Protecting your business is about more than just implementing the right cybersecurity measures – it’s also about ensuring that you as an employer have the right agreements in place.
In the last few years, the Supreme Court has made it easier to enforce covenants not to compete or the legal agreement commonly called a non-competition agreement. These agreements are implemented to protect a business and its information. What employers often do is have employees sign a non-disclosure agreement, or confidentiality agreement to ensure their information is protected from falling into the wrong hands, whether intentionally or unintentionally.
These two agreements are essentially the same documents, which are designed to protect a business’s confidential information.
Confidentiality Agreement
A confidentiality agreement serves the same purpose as it sounds – to keep important information about your business and your clients confidential. It may seem self-explanatory, but this legally-binding agreement attempts to prevent employees from leaking information that could cause your business harm. For example, once an employee signs a confidentiality agreement, they can’t and should not provide a competitor with insider information for their own or someone else’s benefit. If this does happen after an agreement is signed, it can be used if a company chooses to sue a former employee for doing so.
Non-Competition Agreement
When employers have their employees sign a non-competition agreement, they are restricting the ability of the employee to leave and work for someone else within the same competing industry or sector. This speaks especially for high-level employees or executives who have access to a lot of confidential information or inside information. A non-competition restricts your VP or CFO from leaving the company to start their own competing company or joining a competing firm. A non-competition agreement is necessary to protect your business whether you’ve provided an employee with confidential information, specialized training or even company stock.
Taking Steps to Protect Your Company
When drafting a non-competition agreement, you should ensure it is reasonable in restrictions in terms of geographic scope, the length of time it is in place, and the scope of the activity. When drafting confidentiality agreements, you need to be as specific as you can be regarding the information you’re protecting and what you’re asking employees to do. For example, you do not want them to use the information and you equally do not want them to disclose this information.
Once you get these documents in place, you’ll also want to make sure you’re protecting the confidential information. Without taking the proper steps to ensure you’re protecting the information you do not want to be disclosed, it could serve as a stumbling block when you’re trying to enforce the agreements.
As an employee, when you’re signing these agreements, you want to understand what you’re signing, which is why it’s important to ensure these documents are specific and clear to understand, especially because they’re much easier to enforce now.
Have questions regarding employee documentation and more? Contact our office today.