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Employment Contracts and Restrictive
Covenants
In today's
employment market, an ever-increasing number of employees are
moving between competitors. Corporations must protect their
competitive advantage with solid and enforceable employment
contracts and covenants not to compete or to solicit customers
and/or employees. Effective employment contracts will define
the employee's functional responsibilities and compensation
and benefits. They will contain specific objectives upon which
the employee's performance will be evaluated. These contracts
should also include mutually agreed-upon terms which define
the rights of each party should employment end through lay-off,
termination by the corporation with or without cause, or resignation
by the employee.
Restrictive covenants are necessary for the protection of a
business's confidential and proprietary information, talent
and customer bases, and general competitive advantages. A covenant
not to compete is a contractual provision limiting the employee
from competing against the company during and for a specified
period after the employee's tenure with the company. Covenants
not to solicit protect the company by contractually prohibiting
the departing employee from raiding the company's workforce
and customers for a specified period of time.
Great care must be taken to craft restrictions that are enforceable
while still protecting the business's interests. Courts will
enforce restrictive covenants only if the document passes three
legal tests of reasonableness:
- First, there must be a reasonable business need
for this level of protection.
- Second, the restrictive covenant is geographically
reasonable in its reach.
- Third, it protects the legitimate business need
for a reasonable period of time.
Our attorneys are experienced in drafting and reviewing employment
contracts and restrictive covenants. We will pursue emergency
injunctive relief for our corporate clients in court to enforce
restrictive covenants if necessary. We also have successfully
defended clients against claims of breach of restrictive covenants.
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