Non-disclosure/Non-compete Agreements
Many employers have their employees sign non-disclosure/non-compete agreements as a condition of employment. Often, the employees who have access to secret company information sign these agreements. The company requires the contracts as a method of preventing employees, for a specified time period, from going to work for rivals and disseminating secret information that gives the employer its competitive edge. Non-compete contracts keep workers from taking the skills and training learned with their employers to work to for rivals or become self-employed in similar businesses.
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Significance
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Generally, most courts enforce non-compete agreements as long as the contract language does not prohibit the employee from earning a living. The employer has to prove to the court that it has a justifiable business interest to protect. Alternatively, the employer demonstrates the agreements meet the "reasonableness" standards of guarding its business interest. Another legitimate cause for the contract may involve the consideration (a paycheck and benefits) the employee receives in exchange for the promise.
The court enforces non-disclosure that protects the company's business "trade secrets" from exploitation. Trade secrets consist of company's confidential information, such as or methods, manuals, client lists and secret formulas.
Considerations
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Employers have a number of business interests they can justify for non-disclosure/non-compete agreements that prohibit employees from using information, business contacts or skills to work for a rival or start a competing business. For example, most courts recognized confidential client lists as legitimate "protected" information because of the resources the employers invest in accumulating the information and measures used to guard the secret. In some instances, if the company invests in an employee's training, it can prevent the worker from taking the knowledge to work for a competitor or starting his own company.
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Features
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According to the Service Corps of Retired Executives (SCORE), the typical non-disclosure agreement defines the confidential information, exclusions of the secret information, the parties' obligations, the length of the agreement and other clauses.
Warning
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California has stricter laws than most states when it comes to enforcing non-compete contracts. Courts usually find non-competition illegal except under very narrow situations. California encourages worker mobility and does not prohibit employees from working for competitors or starting a competing business. California statutes allow employers to protect their trade secrets, such as a confidential client lists, that meet requirements for confidential information.
Expert Insight
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Myemploymentlawyer.com says employees must negotiate non-competition agreement to protect their career moves. Try to limit the language of the contract as much as possible. If you work in a "highly specialized" business, request a severance package in case you lose your job not for cause.
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