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Other restrictive covenants can replace noncompete agreements

On Behalf of | Aug 5, 2022 | Firm News |

A company’s employment contracts and treatment of its workers need to comply with federal and state laws. Employers in California have to comply with more requirements and restrictions than employers operating in most other states.

From enhanced leave rights to multiple overtime regulations, there are laws that protect workers in California that don’t exist elsewhere in the country. California’s unique employment laws create additional challenges that businesses have to address.

For example, California will not enforce noncompete agreements even if a company includes such agreements in their employment contracts for the protection of the business’s legitimate interest. Such agreements help take the risk out of executive and management onboarding. Is there any way to deter employees from unfairly competing against your company after leaving it?

Non-disclosure and non-solicitation agreements

While you cannot prevent your employees from later competing with your business with a noncompete agreement because the courts will not enforce it, you can limit how they misuse information obtained while working for your company. You can add other restrictive covenants to your contract to achieve the same goals.

Non-disclosure agreements (NDAs) can protect your trade secrets and operational practices from employees that start their own companies or go to work for your competitors. Those subject to NDAs will not be able to share company secrets without violating the agreement. Non-solicitation agreements can help prevent a former worker from hiring members of your staff or attempting to solicit your customers or clients.

Adding the right restrictive covenants to employment contracts will help businesses protect themselves from unfair competition even if they cannot enforce a noncompete agreement.