Many employment contracts contain non-disclosure agreements and non-compete clauses in the restrictive covenants. It may be tempting to sign whatever contract is presented to you when you are accepting a new job. However, take the time to understand what you are agreeing to and what restrictions it may place on you in the future.
The New York Times published a recent report into how the increasing prevalence of non-compete clauses in employment agreements were locking in employees to their current job and making it harder for them to increase their salary or find a better job. The time to be clear on every detail of your employment contract is before you start the new job. Here are a few of the key points to understand about non-disclosure agreements and non-compete clauses before you accept that new position.
What is a Non-Disclosure Agreement?
A non-disclosure agreement is placed into an employment contract to protect the trade secrets, proprietary information, formulas and insider knowledge of a company. They restrict the employee from sharing any of this restriction information with any unauthorized individual or entity.
What is a Non-Compete Clause?
Non-compete clauses or agreements are designed to protect legitimate business interests by preventing an employee from working for a competitor or competing directly against the business. In the state of Arizona, non-compete agreements are only enforceable if they protect a legitimate business interest, have a reasonable scope and duration, and they do not violate Arizona public policy. Our firm has worked with many clients in Arizona to figure out if the non-compete agreement meets these standards.
Limitations on Non-Disclosure Agreements in Arizona
Certainly, it is natural for any company to want to protect their competitive advantage, technology and unique processes, but there are limitations to the scope of any non-disclosure agreement in Arizona. In order for the non-disclosure agreement to valid and enforceable, it must be reasonable in the purview and time limit of the restrictions and it must provide a specific restricted geographic area. These limitations can be interpreted in many different ways. However, it gives you a general framework to understand whether a potential employer is pursuing restrictions that are too broad or overreaching.
Non-Disclosure vs Non-Compete Agreements in Arizona
Most employment contracts will now have some form of non-disclosure agreement and non-compete clause. A typical non-disclosure agreement will simply prevent you from sharing the trade secrets, insider knowledge and protected processes you used and learned while working for a company.
A non-compete clause, though, may also prevent you from being able to take on a better job, if your employer can show that you would be directly competing against the business. It is very important to understand the complete scope of any non-compete before signing, as well as how that may limit your ability to find and accept future employment.
At Macqueen & Gottlieb, we have helped clients understand the complete scope and ramifications of any non-disclosure and non-compete agreements. Our firm can assist you in negotiating an employment contract that protects the business’ interests while allowing you the freedom to seek new job opportunities when they arise. Contact us today to schedule an initial consultation or make an appointment online.