These covenants may be made a part of a more comprehensive employment contract or may be used independently in an at-will employment situation. Restrictive covenants may take a number of different forms. As discussed above, the inclusion of such covenants should be disclosed prior to the executive leaving his or her current position so there can be no claim of bad faith or fraudulent concealment on the part of the hiring company. On the other hand, when recruiting or hiring an executive, a company ought to inquire as to whether or not an executive whom they are recruiting is presently working under a contract which contains a covenant not to compete. In addition, the hiring company may be indirectly liable in tort for inducing the executive to breach their contract.
Executives are privy to the trade secrets and business strategies of their employers.
Employees, including executives, have an implied duty to protect their employer's trade secrets even in the absence of any express contract to that effect. Nevertheless, a confidentiality provision should be included in all executive agreements. Such a provision should define what is considered to be confidential information. It also should prohibit disclosure of confidential information during and after the executive's employment, and require the executive to return all documents and materials containing confidential information to the employer upon departure from the company. The terms also should provide for enforcement, including the right of the company to obtain injunctive relief.