When you have spent a great deal of time building your business’s success and reputation, the last thing you want is for someone with inside information to use it against you. This might occur when a former employee uses your company’s secrets, such as an exclusive formula, financial information or your clients’ contact info, to gain an unfair competitive advantage over you. You might find a solution by creating a noncompete agreement for your employees to sign, but you and other Georgia employers need to understand the elements of a fair noncompete contract.
Let us say that you own a cupcake shop that has become a favorite of the local clientele because of the secret homemade recipe you developed yourself. After one of your top bakers leaves the shop, she sets up a cake business a few miles away, and you find out that her treats are suspiciously similar to yours. You might reasonably conclude that your former employee used your exclusive recipe – your own trade secret – to further her own business.
A noncompete agreement might prevent something like this from happening, but it should also be fair to your employees and not restrict their ability to find jobs elsewhere. The following points may make a fair noncompete agreement:
- Former employees may not open a similar business within five miles of yours for a period of three years.
- Starting a different type of bakery, such as a sandwich shop, should not be off-limits to your former employees.
- A noncompete agreement should not be too restrictive, such as preventing a former worker from doing business out of state or for longer than five years.
It may also be in your best interests to create a fair noncompete contract. If a noncompete is too limiting, it may not hold up in court. Protecting your trade secrets may be effectively achieved by seeking legal advice.