Think noncompetition agreements are just for top executives? Think again. Though non-competes are often found in high-skill, high-paying jobs, they are now standard practice across industries. From coffee shops to technology recruitment, companies are finding it more critical to protect their market share and intellectual property. According to a survey in 2014, 1 in 5 employees were bound by non-competes, and nearly 40% had signed at least one non-compete in the past. The world is only moving faster so you can imagine that number now is likely much higher. Fortunately, as an employee, you have rights, too. Keep reading to find out what you need to know before signing a non-compete agreement.
The difference between a noncompetition and a nondisclosure agreement.
These two agreements have very different intentions. The differences are substantial and can make or break your career. A non-competition means you agree not to directly compete with your former employer for a reasonable length of time and within reasonable geographic limits. A nondisclosure means you agree not to disclose things the company may consider to be proprietary or confidential, such as information about new products, technology, plans, models, sketches, etc. It doesn’t mean you can’t work for a competitor; it simply means you can’t use proprietary information you learned or obtained from the former employer with a new employer.
Read before you sign.
A good employer will discuss a noncompetition agreement in final stages of an interview process. If they don’t, it is a reasonable question to ask before you agree to a position. Caught up in the excitement of the new opportunity, you might feel tempted to sign and accept right away. But not all agreements are created the same. Ask for a copy of the agreement to review while you think about the offer and your starting date. Then, go home, read, and read again. It isn’t likely that you will stay at this job until retirement, so it’s important to know what you’re agreeing to do – and not to do – after you leave.
Do I need a lawyer?
To sign the document? While seeking legal advice is always the right answer, many people will sign without legal advice. Particularly if the language of the document is easy to understand and you feel is reasonable for your position, then you may feel comfortable signing on your own. Many people do not know that non-competes are negotiable, so if you feel something is too broad or too constricting, then maybe discuss these issues with an attorney and see if your future employer is able to revise or compensate you in other areas. If they won’t budge, then that might be a red flag. Also, research the laws in your state. For instance, some states do not even uphold non-competes, while other states tend to side with companies. In Florida, as a general rule non-competes that are reasonable in distance, scope and time are enforceable.
Down the road, if you have been let go from your job and feel you are in a position to be released from your non-compete, then speak with your employer. Since you’re not choosing to leave on your own, an employer might be more willing to give you the freedom to leave without restricting your ability to find another job. But the employer could still hold to the agreement’s terms. In that case, you may need to seek legal counsel.
The bottom line.
A noncompete is a binding contract that can lead to litigation against you. Since this is your livelihood, it is important to take this agreement very seriously before and after agreeing to it. In the future, review the contract you signed to know what you can and cannot do with competitors, clients, and whether or not you can recruit former co-workers. This due-diligence will save you a lot of time, legal fees, embarrassment, and perhaps your career.