Construction Forms Series
Introduction. There is nothing more frustrating than spending the time and money to train an employee or independent contractor, school them in your unique business practices, give full information about your customers, divulge pricing methods, how to do take-offs, and even your special relationships with supply houses. So for whatever reason, the employee then leaves and goes into direct competition through their own business or just as bad, works for a competitor and shares all this proprietary information. For this reason, few employers today do not have some form of confidentiality and no-compete agreement. In fact, most employees are surprised if they don’t sign one.
What is a Non Compete Agreement? In general terms, it is a construction form that prevents the following during employment and for two years (this is the average–can be 6 months to 3 years) after termination of employment:
- Starting their own business in direct competition.
- Working for one of your competitors.
- Stealing away your employees.
- Soliciting your customers.
- Soliciting your competitors for work as an independent contractor or potential employee.
- Stealing away or using your beneficial contracts
- Using your confidential customer and contacts’ lists
- Non-compete by soliciting your suppliers.
- Bad mouthing you—trade libel.
- Taking over company projects.
These non compete rules apply to any employee, whether a crew member, bookkeeper, office manager, job foreman, project manager, job superintendent, or others. These non compete clauses have been drafted by an experienced trial attorney who has litigated trade secret law and construction forms for years. In fact, these are the same construction forms he provides his clients and are from his private library.
What is a Non Disclosure Agreement? Simply stated, it is a confidentiality agreement with your employees and independent contractors for non disclsoure to third parties of any proprietary or confidential information without your prior written consent. Contractors mistakenly assume this only applies to copyrights, trademarks, patents, inventions, and other hard core trade secrets. This is not the case for such a non disclosure forms. Courts broadly define proprietary information as anything which is not disseminated publicly, which you have taken reasonable steps to keep confidential, and if it ended up in the hands of the competitors would give them an economic advantage. As such, it applies to the whole gamut of information in your office, including office procedures, profit and overhead determinations, financials, vendor and manufacturer pricing, customer lists, estimate sheets, spreadsheets, and almost anything else that you have spent time and money developing.
Therefore, a non disclosure agreement treats such information as secret which cannot be disclosed without serious consequences. Our non disclosure agreement templates cover almost every conceivable office procedure or data you may wish to keep solely within the confines of your office.
No-Hire Agreements. What happens if you are doing work for a customer and one of your own employees/independent contractors has been hired by away and has now agreed to work full-time for that customer? You have spent much time and energy training that person and have now lost the benefits of those efforts. Making matters worse, your customer has also given notice they don’t need your services and/or products any longer, primarily because they now have one of your employees to do the same work. Is there anything that can be done legally?
Between yourself and your employees/independent contractors there might not be anything to prevent this. California and other states provide (for example, California Business and Professions Code Section 16,600) that you cannot prevent someone from earning a living and working for whomever they want. This means your employees can terminate their employment and go to work for anyone they wish, even your competitors or your own clients. There is no agreement you can enter into with them to prevent this in such states
But other states will allow you to enter into a contract preventing this. Call us, and we will give free info as to your particular state. (800) 995-9434. We’re not attorneys, that we can look up the law.
In the states that limit your right to do so, do not loose heart. There are two well-recognized exceptions:
1. You can prevent them from divulging, selling, or using confidential or proprietary information. You can’t prevent them from working for someone else, but you certainly can stop them from using your trade secrets.
2. Although the law is somewhat unsettled, you can have an agreement with your customers that they will not hire away your personnel. One can argue that even this agreement is invalid, because it has the indirect effect of preventing your employees from working for whomever they want. However, the opposite argument is that you can restrain your customer, since they are not in the same category as your former employees.
As a result, the No-Hire Agreement in this Kit is signed between you and your customer (not employee).
These construction forms include:[wpsc_products category_id=’24’ ]