BCS: Helping business clients with opportunities and through crises since 1995

Including a non-complete clause in an employment contract

You have worked hard to ensure that your business’s competitive interests are secure. You diligently built a client list, developed unique products, invented processes and taken other steps to achieve success and differentiation from the competition. From intellectual property, such as a secret formula, to a physical asset, such as a client list, you understand how critical it is to protect these things and ensure that your company retains ownership and sole use of these things.

The protection of your intellectual property and business interests is possible with the implementation of specific tools. For example, your company may find the use of employment contracts as a way to outline specific expectations for the relationship between your employees and your Georgia business. Another tool you may consider is the implementation of non-complete clauses in your employment contracts.

How does a non-compete agreement work?

It is possible to include a non-compete clause in some employment contracts, and it is also possible to draft a separate non-complete agreement for certain employees. These agreements are typically signed at the beginning of the term of employment, and they go into effect after the employee-employer relationship has ended. These agreements must be enforceable, fair and reasonable. Otherwise, they may not withstand the scrutiny of the court, and some terms or the entire contract may be invalid.

A non-complete agreement must be for the protection of valid business interests. They may limit where former employees can work after leaving a company, preventing a former employee from leaving and immediately working for the competition. It can also keep proprietary information safe after employees leave. In order for a non-compete agreement to be enforceable, it must protect genuine business interests and include reasonable and fair terms, and it must also be supported by sufficient consideration at the time of signing.

Creating reasonable contracts

The key to having enforceable non-compete agreements that protect genuine business interests is reasonableness. If you believe that this type of contract could benefit your company, you may want to explore how you can create a non-complete agreement or include a non-complete clause in your employment contracts that make sense for your business. If you are unsure of how to do this, it may help to begin with an assessment of your needs and objectives in order to understand the specific legal options available to you.