The basics of a noncompete agreement

Noncompete agreements keep former workers from divulging trade secrets with companies that may be seen as competition.

Whether an employee has just started a new position or has worked for a company for a significant period of time, he or she may choose to leave the job at some point. If and when this situation should occur, the employee may be asked to sign a noncompete agreement. Not only do these documents keep the business's best interests in mind, but they also protect the employee from certain situations. Before people sign a noncompete agreement, they may want to fully understand what the document entails and what it is used for.

What is a noncompete agreement?

Employees who work in certain industries may become privy to certain trade secrets, or information that the company may wish to keep hidden from the competition. Although the specific details outlined in a noncompete agreement may vary depending on the industry or company, most contracts prohibit employees from disclosing confidential information about the company to any potential source that may be viewed as competition.

These legally binding agreements may also ask former employees to avoid discussing business relationships or giving out private information regarding company clientele. In addition, the former employee may be banned from working within a certain geographic area for a specific time period. For example, a worker leaving an engineering firm may not be able to seek employment in a competing engineering firm for a year after leaving his or her position.

Noncompete agreements are in part, designed to keep people from working in an industry, gaining specific knowledge about a company and/or its customers, leaving the company and then using that confidential data to gain a competitive edge. Former employees may go to work for a competing company or start up a company of their own and implement trade secrets in order to better their venture.

Issues surrounding noncompete agreements

According to the Wall Street Journal, multiple studies show how more companies are now requiring employees to sign noncompete agreements. Some argue that these agreements put an unnecessary stop to entrepreneurship and the growth of new business.

Where to turn for answers

If you or someone you know is struggling with the backlash of a noncompete agreement, you may want to contact a Texas lawyer who understands how employment laws work in the state. Whether you were let go from your job or you decided to part ways and find a new position, you may want to speak to an attorney regarding your legal options and rights.