Employment Agreements and Restrictive Covenants: Navigating Your Career Safely
Understanding Your Employment Agreement
In the world of employment, contracts come in various forms, and they often contain restrictive covenants that can significantly impact your professional journey. Whether you're a high-level executive, a salesperson, or a technical expert, understanding the four primary types of covenants in your employment agreement is crucial. These terms may shape your future opportunities when you leave your job, for any reason.
Let's dive into the four most common types of restrictive covenants:
Confidentiality and Non-Disclosure Agreements
Almost every employment agreement includes provisions related to trade secrets and confidential information. Typically, these clauses state that employees must not use or disclose such information outside of their company. These restrictions are often broad in terms of duration and geographical scope. It's essential to know that even if you don't sign such an agreement, you still have a legal duty not to disclose your employer's trade secrets. What these agreements add is protection for your employer's confidential information that may not meet the legal definition of a trade secret. Examples include customer lists, pricing strategies, marketing plans, and certain methodologies.
Non Compete Agreements
A non-compete clause restricts you from working for a competitor for a specific period after your employment ends. Whether such clauses are enforceable depends on several factors. For agreements signed on or after October 1, 2018, Massachusetts law imposes very specific limitations on enforcement. Even for agreements signed earlier than that, the restriction must be reasonably necessary to protect a legitimate business interest of the employer. If you're asked to sign a non-compete agreement, it's wise to review it with an attorney before signing.
Intellectual Property and Work for Hire Agreements
In jobs where you create content or products for your employer, you might encounter clauses related to intellectual property, assignment of inventions, or work-for-hire. These clauses ensure that the company owns the intellectual property related to the work you're paid to do. While these provisions are common and generally enforceable, there are situations where consulting an attorney before signing is advisable. For example, if you have inventions or creative work created outside of your employment, you'll want to protect your rights.
Non Solicit Agreements
Many employment contracts contain provisions that prohibit employees from soliciting either the company's customers or its employees. Such clauses aim to safeguard the employer's investment in its workforce and prevent an employee from taking an entire team to a competitor. Non-solicitation of customers is a milder form of non-compete, as it restricts you from doing business with customers you've built relationships with during your employment. These provisions vary in scope, with some merely prohibiting solicitation and others going further, restricting you from accepting business from former customers. Understanding the language in these clauses is essential to know what is permitted.
Enforcing Restrictive Covenants: Summary
Restrictive covenants are relatively common in employment agreements. Apart from clauses that entirely prohibit competition, businesses often can enforce these covenants. Even non-compete clauses can be enforced under specific circumstances. Therefore, if you're asked to sign an agreement with restrictions that extend beyond your employment, it's wise to consult with an employment attorney. They can provide insights into your rights, potential risks, and help you navigate your career safely.
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