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The Ties That Bind
Restrictive covenant agreements are frequently relied upon by employers to restrict the future activities of former employees following their separation from employment.
These agreements are sometimes generically referred to as a “non-compete,” but there are three types of restrictive covenants that employers commonly use:
- non-competition (or “non-compete”) agreements
- non-solicitation agreements
- non-disclosure agreements
Each of these types of agreements prohibits an employee from engaging in certain activities after his or her employment has ended. Restrictive covenant agreements were originally relied on in the business world to ensure that key employees with knowledge of the inner workings of their employers could not accept employment with a competitor, solicit fellow employees to leave the employer, and/or disclose the employer’s trade secrets to their new employer’s advantage. Once limited to senior executives, restrictive covenant agreements are now being utilized by employers to bind employees at all levels.
In the condominium context, restrictive covenant agreements are becoming more common between property management companies and property managers. Management companies want to cultivate experienced managers without risking the loss of those employees and their know-how, relationships, and proprietary information to their competition. At the same time, management companies and community associations want the ability to hire experienced managers without the limitations commonly imposed by restrictive covenant
agreements. Likewise, managers also resist any limitations placed on their options for future employment.
Is there a way to balance the competing interests of condominium associations, their managers, and management companies? With the right restrictive covenant agreements in their legal toolbox, management companies can safeguard their proprietary information while imposing appropriate restrictions on their former employees. Before deciding what type (or combination) of restrictive covenant agreement is right for your situation, it is important to understand the basic differences among these types of agreements and how they are used in the context of condominium association management.