What is a Non-Competition Agreement Review?
A non-competition, or non-compete, agreement is a legal contract between two parties, such as an employer and their employee. It specifies rules that the employee has to follow, such as not working for the employer’s competitors for a specified period of time.
Reviewing your non-competition agreement is important to do to protect your interests and prevent disputes with the other party. Although a proposed federal ban on non-competes was recently abandoned, state rules govern these documents extensively, so a lawyer can help you ensure the non-competition agreement is legally valid.
Read the rest of this article for key terms you should review in a non-competition agreement, how to thoroughly review the document, and how a lawyer can help you review it for accuracy and clarity.
What Key Terms Should You Review in a Non-Competition Agreement?
A non-competition agreement usually includes the following key terms.
- Term duration. This agreement states how long the restrictions must be followed.
- Location. This specifies the area or region in which an employee isn’t permitted to work for a certain time after leaving the company.
- Scope. This restricts the employee by stating what work they’re not allowed to do, such as activities they’re only allowed to perform for their current company.
- Competitors. The agreement might state what industries the employee can’t work in as well as specific competitors that the employee isn’t allowed to work for.
- Violations. If the employee breaches the contract in any way, this section explains penalties or other damages.
- Governing law. State laws play an important role in non-competes, so the agreement must specify what laws govern the agreement.
- Consideration. The agreement should specify what the employee gains in exchange for agreeing to the terms, such as continued employment or equity compensation.
- Non-solicitation. The non-competition can include non-solicitation activities, such as restricting a previous employee from soliciting the company’s customers or clients.
What are Tips for Reviewing a Non-Competition Agreement?
A non-competition agreement review should involve the following tips so that you engage in a thorough analysis of the contract prior to signing it.
Make it Fair
One of the most important things to do during a review of your non-competition agreement is to ensure it’s reasonable. This involves:
- Reducing the scope. You don’t want the agreement to be too restrictive regarding the employee working for competitors. Completely preventing employees from working in an entire industry is also not recommended as it can severely hamper their career opportunities.
- Reduce the duration. Long-term non-competes can be highly restrictive and unreasonable, so try to stick to an obligation duration of around six months to two years.
- Reduce the location. Limit the location to a specific area so that you don’t prevent the employee from finding work in an entire city or state.
Be Specific and Clear
You want the entire agreement to be detailed and easy to understand. If there’s any vague language, this can result in misinterpretations and accidental violations.
If there’s anything unclear or confusing in the agreement, consider negotiating with the other party to make revisions to the terms so that you both understand everything you’re agreeing to.
Ensure it’s Enforceable
A common mistake when reviewing non-compete agreements is not stating that the company is setting the restrictions to protect valid interests. For example, the company might restrict an employee without being clear about why, which won’t be enforceable in court.
To make your non-compete enforceable and legally valid, it must protect information such as company trade secrets, client relationships, and confidential information or data.
Do You Need to Hire a Lawyer for a Non-Competition Agreement Review?
Although you can review your non-competition agreement yourself, it’s advisable to hire a lawyer to help you, especially because laws surrounding non-competes vary in different states and industries.
A lawyer can help you in practical ways, such as by:
- Evaluating if the agreement is legally enforceable.
- Providing an in-depth review of all clauses, such as geographic restrictions and restriction durations.
- Identifying overly broad restrictions that can prevent employees from taking career opportunities.
- Considering if prohibited activities are reasonable and fair, such as if the employee isn’t allowed to work for specific competitors.
- Assessing your risks as an employee, such as if your new job can expose you to future legal problems.
- Negotiating with the other party to get more favorable terms. Lawyers have experience to know what is and isn’t negotiable.
- Revising the non-competition agreement so that it’s clear, transparent, and legally valid.
Where to Find a Lawyer for a Non-Competition Agreement Review
If you want to hire a qualified lawyer to review your non-compete agreement, you don’t have to feel stressed about where to find one. Make use of an online legal platform such as ContractsCounsel, where you can easily connect with a lawyer without leaving your computer.
ContractsCounsel is one of the largest online legal marketplace that gives you access to a range of vetted lawyers.
To request that a lawyer on the platform reviews your non-compete agreement, here are the easy steps to follow online.
1. Visit the ContractsCounsel marketplace, where you can post your project for free. Include some information about why you’re requesting a non-compete agreement review so that you can match with the best lawyers.
2. Wait for lawyer bids. You’ll receive multiple bids from experienced lawyers directly on the platform who are qualified to assist you.
3. Review the lawyers. Once you receive the lawyer bids, you should review the lawyers’ profiles. The platform provides extensive data to help you choose the most appropriate lawyer, such as the lawyers’ location, client ratings, years of experience, and field of expertise.
4. Connect with a lawyer you think is best suited to your requirements and hire them to review your non-compete agreement.
