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Do's and Don'ts For Managing Your Restrictive Covenants In a Recovering Economy

By Jonathan R. Cavalier

One of the few benefits to employers in a down economy is that they can typically count on a relatively stable workforce. During a recession, employees are generally less willing to jeopardize their current employment by looking to change jobs, and are less able to find open positions even if they are willing to switch. However, as the economy recovers, you can expect that to change significantly, especially for key employees whom competitors may look to hire as a way to jump-start business by poaching your company's customers or knowledge base. Recently, there has been a significant increase in litigation involving noncompete agreements as companies look for quick and easy ways to gain market share and increase revenues. Hiring a key employee from a competitor is an easy, cost-effective way for the competition to eliminate a competitive advantage in an instant, and as a result, companies can be expected to be more willing than ever to fight for the right to hire their competitors' most valuable employees.

You can prevent this from happening to your company by using well-drafted, specifically targeted restrictive covenants that will help you avoid litigation where possible and win it when necessary. With that goal in mind, this article provides helpful “do's” and “don'ts” to be used in constructing and evaluating employees' noncompete, nonsolicitation and confidentiality agreements.

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