Faced With A Non-Compete? Some Advice

by Jayne J. Feld

Before you sign

What do you do if the company that just made you an offer wants you to sign non-compete agreements as a condition of taking the job? After all, if you're really interested in a job, what harm is there in promising that you won't work for any competitors directly upon leaving?

Be very leery of such contracts, says Sam Dobrow, CEO of Atlanta-based Thoughtforce.com, a high-tech recruiting firm. Dobrow suggests that potential employees treat non-competes as a red flag. In his opinion, something is wrong with a company that requires workers to severely limit their future employment in the industry by signing away such rights.

"The better companies today aren't asking people to sign non-competes," claims Dobrow. "Maybe they're asking them to sign non-disclosure agreements requiring them to refuse to divulge company secrets, or not to solicit employees customers. It's another thing to agree not to work in the trade or profession when you leave that company."

Negotiate, negotiate, negotiate

So what should you do if a potential employer springs a non-compete on you? Negotiate.

"Lots of employers are willing to negotiate over these things," says Scott Smith, an attorney with Ford & Harrison in Atlanta..

How successful you are at the bargaining table depends on how in-demand your skills are, comments Smith. If 18 other people are willing to take your place, chances are your refusal to sign a non-compete could cost you the job. There's often middle ground, but workers typically need the help of a lawyer to find it, Smith says.

"If you want to know what they're talking about [in the contract], you pretty much need to talk to a lawyer," says Scott Smith, of Ford & Harrison law firm. "You know the boss has one. One or more lawyers drew up the contract for the employer."

If you can't persuade the boss to drop the clause, try to limit its impact, suggests Ross Runkel, of LawMemo.com.

"If you can't bargain it out altogether, certainly limit the geographic impact so it doesn't apply whole world or state. You could bargain aboutthe amount of time, so it's only six months instead of six years," says Runkel.

In addition, the contract should be as specific as possible in terms of naming competitors and the types of jobs which would be considered off limits

Avoiding a lawsuit

If you've signed a non-compete and you plan to jump ship to a competitor, says Arnold Pedowitz, associate editor of "Covenants Not To Compete, a State by State Survey." Talk to a lawyer before you start job hunting, he stresses.

"Strategize (with a lawyer) ways of protect yourself," he says. "Too many people come to me after they've screwed up."

Strategies include figuring out what you can and cannot say when describing what you do for your current employee, he says. There also may be ways to negotiate your responsibilities with the new employer so that they don't conflict with what's off-limits according to the non-compete clause.

Sometimes you can get permission from the current company to go to work for the new company, he adds.

Make sure you leave the old job with an "extremely clean slate," Dobrow says. Don't email or leave with documents that could be considered work-related. Send the old company a resignation letter stating that you have nothing in your possession that would constitute confidential or proprietary information as it relates to the non-compete agreement.

Also, don't give up hope if you realize too late that your company is likely to sue if you break the agreement. Disclose the fact that you signed one during interviews. Some employees will pay the legal fees to get you on board.