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Ensuring the enforceability of restrictive covenants

Contracts and restrictive covenants are some of the most important tools available to a Georgia business. These types of agreements provide protection for multiple parties entering into any type of business relationship, including relationships with contractors, third parties, employees and more. Any agreement put forth should be appropriate and enforceable in order to prevent complications in the event of a dispute.

Restrictive covenants are a critical part of some employment contracts, most commonly in the form of non-compete agreements. These covenants protect the interests of the employer in case an employee leaves the company in the future. It restricts what employees can do with information they know about the business in case they go to work for a competitor some day.

The function and enforcement of a restrictive covenant

Restrictive covenants are a practical way to ensure the protection of trade secrets and other information that could impact your competitive advantage. They not only restrict what information former employees can pass along, but they can also place restrictions on when employees can go work for a competitor. Note that any restrictive covenant is only as useful to you when it is enforceable. If terms are unfair, illegal or inaccurate, a court may not uphold it in the event of a dispute.

There are different variations of non-compete agreements. One of the most common is the non-solicitation clause, a term that prevents a former employee from soliciting any of his or her former clients for a period of time. You can also include non-recruitment clauses, confidentiality clauses and more. If an employee violates the terms of a restrictive covenant, their former employer may seek various remedies, including court-mandated compliance or compensation.

Your employment contracts

Much care and consideration should go into the terms used in your employment contracts, especially those related to restrictive covenants. If you are drafting an agreement, it will be in your interests to consider the terms in light of a potential dispute. Think about all angles in order to reduce the chance of a court ruling that some or all of the covenant is unenforceable. With the right employment contracts in place, you will feel confident regarding the security of your closely held information and other critical aspects of your business operations.