Non-compete agreements are helpful tools for small businesses, especially those getting established or finding success in their location. These agreements enable businesses to hire talented employees without worrying that the employee will leave the business and set up shop in the same town as a competitor, using the skills they learned at their previous employer to that employer’s disadvantage. Non-compete agreements can be signed by employees or independent contractors, and they are oftentimes necessary when selling a business or part of a business.
However, former employees are frequently disadvantaged by overly broad and restrictive non-compete agreements that severely inhibit their right to earn a living. For this reason, North Carolina courts scrutinize non-compete agreements. But, employers should not shy away from using a carefully crafted, narrowly-tailored non-compete agreement to protect their customer base from poaching and proprietary information.
1. The agreement must be in writing, signed by the person agreeing not to do business.
2. The agreement must be made in exchange for valuable consideration. This means that the employee who is agreeing to the terms must get something in exchange. For new employees, this consideration is obviously employment.
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