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Most business experts agree that noncompete agreements are generally a good way to protect your business. The downside is that noncompete agreements are often difficult to enforce and in some states, may not be enforceable at all. Many state courts have ruled that noncompete agreements are too restrictive on an employee's right to earn a living.
In California, for instance, noncompetes are generally only enforceable in connection with sale of a business and not for employees. In Alabama, noncompetes are generally enforceable in only two contexts: sale of a business and in connection with employment - but even then enforcement requires that there be a valid interest worthy of protection.
Some states require that noncompete be signed at beginning of employment relationship and will only consider enforcement of a noncompete signed after initial employment date if signing of noncompete was accompanied by a promotion, raise in pay, or other event that elevated employee to a more important role within company.
To be enforceable, noncompete agreements must be reasonable on three accounts: Time, geography and scope. Regarding time, you can't restrict someone from competing with you forever, so one to three years is accepted time period for most noncompetes.
As to geography, you can enforce restriction in general area where you conduct business, but you can not enforce restriction beyond those boundaries. And for scope, agreement can restrict certain actions on part of employee, but can't be so generally restrictive that employee won't be able to earn a living working in same industry in a noncompetitive position.
One interesting thing to note: noncompete agreements are not enforceable against certain "professionals," like doctors, CPAs, and lawyers (who do you think writes all those noncompetes).
At this point, Brad, best thing you can do is contact your attorney to see if you have other grounds for suit, then contact your customers and let them know what's going on.
Explain situation regarding former employee, but do so calmly and resist urge to tell them what you really think of this guy. Showing your anger to customer is not going to help you keep their business .
Reaffirm your relationship with client, tell him how much you value his business, remind him of your track record and level of service, then ask one simple question: What can I do to make sure your business stays with me?
Here's to your success!
Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net
Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.
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