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What to include in a noncompetition agreement

Hubbard Snitchler & Parzianello

Many manufacturing or automotive companies may realize they need a noncompetition agreement to protect their business. A previous blog covered the basics of a noncompetition agreement. It is also important for people to understand what they should include in this document. 

Make it Specific 

Automotive and manufacturing companies have unique needs. According to Entrepreneur magazine, it is a good idea for companies to remember their particular situation when they draft a noncompetition agreement. Sometimes employees may learn trade secrets. A noncompetition agreement should usually state that employees cannot disclose these secrets when they leave the company. Additionally, companies may want to consider the kind of training they give their employees. Some companies may provide training courses to help their employees do their jobs more efficiently. It is a good idea to include a clause stating that employees cannot share this training when they start a job at a different company. 

Make it Feasible 

Some companies may want to ensure their former employees can never disclose information about their business practices. FindLaw says it is important for employers to remember that they have to include reasonable terms in a noncompetition agreement. This means that companies typically have to state how long the agreement will be in place. Most of the time, these agreements should not last longer than two years after an employee leaves the company. Additionally, it is important to remember that a noncompetition agreement cannot bar people from working in similar industries. This is because some courts see this kind of restriction as unreasonable. 

Consider the Employee 

Some companies may want to have a noncompetition agreement for all of their workers. However, it is important to remember that this may not be necessary. Someone who works on the assembly line may not always have access to specialized knowledge. In this situation, a noncompetition agreement may be irrelevant. When companies deem that a noncompetition agreement is truly necessary, they may want to consider how the agreement will benefit the employee. Some employees may not want to sign this document if they have worked at the company for a few years. It may be a good idea if employers include benefits such as promotions or salary increases. 

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