Whenever you run a company with assets and proprietary information to protect, it’s worth having nondisclosure and noncompete agreements. These types of contracts are commonly used because companies have to protect their investments.
Not all employees will want to sign noncompete or nondisclosure agreements, but it’s valuable to have them. Those who will not sign could put your company at risk, so you may choose not to work with them or develop a unique arrangement based on their circumstances.
Why use nondisclosure agreements?
Nondisclosure agreements are created to ensure that your employees will not disclose information about those you’ve worked with in the past. For example, if you work with companies A, B, and C, you may request that your employees only say that they’ve worked with your company even as they took work from those other companies.
Nondisclosure agreements may also help you protect software, data and other information that could help competitors if leaked. For instance, if you have a new drug formula available in the research department, you would not want that leaked to a competitor. Having a nondisclosure agreement makes sure that those who work with the formula know that they cannot share it with anyone else. Doing so would give your company the right to pursue a lawsuit and hold the individual accountable for any losses suffered.
Why use noncompete agreements?
Noncompete agreements can help in similar ways. With noncompete agreements, you’re asking employees not to work for another company that could compete with yours. For example, if you hire a chemist working with complex formulas in your lab, you could ask that they don’t work with a competitor in the same field for at least a year or two following their termination from the role. The exact length of time will need to be something you decide in advance and discuss with a potential employee.
Noncompete agreements help you retain employees, minimize the risk of losing important information to competitors and generally assist with company privacy.
These are two common kinds of agreements that could help your company. If you’re not sure which to use or if you should use both, you should look into their legal implications.