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Top Tips: Reviewing Non-Compete Agreements

It can be difficult to review a restrictive employment agreement for enforceability. Typically, when hiring an employee you will want to know, “Is this enforceable?” Here are some Top Tips for you to use when analyzing an agreement:

  • Does the agreement prohibit the employee from being in competition (a true non-compete) or does it merely prohibit the soliciting or servicing of company clients (a non-solicitation agreement)? The more restrictive the agreement, the harder it is to enforce.
  • How long does the agreement attempt to restrict the conduct? Anything longer than two years is likely to be questioned.
  • Does the agreement have a geographic limit and is it consistent with the territory in which the employee was assigned? The less consistent the agreement is with the assigned territory, the less likely it is to be enforced.
  • Does the agreement try to limit the use of confidential information? If so, how is the confidential information defined and is it tailored specifically to the employers’ industry? The more broadly an agreement defines confidential information, the less likely it will be found to actually constitute confidential information.