Magazine article Journal of Property Management

Non-Compete Agreements: Don't Just Sign on the Dotted Line

Magazine article Journal of Property Management

Non-Compete Agreements: Don't Just Sign on the Dotted Line

Article excerpt

Have you ever been asked to sign a non-compete agreement? Found in some business contracts, non-compete agreements are designed to protect a business owner's investment by restricting potential competition. Generally, businesses pursue these agreements in two instances: when hiring new employees, or when purchasing an established business. The non-compete agreement is a form of Restrictive Covenant, a clause that adds limitations to the employment or sales contract.

WHY COMPANIES USE NON-COMPETE AGREEMENTS

The use of a non-compete clause is based on the possibility that upon termination or resignation, an employee might begin working for a competitor or starting a business, and gain competitive advantage by exploiting confidential information about their former employer's operations, lists of clients/customers, business practices, other employees and marketing plans. In the property management industry, this could include proprietary lease administration practices, bidding specifications and service pricing lists.

Typically, companies that require a non-compete agreement do so because they believe they are heavily investing in training their employees. The company does not want to invest in an employee only to see the employee take their acquired skills, or the company's customers, to another employer.

WHY YOU SHOULD THINK BEFORE SIGNING

In practice, most non-compete agreements are very specific in their language. Usually the agreement will define a length of time, a geographic radius and type of activity in which the employee promises to refrain from working after leaving her/his job. …

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