Noncompete Agreement

This paper explains what a noncompete agreement is and the three elements of a noncompete agreement. If these three elements are not met then your case will not hold up in court much less be considered for a trial. The scenario I was provided with asked me to determine if a noncompete agreement was needed for employment purposes. The organization was looking for an engineer but was concerned that the engineer might use the software he developed with our organization with another organization after his employment status ended with our organization. Here is my letter to the engineer department's manager.

I understand why you would like to have the engineer sign a noncompete agreement. The noncompete agreement will prevent the engineer from giving our software design to our competitors. I have researched Iowa's statutes and case laws which will help you decide whether you should have the engineer sign a noncompete agreement. According to Joseph Johnston (2000), there are three factors that must be met in order for the agreement to stand up in the Supreme Court of Iowa.

The three factors state that the agreement must be "necessary for the protection of the employer's business; and not unreasonably restrictive of the employee's rights; and not prejudicial to the public interest" (Johnston, 2000). We do have a need for this agreement as we are developing new software design. The engineer could easily take our software design to our competitors door step after seeing how efficient the software really is. We would lose business if that were to happen, therefore, we have a need. The second factor is that the agreement must be reasonable. We must state how long the engineer must keep quiet about our software design. While it is not in writing, a reasonable amount of time is at least two years after the signing of the agreement. The third factor is that it cannot be harmful to the public.