You invest time and money in developing high performing employees. They earn a fan base among your customers. When they leave, can you stop them from taking clients with them? Under your tutelage, their skills soar. Can you prevent them taking those talents to your competitor? Or launching their own business in direct competition with you?
The answer, of course, is it depends.
Generally, Noncompete Agreements are enforceable in Washington State when:
The best time to discuss post-employment competition is up front, when you’re negotiating employment. You’d be amazed at how much conflict can be avoided with open communication about expectations, followed by a well-crafted agreement that is clear and specific enough that the parties understand what they’re agreeing to. Documenting at the outset as part of the employment contract also helps ensure the court can find sufficient consideration for enforcement. Consideration means something of value has been exchanged.
All hope is not lost if you didn’t negotiate a Noncompete Agreement in the beginning. There are some valid reasons to contemplate one after employment is already underway – but it’s neither fair nor enforceable in Washington if a midstream agreement doesn’t include additional consideration. You’ll need to offer your employee something new and reasonable for their agreement to this change in terms, such as a promotion, raise, bonus, stock, or stock options.
Should you DIY? You can find some perfectly respectable contract templates online for free or no cost. When it comes to Noncompete Agreements though, be careful. Failing to tailor these to address the specific nature of your industry or business, or to analyze the reasonableness of the restrictions under Washington law, could cost you more in the end than a conversation with your lawyer in the beginning.
Most importantly, remember that being a great employer and running a smart business aren’t mutually exclusive. Our clients do both every day.
IMPORTANT DISCLAIMER: This blog post is published for general informational purposes only. This isn't legal advice, and it does not form an attorney-client relationship or constitute attorney-client communication. If you need legal advice on an employment matter, give us a call at 206-456-2579.