Quick Breakdown of the Pros and Cons of Non-Compete Agreements

Background on Non-Competes

There are many pros and cons to non-compete agreements (NCAs) in the eyes of the employee, the company that hired the employee, and the company the employee leaves to go work for.

Pros and Cons for Employees

NCAs provide employees with a sense of security in their new career path. It’s documented proof that the employer is definitely interested in keeping the employee on-board. In many cases, there are terms that can be negotiable, such as certain perks, benefits, and the types of companies that are considered competition. On the flip side, especially with positions that are higher up-the-ladder, employees may need legal assistance out of their own pockets to go over the NCA. The biggest drawback of NCAs, especially broad ones, are how they make seeking future jobs much more difficult.

Pros and Cons for Companies

For companies, NCAs help provide comfort in knowing that their sensitive information will be protected in the short-term. It also helps them be more certain that the employee would be less likely to leave within a certain time period, to avoid repaying penalties over the cost of training. On the flip side, companies also have to worry about potential legal repercussions from former employees, because courts typically favor employees and their right to work with other companies.

NCAs and the "Next Company of Employees"

The ‘next company of employees’ enjoy all the NCA benefits of previous companies. However, they also have to be aware of the NCA that was agreed upon from previous companies, to ensure that lines aren’t being crossed. If it turns out that the previous NCA is being violated, the ‘next company’ can be sued, along with the previous employee.