Non-compete Clause - Related Restrictive Covenants

Related Restrictive Covenants

While CNCs are one of the most common types of restrictive covenants, there are many others. Each serves a specific purpose and provides specific rights and remedies. The most common types of restrictive covenants are as follows:

• Garden-leave clause: a type of CNC by which an employee is compensated during the period that the employee is restricted.

• Forfeiture-for-Competition Agreement and Compensation-for-Competition Agreement: an agreement by which an employee either forfeits certain benefits or pays some amount of money to engage in activities that are competitive with his former employer.

• Forfeiture agreement: an agreement by which an employee forfeits benefits when his employment terminates, regardless of whether he engages in competitive activities.

• Nondisclosure/confidentiality agreement: an agreement by which a party agrees not to use or disclose the other party's confidential information.

• Nonsolicitation agreement: an agreement by which an employee agrees not to solicit - and, if well drafted, not to accept - business from the employer's customers.

• Antipiracy agreement: an agreement by which an employee agrees not to solicit - and, if well drafted, not to hire - the employer's employees.

• Invention assignment agreement: an agreement by which an employee assigns to the employer any potential inventions conceived of during employment.

The enforceability of these agreements depends on the law of the particular state. As a general rule, however, with the exception of invention assignment agreements, they are subject to the same analysis as other CNCs.