Determine When to Require Employees to Sign a Restrictive Covenant

Key Points

  • If an employer is concerned about protecting its trade secrets, customer information, or other information that may give it a competitive edge, it should consider requiring its employees to sign a restrictive covenant, such as a noncompetition agreement, nonsolicitation agreement and/or a nondisclosure agreement.
  • Restrictive covenants can help an employer 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 and the duration.

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