In today's fluid workplace, especially in sales and service oriented businesses, employers risk losing business when employees depart.  As more and more employers combat these risks by requiring employees to sign agreements not to compete, it is important to remember the basics:

Covenants not to compete are restraints on trade and, therefore, are disfavored by the courts.  Consequently, it is important to draft non-compete agreements as narrowly and carefully as possible to increase the likelihood of enforcement.

• An employer must provide something of value, such as a job offer, in exchange for a promise not to compete.  If the non-compete is with an existing employee, the employer must give the employee something new-a raise or a bonus is typical-that the employee would not otherwise receive.
• North Carolina courts require that a non-compete agreement be no more burdensome on the employee than is necessary to protect the employer's legitimate interests.  What a court considers overly burdensome, and therefore unenforceable, varies widely depending on the business and the employee's role.
• As a general rule, a non-compete agreement should apply only in a defined geographic area.  How wide this area may be depends on where the employee is able to harm the employer through competition.
• Non-competes should be limited in time and should not exceed whatever period is necessary to solidify customer relationships after the employee departs.  Generally, a year or two is enough.
• It is easier to enforce agreements not to do business with certain clients or customers than it is to enforce agreements not to compete at all.  Even then, a court might reject the agreement if the departing employee truly does not have the ability to disrupt the employer's relationships.
• Courts more readily enforce agreements not to disclose confidential information than they enforce agreements not to compete.  However, it can be difficult to prove that a former employee, even one competing, is disclosing confidential information.