Are Non-Compete Agreements Right for a Merchant Credit Card Processing Business?

Turnover in today’s economy can be high as sales agents bring their expertise to a new job for higher pay, leaving commercial credit card processing businesses open to information poaching. So is it wise for trade processing companies to consider non-compete agreements?

not compete vs. Non-solicitation agreement

Non-compete and non-solicitation clauses are included in employment and agency contracts as part of the employment contract signed at the start of employment. A non-compete clause restricts an employee or agent from engaging in a specific activity within a certain geographic location and period of time once an employee is terminated.

However, a non-solicitation clause restricts the employee or agent from contacting merchants, customers, or remaining employees who have placed through the former employer within a certain geographic location and time period.

Laws are governed by individual states, so there is no clear way to analyze or enforce agreements across the industry. Merchant lists, in particular, may constitute trade secrets, but it depends on the status and how both parties used the information.

In general, general information learned to do the job effectively is not covered, but conventions in place to protect specific information are considered.

Recruitment precautions

It’s important to know who you’re hiring, especially if you previously worked for a competitor. Be clear if they are still required not to compete, or if you could be liable for a variety of charges, including theft. If you hire someone who solicits a former employer’s contacts while working for you, the former employee could file a court order to keep that information blocked and seek money damages against you.

Even if you are successful in defending yourself, it costs time and money, so it is in your best interest to incorporate inclusive clauses. For non-compete and non-solicitation clauses, it is important to:

* Be clear about how long, where and how to restrict the employee from competitive activity after termination

* Discuss limitations with attorney to account for state law restrictions

* Make sure agreements are clear, well-written, and set specific expectations for both parties