He smiles and says not to worry. But you will anyway. After all, the Web company may not be a direct competitor, but you never know which markets it may eventually enter.
If you want to protect your company in the emerging e-business world, youll need to re-examine the standard noncompete agreement provisions that your key employees sign, warns Carrie Menikoff, an attorney at Ulmer & Bernes Business Litigation Group.
Were no longer dealing with localized markets, Menikoff says. Now, any company that is conducting business over the Internet is exposing itself to a global market.
And that, she says, changes the rules of the game.
Previously and currently, depending on your take noncompete agreements covered several items. They protected the legitimate interests of a business owner by restricting the information that key employees who leave the company could pass along to new employers. They also enacted restrictions that limit what can amount to trade secrets and business practices from being taken to a competitor to gain a competitive edge.
Without noncompete agreements, the business world would be rife with competitors stealing away key employees at top dollar in order to secure the type of information that would otherwise be stashed away in sealed files or the CEOs brain.
Courts are looking at numerous components of noncompete agreements to see if theyre narrowly tailored enough to apply to Internet-based business, Menikoff says. Courts have recognized the Internet is a fast-changing industry.
Its so fast, in fact, that often by the time conventional noncompete clauses expire, the entire premise behind the restrictions is useless, protecting outmoded technology, says Isaac Schulz, also an attorney with Ulmer & Bernes Business Litigation Group. Simply saying you cant compete in Internet business or telephony business isnt going to cut it, he says.
Thats because the job restrictions will be ruled as too broad.
On the other hand, Schulz warns it is difficult to tailor a noncompete agreement to target specific job duties because they change rapidly as technology advances force skill set readjustments every few months.
But that doesnt mean developing noncompete agreements for your company is a no-win situation. Its just not as simple as it used to be.
Draft your provision narrowly enough that it covers the exact activity you want to restrict an employee from doing for a competitor, suggests Ronald H. Isroff, an attorney with Ulmer & Bernes Employment and Labor Law Group. And be sure to define the geographic limitations so that its clear which laws apply.
But, warn Isroff and other attorneys, the law is still evolving in this brave new world. When in doubt, put as much as you can in writing and hope the courts will back your claims.
How to reach: Ulmer & Berne LLP, (216) 621-8400
Dustin Klein (firstname.lastname@example.org) is editor of SBN.