Employees and Non-Competes

If concerns for your customers’ safety aren’t enough to keep you up at night, the conduct of your employees will. Unless it’s a mom and pop operation and Jr. is your only employee, there are issues that should be addressed. As soon as there are employees, there are liability risks and security risks.

Liability risks fall into categories: things your employees do and things you do involving the employees. Things your employees do can often be insured against and things you do to them (hostile work environment or harassment/discrimination) are topics of the next post.

It is what the employees can do to your business with the information they acquire during the scope and course of their employment that is troubling.

The non-compete and confidentiality agreements are powerful tools for employers. Missouri is an “At will” state, meaning that the employer needs no reason to hire or fire an employee. Continued employment is sufficient consideration to require an employee to sign such an agreement if one was not required at the time of hiring. It is a good practice to have well drafted Non-Compete/Confidentiality that is specifically tailored to the specific business presented as a condition of employment.

The biggest problem with these documents is over reaching in the restrictive covenants and protecting secret documents that do not exist. Restrictive covenants are frowned upon by the Court and must protect real and specific interests, not just avoid competition. Confidentiality clauses should likewise be specific in what they protect. Ambiguities are always resolved in favor of the employee.

This is where that ounce of prevention can save you a ton of legal fees. The cost to have a good, tight Non-Compete/Confidentiality Agreement produced specifically for your business and your employees or independent sales force is dwarfed by the damage that can be done if your hard won advantage is taken down the road to your competitor. Did I mention the cost of litigation?

The difference is between hundreds of dollars to create a good agreement and multiples of tens of thousands. To fight over the mess created by not having one or having poorly drafted, one size fits all, agreement.