Noncompete agreements can be an effective instrument for safeguarding trade secrets. Such protocol may prevent employees from working for competitors or participating in certain competitive activities after leaving. The effectiveness of this measure is dependent on a variety of circumstances. It covers the agreement’s scope and enforceability, the specifics of the employee’s departure, and subsequent conduct.
Scope of Noncompete Agreements
A noncompete agreement contains important information.
- Duration
- Geographic scope
- Prohibited activities post-termination
This involves working for a competitor and recruiting clients or staff. Noncompetes should be broader. This would restrict workers from utilizing or leaking trade secrets to help competitors.
Enforceability
A noncompete agreement must have a reasonable scope and duration to be enforceable. Courts assess key factors.
- Lawful business interests
- Its influence on the employee’s capacity to make a living
- The public good
Excessively restrictive or unfair noncompete agreements are not legally binding. This makes it ineffective in stopping employees from stealing trade secrets.
Protection of Trade Secrets
Employers use additional measures to protect trade secrets.
- Confidentiality agreements
- Security protocols
- Employee training on the importance of confidentiality
Employers hope these safeguards would prevent employees from exploiting or disclosing highly confidential data.
Employee Departure and Transition
Employers must state the provisions of noncompete agreements clearly and consistently. Giving proper warning and support with transition can help to reduce the risk of trade secret theft.
Enforcement Actions for Noncompete Agreements
There are cases where an employee violates a noncompete agreement. They may disclose trade secrets to a competitor or participate in prohibited competitive activity. The employer may initiate the actions below.
- Pursue legal action against the employee-violator
- Pursuing injunctive relief to avoid additional injury
- Seek damages for any losses incurred
Noncompete agreements can be a useful instrument for preserving trade secrets. Remember that they are not failsafe. They must be tailored to specific circumstances. Noncompetes must be constantly enforced as well. Employers should check with legal counsel to verify that noncompete agreements are in accordance with existing laws and adequately safeguard trade secrets.
