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A noncompete agreement is a formal agreement between an employer and employee that the employee will not engage in any employment activities that conflict or compete with their primary job. Companies use noncompete agreements to ensure that workers will not engage in business activities that may diminish the company's share in the market.
We've rounded up some important information about noncompete contracts and created a downloadable template.
Download a free noncompete template agreement in Microsoft Word format here.
This Noncompete Agreement is entered into between ________ (Employee) and ________ (Company Name) on the __ day of ____ in the year 20 ____. [Company Name] is located at [Address] and is represented by [name of representative] in this agreement.
WHEREAS, the Company is in the business of [describe type of business].
WHEREAS, the Employee and the Employer have entered into a formal Employment agreement where the Employee will perform duties related to their position as a [Job Title]; and
WHEREAS, the Employee agrees to the restrictions described herein as binding.
THEREFORE, the Employer and the Employee agree to the following terms:
IN WITNESS WHEREOF, both parties agree to these terms and give their consent and authority to this agreement below.
Employee Signature ____________ Date ____________ Employer Representative Signature ______________ Date
Find out what types of businesses represent direct competition to your business. Competitors are businesses that offer the same goods or services as you, sometimes in the same geographic location. You need to know what possible conflicts of interest could arise among your employees.
You can create an agreement from scratch, or you can use a noncompete agreement sample like ours. Either way, your agreement should be customized to reflect the specifics of your business.
It is important to have the advice of a lawyer or legal representative when drafting legal documents. Get a lawyer to read through your contract and look for any possible omissions or flaws. You want your noncompete form to be airtight, so don't assume that it is just because you used a free noncompete agreement template.
At this point, the employee should be given ample opportunity to ask questions. The best thing to do is read through the document with them.
Provided that everyone feels that the terms of the noncompete agreement are fair, both parties can sign it. You should keep a copy for your records and give a copy to your employee for his or her records.
Noncompete agreements are often restricted or not enforceable because they are so restrictive. They are illegal in California unless you are selling a business. Other states enforce some provisions, like trade secret protection, but not the work restrictions.
An employer must fulfill specific criteria before a noncompete clause will hold up in a court of law. Noncompete agreements are difficult to enforce because they interfere with a person's ability to make a living.
A standard noncompete agreement is a formal agreement between an employer and employee that states that the employee will not engage in any employment activities that are in competition or conflict with their primary job.
The time frame for noncompete agreements must be for a reasonable duration and is usually determined by the state. Noncompete agreements generally last two to three years.
Use a noncompete agreement template and customize it for your specific requirements.
A sales noncompete agreement is created specifically for employees in sales roles. These agreements typically include details about the salesperson's sales restrictions and their limitations when selling for other parties.
No. There is no statutory or common law requirement that a noncompete agreement be notarized. It has to be signed by the party against whom enforcement is sought to be enforceable, though.
A noncompete agreement prevents employees from entering into competition with you during or after employment.
Yes, but it doesn't need to be witnessed to be legally binding.
California, Montana, North Dakota, and Oklahoma ban noncompete agreements for employees completely.
This varies from state to state. The agreement must be reasonable in duration to be enforceable in most states, Generally speaking, noncompete agreements that last longer than two or three years may not be enforced by a court.
Not exactly. A nondisclosure agreement (NDA) is a confidentiality agreement. An NDA might be put in place if an employee is going to be granted access to privileged information.