How to Enforce a Non-Compete Agreement
In many industries non-compete agreements are used to safeguard your client base and proprietary trade secrets. Here's what you'll need to do to prevent an exiting employee from violating a non-compete agreement and what you'll need to do to enforce the agreement if it is violated by a former employee.
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Instructions
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Preventative Measures for Avoiding Violation of a Non-Compete Agreement
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1
Conduct an exit interview with your exiting employee. Remind the exiting employee that she signed a non-compete agreement. Review the terms of that agreement, including the applicable restrictions to her future employment, and possible damages due to you if she violates those terms.
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2
Question the exiting employee about her future plans. Her answers may provide you with information about future employment considerations that are in violation of your non-compete agreement.
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3
Send a letter to the exiting employee, including a reminder of her continuing obligations to your company as agreed to in the contract and possible recourse if those obligations are not met.
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4
Continue to build relationships with your exiting employee's former clients and accounts. If your ex-employee engages in solicitation of ex-customers in violation of the terms of your non-compete agreement, then you are more likely to be informed about it by those customers if you've fostered your mutual relationship.
Enforcing a Violated Non-Compete Agreement
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5
Send a cease-and-desist letter to the employee. Inform him that he is not eligible to seek competing employment under the authority of the non-compete agreement that he signed. Explain the terms of the contract and possible recourse that you may pursue if he continues to breach the contract. Include a copy of the original contract.
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Send a cease-and-desist letter to your ex-employee's new company. Explain to the new company why their business relationship with your ex-employee is unlawful and include a copy of the original contract. In many cases issuance of cease-and-desist letters is sufficient for obtaining compliance to a non-compete agreement.
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File a lawsuit against your for employee if he continues to violate the non-compete agreement despite the cease-and-desist letter.
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Seek a preliminary injunction against your former employee's relationship with his new company. The goal of the preliminary injunction is to prevent the ex-employee from working for the new company while the case is being tried.
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9
Seek a permanent injunction if you win the lawsuit. This injunction will bar your ex-employee from working for the new company for the remainder of the contract.
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Tips & Warnings
Before enforcing your non-compete agreement you must ensure that the non-compete agreement is legally valid. Even with a signed non-compete clause, there are several elements that must be in place for the agreement to be legally binding. These requirements vary from place to place. You may need to contact a qualified employment law attorney to advise you about whether your non-compete agreement is enforceable.
