Afraid that a top-producing sales rep may quit and set up his or her own shop? Many company owners try, first, to draft an airtight noncompete agreement, then get valued reps to sign it. But Gary Bitner, president of Bitner.com, a $2-million marketing and communications company headquartered in Fort Lauderdale, Fla., believes that requiring employees to sign "noncompetes" sets the wrong tone. "They're hard to make work in Florida, anyway," he says. So, as part of his client contract, Bitner asks customers not to hire or do business with former employees for a year after their departure.
In California, noncompete agreements are recognized only for shareholders. So Mark Moses, CEO of Platinum Capital Group, a $20-million mortgage banker in Irvine, includes a noncompete clause in the shareholders' agreement his managers sign. If any shareholder leaves while the company is still private, the value of his or her stock will take a 20% "haircut," and Moses can buy back the rest over three years.