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NCAs: the pros and cons

On Behalf of | Apr 21, 2022 | Blog |

Non-compete agreements, or NCAs, are contracts between companies and workers. In such an agreement, the employee agrees not to go into competition with the company they are working for during their employment and/or after they are no longer working for the company. If you’re a Minnesota resident, here are some important things to know about NCAs to prevent contract disputes.

More about NCAs

An NCA is enforced when the employee is not working for the company mentioned in the non-compete agreement anymore. The document goes into effect to keep the former employee from competing against their previous employer. The terms can include prohibiting the employee from working for a competing company or preventing the former employee from going into business in the same niche as the company they worked for previously. The employee is also not allowed to recruit other employees of their former company to work for them.

Independent contractors and consultants are able to terminate their connection with companies once their projects are complete. However, they are often still bound by NCA clauses to prevent contract disputes after the professional separation.

Advantages and drawbacks of an NCA

There are several advantages to having a non-compete agreement. For instance, the document reduces contract disputes by protecting the trade secrets of the company and preventing workers from using sensitive company information to start their own businesses. Non-compete agreements can also reduce employee turnover, especially with workers who have no desire to change jobs in the near future. This legal document can motivate employers to provide more in-depth training for workers, which could lessen the chances that workers will move to another company.

However, NCAs can also reduce professional opportunities for some workers, which can lower their motivation to perform well. In some cases, a worker will leave the industry altogether and take their skill set with them into another field.

Overall, a non-compete agreement will make employee expectations clear. It can provide an incentive for employers to focus more on professional development for the company.