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2 important rules for employers who use non-compete agreements

On Behalf of | Oct 28, 2022 | Employment Law

Many successful businesses have certain trade secrets that make them competitive. Whether you have a proprietary production process or special recipes for fragrances, keeping those trade secrets out of the hands of your competitors is crucial for your company’s ongoing success. Of course, you need employees to call your customers for new sales or to make the products using your secret process. Every new hire involves a little bit of risk for your company.

Non-compete agreements and other restrictive covenants can be an important form of protection for businesses that want to bring in new talent but also need to protect their intellectual property against misconduct by those workers. Although lawmakers in Connecticut have attempted to limit or restrict the use of non-complete agreements, currently the law in the state does not prohibit employers negotiating and compete agreements with new and existing employees.

Negotiating a non-compete agreement with a new hire or presenting one to an existing employee will better protect your company if you follow the two rules below.

Make sure the worker receives something of value

The easiest way to undermine the usefulness of your company’s contract is to make it imbalanced or unconscionable. The worker will make a concession to the business by doing that to compete with it after leaving their job, so you have to offer them something of value in return.

Having them sign the agreement when they take the job with your company or while training for a new position after a promotion is one way to compensate them for making those minor sacrifices. Some companies choose to offer existing employees at one time bonus or an extra day of paid vacation for a single year as compensation for signing an agreement.

Review the limitations on the agreement

Another far too easy way for your company to negotiate an unenforceable non-compete agreement is to use language that is too broad. Including both geographical limitations in a specific time frame in which the agreement applies will make it more likely that you can successfully enforce the agreements if necessary in the future.

Understanding the Connecticut approach to different employment law issues can help companies trying to protect themselves when bringing in new workers.