By: Attorney Kevin P. McRoy| Partner
As I was growing up, my father used to tell me the same phrase over and over again, undoubtedly trying to cement the mantra into my brain… “Say what you mean, and mean what you say!” The meaning of the phrase is obvious. The phrase becomes particularly poignant when faced with a situation involving a current or former employee in the context of Non-Disclosure, Non-Solicitation, and Non-Competition Agreements.
It is often prudent for employers to have written Non-Disclosure, Non-Solicitation, and Non-Competition Agreements with employees. That way, when an employee is discharged or otherwise terminates his or her employment, the employer is safeguarded at least to some extent against inappropriate use by a former employee of trade secrets, proprietary, or confidential information.
These types of Agreements are, in actuality, contracts. As such, they have to be supported by “consideration” – some sort of benefit provided to the employee. It is much easier for these Agreements to be found enforceable when they are entered into between the employer and the employee at the beginning of the employment, although under certain circumstances they can also be held to be enforceable when executed by the employee after commencement but during the course of employment.
The purpose of a Non-Competition Agreement is to restrict a former employee’s ability to go out and compete (whether on his/her own or with a new employer) against the business of his/her former employer in a geographic area and for a period of time after employment has ended. The scope of the Agreement, as far as duration, geography, and prohibited activities, must be reasonable. What is reasonable is, of course, subject to judicial interpretation. However, the more reasonably related the duration, geographical range, and prohibited activities are to the scope of the former employee’s duties while employed, the more likely they are to be held to be reasonable, and thereby fully enforceable, by Massachusetts Courts. Also, a Non-Competition Agreement, as with all of these agreements, can list a number of acknowledgements as to the validity, importance, and need for the Agreement which would provide support for the interests of the employer should the employer be forced to turn to the Courts for enforcement of the Agreement.
Non-Disclosure Agreements, effectively, are engineered to do exactly what they say – they seek to prohibit a former employee’s use of trade secrets or confidential information, developed by the employer, or by the employee while employed with the employer, such that the employee cannot use it for any reason after his/her employment ceases. These agreements can provide that the employee must return to the employer all property of the employer which he/she may possess at the time. Notably, these materials can include drawings, photos, internal memoranda, business plans, marketing plans, customer lists, etc. The list goes on and on… These types of documents are often critical to the continued successful business of the employer. Moreover, in some circumstances, when not properly safeguarded against, former employees can utilize the information of the former employer for their own benefit or for the benefit of their new employers. In order for such Agreements to be enforceable, it is generally incumbent upon the employer to prove that the information sought to be protected from disclosure is, in fact, confidential and has been treated as such by the employer during the course of the employee’s employment.
The purpose of a Non-Solicitation Agreement is to protect against a former employee’s solicitation of existing customers or of other employees. Again, the enforceability of this type of Agreement is, at the end of the day, left to the Court. However, having this Agreement, and all of these agreements, in writing certainly benefits the employer. Due care, however, must be taken in order to make sure that all of the above-referenced Agreements protect the legitimate business interests of the employer, without over-reaching.
Should you have any questions at all please call the attorneys at Wynn & Wynn, P.C. at 1.800.852.5211 or request a free consultation.