Non-compete agreements are an important tool used by many businesses to protect legitimate business interests. But what’s actually considered a legitimate business interest?
A case-in-point involves two high profile companies that were recently profiled by various media outlets.
Employers often enter into non-compete agreements with employees leaving the company in order to protect certain business interests, such as trade secrets involving secret formulas, ideas or processes that could provide a competitive edge in the market, the company’s existing clientele or geographic locations the company serves. Another often involves limitations on employees working for other companies for a certain period after leaving.
This exact scenario is been playing out in real life as media outlets everywhere are profiling a lawsuit involving two major, high-profile companies: Amazon and Target.
For 16 years, a logistics executive tasked with handling international supply chains worked for Amazon. He left the company and a month later was hired by Target as a chief supply chain and logistics officer.
A non-compete agreement, however, was executed in 2012 prior to his departure from Amazon. The agreement stipulated that he was prohibited from working for a direct competitor for a year and a half if he were to leave.
Amazon filed suit claiming that the “new position with a key Amazon competitor will involve the disclosure and use of Amazon’s confidential and proprietary information to Amazon’s detriment and Target’s advantage in a core area of competition between the companies.”
A Target spokesperson, however, stated that the complaint is baseless and that the company has taken measure to ensure such information stays confidential.
It remains to be seen what will become of the lawsuit; it is still pending in Superior Court.
The issue, however, certainly points out the importance of non-compete agreements and the need to protect a company’s business interests in today’s competitive marketplace.