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Does my business need both a non-compete and an NDA?

On Behalf of | Oct 2, 2020 | Business Law, Employment Law |

Information is what gives your business an edge over the competition. If you do not take care to protect your company’s trade secrets and other confidential information, your business could be at risk.

You trust your employees to promote your company and talk knowledgeably with your customers and clients. However, the same information they use to support your business could hurt you if your employees go to work for the competition.

Depending on your company’s trade secrets and the risks you have, you may need non-compete agreements, non-disclosure agreements (NDAs) or both to protect your business. Here’s what you should consider as you make your decision.

Assess your risks

Before you decide what protection you need, it is vital to look at what you are trying to protect and what threatens it.

Consider what you want to protect. Employees who are talented at making sales will be a threat if they work for the competition, even if they cannot disclose confidential information. On the other hand, if an employee works for a company outside the scope of a non-compete, they could still leak essential data if they are not bound by an NDA.

Your need for protection

Think about what your employees tend to do after they leave a position with your business. Staff who tend to stay within the industry pose a different threat than those who tend to change directions.

When you have employees who are both a competitive threat and a disclosure risk, you may need both types of agreements to protect your company.

Keep in mind, no matter which agreement(s) you choose, they need to be tailored to your business. When courts look at these types of arrangements and decide whether they are enforceable, they tend to look for agreements that protect essential data from credible risks.