Non-compete agreements limit your ability to quit jobs and get raises.
Would you want to know before quitting your current job if your new employer was going to ask you to sign a non-compete agreement?
If your answer is, “Yes!” then add talking about them to your list of questions to ask before accepting a job offer.
What Is a Non-Compete Agreement?
According to Wikipedia, a non-compete is an agreement “under which one party…agrees not to enter into…competition against another party.”
Historically, non-competes have been used to stop former employees from using knowledge or relationships gained at a previous job to benefit a competitor or start their own business.
However, according to a recent series of New York Times stories, the use of non-competes has been “exploding,” and state laws about the agreements have been changing.
Some states have increased employee protections; others have made it easier for employers to enforce non-competes.
Who Signs Non-Compete Agreements?
A recent study estimated that 18% of working Americans (at all levels of organizations) are currently subject to non-competes.
That means roughly 1 of 5 working Americans, or about 30 million people, work under non-compete restrictions.
One-third of those people didn’t hear about a non-compete until they accepted their new job. Of course, that means many of them quit another job with no idea about an impending non-compete.
If you aren’t part of the 18% now, you might be in your next job. Hence this article and my advice to add the topic to your list of questions to ask BEFORE accepting a job offer.
Why Is Asking About Non-Compete Agreements Essential?
One would think if an employer wants you to sign a non-compete that the topic, and the document, would be part of negotiating your job offer.
Sadly, one would be wrong about this.
It happened to me.
Luckily, I was highly employable, so I had bargaining power and negotiated an agreement that worked for both parties.
However, the owners broke my trust and never got it back. When they violated the agreement a few months later, I hired an attorney to help me quit, and I was out the door to start my own business.
That info aside, wouldn’t you rather know if you’re going to be asked to sign a non-compete agreement before you quit your job than after you’ve started your new job?
How Do I Ask About Non-Compete Agreements?
You’ll want to judge when to ask about non-competes. You might:
1. Casually ask during the interview process, “Does this position involve a non-compete agreement?”
2. Ask about it while negotiating your offer, “Will you want me to sign a non-compete?”
3. Bring it up before signing your offer letter, “We haven’t talked about non-competes. Will you or anyone else at the company want me to sign one? If so, I’d like to see it before we move forward.”
Whatever you do, document who, what, where, when, and how you asked the question and the answer you got.
What Should You Do if You’re Asked to Sign a Non-Compete?
Do not google, “What should I do if I’m asked to sign a non-compete?”
If you think you would sign or negotiate it, there’s only one answer to your question, “Ask an employment attorney to review the document and explain what it means to you.”
State and local laws about what non-compete agreements can cover and how enforceable they are vary widely. For example, California places heavy restrictions on them, while Idaho recently passed employer-friendly legislation.
Note that I’m not offering legal advice here. Plus, I encourage you to ignore the advice or opinions of anyone other than your attorney.
What’s the Worst-Case Scenario on Signing a Non-Compete?
Let’s face it, companies want these agreements because they believe they benefit from them.
They can make it much harder, even impossible, for you to:
1. Find another job — because other employers will be nervous about potential litigation.
2. Quit — because you’ll be worried about potential litigation.
3. Negotiate higher compensation — because what are you going to do if you don’t get it, quit?
Do you want to be removed from your new job by court order because your former employer decides to litigate your non-compete — enforceable or not? You can see that and other non-compete horror stories at the New York Times link above.
And litigation? That means legal fees that can do enormous damage to your financial stability.
If you want to avoid the potential for severe career disruption and financial trouble, then add non-compete agreements to your list of questions to ask before accepting a job offer.
Question for Comment
Have you ever signed a non-compete? How did it work out for you?
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Updated January 2022
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Donna Svei, an executive resume writer and former C-level executive, retained search consultant, and CPA, authors all of AvidCareerist’s posts.
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I didn’t actually SIGN a non-compete, but still almost got in trouble over one. The consulting firm I was working for at the time decided to institute non-competes after I started work there. I guess they THOUGHT they got everyone to sign, but somehow they overlooked me. Eventually, I quit the firm and began freelancing. The owner of the consulting firm sent me a series of threatening emails and even called me up to curse at me and tell me how he was going to sue me into oblivion for “competing” with the firm. I talked to a lawyer who said to ignore them. He said since I hadn’t actually signed anything, the owner had no legal leg to stand on. I guess the firm probably consulted with their own lawyer who must have told them the same thing, because after another threatening email or two, they went away and I never heard anything more about it. I heard a few years later they’d gone out of business. (Karma, perhaps?)
Interesting that they wanted people to sign their rights away, I’m guessing without any additional compensation for the value the firm’s owners were receiving from the non-competes.
Lucky you that they missed you.
I’m guessing we’ll see more progressive jurisdictions providing more protective legislation, much like laws preventing employers from asking people about their current compensation, etc.
Thank you for sharing your experience.
Hi! thank you for the article!