(Part Eight in a Series)
Imagine that you have just started a new job with a great company. You’ve quit your job, sold your home, and moved hundreds of miles away from your family and friends to accept this fabulous opportunity.
Now imagine that on your first day at work the Director of HR plops the company’s “standard” five-page Non-Compete Agreement in front of you and tells you that you must agree not to work in your industry for three years if you should ever leave the company. What is your initial reaction?
Yeah, I thought so. That’s what judges think, too.
Principles of free enterprise dictate that you are subject to the challenges of fair competition. You can, however, protect your business from unfair competition. The way you go about protecting your business determines whether you will be protected.
Black Hats think only about protecting their interests and give no thought to the restrictions being placed on the employee. Their only concern is that the employee sign the restrictive covenant, the sooner the better.
White Hats, on the other hand, realize that a human being sits on the other side of the table. Human beings have parents, spouses, children, and friends. They have personal and professional goals, choices and preferences, wants and needs. In short, they have objectives that may not match your own.
Courtesy dictates that your employees be given an opportunity to thoughtfully consider the consequences, risks, and rewards before they sign a restrictive covenant. They should be encouraged to review it with the important people in their lives and with legal counsel. In appropriate circumstances — for example, if an employee brings a book of business to the company — the company may need to revise its “standard” agreement to accommodate the situation with a particular employee.
Provide prospective employees with a copy of the agreement you expect them to sign when you extend the job offer. Give them time to review the agreement before you allow them to sign. Review important portions of the agreement with them, and ensure that their questions are answered before they sign.
Seek the advice of experienced legal counsel if you are implementing restrictive covenants in your existing work force. The way you must do so varies widely from jurisdiction to jurisdiction, and you will want to make sure that you meet all the requirements. Regardless of what your jurisdiction requires, make sure that you give your employees adequate time to consider the risks and rewards of signing the agreement.
When you give employees and prospective employees adequate time to review and consider restrictive covenants, your employees will be more accepting of the agreement. You will develop a better agreement from the give and take in any negotiations. You will increase the likelihood that the court will enforce the agreement.
Wear a White Hat by giving your employees adequate time to consider your restrictive covenants. Your business will boom.
I am, first of all, a husband and father. Rebecca and I have been married 23 years; we have four children ages 21, 19, 18, and 15. My family is my greatest joy in life. For 24 years, I have practiced business law in Arizona, the past eleven as the managing partner of Gibson Ferrin, PLC. We help businesses and their owners meet their business and personal goals. My practice focuses on the intersection between intellectual property law and employment law. I help businesses prosper by properly managing their intangible assets.
I am licensed to practice law in Arizona only. Though I believe the advice in BiziBoom™ is based on sound legal principles, the law of your jurisdiction may be different. The advice given on BiziBoom™ is informational only; it may not be applicable to your specific situation. You should seek the advice of competent counsel in your jurisdiction, someone who knows the particular legal requirements of your jurisdiction. Until you have signed an engagement letter with Gibson Ferrin, PLC, neither the Firm nor I are acting as your legal counsel. Nothing on BiziBoom™ creates an attorney/client relationship between you and the Firm.