Do Your Key Employees Have an Employment Agreement?
07/29/2025One of the most important tools a business can use to manage risk is a well-drafted employment agreement. Every company has employees with access to confidential trade secrets, customer lists, and other proprietary information. You must have these employees sign a written employment agreement prohibiting them from stealing the business’s trade secrets, confidential customer lists, and other proprietary confidential information, and restricting their ability to compete with your business within a certain geographic location and time period. The employment agreement must ensure that the employer is entitled to an immediate court order providing for an injunction against the employee to stop the employee from using or further using the trade secrets for their own benefit.
Failure to have an employment agreement in place with these restrictions can result in costly litigation, significant loss of revenue, and irreparable harm to your company.
What Are the Benefits of Employment Agreements?
An employment agreement specifies the employee’s role, responsibilities, and employment terms (compensation, benefits, termination provisions, etc.), minimizing disputes over these issues.
Just as important, it protects the business’s most valuable assets, including its intellectual property, proprietary systems, customer lists, and other confidential information that an employee could steal during employment or after termination.
Business owners can use confidentiality, non-solicitation, and, where enforceable, non-compete clauses in the agreement to help ensure that employees cannot take information gained during employment to a competitor or start a competing business.
Provisions in the agreement can also clarify that intellectual property created on the job by the employee is owned by the employer.
Who Should Get an Employment Agreement?
Any employee with access to strategic or sensitive information that impacts operations or customer relationships should be required to sign an agreement as a condition of employment.
What Are the Risks of Not Having a Well-Drafted Agreement?
Without a clear written employment agreement, businesses may have to resort to expensive and time-consuming lawsuits to protect their trade secrets and theft of proprietary information where the damage has already been done and all you may be left with is a claim for damages that may be uncollectible. I’ve handled cases where employees already stole confidential information and trade secrets or went to work for a competitor using the company’s customer lists and other trade secrets, resulting in significant damage to the business.
An agreement can minimize the risks, but it must be drafted by a knowledgeable attorney. This is particularly true for non-competes. New York and many other states have strict limitations on when and how non-competes can be used, and possible future legislation may limit them further, so these provisions must be carefully written to be enforceable.
If your business (or your client’s business) is not using employment agreements or an attorney has not reviewed your agreement in a while, you need to take action now before a rogue employee tries to destroy your business that took you years to establish.
I can draft agreements for you or review the ones you have to determine if they have the necessary restrictive provisions, protection of your company’s trade secrets, and the right to an immediate court injunction in case of a breach. Contact me for a consultation.