"Tighten" Your Noncompete Agreement

Many companies ask all new employees to sign a noncompete agreement. To make sure you're able to work in your field once you leave the company, it's important to narrow the scope of the noncompete agreement.

In fact, tightening the scope of the agreement is to the employer's benefit, as well as the employee's. Courts in many states have refused to enforce noncompete agreements that are too broad. A focused, specific noncompete agreement can protect the employer while not causing the employee undue hardship.

To tighten up your noncompete agreement, look at the following areas: More...

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Win-Win Career Negotiations

Have you ever signed off on an employment agreement, even thought the terms weren't just what you wanted? Even executives with great skills and experience sometimes find themselves at a loss when it comes to negotiating the agreement. It can be hard to know just which aspects of an agreement are negotiable-- and the best way to approach this kind of negotiation. In a rapidly changing economy, the odds seem to be stacked increasingly in the employer's favor.

Win-Win Career Negotiations will help you redirect that balance to make job negotiations a more positive experience. This book is a comprehensive approach to the negotiation process, and will help you understand and negotiate all the essential elements of the agreement-- from how to identify an appropriate salary to limiting the terms of a noncompete agreement and using performance reviews as part of your career advancement plan. More...

© 2005 Kennedy Information, Inc., a BNA Company.

NONCOMPETE AGREEMENTS AND YOU

After five years as PerfectPage's VP of Engineering, Marcus no longer felt challenged. Confident his skills would quickly yield new opportunities, he left PerfectPage.

Four months later, Marcus has had job offers, but he doesn't have a job. The reason: PerfectPage has made it clear that they will enforce his noncompete agreement, which prevents Marcus from doing Web engineering work in New England for two years. "When I took the job at PerfectPage, everyone was being given noncompetes to sign, so I didn't really think anything of it," says Marcus. "Under the terms of the agreement, I'm stuck."

Noncompete agreements are designed to protect employers. If a former employee moves to a competitor, inevitably, there's a transfer of knowledge. To prevent this, many companies routinely ask new employees to sign statements that they won't work for a competitor for a certain period after leaving the employer.

From the employer's perspective, this is a reasonable solution to a real problem. Employers often try to make the agreement as broad as possible in terms of length of time and geographic area.

From the employee's perspective, however, the broader the noncompete agreement, the harder it is to earn a living. As Marcus saw it, the agreement he signed left him with three choices: to change his field of work; to move out of the area; or to spend two years not working. With regret, Marcus chose to move to the Atlanta area.

In fact, Marcus had a fourth choice: litigation. In some states, courts have refused to enforce noncompete agreements, for a variety of reasons. However, the law in this area is far from clear, and varies from state to state and profession to profession. For most employees, the risk of losing a suit against the employer isn't worth taking on.

What can you do to avoid ending up in Marcus' position? Start by taking the long-term view when you're offered a job. No matter how great the job is, and how well it suits you, the days when employees stayed at one company for life are long gone. Sooner or later, you're going to want to move on. If you sign a broad noncompete now, it will be hard to convince the employer to change the terms when you want to leave. The best time to get changes made is now, when you have the most leverage-between the time they make you the offer, and you accept it.

Sit down with the employer to find out exactly what they want the noncompete agreement to protect. In some industries, the core concern is that you will persuade clients to move to the new company with you. Where a company's clients are its capital-for example, in the advertising field-a loss of clients can be disastrous.

If your employer's major concern is protecting its client base, you might propose a nonsolicitation agreement instead of a noncompete. Under the terms of a nonsolicitation agreement, you agree not to solicit any of the company's current customers, clients, or near-term prospects. However, you are not prevented from working for a competitor, or even from setting up your own company. You are usually not even restricted from accepting your former employer's clients if they come to you, as long as you don't go to them looking for business. Combined with a nondisclosure agreement, which states that you will not share certain information, a nonsolicitation agreement often addresses an employer's concerns.

Sometimes, however, a nonsolicitation agreement just isn't enough, or an employer doesn't want to switch from a noncompete agreement. In that case, your best approach is to tighten up the noncompete agreement as much as possible. (See sidebar, Tips to "Tighten" Your Noncompete Agreement.)

Remember, the best time to negotiate these issues is when you are first being hired.