Determine When to Require Employees to Sign a Restrictive Covenant

Key Points

  • If an employer is concerned about protecting its trade secrets, client or customer information, employee lists or other information that may give it a competitive edge in its industry, it should consider requiring its employees to sign a restrictive covenant, such as a noncompetition agreement, nonsolicitation agreement and/or a nondisclosure agreement.
  • By requiring employees to sign the restrictive covenant, an employer will protect its legitimate business interests by preventing a former employee from working for a competitor, poaching the employer's clients or customers and/or disclosing its confidential information.
  • Employers should be aware, however, that some states do not enforce restrictive covenants at all, while others place restrictions on the types of information that is confidential, the geographic scope of the covenant as well as the duration.

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