Are non-compete agreements suitable for a commercial credit card processing business?
Turnover in today’s economy can be high as sales agents bring their experience to a new job for a higher salary, leaving the business credit card processing company exposed to information poaching. So is it smart for commercial processing companies to consider non-compete agreements?
Not competing vs. Non-application agreement
Non-compete and non-solicitation clauses are included in employment and agency agreements as part of the employment contract signed at the beginning of employment. A non-compete clause restricts an employee or agent from engaging in a specific activity within a certain geographic location and time period once an employee is laid off.
However, a non-solicitation clause prevents the employee or agent from communicating with remaining merchants, customers, or employees they met through the previous employer within a certain geographic location and time period.
Laws are governed by individual states, so there is no clear way to analyze or enforce agreements across the industry. Merchant lists, in particular, may constitute trade secrets, but it depends on the status and how the information was used by both parties.
In general, general information learned to do the job effectively is not covered, but any agreement established to protect specific information is considered.
Recruitment precautions
It is important to know who you are hiring, especially if you previously worked for a competitor. Be clear if they are still subject to non-competition, or could be held liable for a variety of charges, including theft. If you hire someone who requests the contacts of a former employer while working for you, the former employee could file a court order to keep that information blocked and seek monetary damages against you.
Even if you are successful in defending yourself, it costs time and money, so it is best for you to incorporate inclusive clauses. For non-compete and non-application clauses, it is important to:
* Be clear about how long, where and how to restrict the employee from competitive activity after layoff
* Discuss limitations with an attorney to account for state law restrictions
* Make sure agreements are clear, well written, and set specific expectations for both parties.