When should an employer require an employee to sign a restrictive covenant?

Author: Melanie J. Perez-Vellios, VP Group, LLC

An employer should have an employee sign a restrictive covenant in any instance where the employee can come into contact with confidential or proprietary information belonging to the employer. These can include customer lists, strategic company information, pricing information, trade secrets, sales and marketing information, or other information belonging to the employer. In order to best protect the employer, restrictive covenants should be signed by a prospective employee at the start of his or her employment. However, an employer needs to be aware that a few states have enacted legislation requiring employers to provide employees with a copy of a noncompete agreement prior to or concurrent with making an employment offer or an offer of change of job classification. If an employer does not comply, the agreement may be unenforceable, exposing an employer to unwanted competition.