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What to consider when creating a non-compete clause

On Behalf of | Mar 13, 2019 | Uncategorized

In a large city like New York, competition is inevitable with businesses. No matter what type of service your company specializes in, all it can take is a few blocks to come across another business that does something similar. Because of this, you might start to worry when one of your top workers leaves your company. You’ve taught them everything they need to know for their line of work, but now they have the chance to relay this information to another company you are directly competing against.

Whether you are starting a new business or notice a competing company within your area, you may want to consider creating a non-compete agreement for your current workers and future applicants. This can affect your business in more ways than one, so you need to know what effects this could potentially have on your workers.

Who is your competition?

In several instances, employees that go on to work for competing companies may not see them as competition even if there are similarities. If your business specializes in a certain area, then they might not have many options after they leave. For example, a real estate agent may find it hard to search for a job that doesn’t involve selling houses because they got so good at it for years. It might be beneficial for you to list different companies that you consider competition so that the worker can make sure not to apply for them when it comes time for them to leave.

Where is your competition?

This is arguably one of the more controversial parts when it comes to these agreements within New York City. Many non-competes include the length a competing company has to be within to be considered a threat. What seems small in other states makes a significant different in New York City, as you could end up wiping out a large portion of a worker’s employment opportunities with 20 or 30 miles alone. The state encourages workers to look closely at non-competes before agreeing to work, so you could be losing a potentially excellent candidate with your restrictions.

How long should the period last?

New York expects employers to have non-compete clauses last for a reasonable amount of time. It can range from a couple of months to a few years. This does depend mostly on what your worker would pick up on while they worked for you. If the information is highly confidential and would damage your company if it went to the competition, then it should be long enough for them to forget about it. If there really isn’t a lot of company secrets they learn in the process, then it probably shouldn’t be as strict.

Before you create a non-compete clause, you should consider discussing the matter with an employment law attorney to get a better sense of what you want to accomplish with this. Knowing what legal assistance is available is also important if one of your former workers ends up betraying the agreement.