For many, living in Alaska means living in a land of opportunity – the opportunity to strike out on their own and maybe even launch their own business. If you are an entrepreneur and plan to launch your business in the Last Frontier, one thing you need to consider is how you will safeguard your business in the long run.
As part of that, you may consider if you want key employees to sign noncompete or nondisclosure agreements, so you can prevent them from working for your competition or using confidential information to help a competitor. Yet you aren’t sure how effective noncompete agreements or nondisclosure agreements are. Can these really help you protect your business?
Understanding noncompete agreements
If you want to have a key employee sign a noncompete agreement, it is best to draft that agreement before your employee begins their official duties. They should have an opportunity to understand how the noncompete agreement will affect them.
Through a noncompete, you can avoid having a key employee, perhaps who has good knowledge of your business’ trade secrets or products in development, go work for a competitor company for a set amount of time. If you want Alaska courts to enforce your noncompete agreement, you need to work closely with an employment law attorney in creating it.
You will have to show that:
- You have a legitimate interest in protecting your business with the noncompete agreement.
- You aren’t preventing an employee from being able to earn a living with the noncompete.
- The noncompete agreement isn’t excessive in its geographic scope or length of enforcement.
- You provided your employee with compensation for signing the noncompete agreement.
Understanding nondisclosure agreements
Because noncompete agreements can be difficult to enforce, you instead may want to consider having key employees sign nondisclosure agreements. That way you can prevent them from sharing information about your trade secrets, product innovations, customer list and more.
For a nondisclosure agreement to be enforceable, it must protect information that is:
You may even consider having vendors, consultants and potential high-level hires sign nondisclosure agreements because they could have access to some of your confidential information. Another situation where a nondisclosure agreement may be warranted is when you are planning to sell your company and meet with potential buyers. In the vetting process, potential buyers likely will learn valuable, confidential information you want to protect.
In the end, working with a business law attorney can help you know if and when you should seek noncompete agreements and nondisclosure agreements. You will get a better understanding of how to protect vital information from your competitors and maintain your competitive advantage in the marketplace.