Alternatives to Noncompete Agreements
In light of a declining economy, courts are less likely to enforce noncompete agreements. Such agreements protect valuable training and trade secrets by preventing employees from competing with their former employers. They are not being enforced due to the interest in allowing people to work in such tough economic times. Despite the fact that noncompete agreements are seldom enforced, companies have other means of protecting their assets.
As an initial matter, a company will audit all of its proprietary information, assess the risks involved in losing such information, and determine how an employee might misappropriate it. Once the audit is complete, the company will employ a “comprehensive protection program,” which is a combination of policies and restrictive covenants as well as a consistent enforcement scheme. Restrictive covenants differ from noncompete agreements in that they can be tailored to protect specific company assets. For example a "nonsolicitation agreement" prohibits an ex-employee from contacting the employer’s clients. In this manner, the company will not lose clients when a key member of the sales staff defects to a competitor. Another example of a restrictive covenant is a "forfeiture agreement" wherein the employee’s benefits from the company cease upon termination of employment. These instruments are advantageous because they offer the most protection with the least restriction.
For more information regarding alternatives to noncompete agreements, contact an attorney to explore your options.
