In Iowa, like in any other state, a non-compete agreement—also known as a covenant not to compete—is used by business entities to add another protection layer to their proprietary information.
An employer and an employee usually conclude the contract to ensure that the sensitive information the worker has access to will not benefit a third party once the professional relationship between the two parties is over. The employer puts some restrictions on the employee’s actions once they are no longer working together. Thus, the document’s primary purpose is to restrict the worker from competing with the employer’s business. However, a non-compete agreement template may also come in handy when dealing with business sales, purchases, mergers, and even business partnerships.
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Now that the non-compete agreement definition is a bit clear, let us proceed to the different types of proprietary information a business company might want to protect. The list includes but is not limited to:
If revealed to the public, all the information above might damage the employer’s business. Employers tend to use non-compete forms when there is a lot of exposure to such kinds of sensitive information. In other cases, non-disclosure agreements will suffice to protect a good deal of the company’s commercial data.
The document structure may vary from state to state. Usually, it contains several mandatory parts in states where such documents are enforceable, including the state of Iowa. See the list below to make sure that you fill out your non-compete form correctly. You are welcome to use our form-building software to create one of your own.
Every NCA form comprises a section where both parties write their full legal names. Typically, the business entity’s head, or any other authorized representative, is responsible for completing the document. The employee is often referred to as the “Recipient,” while the business representative is referred to as the “Company.”
Restrictions Imposed on the Worker
The business entity sets particular limitations upon the employee’s activity to prevent them from engaging in similar businesses and entering a competition. The employer also has to specify what kind of information is considered confidential for the employee and what penalties are imposed in case of agreement violation. Make sure all terms and conditions are as clear and transparent as possible.
The Duration of the Agreement
It is mandatory to indicate the NCA effective dates. The employer has the right to choose whether the document will stay valid for an extended time after the worker is no longer employed. An entity’s representative can write the exact number of years the record should remain valid. Usually, the duration does not exceed two years.
Both Parties’ Signatures
The document will not come into effect until the company and the recipient sign the covenant. Parties should sign all the paper copies and keep them in a safe and accessible place.
States are not unanimous when it comes to non-competes. Some states have passed their unique laws regulating the non-compete covenants. In contrast, other states do not have any specific regulations regarding NCA forms and even demonstrate disdain towards such agreements as long as they restrain free trade. Iowa is part of the second group of states—it doesn’t have any laws concerning non-compete agreements.
In some states, particular specialists are exempted from signing a covenant not to compete. In Iowa, following Section 523H.8 of the Iowa Code, if you are a franchise owner willing to cancel the franchise agreement, no one can use the document against you. However, you, in turn, should meet one of the following requirements:
If you have doubts about any term of the agreement or questions regarding the document completion, it is better to seek legal advice before you sign the paper. This measure will help you avoid misunderstandings and protect yourself in the long run.