In this article, we explain some of the most important clauses for employers to include in employment contracts and independent contractor agreements. We explain non-compete clauses, non-solicitation clauses, trade secret clauses, confidentiality clauses, and non-disparagement clauses in the context of protecting an employer's interests through employee and independent contractor agreements.
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.
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.
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.
A Non-Disparagement Clause prevents the employee or contractor from tarnishing your business' reputation during or after employment.
All of 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.