When you are offered a position, it usually comes with a few strings. You’ll be given an employee handbook and asked to sign a form that you agree with the policies. Sometimes, contracts have a few more specific notations, such as agreements not to disclose secrets, or even agreements about what happens after you leave the position. This last is known as a non-compete. While more and more employers make them a condition of accepting a job offer, they’re not something you should sign without thoroughly understanding them.
If you are being asked to make significant concessions, it can be worth it to have an employment law firm look the agreement over before you sign. While many sweeping non-competes are unenforceable, knowing what you are getting into in advance can save headaches later on.
What Is a Non-Compete?
A non-compete agreement restricts where you can work after you leave your current job. Typically, they prohibit you from working for a competitor or starting your own business in the same field. Most are restricted to a particular geographic area and are time-bound. For instance, you might be required not to work for a competitor in your industry within a 50 mile radius for two years.
What to Do If You Are Asked to Sign a Non-Compete
Nearly half of all employers bind at least some of their employees to non-compete agreements. Some agreements are sent along with offer letters when you get the job. Others are included in the employee handbook. Be sure to read everything thoroughly before you sign.
Don’t be afraid to ask why you are being asked to sign a non-compete. Ask what you are getting in return for the exclusivity. In many states, additional consideration is required if you are being asked to sign away rights. For instance, a non-compete may be attached to a bonus structure or specific severance agreements. You may also be asked to sign a non-compete at a current job because you are being given extra training or getting a promotion.
Know Your State Laws
Protection for workers happens largely at the state level. In states like Massachusetts and Pennsylvania, you must receive valuable consideration if you are expected to sign a non-compete.
However, in other states like Florida, you may not be entitled to any additional compensation for signing a non-compete. In these states, the job itself is considered adequate consideration. By becoming familiar with employment laws in your state, you can determine whether what you are being asked for is fair and legal.
Be Willing to Negotiate
Some non-competes are written in ways that would make it difficult to find new work in your field after leaving a company. If this is true in a non-compete you are being offered, see if your employer would be willing to negotiate on the terms.
For instance, you may wish to shorten the duration of the non-compete, or narrow the applicable geographic area. These will keep more opportunities open to you if you need to switch jobs.
You can also ask for a narrow definition of what your employer considers a customer or a competitor. For instance, if you are working for a company that makes running shoes, consider asking whether a different athletic product or a different kind of shoemaker would be considered “competitors” for the terms of your agreement.
Don’t Assume It Won’t Be Enforced
Employers know that most workers do not have the time or funds to defend themselves against a lawsuit. Non-competes are often used as scare tactics to keep employees in line.
However, that doesn’t mean that an employer will not pursue a lawsuit if you violate the non-compete.
Usually, employers decide on a case by case basis which agreements to pursue. If you have gone into business for yourself and you are openly courting customers of your former employer, this could lead to a lawsuit.
Summing Up
Remember that when you are interviewing for a job, you are interviewing the employer as much as they are interviewing you. Before agreeing to sign a non-compete, consider what that could mean for you later on. Do you plan to be with the company for a long time, or do you see yourself moving laterally in a few years? Is the agreement written in a way that will make it hard to make a living?
Don’t be afraid to stand up for yourself during negotiations. You may find that the terms offered for a job do not fit your plans or your goals. Or, you could learn that the agreement is reasonable or that your employer is willing to work with you. By being willing to speak up and negotiate, you can get the outcomes you want.
