Do I Need my Employees to Sign a Non-Compete?

Whether it is a necessity depends on what they do and who they know.  But not a bad idea to have all your employees sign a non-competition, non-solicitation and non-disclosure agreement as part of the terms of their employment.  Employees often learn confidential and proprietary information about you and your business.  If such information gets into the hands of the wrong people, your business may be injured or destroyed. 

A well-drafted agreement will prevent your employees from competing with your business, soliciting your customers or employees, and using or disclosing your confidential information.  If your employee violates or threatens to violate the terms of the agreement, you can send a cease and desist letter, and then sue for breach if he or she does not comply.  If you have to sue, the court can issue a temporary restraining order, permanent injunction and other legal and equitable relief including monetary damages and attorney fees.

If your employee is using or disclosing your confidential information as an employee, partner or owner of another business, you should notify the other business that the employee is subject to a non-compete agreement.  If the other business continues to employee or be associated with the employee, you can sue the other business for tortuous interference with contractual obligations. 

In the absence of a non-compete agreement, you may be able to find some protection for your confidential information under the Ohio Trade Secrets Act.  But such protection is not perfect and only applies if you can prove your confidential information amounts to a protected trade secret.  More about that in a future blog.  But it is way better, easier and less expensive in the long run to simply have all your employees sign a non-compete, non-solicitation and non-disclosure agreement when you hire them.

If you want to talk about non-competes or need some help drafting one, give me a call.  Jsenney@pselaw.com or 937-223-1130.

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AND ONE MORE THING.  Have you ever heard of Use tax?  Use tax is the compliment to sales tax.   You are obligated to pay use tax in Ohio if you buy something out of state and then bring it into Ohio to be used or consumed in Ohio.  The state of Ohio is stepping up its enforcement efforts against businesses.  Joe Testa, the Ohio tax commissioner estimates that hundreds of thousands of Ohio businesses may owe use tax.  The Ohio Tax Department is offering an amnesty program beginning October 1, 2011 and ending May 1, 2013.  Businesses that enter the program will have to pay use tax back to January 1, 2009, but will not have to pay interest or penalty.   If you want to know more about use tax or the amnesty program, please give me a call.  Jsenney@pselaw.com or 937-223-1130.

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