When it comes to the world of business, agreements not to compete are becoming increasingly popular. These agreements are put in place to protect companies from employees leaving and starting a competing business in the same industry. While non-compete agreements can be complex, there are two main types: geographic and temporal.
Geographic non-compete agreements focus on limiting an employee`s ability to start a competing business in a specific geographic area. For example, let`s say that you own a restaurant in Los Angeles and you hire a chef. You may want to include a geographic non-compete clause in the chef`s contract so that if they leave your restaurant, they cannot start a competing restaurant within a certain mile radius or in a specific neighborhood.
Temporal non-compete agreements, on the other hand, are focused on limiting an employee`s ability to start a competing business for a certain period of time. For example, let`s say that you own a marketing agency and you hire a talented marketer. You may want to include a temporal non-compete clause in the marketer`s contract that prevents them from starting a competing agency for a set period of time (e.g. one year) after leaving your company.
While non-compete agreements can be useful in protecting a business, they can also have drawbacks. For example, some argue that these agreements can stifle innovation and limit an employee`s ability to earn a living after leaving a company. It`s important to weigh the pros and cons before including a non-compete agreement in an employee`s contract.
If you do decide to include a non-compete agreement in an employee`s contract, it`s important to ensure that it is reasonable and enforceable. In many states, non-compete agreements must meet certain criteria to be legally binding. For example, the agreement must be based on a legitimate business interest, such as protecting trade secrets or preventing unfair competition.
In conclusion, non-compete agreements are becoming more common in the business world. There are two main types: geographic and temporal. While these agreements can be useful in protecting a business, they can also have drawbacks. It`s important to weigh the pros and cons and ensure that any non-compete agreement is reasonable and enforceable.