Should you utilize non-compete agreements?

| Mar 2, 2021 | Business Litigation |

As a business owner, you’ve got a lot to think about when it comes to protecting your interests. You’ll need to negotiate and finalize contracts that speak to supply chains and purchase agreements, obtain commercial real estate that furthers your business operations, and secure the talent needed to meet your expectations. But even when you’re securing employees, there are certain things that you might want to do to ensure that you’re protecting your interests in the long-term. One way to do this is to utilize non-compete agreements.

How a non-compete agreement can help your business

On its face, a non-compete agreement is pretty straightforward. Your employee signs an agreement that restricts their ability to work for competitors within a certain geographic range for a certain period of time. This is meant to protect your business. For example, a non-compete prevents your former employer from leaving your business, going to work for a competitor, and then soliciting your customers. Non-compete agreements can also ensure confidentiality.

Limitations on non-compete agreements

There are limitations on these agreements, though, which means that if you create a non-compete agreement that is too restrictive, then a court may find it unenforceable. This means that you could be left without protection if you’re too aggressive with your agreement. When considering whether a non-compete agreement should be enforceable, a court will consider:

  • If the agreement is more restrictive than needed to protect a legitimate business interest
  • Whether the agreement poses an undue hardship on the employee
  • Whether the agreement harms the public

When looking at these factors, the court will assess the specific terms of the agreement, such as the length of the restriction and its geographic scope. That’s why it’s best to ensure that you have a strong but enforceable agreement on the front end.

Have strong representation on your side

Of course, business problems arise all the time. While you can work hard to try to prevent them, and you certainly should, you also need to be prepared to address them when they come up. That’s why it’s often best for Ohio business owners to have a competent legal professional on their side who can help them at any point in life of their business.