You guys make your employees sign Non-Disclosures?

aproxaday

aproxaday

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Apr 20, 2011
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Scottsdale, AZ
Non-Disclosures and Non-Competition agreements, Do you guys have your employees sign them? I'm trying to draft one up right now, and wanted to see if you guys have any tips on what things I might include in the terms. I was thinking about a 3 year Non-Competition agreement that starts after the employee stops working.
 


The non compete can't be so overreaching that a person would not be able to work. Even if you put three years in the contract and the employee signs it, that does not mean it will hold up in court.

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What about a 1 year non-compete. What would be so wrong with that?

What if they sign a NDA, does that protect me against them using my suppliers and competing against me, or is that only protected in a non-compete?
 
aproxaday said:
What about a 1 year non-compete. What would be so wrong with that?

What if they sign a NDA, does that protect me against them using my suppliers and competing against me, or is that only protected in a non-compete?
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Many states frown upon keeping people from working. Unless you have a very well written non compete, which isn't to restrictive the courts will often overturn them.
 
If you have enough money to hire someone, you have enough money to pay a lawyer who deals with employment law in your state.

This is one of those areas where it's worth spending a few hundred bucks. Employees disputes can quickly escalate into $XX,XXX
 
Just to reiterate what everyone has said, if your non-compete is too broad, it doesn't really matter and will not be held up in court.
 
I use both and had a reputable employment attorney put them together. The barrier for entry in our industry is far to low to go without these.

Agree with everyone else on the non-compete terms, you can't go overboard otherwise it's not worth a damn thing. Truthfully, they are worth more in the sense that the employee knows that there is at least a chance that you could win with it.
 
dmnEPC said:
This

Its usually enough to scare most people into compliance.
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I was curious about this as well, but then I figured it would only really be enough to scare them. Curious though....why would a nicely attorney drafted non-compete not hold up? I mean I can see the employee just having another friend or family put the business in their name to avoid it, but there has to be some kind of way to make it hold up. Any attorneys here?
 
If your employee is smart enough to sign anything that binds them to a 3 year agreement they are not smart enough to compete with you. PM me your business model and I will tell you how to protect it. Also, if your not a lawyer, don't draft a legal document...
 
aproxaday said:
That's the reason I feel like I need something just to deter employees from thinking that they can just go and set up their own shop and their wouldn't be any repercussions.
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If you want to use the non-compete, just put some language in there about not contacting or working with any current or past clients. Basically, if they build a "book of business" selling for you, make sure that stays company property. Anything other then this starts to get into a grey area and the non-compete could be thrown out due to reasons that everyone else has stated.
 
Even if the non-compete can't hold up in court, I think that the simple fact that they can be sued if they were to try and compete after termination, that would deter most. If they were to try and set up their own shop, the last thing they would want to start with is a law suit against them.

One thing is for sure, I do want to protect my supplier list and client list.
 
Yeah, realistically, a 3 year non-compete is not going to hold up unless your are a company like verzion. They got this one guy in a 7 year non-compete, that I knew. If the employee is a web designer, and he signs, you are pretty much telling him he can't design websites in your industry, maybe websites at all. Even then, if your business model is so flimsy that one guy can duplicate it that quickly, I don't know dude. 3 year non-compete is going to get shredded quickly.

It would only scare some youngsters that haven't been around the block. I've got a several employees, and all the smart and my best ones, happened to be smart enough not to sign the Non-compete, but do sign the NDA. Go figure.

This is where a lawyer is key, they'll give you all the major scenarios, but if you honestly can't trust an employee to leave and not copy your shit, it's not an employee you want around you in my opinion. Good employees are hard to find.
 
Non Compete's are valid in most states as long as they are limited in scope and duration. I find most non competes over 1 year excessive, especially if they prohibit working in anything remotely close to the industry you're in. I've seen some excessive ones in this industry, laughable really.

Some states, like Illinois, actually require a protectible business interest in order to have the non compete be valid. Pennsylvania is kind of the same, but is a blue pencil state (meaning the judge can literally cross out parts of the contract and put less restrictive language)
 
My lawyer says Non-competes are only valid in very few circumstances and short time-frames. Such as you can keep an employee from opening the same type restaurant within 5-10m radius for 1 year.

If you are in tech, or a service that isn't easy to justify the loss of business or inherent negative impact on your business from their opening, it will have a tough time convincing the judge intervene.

I would contact a lawyer to see if your business could be protected. I do have everyone sign NDA's for my businesses with sensitive info. I use them more or less to let people know they need to keep everything on the DL.
 
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