Sheehan & Associates, P.L.C.

Non-compete agreements, good or bad for business?

Business owners often rely on employee contracts in order to protect their business. There is nothing wrong with this practice. These contracts set certain obligations employers are to keep to their employees and vice versa. One type of contract often used, though, is being questioned by some as to whether or not it is good or bad for businesses and employees in Michigan and elsewhere. The contracts in question are known as non-compete agreements.

Competition is part of the business world. There is no escaping it, but there are steps company owners can take to protect their trade secrets and brand. Non-compete agreements are designed to do just that. However, some employees have started to question the restrictions these agreements place on their ability to experience other career opportunities.

Non-compete agreements were, at one time, only seen by those in higher positions or employees with certain skill sets. Now, even hourly employees are being asked to sign these contracts. This practice, however, has resulted in legal claims against employers, which can be drawn out and expensive.

So, are non-compete agreements good or bad for business? Certainly, there are businesses in Michigan and across the country that can truly benefit from having employees sign non-compete agreements. There are those, though, that may benefit from other legal protections, such as non-disclosure contracts, which have fewer restrictions on an employee's ability to make a career move. Legal guidance is available to determine which type of employee contracts are best for specific business' needs, and further assistance is on hand to draft contracts that are legally binding, yet do not infringe on employee rights.

Source: cheatsheet.com, "The Latest Way Employers Are Taking Advantage of Employees", Sam Becker, April 13, 2015

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