Hiring A Key Employee
Before hiring a key manager, supervisor or sales professional, you should consider preparing an employment contract with a non-compete clause to protect your most valuable assets. Otherwise, that employee could leave your company and become a dangerous competitor who takes advantage of “inside” information about your business operations and customer relationships.
Non-compete clauses are also frequently included in dealer and franchise agreements, and in the purchase and sale of a business. That’s because the customer relationships held by a dealer, franchisee or owner are a significant part of the value of the business.
In all those cases, the goal is the same: to protect current assets and prevent someone with proven skills and industry knowledge from becoming a competitor. To be enforceable, a non-co! mpete clause or agreement must comply with Florida statutes and case law. All the technical details must be correct; otherwise, it’s a futile exercise.
Non-competes usually specify a certain time period and geographic area in which the ex-employee or owner is restrained from doing business. In dealing with former employee or agent, any restraint of six months or less is assumed to be valid, while a restraint that runs for more than two years is considered invalid, unless special circumstances apply. Therefore, a non-compete should be drafted for less than a two-year period. Geographically, it’s up to the court to determine a reasonable competitive distance.
In some cases, that might be a certain radius around the company’s offices, but it might also be a salesperson’s territory. If you think a new employee to sign a non-compete clause, it’s best to prepare the agreement well in advance to cover potential contingencies, and get it signed on the day of hir! ing. Then, your interests are protected even if the employee! works on ly one day and quits. The situation is more challenging if you ask an employee to sign a non-compete agreement after being on the job for several months or more.
As soon as you raise the subject, that employee will suspect an ulterior motive: Are you thinking about laying her off? That can create new issues with the employee and in your workplace. But you don’t have to worry about protecting your trade secrets from an ex-employee or former owner Trade secrets like the legendary formula for Coc or the source code for a new mobile app are covered by a different set of federal and state statutes.
In general, the courts provide extensive protection to the intellectual property owner. But if you want to safeguard your valuable customer relationships and keep outsiders from knowing your secrets, it makes sense to prepare strong and enforceable non-compete agreements.
In the 20 years since opening his practice, Mr. Levy has become one of South Florida’s most sought-after legal service providers, assisting both clients and attorneys navigate the time-consuming and technical aspects of both business litigation and the appellate process with best business strategies.
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