Financial Services Resource Center for HR: Restrictive Covenants

This item is part of Financial Services Resource Center for HR

Financial services employers should be conscious of the risk of employees or former employees working for competitors. Therefore, in order to protect the competitive edge, employers should consider requiring employees to execute employment agreements containing restrictive covenants as a condition of their employment. The agreement can prevent them from: competing with the employer during and for a limited period of time after employment; soliciting clients or customers of the employer; soliciting employees of the employer; and disclosing an employer's confidential and proprietary information. Financial services employers should be aware, however, that restrictive covenants are often challenged by former employees. Therefore, employers should not only check their state laws to determine what restrictions are enforceable (if any), they should ensure that the terms of the restrictive covenants do not force an employee out of the financial services industry entirely.

XpertHR has the following information to help financial services employers effectively create, manage and enforce restrictive covenants: