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Non-Compete Agreement Templates

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A Non Compete Agreement is a document that attempts to block an individual or entity from potentially entering into competition with another party. This is most common when hiring employees, as individuals will be exposed to sensitive information about an entity that could later be used against it if the employee decided to create a “like” business in the future. This document can prohibit an individual from being able to work in the same field for a period of time or indefinitely due to the “trade secrets” that are passed-on by the employer.

Types

Independent Contractor Non-Compete Agreement – Between a business and a party that is not an employee (individual or entity) that agrees to conduct services while withholding sensitive information.

Employee Non-Compete Agreement – Protects a Company from hiring an individual and teaching ‘trade-secrets’ without the fear of the individual using the information against the Company by being hired by another business or going out on their own.

Release of Non-Compete Agreement – Otherwise known as a ‘release of liability’ and allows a person that is in a non-compete to escape from the confinement of working in the industry.

Forms By State

What is a Non Compete Agreement?

In order for some companies to be successful, they need their employees to know sensitive information to perform the job at hand in order to have an edge over their competitors. If a company’s sensitive information is released or practiced by a previous employee elsewhere, it could have a damaging impact on the business. By signing a Non Compete Agreement, it legally enforces a current or previous employee not to share, trade, or practice sensitive information.

A Non Compete Agreement is also referred to as the following:

  • Non Compete Agreement Template
  • Non Compete Clause
  • Covenant Not to Compete

When to Use a Non Compete Agreement?

Hiring new employees – Lets say you recently started a new business and it’s starting to thrive. The reason for the business’s success is due to acquiring information that no other competitor has been able to gain. The demand for the business’s product is increasing quickly and the company is in dire need of more employees. In order for new employees to successfully execute their job, they need to know the sensitive information that gives the company such an edge over its competitors. When potential employees apply to your job, being hired would be contingent upon signing your Non Compete Agreement. Applicants have the right to refuse signing and as an employer, you have have to right to deny employment.

Requesting from current employees – Trying to request current employees to complete a Non Compete Agreement is a bit more tricky and complicated than when requiring new employees to do so. For example – You are the owner of an established business that has obtained confidential information pertaining to the business’s operation. Before disclosing this information to current employees, they each must agree not to share or practice this information with any other company going forth by singing a Non Compete Agreement. Refusal to sign could result in the firing of an employee.

Laws by State

How to Write a Non Compete Agreement

Step 1 – Purpose – The hiring representative shall submit the following information:

  • The company name
  • Recipient’s name
  • Parties must read the remaining paragraph

Step 2 – Non-Compete/Disclosure – The company’s hiring representative shall read all of the following statements. Check all applicable statements pertaining to what, specifically, will be disallowed by the recipient until the time period expiration –

  • Business Practices
  • Clients/Customers
  • General Competitor(s)
  • Specific Competitor(s)
  • Employees

Step 3 – Time Period –

  • Provide the time period in which the recipient must agree to continue to maintain company confidentiality (in weeks,months, year(s)
  • Check the box reflecting the company’s preferred commencement period

Step 4 – Purchase Option – Should the company offer the recipient the opportunity to void this contract by paying an agreed fee to the company, check the applicable box and enter any required information as follows:

  • If the company wishes to offer this option to the employee, check  the first box – hiring representative  shall enter the amount to be paid by the recipient to the company in the lines provided
  • If the company would prefer not to offer the Purchase Option, check the second box in this section

Step 5 – Jurisdiction –

  • The company representative must submit the specific geographical area in which the recipient will be restricted

Step 6 – Titled Sections and Subsections – The employee will be required to read and understand the following:

  •  Confidential Information
  • Permitted Disclosure (1 through 5)
  • Confidentiality
  • Consultants and Employees Bound
  • Return of Materials
  • Remedies
  • Choice of Law – Enter the state
  • Entire Agreement

Step 7 – Signatures – Company and recipient must provide the following information in agreement:

Company –

  • Hiring representative’s signature
  • Printed name and title
  • Date of signature in mm/dd/yyyy format

Recipient –

  • Recipient’s signature
  • Printed name
  • Date of signature in mm/dd/yyyy format

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