Noncompete Agreements

If there’s a real possibility that an employee may leave and open a competing business, a noncompete clause in a severance agreement is probably appropriate. Be sure to limit the time period during which the employee may not compete, and to restrict the agreement to just your geographic market area. Courts are unwilling to enforce agreements that unreasonably restrict a person’s right to make a living. Because of the strict scrutiny given to these types of clauses, you should have an attorney draft, or at least review, the agreement if it includes a noncompete clause.

Every state has its own legal precedents regarding the extent to which you can prevent a former employee from competing. If you overreach by making the agreement too restrictive, it's likely that a court won't enforce it.

Sample Noncompetition agreement clauses.