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Employees are an integral part of any business. In fact, some employees play such a key role that she or he knows everything there is to know about your business. Generally, this is what you want, as long as they are working for you. But what happens when they quit or are fired? Will they “open up shop” across the street using the know-how learned at your company’s expense? The great news is that there are ways to protect your company’s investment.
Non-Compete Agreements
The goal is to protect your trade secrets and other sensitive, confidential information such as product development plans, launching plans, and marketing strategies. A non-compete agreement prohibits an employee from competing against your Company for a period of time and within a given geographical area. However, due to the power of such agreements, you must comply with strict legal requirements to have a valid non-compete agreement, including entering the agreement only before hire or upon a bona fide advancement.
Confidentiality Agreements
If you are unable to secure a non-compete agreement with key employees, consider a confidentiality agreement. Properly drafted confidentiality agreements will prohibit employee competition by restricting his or her use of your company’s confidential information. The agreement may be part of a broad employment agreement or entered into as a stand-alone agreement.
Non-Solicitation Agreements
In addition to trade secrets and confidential information, your business relationships are also worth protecting. Non-solicitation agreements can effectively prohibit an employee from soliciting your existing customers and former employees. These relationships were built and secured at your company’s expense and should stay with your company. Take care however, that such agreements do not turn into non-compete agreements unless you can meet the same legal requirements for a valid non-compete agreement.
Intellectual Property
Depending on your company’s services, your employees or contractors may be generating copyrightable work product. Generally, a company owns copyrightable work when created by an employee, but not when created by an independent contractor unless agreed to otherwise. Whatever the case in your situation, prevent future disputes and secure valuable rights by clarifying copyright ownership from the beginning and in writing.
General company policies are not enough. In order to protect your company’s proprietary information, business relationships, and intellectual property you need to enter written agreements with key employees. These agreements will articulate and emphasize the importance of these subjects to your employees and allow you to enforce stated restrictions through the courts. |