Employers sometimes ask employees to sign non-compete agreements or non-disclosure agreements. But documents with similar names don’t always have the same effect. Whether you’re the employer or the employee, understand how non-disclosure and non-compete agreement work.
Non-Disclosure Agreements Protect Confidential Information.
Proprietary information may set one business apart from its competitors. Research, trade secrets, client lists, and internal procedures are just a few examples of confidential data that needs to be protected from disclosure.
Non-disclosure agreements are designed to help companies protect their information from being distributed inappropriately. Parties agree not to disclose confidential information they’ve learned from the company that owns the information. Releasing information protected by a non-disclosure agreement may lead to lawsuits being filed against the offenders.
There are two basic forms of non-disclosure agreements. A “one way” agreement is made when one party shares information with another party. When two parties exchange information with each other, it’s considered a “two way” agreement.
A non-disclosure agreement may include:
- The information to be protected by the non-disclosure agreement;
- Each party’s responsibilities;
- Agreements the parties have negotiated;
- The term for which the agreement is effective; and
- Provisions that are common in contracts – called boilerplate language – may be included.
Parties to a non-disclosure agreement agree not to release or use the protected information. In addition, helping other people find the information on their own is prohibited.
Non-Compete Agreements Prevent Competition.
Business owners may want to prevent their employees from working from competitors. An employee who leaves one company for a competitor carries knowledge insider knowledge of their former employer. They also may have intimate knowledge of the company’s clients.
A non-compete agreement asks someone, often an employee, to refrain from engaging in competitive behavior after leaving the service of an employer. This type of agreement might be part of a job offer or a severance package. Sometimes, however, an employee might be asked to sign a non-compete in order to get a raise or promotion.
Non-compete agreements must be enforceable, though. Courts considering the validity of a non-compete may look for the following:
- Is the non-compete truly necessary to protect the company’s interests;
- Was the employee provided adequate compensation for signing the non-compete;
- Are the terms of the non-compete too restrictive.
When someone breaches a non-compete agreement, an employer may:
- Obtain a temporary restraining order or temporary injunction to stop the former’s employee’s prohibited behavior;
- File a lawsuit seeking damages from the former employee.
Learn More About Non-Compete and Non-Disclosure Agreements.
It’s often difficult for the average person to understand the consequences of the legal documents. Having an attorney draft or review agreements may help you avoid future litigation.
Contact the attorneys at the Dillon Law Group, PLC with your questions and concerns. We give our clients the personalized attention they deserve. Call us at 757-962-4796 to schedule an appointment or use our Contact Form to let us know you’re interested. We assist clients in Virginia Beach, Newport News, and surrounding areas.