Does your business need non-compete agreements?

by | Nov 9, 2017 | Commercial Litigation |

If you are a small business owner, you have many responsibilities on your hands. You have to keep your eye on the bottom line, which is why you can’t afford to breed competition right in your own workforce.

Large corporations traditionally use ironclad non-competition agreements (NCAs) to keep former employees from going off on their own and becoming direct competitors. But these legal documents may also be ideal to protect small business owners from poaching employees.

How can you tell whether a non-competition agreement would benefit your business?

There are two schools of thought regarding these agreements for those workers who earn hourly wages and who are not working with trade secrets. Those in favor say that the documents provide necessary protection to businesses so that they can remain in top form in competitive industries.

Those who oppose NCAs claim that they limit workers’ freedom to pursue new employment opportunities and that they also keep wages low.

But regardless of where your feelings fall on that spectrum, it’s likely that many New York City businesses could benefit from having a business law attorney draft such an agreement.

NCAs help businesses retain their clients

When an employee decides to branch out on his or her own, without an NCA in place, there is no way to prevent the former employee from wooing long-term clients away from the company by offering sweetheart deals to take their business to the newly opened shop.

But there are also other reasons a small business owner might decide to put such agreements in place.

NCAs decrease worker turnover

Business owners with a constant revolving door of employees may have bigger problems on hand they should be addressing, but it’s a fact that businesses that can’t retain workers bleed money on training new hires.

Those business owners that use NCAs may find that in order to continue retaining quality employees, they need to offer certain perks and maintain competitive wages. In this way, these agreements can actually improve working conditions for employees of the business.

Source: The Baltimore Sun, “Employers use non-compete agreements even for low-wage workers,” Lorraine Mirabella, accessed Oct. 27, 2017