Non-Compete Considerations

All employees will discover and learn aspects about their jobs and about your company that may become a particularly sensitive issue when an employee leaves the company.  While depending on state laws, employers can add a certain amount of protection through the use of properly written non-compete agreements.

It is generally understood that a former employee may eventually be in a new job position that could be in competition with the former employer.  For example, an electrician may not necessarily prevent a former apprentice from opening up his or her own business in the same neighborhood. However, an employer may restrict the former employee from entering into a certain scope of competition through a covenant not to compete.  Since specific restrictions and steps can apply, such agreements and covenants should be reviewed by an attorney.

In determining whether or not entering a non-compete arrangement makes sense for your business, the agreement should:

  • Be crucial to protect the interests and survival of the business.
  • Not limit the employee in a manner that goes beyond what is reasonable to protect your business interests. (Example: If your CPA firm focuses on clients in Arizona, then restricting the former employee from practicing in Florida would be deemed unreasonable.)
  • Not subject the public with a loss of access to the former’s employee’s service or skill.
  • Be a legitimate binding contract such that the former employee receives something in return by signing such an agreement (i.e. monetary compensation).


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