No one disputes a company`s right to protect its proprietary information. But if you`re considering using these restrictive agreements, you need to carefully weigh the company`s business interests against your employees` right to move freely from one job to another, taking into account the many state laws governing the use of non-compete rules. The Cicero Group requires some of its employees to sign the covenants, but Shumway never felt the need to impose it. “We try to be an honorable company,” he explains. “The employees will come, and when they leave, I would like to wish them the best.” The company would try to impose a non-compete clause only in response to a monstrous breach of the agreement, he said. Competition bans for candidates in the distribution, freight intermediation and various other roles are commonplace, said Kelly Garland, president of Garland Source, a staffing firm for transportation executives based in Fayetteville, Ark. A critical question will be whether, when the applicant enters the bidding phase, the non-competition agreement is applicable. By continuing to allow reasonable and less restrictive deals for other employees, small and medium-sized businesses are being encouraged to take a risk by investing in talent that might otherwise turn into competition, he added. “The non-competition rules are focused on risk management,” says Calli. “But if you decide you want a deal, you`re also introducing a new risk. You really need to think deeply about cultural impact and strategic value. The founder and CEO of Domo, a cloud computing company based in American Fork, Utah, was sued in 2010 by his former employer, Adobe Systems Inc., for violating a non-compete clause when setting up his own company.
Two years later, both parties terminated the case for an unsused sum. After that, James tore apart the agreements he had previously had to sign with his own workers. Today, he invites other companies to do the same. Employers may want to use competition bans and other restrictive agreements to protect their business interests, but they need to be careful not to go too far. Some state legislators have significantly limited the permissible terms of such agreements — or are considering limiting laws. . . .