Sometimes an employer’s greatest legal concerns do not arise until after an employee has left the company. Unfortunately, it may be too late at that point for the employer to adequately protect its interests.
In the absence of a restrictive covenant, former employees may immediately work for a competitor and solicit the former employer’s customers and employees. This freedom may cause significant harm to the former employer, particularly when the employee had strong relationships with customers, vendors or other employees or where the employee had access to confidential business information. In short, unless a company requires that its employees execute legally enforceable restrictive covenants, the employer will be helpless to stop former employees who use their training, knowledge and customer base for the benefit of a direct competitor.
This chapter provides a brief summary of the contractual restrictions that an employer may lawfully place on its employees, as well as an explanation of an employer’s ability to protect its trade secrets and restrict post-employment activity in the absence of an enforceable agreement.
A restrictive covenant is an agreement between an employer and an employee in which the employee...
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