When you are offered a new job or take on a new client, there is always paperwork to negotiate and sign. While employment contracts are fairly common, many brands also require a non-compete agreement. As you can deduce from the name, this document will prevent you from jumping ship and instantly moving to a competitor within the industry.
The terms vary vastly depending on the business, so it’s paramount to read the nitty-gritty details paramount before signing on the dotted line. Especially since NDAs can be challenged in the court of law, and thus prevent you from taking a new job, understanding all of the restrictions and consequences will save you a headache. Here, experts and lawyers explain what you should consider before signing a non-compete agreement.
Consider why it is necessary
If you are part of the investment banking world, NDAs are standard. The same is true with plenty of sales positions, too. But not all jobs should require an NDA, which is why executive career coach Elizabeth Pearson suggests exploring why your employer is asking you to sign. For it to make sense, there need to be legitimate business reasons to justify their enforcement of a non-disclosure. Simply wanting to ‘own’ you for a specified period of time isn’t enough proof. What is? These, according to Pearson:
Think about what types of information you will work with day-in and day-out in your new gig. Pearson says if you gained certain confidential knowledge that you would inevitably use in the course of working for your new employer, it’s reasonable to assume a court may find that to be a legitimate reason to uphold a non-compete agreement.
Customer interactions and relationships.
If part of your job involves calling on customers that your employer introduced you, they may have a legitimate reason for prohibiting you from going to a competitor and taking all of their customers with you, Pearson explains. This may include being employed at an agency managing clients, and then trying to take those clients with you when you leave. That’s a no-no. As Pearson puts it, relationships that develop with customers gives the employer a competitive advantage. They may naturally want to prevent you from cashing in on it, thus they are entitled to protection.
Check the time restrictions
As we have all learned recently, there’s a big difference between a week, a month, three months and a year. NDAs typically have time restrictions for how long you are limited once you leave an employer. As lawyer Glen Levine, the co-founder and senior partner for the Law Offices of Anidjar & Levine explains, it’s important to understand the time frame and location guidelines in the NDA. “When signing this document, you are minimizing your job options should you ever want to leave your position,” he continues. “The amount of time you accept the restrictions and the area in which you cannot find employment will significantly affect the restrictions of the non-compete.”
Also, keep in mind that most employees negotiate these agreements. Levine says NDAs are typically not one-size-fit-all, and it’s within your right to push back if something feels unfair or unjust for the industry.
Make sure you are given consideration
This is ‘lawyer speak’ that may not seem like much at first glance but can end up being a pain or a lifesaver, depending on what’s in your favor. As Levine explains, under contract law, ‘consideration’ is an exchange of value between two parties of an agreement. In fact, he notes that often non-competes are deemed invalid because the employee is not given consideration. In other words: you should not merely have the employee sign a non-compete after they have been hired. “There should be a provision in the contract that shows they were given a higher salary, extra days off, or other consideration in exchange for them signing the non-compete,” he adds.
Double (and triple) check you understand the disclosure
This may seem like a no-brainer, but the author and the CEO of TVGuestpert encourage professionals to read, read, and read again their NDA. All too often, this document gets lost in the shuffle of the employment process and it’s signed without thinking clearly through all boundaries and limitations. Jordan says no question is dumb when it comes to a non-disclosure, and if you are unsure about any part, it’s within your right to inquire. Any employer who doesn’t happily clear up your confusion isn’t someone you want to work with.
Enlist a lawyer
Don’t have a lawyer? Ask a friend to recommend someone who specializes in contract law to read over it for you. Usually, lawyers can provide an hourly rate and can highlight any questionable sections. While this is an investment, Pearson says it’s a worthwhile one. Much like you would seek a doctor’s insight about a suspicious health symptom, lawyers are trained to understand the law and will have the right recommendations to put you in the best case possible. While an employer will put their business first, your lawyer’s duty is to do the same for you.