Non-compete agreements, or covenants not to compete, are commonplace clauses in employment contracts. Businesses depend on these agreements to protect their proprietary information and prevent ex-employees, or sellers, from competing against them for a certain period of time.
Whether you are an employee with access to important company information, an executive, a licensed professional, or a company, our Houston business lawyers at Hendershot, Cannon & Hisey, P.C. can help with drafting, reviewing, and negotiating non-compete clauses. As seasoned litigators, we can also assist with enforcing and defending against non-compete violations.
When drafting and negotiating terms of a non-compete, companies and employees should be mindful of key considerations:
Although non-compete agreements may vary, there are common terms and provisions that prohibit certain conduct. Generally, non-competes may make the following conduct a violation:
Employers and potential candidates may negotiate terms of a non-compete as a condition for new employees, or as a critical part of a merger and acquisition. For employers, this means drafting mutually agreeable terms important for protection of critical investments while still attracting talent. For employees, negotiation will focus on one’s professional interests and options in the future.
When a former employer wishes to enforce a non-compete, they must demonstrate the covenant is reasonable and specifically designed to protect legitimate business interests. Agreements that contain excessively long duration, broad geographic scope, or overly broad prohibited conduct may ultimately be determined by a court to be unenforceable.
Employers enforcing a non-compete may seek injunctive relief in the form of prohibiting an executive from acting in violation of the agreement. If damages are present – such as when there is a breach of fiduciary duty, misappropriation of trade secrets, or another contract breach – a recovery may be sought. In either case, the burden of proof is the employer’s.
Non-competes are vital to the prosperity of health care providers and medical professionals. However, the vitality of medicine means these agreements have to consider the interests of the public, and are thus bound by certain restrictions and additional requirements.
Specifically, physician non-competes must allow doctors:
Non-competes may require doctors to move out of their region if they choose to open their own practice or limit their practice in other ways. As such, negotiating a reasonable agreement provides protection from overly restrictive terms.
By assisting clients with drafting, review, and negotiating, and leveraging our experience in enforcement and dense of non-compete agreements, our award-winning business lawyers at Hendershot, Cannon & Hisey, P.C. provide the comprehensive approach employees and companies need when addressing non-compete agreements and other contractual matters. To speak with a member of our team about your needs, contact us for an initial consultation.