What used to be a clause or separate contract reserved for high ranking business leaders or executives with access to top secret trade secrets has somehow worked its way into everyday life for employees of every level of organizations. I'm talking about the dreaded non-compete agreement! The real questions more and more people are having is, what is it and how will it affect me? This post will seek to answer those two questions.
What is a Non-Compete?
To put it in simple terms, a non-compete agreement (or clause, depending on whether the employee has a separate employment contract) limits an employee's ability to work in the same industry, within a certain area and time frame. The purpose of the non-compete is to protect the employer from rogue employees that bring great value to a company or good will to its customers and then leaves to bring that same value to another company. In earlier days, it was reserved for employees with very high ranking or influence in an organization because one of those employees defecting to another company could bring the original company to its knees once customers and industry insiders found out.
Now, however, it is becoming more and more common for businesses to require lower level employees to sign non-compete agreements. They recognized that in certain industries, customers follow their service providers because of the great job they do, their high skill level, personality, etc. When someone finds an amazing hair stylist or mechanic, they might follow that person to the ends of the earth!
Steps to Take When Presented with a Non-Compete
If an employer requests that you sign a non-compete agreement to secure a job or after employed, here are a few steps you should follow to protect yourself and future earning ability.
1. Contact an Attorney
You knew I would say that didn't you? But, seriously, an attorney can take a look at the contract and know instantly whether or not it is overly burdensome and would be thrown out of court, or reasonable. An attorney can help you negotiate the terms. Let your employer know you're having an attorney review the contract and find out if they have a deadline when you need to return it.
Just like any other contract, non-competes can be negotiated. Try to get your employer to limit the area of coverage or amount of time the agreement is in effect. An attorney can help with this because they know what courts have found enforceable and not enforceable in your industry in terms of restrictions. Perhaps you can negotiate a severance package if you happen to be terminated for cause. An attorney might be able to get the employer to agree to waive the agreement entirely if you are terminated without cause. There are too many options to list that you may have at your disposal when negotiating.
3. Know your Value!!!
If your employer is having you sign a non-compete, that means they know you bring value to their company in some significant way. Significant enough that they feel the need to protect themselves should you leave. Use this knowledge in your negotiation. If they will not bend on the terms, maybe you can get a raise or promotion out of the deal. Whatever you do, do not forget that your employer is NOT holding all the chips here.
A non-compete agreement is nothing to fear, but also nothing to take lightly. It could have a serious and debilitating effect on your career and life plans should the need to enforce it ever arise. Trying to defend against a violation of a non-compete or suing to get out of it after the fact can costs thousands and thousands of dollars in legal fees. Negotiating a fair agreement before signing will not cost anywhere near the fees to litigate.
If you are presented with a non-compete agreement by your employer, be smart and contact an attorney immediately to protect your rights!