Establishing carefully crafted agreements at the onset of an employment relationship is critical to protecting a company, the information, and the clientele that makes it unique. Among these agreements are non-competes, also called covenants not to compete which are agreements often used for those in the front line of a company, such as executives, who have access to trade secrets and other important company information.
At Hendershot, Cannon & Hisey, P.C., we understand the needs of both executives and employers, and leverage our insight and litigation experience to effectively draft, review, negotiate, enforce, and defend against non-compete agreements.
Structuring a Non-compete Agreement:
The reason non-competes must be carefully crafted is because courts closely scrutinize their terms in order to ensure they are not overly burdensome to an individual and their professional future.
Structuring a non-compete requires particular focus on the following components:
- Be necessary to protect an employer’s legitimate business interests (Examples of legitimate, protectable interests for non-compete agreements include business goodwill, trade secrets, and other confidential or proprietary information)
- Be reasonable in time and scope
- Be reasonable in geographic area
- Be reasonable in scope of prohibited activities
Non-competes may entail a range of prohibited activities and provisions, including:
- Employment with competitors
- Investment and ownership with competitors
- Confidentiality provisions regarding theft of trade secrets
- Non-solicitation and non-dealing provisions that prevent servicing customers with whom executives have worked with in the past
- Non-poaching provisions that prevent recruitment of an executive’s former colleagues.
Non-Compete Agreements for Executives:
Non-competes are traditionally a condition of employment, and executives have greater leverage in negotiating their terms than other employees due to their position and value to a company. Because they also impact one’s professional options in the future, executives should work with attorneys to thoroughly review its terms and negotiate modifications when necessary. From the viewpoint of a senior executive, their future and post-employment options are of the greatest concern.
Companies that create excessively broad non-competes or include unreasonable provisions can lose out on valuable executives, which is why it is essential for companies to devise these agreements with the assistance of business attorneys who have a deep understanding of executive relations and concerns, and who are able to negotiate equitable terms.
Our Houston Business Lawyers Can Help
Non-compete agreements are commonplace during matters of executive recruitment and employment, and they are complicated by the inherent tension between the objectives of companies that wish to protect themselves, and executives who want to maximize their freedom to work in their chosen field. Whether you are an executive, licensed professional, or a company, our legal team at Hendershot, Cannon & Hisey, P.C. is available to help with drafting, review, negotiation, enforcement, and defense of non-compete agreements and other contractual matters. Contact us to request an initial consultation.