The goal of any restrictive covenant is to protect the employer’s legitimate business interests. Employers, however, often view restrictive covenants as a one-size and one-type fits all situations tool. In reality, restrictive covenants come in many varieties including non-compete, non-solicitation and confidentiality agreements. Clients are often interested in enforcing a “non-compete” clause against a former employee. A careful evaluation of the contract, however, often reveals that even though a restrictive covenant may be called a non-compete, in reality it is a non-solicitation restriction or simply an agreement to keep certain information confidential.
Experience shows that employers generally create a template or form employment agreement which they use for all future employees and simply change the names, dates, and hopefully the compensation for each employee, without regard to whether or not the employer’s interests would be better served by ensuring that certain employees have non-competes, non-solicitations or confidentiality restrictions. Unfortunately, these templates get mangled over time, as multiple managers make different changes or modifications to the agreement that are requested by various employees. In the end, the agreement an employer seeks to enforce is often hardly recognizable and bears little resemblance to the original employment agreement.
The first and most important step in obtaining an enforceable and appropriate restrictive covenant is to carefully evaluate each employee to determine what, if any, restrictive covenants are appropriate. Once this is determined, creating an appropriate restrictive covenant that is tailored to the employee, their position, and the types of information they have access to, as well as the potential damage they could cause should they leave their employment, is a much more focused and direct process.