Advertising agency non-compete agreements

A non-compete agreement form is like fire insurance. It’s a sickening feeling to see the smoldering ruins of your just-burned house, and wish you’d bought the insurance policy. The time to create your non-compete agreement is before you get burned.

There’s a widespread belief among the advertising agencies that we meet in our workshops and consulting that non-compete agreements are not enforceable. We do all we can to dispel that belief.

We’re not attorneys so we won’t attempt to give you legal advice, other than say a properly written non-compete agreement form required by the agency and signed by the employee is binding upon both parties. Doing so could even save you a fortune on legal fees. Non-compete agreements do not fall under Federal jurisdiction. The covenants are governed by State law. With fifty states there are fifty sets of rules. This means you need to talk to your legal eagles and have them put one together for you that can be upheld in your state courts.

You need to have ALL current and new employees sign the non-compete agreement form you and your attorneys have fashioned. Your attorney will tell you that you will probably have to compensate each employee in some way to sign the new agreement.  In my agency, we paid them all $1 — which we literally handed to them.

You may find that it may be simple to include a “section” on non-compete in the employment agreement. But the key is getting signatures on the document — no matter which document you choose to include your non-compete language.

While it’s true that you can’t prevent someone from making a living, you can prevent them from making a living at your expense.  Some states will allow you to restrict your employees from accepting jobs in the same field within a certain distance for a certain number of years.  But even if you can’t legally do that, your non-compete should always protect you from a departing employee poaching clients or your employees for a period of at least two years.  Can they go work for a competitor?  Sure…but they can’t contact or solicit any clients or people you have on staff.  And really — isn’t that what you’re worried about?

Now, here’s the bottom line. You have to be willing to not hire new employees and replace any employee that won’t sign the non-compete agreement form. You must also be willing to prosecute an employee that breaks the signed agreement after leaving the agency. Insurance serves no purpose if you don’t file a claim.

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