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Including a non-compete clause in your employment contracts

On Behalf of | Jun 13, 2023 | Business Law

Employment contracts are some of the most important tools available to a business. These legally binding agreements outline the rights and responsibilities of two parties that will be working together, typically an employer and the employee. By having carefully drafted employment contracts that are uniquely suited to the needs of your business, you can ensure the smooth operation of your company and minimize the risk of disputes with the individuals who work for you.  

You can draft your employment contracts to suit the operational requirements of your company and the role of the individual employee. Depending on the role of the employee, it may also be helpful to include a non-compete clause in your employment contracts or create a separate non-compete agreement. This could protect your company’s proprietary information and shield your business from the misuse of private information. 

The function of a non-compete agreement 

Depending on the nature of your business, a non-compete agreement could be critical to the long-term health of your business. The intent of this type of agreement is to prevent a former employee from taking information from your business and using it for the benefit of a competing company. This protects proprietary information that includes client lists, secret formulas, processes and more. By including this agreement as part of your employment contracts, you can prevent an employee from working for a competing business for a certain amount of time. 

It is critical that non-compete agreements be legally enforceable and reasonable in scope and duration. If they are not, it could result in a court ruling some or all of your agreement invalid, exposing your business to certain risks. It is in your interests to have assistance as you create your contracts in order to ensure that your employment contracts provide the full amount of protection you need. 

Specificity in contracts 

 Employment contracts should be specific, including terms that mention how long the contract is valid, the specific limits enforced, geographical information and the parties your business considers competitors. Before you present an employment contract for consideration, you will benefit from seeking the guidance of an experienced professional who can provide you with insight regarding your options. An assessment of your business operations, the roles of employees and trade secrets owned by your business can help you shield the long-term success of your Maryland business.