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What should I consider when updating our noncompete agreements?

by on
in Employment Law,Human Resources

Q. The employment and noncompete agreements we have with our salespeople are several years old and appear outdated to me. May I require everyone to sign new, updated agreements?

A. You may, but new consideration may be required, and the interplay of the two agreements is important. In North Carolina, continued employment is not adequate consideration for a noncompetition or nonsolicitation-of-customers clause. Usually, new consideration must be given to an existing employee whom an employer wishes to enter into such restrictive covenants. North Carolina differs from some other states in this regard.

If your new agreements will differ from the original agreements, your company may run the risk that the new agreements will be deemed unenforceable because they’re not supported by adequate consideration.

If the original agreements are truly inadequate for your company’s needs and it remains important to update or amend them, you should determine whether you need to offer new consideration—perhaps in the form of bonuses or raises.

Also, many “form” agreements contain an integration clause that declares the new agreement to be governing and all former agreements to be null and void. An imprecisely drafted integration clause, therefore, could leave your company without the original agreements upon which to fall back if the new agreements are deemed unenforceable.

Have a conversation with your attorney about specific details regarding the necessity of new consideration and the interrelation of the two agreements.

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