When hiring an employee or independent contractor, you should make sure that your business interests are protected in the Employment Contract or Independent Contractor Agreement. This can be done with Non-Compete, Non-Solicitation, Trade Secret, and Non-Disparagement Clauses:
- Non-Compete Clause: A non-compete clause prevents the employee or contractor from owning or being employed in competing businesses during and after his or her employment with you. The rule of thumb is that, in order to be enforceable, a non-compete clauses should only cover geographic areas in which you are actually or reasonably expect to be doing business, and should only cover types of business activities that would actually compete with your business.
- Non-Solicitation Clause: A Non-Solicitation Clause prevents the employee or contractor from pursuing your employees, business partners, and clients after their employment. Unlike a Non-Compete Clause, it does not have to be narrowly tailored in geographic scope in order to be enforceable.
- Trade Secret/Confidentiality Clause: A Trade Secret or Confidentiality Clause prevents the employee or contractor, during employment or after their termination, from using or sharing your business information, such as marketing strategies, proprietary business systems, customer lists, and customer information.
- Non-Disparagement Clause: A Non-Disparagement Clause prevents the employee or contractor from tarnishing your business' reputation during or after employment.
These clauses should be drafted by an attorney, because whether or not they are enforceable will depend on the care taken to draft the language of the clause itself.