What Small Business Owners Need to Know About Non-Compete Agreements

Date: June 04, 2013

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June 4, 2013 –Business owners concerned about losing employees to competitors can require workers to sign non-compete agreements, but Beth Milito of the NFIB Small Business Legal Center says employers should consider several factors to protect themselves when crafting these contracts. 

Milito points to three main considerations:

  • There must be a legitimate business reason for the non-compete agreement such as the protection of customer lists or trade secrets.
  • There must be some benefit to the employee. New employees might sign as a condition of employment, but asking existing employees to sign an agreement may require a promotion or a raise.
  • The terms of the agreement must be reasonable in terms of time, geography and types of businesses restricted.

“As with any employment contract, it’s always a good practice to consult with an experienced employment attorney before having your employees sign an agreement,” Milito said.

Small Business Legal Ease is a web series from NFIB, the leading small business association, where experts from the NFIB Small Business Legal Center look at laws and regulations affecting the right of small business owners to own, operate and grow their business.

About NFIB

NFIB Small Business Legal Ease video seriesNFIB is the nation’s leading small business association, with offices in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through a unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of members to own, operate and grow their businesses. For more information visit www.nfib.com.

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