According to the American Bar Association, there are many different types of restrictive covenants. Many may already be familiar to you, while others are more uncommon, at least in the United States. 

Non-solicitation 

If your employees sign a non-solicitation agreement, it means that they agree not to try to lure away your customers to do business with them instead. Non-solicitation agreements are usually only effective for a limited amount of time, but they apply to past, present and prospective customers. 

Anti-raiding 

An anti-raiding agreement is somewhat similar to a non-solicitation agreement. Where a non-solicitation agreement ensures that former employees will not poach your customers, an anti-raiding agreement prevents them from hiring away their co-workers upon leaving the company. 

Non-competition 

This type is very common but also the most restrictive. Upon leaving the company, your former employees agree not to compete with you for a specified period of time within a particular geographic area. Enforcing non-compete agreements can be challenging because of their restrictiveness, but it is possible to create one that should hold up. 

Confidentiality/Non-disclosure 

An employee may gain confidential or proprietary information about you, your company or your clients. A confidentiality agreement prevents him or her from disclosing or using that information. This applies to any information that is not publicly available even if it is not technically a trade secret. Some people use the terms “confidentiality agreement” and “non-disclosure agreement” interchangeably, but there may be a difference depending on the jurisdiction. 

Restrictive covenants can be controversial, and some jurisdictions make them difficult to enforce. However, if they are not injurious to the public interest, impose no undue hardship and protect your legitimate business interests, they should meet the necessary standard of reasonableness. 

Meynardie & Nanney

The post What are the different types of restrictive covenants? appeared first on NC Business Lawyer.

Typically, the terms of the NDA include what happens if the agreement is later breached. This can result in a lawsuit, during which the employer would sue you for breach of contract and pursue financial damages to remedy the issue. if you’re currently still employed by the company, it’s likely that you’ll be fired for disclosing the information. You may also be subject to liquidated damages. These are fines that must be paid for each individual breach cited within the lawsuit. In the event your NDA was part of a settlement agreement, you may be ordered to repay the settlement for the unlawful disclosure.

In some cases, employees may want to expose confidential information for the greater good. This can occur if a company is making dangerous violations in the workplace or mistreating its employees. Keep in mind that any clauses that go against the letter of the law will probably not be enforceable in the first place. For instance, if employees are obligated to withhold information about illegal activities, chances are that NDA won’t be considered valid.

No matter the reason, it’s best to consult an attorney before breaking an NDA. It may be possible to have the document thrown out of court. You’ll also be able to understand exactly what is obligated of you from the agreement and if there are any issues with enforceability. If you have concerns about an NDA before signing, it’s best to hold off until you get answers. However, this can be difficult since employment may be contingent on you signing the NDA.

Meynardie & Nanney

The post What happens when a person breaks an NDA? appeared first on NC Business Lawyer.

As Chron.com points out, a non-solicitation agreement is not the same as a non-compete clause. It is true that employees can feel alarmed if they feel an employer is trying to strictly limit their future work prospects. However, a non-solicitation agreement does not ask an employee to never compete with a current employer at a future time. An employee is just being bound not to use company information, such as a client list, to unfairly take away business from the current employer.

The typical provisions of a non-solicitation agreement are something many employees can respect. A person who has aspirations to run a company someday can likely empathize with an employer’s efforts to protect their operation. It may even inspire employees to take similar actions to protect their own sensitive information in the event they start their own companies at a later date.

 Even so, some employees do not like the idea of being restricted in their future business endeavors and may decide to leave a company rather than sign such an agreement. However, packaging a non-solicitation agreement with an incentive plan can make the agreement more palatable. Some companies offer a cash bonus to be earned over time and a deferred bonus that an employee receives after helping the company achieve a performance benchmark. This can motivate an employee to stick around the company for a while.

Non-solicitation agreements are worth pursuing because they can be effective, plus courts look favorably on them since they do not excessively limit the work prospects of an employee. Since businesses may draft non-solicitation agreements in different ways, this article should not be read as legal advice, only for your personal educational benefit.

Meynardie & Nanney

The post Will employees react negatively to non-solicitation agreements? appeared first on NC Business Lawyer.