I’ve had a string of injunction hearings in trade-secret and restrictive covenant cases the last two months, which has prevented me from writing regularly. In several of these cases, the defendants signed nonsolicitation and nondisclosure agreements that did not include a noncompete. This type of contractual protection is worth considering.
Recently, there has been a lot of negative press about noncompete agreements that large companies like Jimmy Johns and Amazon have forced upon low-level employees. These situations show that a noncompete is not always necessary. When deciding what contracts you will require your employees to sign, think about each employee’s role and what level of protection you need.
For lower-level employees with limited or no access to your proprietary information, a nondisclosure agreement may be sufficient. Sales or customer-relations employees would likely require a nonsolicitation agreement as well. Generally, it’s worth considering whether to limit noncompetes to those employees who have ongoing access to (or perhaps created) your trade secrets.
There’s a tangible benefit to leaving out the non-compete clause. In my experience, judges are far more comfortable preventing a former employee from soliciting employees, as compared to preventing them from working in an entire industry. I like being able to say “Your honor, we are not asking you to prevent John Doe from working in this industry. In fact, we have no problem with him continuing to work for his new employer. All we are asking is that Mr. Doe not be permitted to use our confidential information or solicit our clients.”
In the end, if you only need to prevent solicitation, including a non-compete can do more harm than good.
Of course, non-compete agreements have their place. Figuring out which agreements to implement is a critical decision that you should not make alone. Consult with an attorney who can help craft an overall strategy for protecting your trade secrets.