A restrictive covenant is an agreement that works to prohibit current and former employees from certain activities during their employment and after it comes to an end.
Restrict covenants can be written in stand-alone agreements or as clauses in employment contracts.
Essentially, there are four main types of restrictive covenants in the employer/employee relationship.
- The most common is a non-compete agreement. Non-compete prohibits a former employee from competing against a former employer within a particular geographic area for a specified period of time.
- The second is a non-solicitation agreement. Non-solicitation prohibits a former employee from soliciting its former employer’s current, prior or prospective customers for a specified period.
- The third is an anti-raiding agreement, which prohibits a former employee from soliciting the former employer’s employees to quit their jobs.
- And the last is a confidentiality agreement, which prevents current and former employees from disclosing or using the proprietary or confidential information of the employer, or the employer’s customers or clients.
Restrictive covenants are most common in the world of employment, but they can also be found in shareholder agreements, operating agreements, and even stock agreements.
If you’d like to further discuss these types of agreements, give us a call.
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