Do You Have the Right Critical Documents? Employee Agreements and NDA’s (Part Two)

The next important documents in our series that every business should have is the employee agreement
and non-compete.

Employee Agreements

The importance of an employee agreement, or employment contract, cannot be understated. Even if you only have one employee, it is still necessary to have an employee agreement as it sets the obligations and expectations of the business and the employee. This document will outline the rights, responsibilities, and obligations of both parties during the time of employment.
Some key areas to cover in an employee agreement include: pay & benefits, work schedule, probation period, annual leave, termination, and non-compete. As an employer, the employment agreement can be utilized as a way to incentivize highly skilled employees to join your business and can ensure that qualified talent is working for you and stays working for you. It is important to have an employee agreement whether that employment will be at-will or contracted. The employment agreement sets the tone of the employer/employee relationship and a robust employment agreement can set your business up for success.

Non-Compete Agreements

Depending on the work involved in your business, it is also beneficial to include a non-compete within your employment agreement, or as a supplemental document. This type of clause can provide you with a valuable tool of protection from a variety of circumstances that could cause irreparable harm to your business. For example, you may lose valuable business if you have employees poached by competitors or have trade secrets revealed to others in your industry. The non-compete clause is perfect in mitigating this potential problem.

A non-compete agreement is an agreement between an employer and employee or a contract worker. They are intended to protect your business from competition by restricting applicable parties from sharing proprietary information or starting up a competing business. Non-compete clauses are not open ended and must have an end date upon which the employee can compete with their current employer if need be. Other requirements to include that ensure enforceability would be language that limits the competition restriction to a reasonable geographic location, or language that limits competition to a certain industry. While most non-compete clauses are signed by new employees it is possible, under certain circumstances, to ask an existing employee to sign a non-compete agreement if a new one is implemented.

Employment agreements and non-compete clauses can help protect your business interests as they lay out the expectations and responsibilities for both parties. It is vital for you as an employer to put the terms and conditions for employment in writing.


Non-Disclosure Agreements

Another important document that is similar to a non-compete is the non-disclosure agreement, more commonly known as an NDA. An NDA is a legally enforceable contract that creates a confidential relationship between a person who holds some kind of trade secret and a person to whom the secret will be disclosed. Like a non-compete clause an NDA will protect business interests, however an NDA will protect a business’s trade secrets instead of just protecting against potential competition from former employees or contract workers.
The scope of an NDA is usually broader than a non-compete clause as well. The type of information covered by an NDA is vast and can cover anything from customer lists, software, passwords, system specifications and more. However, there are some items, such as public records filed with the SEC or the address of the business that are not covered by an NDA.


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