In many employment and sale of business contracts, the employer or seller will include a non-competition and non-solicitation clause. At Antonoplos & Associate, our breach of non-compete lawyers commonly assists clients with seeking urgent remedies, including injunctions and mandatory orders, to enforce contractual provisions, including confidentiality agreements, and restrain a breach of confidence and solicitation.
Departing Employee Taking Clients or Confidential Information
Contractual and common law provide many different remedies to employers that allow them to deny former or departing employees from soliciting clients that work with the company, working in competing companies or industries, and from utilizing or discussing confidential information, proprietary products, trade secrets, or clients. In many cases, companies that suffer financial losses because a former employee breached this clause will seek an urgent injunction in order to immediately freeze the breaching party’s unlawful actions.
Employers often require employees to sign Non-Solicitation Agreements, Non-Competition Agreements, Confidentiality Agreements, and Non-Disclosure Agreements before joining or leaving the company. Additionally, rapidly growing industries and companies sometimes have many employees who see the success and lack of competition of the company and then want to replicate this success in their own venture. However, certain industries have a high turn-over rate of employees. In these industries, employees that leave one company to go work for a competitor or start their own business venture and have an incentive to solicit former clients and utilize confidential information at their new place of employment. This is extremely problematic as the former employee could be breaking their contract or at the very least, taking away current or potential business from our existing company.
Restrictive Covenants for Sale of Business
When selling a business, restrictive covenants are common as they provide a promise by the seller of the company not to go into a similar business within a certain geographic area for a certain period of time.
Restrictive Covenants for Employment Agreements
Another common use of restrictive covenants is to stop an employee from leaving a company to work for a competitor. This use of a restrictive covenant is commonly signed by employees and will typically restrict their future employment but can even restrict their actions while employed at their current job. However, to ensure the viability of the contract, you must consult a breach of non-compete lawyer.
While similar to a non-competition clause, a non-solicitation clause is different in a few key areas. This type of agreement prevents former employees from trying to get clients or other current employees from leaving the business for a new venture. In most cases, this is not a lifetime agreement and instead will last for between 1 – 5 years. Finally, because of the non-permanent nature, courts are more likely to enforce this type of agreement over a non-competition clause.
The most common type of restrictive covenants that employers place on employees in a non-competition clause. Typically, a non-competition clause will state that after an employee has been fired or quits, the employee cannot create or work for a competing business within a certain geographic area for a limited period of time. However, certain courts will deny an employer’s use of a non-competition clause if a non-solicitation clause is sufficient for that specific case. One common use of a non-competition clause is if someone sells their business. In this case, the purchaser of the company will likely include a non-competition clause in the contract.
Confidentiality Clauses and Non-Disclosure Agreements
A confidentiality clause or non-disclosure agreement stops an employee from discussing private information that they learned during the course of their employment with a specific company. Furthermore, this clause or agreement applies both during and after the employment of an employee. Confidentiality clauses and non-disclosure agreements typically includes: customer lists, data, test results, software, and prototypes.
Enforcement: Injunctions and Other Remedies
When an employer establishes a restrictive covenant, they may have to seek an injunction or other remedy to have the agreement enforced. Common injunctions that employers seek include:
- Injunctions enforcing post-termination restrictive covenants;
- Injunctions preventing the use of the employer’s confidential information.
If a breach of contract occurs relating to a restrictive covenant, an employer or business purchaser can also seek damages if the employee or sellers breach results in a direct loss. This is a prime example of why a breach of non-compete lawyers are vital parts of any contractual disputes.
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