COVID-19 Update: FAQ and Other Information for Clients

Restrictive Covenant and Noncompete

As an employer, the information you have over your competitors gives you an edge in the market. The time and resources you invest in building client connections, collecting information, and creating business strategies is immensely valuable. You want to protect them. At KHF, we can help you come up with ways to protect this valuable information from being leaked to competitors, especially when a former employee leaves your business, but continues to work in the same industry.

You are permitted to put restrictions in place on your former employees to ensure that your assets, in this respect, are protected. Namely, this can be achieved through restrictive covenants. These clauses, inserted in an employee’s contract, identify restrictions as to where an employee can work after leaving your company, as well as identifying restrictions on what kind of company information can be used after the employee leaves the business.

As an employer, it is essential that you carefully consider the restrictive covenants that you want to put in place. Arbitrarily harsh or restrictive covenants will not be upheld by the courts, if it so happens that you take a case to court over an employee violating their restrictive covenant agreements. Being overly broad in terms of geographic restrictions, temporal restrictions, and what would constitute a violation is only likely to impede successful enforcement.

This is where legal counsel is critical. Defining the terms within restrictive covenants requires careful attention to detail and reason – so that your business interests can be best protected, as well as ensuring that these clauses will hold up to any potential scrutiny in the courts. If you need to take legal action to protect your business and stop the violating former employee, we at KHF are also here to help you every step of the way.