Should Employers Make All of Their Employees Sign Non-Competes?

Most employers know that it is a good idea to have employees sign “non-competes” – that is, agreements that limit the extent to which current employees may compete against the employer if the employee leaves and wants to start working somewhere else.  Many employers get so excited about this protection that they require all of their employees to sign a non-compete, including not only sales people, but also bookkeepers, secretaries, and the clerks working in the mail room.

Is such an approach a good idea?

To answer the question, we first have to understand an important point about non-competition agreements.  Specifically, we have to understand what interest of the employer non-competes are designed to protect, and by extension, what they are NOT designed to protect.

In Maryland, employers primarily are permitted to use non-competition agreements to prevent employees from using their relationships with a business’s customers to the employee’s own advantage once their employment ends.  For example, computer IT companies depend on their technicians to develop relationships with the customers of the business in order to keep the customers satisfied, to earn additional business from them, and to develop good will and future referrals.  In many cases, the companies’ customers do not even know the owner of the IT company.  What they do know is the name of the computer technician who works on their account and that technician’s capabilities.  If the technician were to leave the IT company that employs him, it would be easy for the technician to let “his” customers know that he is going to another company, and it is likely that the customers would follow him to his new place of employment.

Non-competes are designed primarily to protect against that situation, a situation that would constitute unfair competition by the employee.  After all, the company hired the technician to develop customer relationships for the benefit of the company.  The employer supported the relationship and encouraged the technician to get to know the customer – but only on behalf of the employer.  It would be fundamentally unfair for the employee to take the company’s investment in this relationship with its customers and steal that investment from the company.  And, therefore, companies may prohibit employees from capitalizing on that relationship for a period of time after the employment ends.

But when employers have their secretaries and controllers sign non-competes, they are not following this principle.  Secretaries and controllers – and many other company employees – do not have relationships with the company’s customers.  When it comes to these employees, the employer simply does not have a “protectable interest” that would justify having them sign non-competes.  Making them do so would be at best a waste of time, and at worst, it may undermine the legitimacy of the company’s proper non-competes in the event that a company ever were required to enforce such an agreement against its sales people.

Therefore, choosing the employees who should sign a non-compete often is just as important as deciding what terms to include in the non-compete agreement.  If you currently utilize non-competition agreements, or if you have been intending to put these agreements in place, you would benefit from having a Maryland employment law attorney review your approach to this crucial layer of protection for your business.  Call Bruce Luchansky, Esq., of Luchansky Millman, the premier employment law firm in Towson, Maryland, at 410.522.1020, and speak to one of our employment law attorneys to make sure that your non-compete is enforceable, and that it will protect the business interests that you worked so hard to develop.

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