Restrictive covenants in employment agreements can be very useful to companies on the leading edge of technology and business innovation. This document is a general checklist of factors employers should consider with respect to the use of such covenants.
Guam Employee Restrictive Covenants
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FAQ
Restrictive covenants may contain 4 different types of promises: (1) a promise not to compete with one's former employer; (2) a promise not to solicit or accept business from customers of the former employer; (3) a promise not to recruit or hire away employees of the former employer; and (4) the promise not to use or ...
Restrictive covenants can generally be found in one of three forms: non-disclosure, non-solicitation, and non-compete clauses. Sometimes their usage is a reasonable attempt to ensure the success of the business.
California law bars covenants not to compete in nearly all circumstances. In Edwards v. Arthur Anderson, the California Supreme Court determined that the law should be read strictly, and not only void the ?unreasonable? noncompete clause, but all noncompete clauses other than those explicitly allowed in the code.
Apart from the "covenant hostile state" issue discussed above, the majority of jurisdictions within the US (either by statute or case law) will enforce restrictive covenants to the extent they are "reasonable" under the circumstances.
Restrictive covenants are clauses that prevent, prohibit, restrict, or limit the actions of a person or entity named in a contract. Restrictive covenants are common in real estate transactions and apply to everything from the colors you can paint your house to how many tenants can live in a building.
An example of a restrictive covenant is a 'non-compete' clause. Such a clause prevents an individual from joining a competitor for a specific time. In addition, you will find 'non-dealing' clauses. These clauses say that an employee is not allowed to work with certain clients for a period of time.
Examples of restrictive covenants include confidentiality, non-disclosure, non-solicitation, and non-compete agreements. Confidentiality and non-disclosure agreements are restrictive covenants that prohibit the sharing of confidential or proprietary information with a competitor or any other interested third party.
There are two types of restrictive covenants: affirmative and negative. An affirmative covenant obligates a person to act. For example, a covenant that requires the homeowner to keep the trees trimmed in the yard is an affirmative covenant. A negative covenant prohibits a person to act.
