Alex Austin is a Graduate Administrative Associate with Engineering Career Services.
Adapted from a National Association of Colleges and Employers (NACE) resource titled “Noncompete, Nonsolicitation, Nondisclosure Agreements: What You Need to Know”.
You got an offer, congratulations! Now it’s time to figure out what you will be agreeing to by signing. Some of the more common legal items in offers are noncompete, nonsolicitation, and nondisclosure agreements.
Noncompete agreements limit an individual's ability to perform work in his or her chosen profession for a certain period of time. In this regard, a noncompete restricts former employees from working for competitors or defined groups of competitors in a specific geographic area for a defined time period. Employers require employees to sign noncompete agreements to protect corporate assets, such as trade secrets, proprietary information, and goodwill.
With regard to temporal and geographic scope, courts look to what is reasonable to protect the employer’s legitimate business interests. In most cases, a two-year noncompete agreement is deemed reasonable. For the geographic scope, however, there is no set standard. For example, if an individual works as a salesperson and has a territory of the East Coast, then a noncompete agreement that prohibits that person for working for a competitor on the East Coast may be reasonable, whereas a noncompete that prohibits that same person from working anywhere in the United States would likely be overly broad and unenforceable.
Nonsolicitation agreements prohibit former employees (or interns) from soliciting customers or clients of their former employer for a competitor. Nonsolicitation provisions may also prohibit former employees from attempting to “pirate” or take away employees of the former employer for other competing business.
There are looser restrictions for nonsolicitations because courts are generally agreeable to allowing an employer a period of time to retain its customers. However, there are exceptions to that general rule.
A nondisclosure agreement prohibits an employee or intern from disclosing an organization's confidential and/or proprietary information to third parties during both the tenure of employment and after termination. The individual agrees that he or she will not reveal anything the company considers confidential, such as customer lists, research, and development plans.
Unlike other forms of restrictive covenants, a nondisclosure agreement does not restrict an individual's ability to obtain work upon the termination of employment, but merely protects an employer's proprietary information. In this regard, a nondisclosure agreement will provide a definition of “confidential information” and indicate that the employee is not permitted to disclose such information to any third parties. Nondisclosure agreements are generally enforceable provided that there is a specific definition of what constitutes confidential information.
INTELLECTUAL PROPERTY AGREEMENTS
Intellectual property agreements limit an employee’s ability to maintain ownership of inventions and ideas while working for an employer. In this regard, employees essentially sign over their rights to inventions or ideas if they were created using an employer’s confidential information or as part of an employee’s position with a company. Such agreements, however, can be overly broad and expand to areas outside of what should be protected. Accordingly, it is imperative that individuals carefully read over such provisions prior to execution, as failing to do so may cost the individual more than a job in the future—it may cost him or her rights to an invention.
STEPS TO TAKE BEFORE SIGNING
We encourage you to visit Student Legal Services if you have specific questions regarding the legal agreements within your employment offer.
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