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Is it common to ask early employee of a startup to sign a contract containing non-compete clauses?

I am against our employee, but I have a little concern on our competitor as they have money to lure our employee away from our startup.

What are the fair terms?

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It is a legal issue that varies state to state (in the US). Right-to-work states can negate these. – JeffO Jul 14 '12 at 22:00
Where I live my research led me to believe that it's also a requirement that the employee be getting something in return for the non-compete (beyond a job). That said you should probably involve a lawyer in any contracts you want to have. – ShaneC Jul 15 '12 at 19:07
It would help if you mentioned country. In the UK for example, certain jobs this is common, however the period is usually limited to 6 months or less due to legal precedence where employers were asking for very long period - the courts seem to be happy with up to 6 months after employment. Tort and employment law is complex and very different from country to country, juristiction to juristiction. Also note that some countries/juristictions expect contracts to be equal/onus on both sides in equal measure - so if the ex-employee is limited in this way, the employer may have to pay severence etc. – Wolf5370 Jul 16 '12 at 9:50

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Absolutely. Just make sure that the Non-compete isn't too strict, as that may drive away employees. I signed a non-compete when I started at my current job. I'm not allowed to work for a competitor while I'm still employed or for two years afterward.

However, we defined "competitor" very narrowly (only direct competitors, not all tech companies), so I'm not worried that it will be cumbersome if I decide to move on. However, it's still effective against those that would try and steal our employees.

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What if a company which is not a direct competitor ATM, but lure you employee to start a competing services? – Yoga Jul 15 '12 at 3:16
You'd want to phrase the contract to reflect that. For instance, I can't leave my current employer to start something that would compete. – SomeKittens Jul 15 '12 at 15:05

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