Restrictive covenants refer to provisions in an agreement that restrict a current or former employee (the “Employee”) from engaging in certain types of business activities. There are four types. First, is a non-compete provision. It prohibits an Employee from working for a competitor within a specific geographical area for a specific period of time. Competitor and the geographical area should be specifically and narrowly defined. Second, is a non-solicit provision. It prohibits an Employee from soliciting an employer’s current or prospective customers for a specific period of time. Third, is the anti-raiding provision. It prohibits the Employee from soliciting the employer’s employees for a specific period of time. As a practical matter, the anti-raiding provision is often incorporated into the non-solicit provision). Fourth, is a confidentiality or non-disclosure agreement. It prohibits the Employee from disclosing the employer’s trade secrets and/or confidential information. Trade secrets are statutorily protected; whereas, confidential information is not. A follow up post will set forth the rational for limiting restrictive covenants scope (from both the employer and employee’s perspectives).
The information contained in this document does not constitute legal advice.