Failure to understand just what signing a non-compete clause or agreement binds you to is becoming a huge potential problem for job seekers and new employees. Coming from a sales background, I have always been familiar with an employer or potential employer seeking to protect their interests, but we are now seeing more and more industries and job roles being subjected to non-compete clauses.
According to Wikipedia a non-compete agreement is:
a term used in contract law under which one party (usually an employee) agrees not to pursue a similar profession or trade in competition against another party (usually the employer).
In simple terms, a non-compete is usually an agreement signed by an employee stating that they will not leave a company and take knowledge and/or clients to another employer.
Seems straight forward right? Wrong!! YOU NEED TO BE SURE OF WHAT YOU ARE AGREEING TO!
What can signing a non-compete mean?
Firstly, signing a non-compete can actually stop you from working in your trained and chosen profession with ANY OTHER EMPLOYER! It can also stop you from working near where you live, it could stop you working for a prospective employer even if YOU do nothing wrong!
How can all of these things happen? If you sign a non-compete agreement, you need to be prepared to have it enforced to the letter.
How do you protect yourself?
It would be trite of me to say don't ever sign a non-compete agreement, but ideally that is the best solution! However, many employers now will not offer you a job unless you are willing to sign one (and to be fair - they do have to protect themselves!). So, what can you do to protect yourself?
- seek legal advice before signing anything!!! Now you may be thinking is "who can afford that"? But here is an interesting take on the situation - tell your potential employer you are not adverse to signing a non-compete, BUT they need to wear the cost of you gaining INDEPENDENT counsel. It may not work, but you don't know if you don't ask! You could also try contacting your local Chamber of Commerce as they may be able to steer you in the right direction, or contact a union if there is one that represents your industry.
- be careful of the terms: Make sure that you completely understand what the agreement is asking of you; eg: If you are in sales - there is the very real possibility that your clients will follow you if you move to a new company, make sure that your non-compete doesn't bar you from dealing with people who seek you out.
- remember that specific stipulations can be enforced: again from my experience as a sales person, if a non-compete mentions a specific client, you should be wary - if it stipulates a particular product you are not to represent in the future, listen to those alarm bells! Don't ever sign an agreement to not work in your qualified/experienced job role at another employer with out legal advice. For example I once had a boss who expected me to sign a non-compete that I would not work as a telemarketer for anyone else, as a sales person making sales phone calls can be defined as telemarketing: I didn't sign her clause...
- don't accept any compensation for signing: yes, I know this one can be hard - if you are offered a $10K 'bonus' so sign the non-compete agreement, BE WARY!! The accepting of ANY compensation for signing an agreement can mean that you are absolving your employer from responsibility. Think of it this way: compensation = you fully understanding what you signed, EVEN IF YOU DIDN'T!!!
- think about who your FUTURE employers could be: if you dream job is with a supplier to your current employer, imagine how great it would be to get an offer from them! BUT now imagine what would happen if they are selling the same product to similar clients - or worse still, what if they are they type of supplier to go direct and cut out your current employer? If you have signed a non-compete about a specific industry or product, you can't take a job that would expose you to breaking this agreement, even if you can prove you are not in direct competition!
I'm not saying you can never sign a non-compete agreement, but I am saying that they can and will be enforced - so you have to give weighted thought as to what that will mean when you decide to leave this job for a new one!! (and trust me, as a sales rep - a poach offer for twice as much money is hard to ignore!). You really should gain independent legal advice before signing anything, you should look out for specifics that can be measured and stipulated and you should definitely NEVER accept anything for signing one!
We'd love to hear from you!! If you have any questions about the above, or any examples of non-compete issues you have had, please drop us a response below!
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