-Wage Workers
What’s the true reasoning, then, behind many non-compete agreements? Companies everywhere are aware of non-disclosure agreements, and non-competes give these agreements more teeth — an extra precaution. But non-competes can have serious consequences for employees, by unfairly limiting their options for future employment.
When trade secrets certainly are a concern, using non-compete agreements could be valuable. Think partners, executives and other key personnel who may take customers and resources with them. However, for lower-level associates who don’t have trade secrets, non-compete agreements is probably not worth the difficulty. These legal contracts are created to protect high-profile information, not restrict employee mobility — as some sources have found.
Most states recognize and enforce several variations of a non-compete agreement, but how about those states that don’t? In a number of states, non-compete agreements aren’t enforceable, while in other states, they canbe enforced only when they stick to strict requirements.
For instance, 19 percent of California workers are bound by non-competes, an interest rate slightly greater than the national average, the White House report found. However, non-competes aren’t enforceable for the reason that state.
In a nutshell, companies that insist upon having their workers sign these contracts can’t utilize them in a legal setting. Essentially, California businesses utilize them as a scare tactic, wanting to retain staff and restrict their growth.
Always concentrate on the reason behind why your company supplies these clauses. If the agreement can’t be enforced, what’s the idea? Does the agreement have an objective? Or does it just complicate things for employees?
Before drafting non-compete agreements, review a state laws to be sure the contract meets necessary requirements. Once agreements are legally enforceable, utilize them responsibly and limit the terms. The target is to protect the business enterprise without harming employees.
Overly broad non-compete agreements can do more harm for employees than best for employers. For example, regarding geographic region or timeframe, these contracts need limits. Be specific about these factors. If your contract is too vague, job-seekers could be forced to eventually leave your industry entirely and battle to take the next phase within their careers.
Strong-arming employees into contracts that force them to remain or threaten to push them out of a business is merely bad business. Consider using non-compete agreements limited to higher-level associates to safeguard your business’ assets and value. If employees are signing despite the fact that they lack usage of vital information, think about your company’s reasoning.
HOW DO I Escape a Non-Compete?
As so many critics are actually saying, non-competes could possibly be causing more trouble than they’r