Restrictive Covenants Toolkit

Resources to help employers protect their proprietary and confidential information and assets.

Practical Law Labor & Employment

Protection of employer proprietary, confidential information, and other assets is imperative for all employers to remain competitive. Given that employees move between employers with more frequency than ever before, employers must put in place measures to protect their information and assets before they are compromised and follow up on any potential threats immediately. Threats can arise from:

  • Employees with sensitive business information joining competitors. Whether the employment relationship ends voluntarily or involuntarily, a departing employee may attempt to use valuable trade secrets ( www.practicallaw.com/0-502-0451) or other confidential and competitive information for personal gain or for the benefit of a new employer or other third party. Even if a former employee does not have malicious intent, it may be difficult for him to not use his knowledge of the former employer's strategy or plans to compete against the employer.

  • Solicitation of key employees. A departing employee may attempt to solicit other key employees to join him at a new employer or in a new competitive enterprise competing with the former employer.

With the exception of a few jurisdictions and specific professions, the law generally affords employers the right to restrict post-employment competitive activities of employees, subject to a balancing test weighing the legitimate business needs of the employer against the right of an employee to earn a livelihood. There are a number of tools an employer can use at the outset and during the course of employment, as well as once employment terminates, to protect their interests and restrict the post-employment competitive activities of an employee. The law of each jurisdiction varies, however, regarding how and when restrictive covenants can be enforced, so it is important to check the law of the relevant jurisdiction to ensure enforceability of a restrictive covenant.

This Restrictive Covenants Toolkit provides information on best practices for employers to protect their business against a loss of competitive advantage, both proactively, before a threat arises, and in response to a threat once it does arise.

Practice Notes

Standard Documents

Checklists

State-Specific Content

Legal Updates and Articles

 
{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247757391941", "objName" : "ACT_OWNED - READ_ONLY - 4-523-8981", "userID" : "2", "objUrl" : "http://us.practicallaw.com/cs/Satellite/us/resource/4-523-8981?null", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-62dceab2:15b02a5478c:-6bf9", "analyticsSessionCookie" : "2-62dceab2:15b02a5478c:-6bf8", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }