What is a noncompete agreement?
A noncompete agreement is a binding contract that protects proprietary business information. The contract can limit the employee or contractor from working for competing businesses, soliciting certain clients, starting their own business within the same sector, or a variety of other actions that could be deemed as direct competition or use of trade secrets. The contract must include a realistic timeframe and defined geographic area. It's wise to check your state's regulations to avoid legal repercussions for creating a noncompete agreement that is considered unreasonable or excessive.
Why should I use a noncompete agreement?
If your business is successful because of proprietary information, you need to protect that information to ensure your business continues to thrive. A noncompete agreement provides your business with protection and security by clearly defining what is considered a misuse of trade secrets, proprietary information, and business connections. If violated, you can take legal action to enforce the agreement. If you work in an incredibly competitive industry that must innovate often, it's crucial to have a noncompete agreement in place to ensure your competitive advantage is protected.