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What are restrictive covenants and how can I enforce them?

| Aug 19, 2020 | Firm News |

As a business owner, you may have information or trade secrets that you would like to protect from exposure. Perhaps you have a solid customer base that you would like to protect from competitors. How do you prevent employees with inside information from using it against you once they part ways?

Keep reading for more information on restrictive covenants and how you can enforce them as a business owner.

What are restrictive covenants?

According to the experts at FindLaw, you may include restrictive covenants in employment agreements as a condition of employment. The following are the most common types that business and employers utilize:

  • Noncompete clauses prevent employees from competing with your business for a determined time after their employment with you ends. This includes starting a competing business or working for competitors.
  • Nondisclosure agreements inhibit employees from revealing certain information that is pertinent to your business, such as trade secrets.
  • Nonsolicitation clauses stop employees from trying to “steal” your customers for a predetermined time after employment ends.
  • Nonrecruitment clauses prevent employees from trying to recruit other employees for a predetermined time after employment ends.

How can I enforce restrictive covenants?

The presence of restrictive covenants in an employment agreement is usually enough to deter employees from violating it. However, if you do find out that an employee is breaching the agreement, you may need to begin litigation for damages.

As an employer, you may sue the former employee for damages resulting from their actions. To do this, however, you must ensure that the covenant is legally sound and enforceable. Additionally, you must ensure that you are also in compliance with the employment agreement.

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