During contract negotiations, your soon-to-be employer may bring up the idea of a non-compete clause (also known as a do not compete clause or a covenant not to compete). According to CNN, around 37% of workers in the US have signed a non-compete clause (NCC) at some point in their careers, and around 18% are restricted by NCCs at any given time. This is a popular practice in the IT field, so it is important to understand what you are signing before you agree to an NCC.
What Are Non-Compete Clauses?
Non-compete clauses are additions to standard contracts preventing an employee from working for a competitor after termination or resignation. The idea behind NCCs is that an employee might take innovations, trade secrets, or other sensitive information to a competing company and use them to gain an advantage over their previous employer. The financial ramifications of an employee taking their knowledge to a competitor are very real, so employers often feel the need to protect themselves and their company with these legal agreements.
The biggest problem with non-compete clauses is that they limit an employee’s options when they leave their employer. Depending on the language used in the clause, NCCs can limit your ability to work with specific competitors or in your chosen field—or your ability to work at all—for years at a time.
How Can They Affect My Career?
Non-compete clauses can block you from pursuing career goals and working with companies in your field. However, there are usually ways that you can continue to pursue your goals while staying within the bounds of your NCC. Before looking for work with another company, speak with a lawyer to determine what work you can and cannot pursue.
Are They Enforceable?
The legality and enforceability of any non-compete clause will depend on where you live. Typically, judges only enforce an NCC as far as is necessary to protect the employer. This means that overly broad NCCs that prevent employees from working at all are usually overturned, but judges may enforce more specific NCCs with direct competitor involvement. Your lawyer can give a better idea about how you may fare should your employer attempt to enforce your NCC.
There is also a question as to whether your employer will choose to pursue your NCC. The legal fees and time cost associated with enforcing NCCs may not be worth it for your employer to spend, especially if you were not given access to any sensitive information during your tenure.
What to Do with a Non-Compete Clause
There are several options for how to handle a non-compete clause, but they will depend on you, your employer, and your lawyer. The easiest thing to do is to sign the agreement; however, this may put you in a vulnerable position when you do leave your job. You could attempt to negotiate the contents and duration of the NCC, which may lead to better terms—but might also be fruitless if the company uses very standardized contracts. You could decline to sign the agreement, but this could lead to you losing your contract.
The very best thing you can do is seek a lawyer’s advice before you sign. A lawyer will be able to inform you of the risks involved with the NCC, how your state typically enforces or does not enforce NCCs, and whether the agreement could delay your career goals.