Planning and maintaining a business company is not an easy responsibility for the management of the company and the company owner himself. This is why it is essential that the people who will be hired to work in the company will place the same value that the owner places in his business as they begin their employment. One of the documents that center on protecting the company and its resources, as well as other procedures and trade practices, is known as an employee non-compete agreement form.
Employee Non-Compete Agreement Form Sample
What Is an Employee Non-Compete Agreement Form?
An employee non-compete agreement form is a type of form or document which is created and used by business companies and organizations for their employees. The purpose of this form is to inform an employee about the mandated rule of a company that requires the employee to not get involved in any action or any business which competes with the company that he is working in. Most non-compete agreement forms are also still recognized and regulated even years after the employee has left the company. This means that for the specified number of years in the agreement, the employee must not venture on a business or trade which is identical to that of the company that he formerly had signed the agreement with.
Why Is an Employee Non-Compete Agreement Form Important?
An employee non-compete agreement form is important for one main reason which is to protect the company’s trade secrets. By having the agreement, the company can restrict an employee to work for a competitor in the same field or industry that the company is in. This ensures that any advancements or progress in the skills of the employee which were earned during his employment in the company will not be put into the benefit of competing companies throughout the period of the agreement. In addition, employees who signed the non-compete agreement form will also be held accountable for their actions in and out of the company that will put the company’s resources, systems, and secrets at risks.
Another importance of having an employee non-compete agreement form is that it allows the employer and the employee to have a negotiation in order to attain a balance. Both parties can negotiate on the costs and the penalties which will be mandated in the event of a breach ranging from the lawsuit fees to be paid and the different procedures to be taken in addressing the breach of the signed agreement contract.
Lastly, with an employee non-compete agreement form, a company or the employer will be able to document and inform the employee of the expectations and responsibilities that he must adhere to during the period of the agreement.
Employee Confidentiality and Non-Compete Agreement Form
Essential Contents and Clauses of Employee Non-Compete Agreement Forms
Although every company have different needs and preferences, when it comes to creating employee non-compete agreement forms, the following essential contents and clauses along with the identification of the parties in the agreement form must always be present and defined properly in the document regardless of the business field or the industry that the company is involved in:
Covenants against competition – An acknowledgment statement regarding the agreement of the employee to value the company’s resources, confidential items, and all significant company information will be indicated in this content. A list which will define what covenants are agreed by the employee is also in this section of the form such as the time period of the agreement’s execution, the restricted solicitation of the employee towards other companies within the stated period of his employment and years after he ceases the company, and the responsibility of the employee to keep confidential information within himself and the company only til the end of the agreement period.
Willingness acknowledgment statement – It is important that an employee is signing the agreement not because he was forced to do so but because he is willing and is fully aware of his responsibilities once he affixes his signature in the agreement. This can be stated with an at-will acknowledgment in the agreement which should indicate the employee’s full willingness in participating in the agreement with his employer or the company that he is working in.
Accounting for profits – This is a crucial and important content to include in the agreement since it deals with the profits that the employee has earned throughout his employment which can be affected if he ever violates the agreement’s terms. In this particular portion of the form, the employer will be entitled to the accounting and the repayment of the profits and other financial benefits that the employee have acquired before the violation was made.
Reasonableness of restrictions – The focus of this content is to document that the employee has read, understood, and have agreed on the restrictions stated in the agreement form. It also will state the agreement of the employee that the restrictions were fair and reasonable for the interests of the employer or the company. Additionally, this portion of the form will also include a statement regarding the actions to be taken in the event that a part of the agreement will be considered by the court as invalid or not enforceable. Most agreements will state that if one part of the agreement is invalid, the rest which is validated and accepted by the court or the law will still be enforced regardless of the part which will not be included.
Burden and benefit – The specific people who are included in the burden and the benefit of the agreement will be stated in the form as well such as the respective heirs of each party, their successors, assigns, and their representatives.
Governing law – Each State or country will have different laws to be regulated when it comes to fair work and employment. This is why it is important to define in the agreement form what law the agreement falls into and will be observed throughout the agreement period.
Notices – The accepted method of sending notices from one party to another will be the main focus of this content of the form. It is essential that both parties will agree on when, how, and where any notice form will be sent if there is a need to do so which means that the addresses of each party should be disclosed in the form.
Rules of conduct – This part of the agreement will enlist the rules and regulations to be followed by the employee, as well as the employer, in lieu of the non-compete agreement. At the end of the list of rules, a signature block for both parties must be incorporated along with a witness statement addressed for the employer and the employee.
Employee Non-Compete Agreement Form
Employee Non-Compete Agreement Form FAQs
What happens if an employee refuses to sign the employee non-compete agreement form?
The decision lies upon the company. Although the company is not permitted to obligate or force an employee to sign the agreement against his own will, they can still decide on whether continuing the employment of the employee or not. This type of action will imply that the agreement is an important document to the company itself which should also be deemed with the same value to the employees or other parties signing the form.
Is an employee non-compete agreement enforceable?
Employee non-compete agreements are considered as one of the restrictive covenants. Due to this, there are some courts, States, or countries which do not enforce the agreement. However, an employee who is presented with the form must not put in his mind that the agreement is not enforceable since it may cause him legal conflicts if he will not abide on the agreement that he willfully signed. On the other hand, there are also courts who will enforce the non-compete agreement especially if the employee or a former employee ventured on business using the same trade secrets on the company to have his own success in the same industry.
How long should an employee non-compete agreement last?
Employee non-compete agreements must not go beyond a three-year period. This means that after the period of three years, the employee who previously has signed the agreement form will be permitted and will no longer be bind with the terms, conditions, and the rules in the agreement.
Non-Compete and Non-Solicitation Agreement Form
Just like any other legal contracts or employment forms, if one party breaches the terms in the employee non-compete agreement form, he must be held liable and responsible for the facing the penalties or sanctions defined in the agreement form. Some companies will state the amount or the fees that the employee will be paying if it will be proven that he has failed and have caused a breach in the agreement that he signed. While there are also companies who will not accept any payments, yet will sue the employee who copied and used the company’s trade practices and secrets for a business that the employee made or for the competitors of the company in the field or business industry that they are known.
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