Non-Compete Agreements and Their Role in Business
When your focus is on the success of a business, it is vital that trade secrets and other confidential information about how a business runs and produces its product are kept out of the hands of competitors. A lot of time and effort goes into developing trade secrets. Additionally, hours upon hours of training can be spent getting employees up to speed and able to use specialty equipment, programs, tools, information, etc.
Needless to say, having an employee leave and begin work for a competitor can be detrimental. Even if the employee has no intention of divulging trade secrets or other confidential information, their training and knowledge alone could give a definite advantage to a competitor. That is why including non-disclosure and non-compete agreements, as part of standard employment agreements, is vital.
We, at HKM Employment Attorneys, concentrate in employment law. Our attorneys have over 40 years combined experience dealing with businesses, employers and employees and we understand what needs to be done to protect you and your business. When you consult with a Washington employment law attorney from our firm, we will be able to review your specific needs so we can devise and compile the air-tight legal documents and agreements your business requires.
Non-Compete Agreements in Washington
Unlike in many other states, non-compete agreements are generally enforced by courts in Washington. To be valid, however, the agreements must meet the following three-part test:
- The restraint on the employee’s future employment must be reasonably necessary to protect the business or goodwill of the employer;
- The agreement must not impose restraint on the employee greater than reasonably necessary to protect the employer;
- The restraint must cause no undue harm to the public by losing the skill and/or service of the employee in the competing field.
Additionally, the agreements cannot be unreasonably broad in terms of geographic area or time period in which the employee’s work is restrained. Therefore, if the non-compete agreement is reasonable and is based on Washington law, there is a good chance the court will uphold that agreement and require the employee to abide by it.
However, employers must still be careful when drafting a non-compete agreements, because the courts have invalidated some agreements in the past. For example, employers must ensure that a valid and complete contract was formed, and that the employer provides valuable training and/or marketable skills to the employee in return for the employee’s promise not to compete. In one case, a copier company briefly trained an employee in servicing copy machines before going to work for another copier servicer. The courts did not uphold that non-compete agreement because the training was not extensive and the employee had very limited contact with customers, so he would likely not be able to take customers away from the original employer.
Therefore, an employer may believe that their non-compete agreement is valid and enforceable, however under the specific circumstances, a court may disagree. Because Washington has no bright-line rule on when a non-compete agreement is valid and enforceable, an employer should always contact an attorney with experience in drafting Washington non-compete agreements to ensure maximum enforceability and protection of their business against former employees. Furthermore, if you are a party to legal action regarding a non-compete agreement, no matter what side you are on you should call a Washington employment lawyer to represent you.
Preparing Non-Compete Agreements
Taking action ahead of time can save or prevent legal claims and litigation later. Not to mention the hundreds or hundreds of thousands of dollars you could have to spend trying to defend trade secrets and confidential business information after the fact. If you or need help preparing trade secret, non-disclosure or non-compete agreements, we have the experience in drafting these documents you need. Don’t wait until you face a legal problem. Protect your rights. Take steps now to ensure your business information and trade secrets remain in safe hands.
Contact a Washington employment law attorney at our firm today.