Continuing with our start-up series, your Baltimore Small Business lawyer wants to briefly discuss something that is often overlooked by small business owners, non-compete clauses, and making sure they work for you and your business. If you want to review our previous post, check out the startup checklist here or for a simple primer on Contracts. Now, Non-Compete clauses:
Baltimore Small Business Lawyer: Non-compete’s
Non-competes in a simple illustration from another great blog.
According to Mirriam-Webster’s Dictionary, a Non-compete agreement is, “an agreement or contract not to interfere or compete with a former employer (as by working with a competitor).” Small business employers should consider having employees and business partners sign non-compete agreements. This is true whether the product of your small business is unique, mobile, or easily reproduced. Additionally if you are in a developmental stage of the small business process, the last thing you would want is for an employee to walk off with all your hard work and set up shop down the street. Without a non-compete agreement, all that is possible.
Baltimore Small Business lawyer: Basic terms
When you are designing a non-compete, always think about what is reasonable in time, place, and scope. Courts, and the Court of Appeals of Maryland in particular, does not like to enforce an overly broad non-compete. Courts generally want a person to be able to make a living in their chosen profession. For example, Non-competes are void against lawyers (insert joke here). However, for technology companies, they are broadly and regularly utilized and enforced. Mostly because new technology concepts are difficult to develop and easy to steal/replicate by a former employee. Therefore, a reasonable time place and scope might be the entire east coast of the US for 2 years. Or it might be a 20 mile radius around Baltimore for a more local concept. Another consideration is that non-compete agreements should be drafted and executed prior to employment beginning. Courts have routinely rejected non-competes signed after an employee is hired and working, for public policy reasons. That is why it is not only important to have a lawyer draft your non-compete, but also to have other legal clauses included in the employment contract that offers protections in the event that some of the non-compete is voided by the court.
Baltimore Small Business lawyer: Bottom Line
Our firm often constructs agreements for clients on a flat fee basis . Our goal is always to make non-competes enforceable and effective. All of our contracts will be provided in word format for later editing by the client. A small fee up front can save thousands in litigation costs if a non-compete goes bad. Bottom line: Call ENlawyers if you have a question about a small business contract!