Also called “Covenants Not to Compete,” or CNC, these contracts were developed to allow business owners to benefit from the time and money spent training certain key employees. All things being equal, when a person is trained to be the manager of a company that has a successful unique business model, what is there to stop that new employee from quitting his job and starting his own version of the company?
Or, alternatively, what can prevent that person from taking a higher paying salary from a direct competitor, and disclosing all of the secrets and techniques in use by the first employer? To prevent these situations, business owners needed a way to protect themselves while still being able to train their employees effectively. Hence, the idea of a non-compete agreement was created. For assistance drafting an NDA or to discuss how it may be beneficial to your business, consult with a skilled business law attorney with our firm today. A Georgia non-disclosure and non-compete agreement lawyer can help you draft a binding contract to protect your trade secrets.
That all being said, from the employee’s perspective, Covenants Not to Compete threaten to take away a person’s livelihood. If you’ve been working for a company for a long time, you have probably become highly specialized in a certain industry. From a purely economic standpoint, it wouldn’t make much sense to leave an industry for two years (so as not to compete) and be trained in an entirely new industry at a significantly lower salary. Sadly, this is sometimes the only option available to an employee who has signed a strict Non-Compete.
At Sparks Law, our attorneys represent many employees who have been asked to sign a new non-compete agreement, or have a non-compete agreement already intact and are considering leaving their current position. Because our client’s livelihood is on the bargaining table, this can be a very stressful and complex situation and many factors are involved. Each state has different laws regarding non-compete agreements.
For example, Georgia recently overhauled its non-compete agreement laws to allow for very strong contracts that highly favor businesses (link to blog post). However, the new state laws don’t have the same effect on non-compete agreements signed before the new laws were put in place.
An employee in this situation needs to consider how long the non-compete agreement lasts after their employment, the geographical range that it precludes the employee from working in, the strength of the agreement based on relevant state laws at the time the agreement was signed, how favorably judges are treating similar non-compete agreements, whether the new position would “compete” as the CNC is written, and so on.
At Sparks Law, our attorneys work hard to analyze our client’s non-compete agreements so that they can make informed, strategic decisions about their future employment.
Businesses have many factors to consider when drafting their non-compete agreements. They have to keep in mind which state’s laws will apply, as some states are more favorable to businesses than others, the time at which the employees will sign the agreements, whether they need to give their employees a bonus or other consideration to make the agreements stronger from a contract law perspective, which employees are most at risk for the company and therefore need a solid non-compete agreement the most, etc.
At Sparks Law, we do our best to ensure that our business clients have solid contracts intact that effectively and strategically offset the risks involved in the departure of key employees. Contact a Georgia non-disclosure and non-compete agreement lawyer today to set up a consultation.