Should I Sign the Non-Compete?

By Joe Stein

One item that may damper the excitement of receiving a job offer is the presence of a non-compete agreement. A Non-Complete agreement is a signed document that states you will not work for certain companies for a set period of time within a set geographic area (+ potentially other restrictions).
The first reaction of many Job Seekers is the same…is this legal? This is where I will stop and reiterate the legal disclaimer on the bottom of each column.   A non-compete agreement is a legal document that should be reviewed with a lawyer before signing. Please do not rely on this article for your actual legal advice. Now back to the subject matter, the answer is that it usually can be enforced (there are a couple of states that do not allow them, but New York is not one of them). The key for an employer to be able to enforce the agreement is whether it was reasonable in its scope. In general, to be valid, the agreement can’t be overly broad. For example, preventing you from working for any employer, in any geographic region for a long period of time.
Now that you know a bit about non-compete agreements, the question is whether you should sign the document if it is presented. Of course, the decision rests solely on you (with the advice of a lawyer), but there are some questions you may want to consider prior to grabbing a pen.
·         Is It Standard for My Role? – For some positions, a non-compete is pretty standard when hired. In the sales field, this type of document is expected. Generally it will prevent you from working in a similar role in the same industry within a certain geographic area for a set period of time. The concern being that a salesperson will take their contacts gained while working at one company and carry them over to the next. A non-compete is also common for those in senior leadership roles or those who will hold company trade secrets (in addition to a confidentiality agreement). For those outside of these examples, a non-compete tends to be much less common, but is growing in popularity.
·         Does It Feel Reasonable? – A key to a non-compete for an employee is to feel the requirements are reasonable and that you are not being taking advantage of by your prospective employer.    For example, if the non-compete is for a year or less and a geographic area of 100 miles (or fewer), then you may feel the document is not overly broad.
·         Can You Work Outside the Agreement? – For those who have a limited skill set or who are tied to this geographic area, signing a non-compete may be very stressful. To a person who is not tied to this area nor one particular industry or type of job, signing a non-compete is not as big of a deal. Prior to signing, have this type of long-term review and discuss with your family.
·         What Are You Receiving In Exchange for Your Signature? – In exchange for a non-compete to be enforceable; a person generally must receive something of comparable value in exchange. For someone external to the organization, this would be the offer of employment. So the question would be…how good is this job being offered? Is this the job that meets all of your requirements and stands out amongst the opportunities that would not require you to sign a non-compete? For an internal employee, you need to receive something such as a pay increase or a promotion (with an increase) in exchange for your signature. This is one area that employers will sometimes forget…something must be offered to an internal for the non-compete.
·         Will They Choose to Enforce It? – This question comes with some obvious risk, as you will never know for sure until the time comes, but does the employer tend to enforce? This may be more easily known if you are internal to the organization, but you may be able to find out online from others’ past experiences.
·         Is It a Sign of the Type of Employer? – If you are faced with a non-compete outside of the type of positions noted above, the document may be a sign of a much larger message. This message could be a variety of things, such as they have a turnover issue, or they lack trust in their employees. Something, however, may be out there that is driving the decision to go to a non-compete. Is the document trying to tell you something, such as avoid this employer?
·         Are the Terms Negotiable? – Usually the language is fairly standard, since it has been approved by an employment lawyer representing the employer. You may want to try to leverage the agreement for something else, such as more money using a competing suitor who does not require one as leverage. You may also try to negotiate terms such as having the document void if you are involuntarily terminated, such as in a reduction in force. This would prevent you from losing your job, but still being under the requirements of the agreement.
The presence of non-competes appear to be on the rise and are gaining in popularity for positions beyond sales, management, and technology. Before you immediately sign such an agreement in the excitement of the new job offer, review carefully the terms and whether you can live with them in your career. Solicit advice from an attorney who is an expert in these agreements, since most likely the employer had a lawyer draft it.
As always, best of luck in your job search!