Nov 7, 2017

Non-Compete? No. Compete.

By Dan Dalzotto •

If you’ve signed a hiring contract at some point during your career, you have almost certainly come across non-compete clauses. It’s the part of a contract that says new hires can’t immediately go to work for a competitor after leaving the company or completing the project they were brought on to do.

It makes sense why employers would want to put some distance between the end of an employee’s contract and the beginning of their contract with another company that does or sells something similar. Companies don’t want competitors gaining access to sensitive information about their business operations, which may have been shared with employees or freelancers while working there: things like the identities of clients and prospective clients, business and marketing strategies being pursued, and new products being developed. Non-compete clauses are meant to prevent former employees from damaging a company’s business interests by letting this kind of information get out.

Squash employer over-reach

Unfortunately, companies routinely try to restrict former employees’ right to compete to an excessive degree that goes well beyond protecting their own business prospects. Such over-reaching may look like trying to limit where someone can work too broadly (in terms of things like geography or industry), or for unreasonably long periods of time. When non-compete requirements become this much of a burden, it isn’t just unfair—it’s actually illegal. Judges often invalidate these terms when they are challenged in court, but they usually never make it that far. Most people have no idea non-competes can be illegal so they take them at face value.

Fight for your right (to compete)

When people believe they aren’t allowed to compete they end up following absurd requirements that put them at a huge disadvantage compared to their peers. If you can’t get work in the same industry as your recent gigs, the pool of available projects shrinks and you have to work twice as hard to find new clients. This only worsens over time as someone’s résumé becomes more skill and industry-specific—turning expertise, which should be a good thing, into a liability.

The purpose of non-compete clauses is to protect a company’s legitimate business interests—not to control the future of your career! Workers shouldn’t miss out on the most exciting projects and highest pay available in their industry because of unfair and illegal non-compete requirements. Use this “competition checklist” to protect your right to compete:

Read also: Getting the facts on unenforced terms

Time is of the essence

How long is competition restricted for? The period of time should be named, and be reasonable. While there is no “absolute” definition for what is reasonable, you can probably sense based on the nature of your job or role in a project whether, say, six months or two years seems more reasonable. And a lifetime non-compete is almost always bunk.

Oh the places you’ll go

Where is competition restricted? Competition should be restricted within a geographical area that is stated explicitly and is relevant to the market your employer is active in (where are they located, where are their customers, etc?). You shouldn’t be restricted from working anywhere in the country if your employer only operates in the southeastern United States.

States of exception

Do you know how your state enforces non-compete clauses? They aren’t all the same. About one-third of states limit non-competes in some way in order to better protect workers (in California they barely even exist, outside of a few specific situations like sale of an entire business). So do your research—you may have way more latitude depending on your…latitude.

Written by Dan Dalzotto
Co-Founder & Chief Product Officer

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