Understanding Non-Compete At Work

When you get your first job, you’ll be signing a lot of documents upon being hired. You’ll be paying the most attention to your direct deposit form and your 401k form since these deal with your salary. One form that might not raise questions but needs understanding is the non-compete form. More and more employers are having their employees sign a non-compete and it is in your best interest to fully understand what you are signing.

co-signing

What Is A Non-Compete?

Though they vary from state to state and from employer to employer, in general, a non-compete gives the employer the right to come after you legally if you leave and take a job with a direct competitor.

If you are in sales and have clients, the non-compete typically extends to your clients as well. In other words, you cannot solicit your clients from your old employer to your new employer.

Lastly, non-competes can even extend into any software or programs you develop while at the company. Whatever you develop is the property of your employer, not you.

While this might sound a little scary, the information below will show you that for the most part, you need not worry about a non-compete, you just need to understand how it applies to you.

Should You Sign A Non-Compete?

You cannot be forced to sign a non-compete. While not signing may risk you getting the job, this tends to not be the case. You have a variety of options. First, simply deflect. Tell them that you want your lawyer to look over it. In most cases, it will be forgotten about.
If the employer still hassles you over it, then actually take it to a lawyer and edit it:

  • Most non-competes contain language that you cannot be employed by a direct competitor. What exactly is this? Have your lawyer draft up specifics. Name companies in the non-compete.
  • Most non-competes are for 1 or 2 years. Edit the time down to 6 months to one year.

As you can see, the more specific you can get, the better off you will be.

In most cases, this will be acceptable. At the worst, you can have your lawyer draft up an entirely new non-compete and force your employer to review and edit it, only to have it go back-and-forth. Neither party really wants this.

Why Is A Non-Compete Such A Big Deal?

Some might be reading this post and think that a non-compete isn’t such a big deal. But here is a fairly common example: You are hired by a firm and sign a non-compete. While in the position you work with an outside consultant. They are impressed by your work and offer you a better job, at a much higher salary. Unfortunately, you cannot take the position because you signed the non-compete. If the non-compete states that you have to wait one year after leaving the industry, then you would have to quit your job and take a job in a completely unrelated field for a year, and then reach out to the consultant to see if they still want to hire you.

In layman’s terms, signing a non-compete limits your ability from taking another job. You are being forced to stay at your firm, possibly doing a job you don’t love and earning a lower salary than you otherwise could be earning.

One Other Option Around A Non-Compete

There is one other way to get around a non-compete and it all depends on the employer. When I took my first job out of college, I signed a non-compete without understanding it. When I left there, I went to a non-direct competitor. But, many of my friends did go to a direct competitor. They told me that the employer never enforced the non-compete.

Many other employers fall into this category as well. They have you sign the non-compete, but they don’t enforce it. While it will be hard (if not impossible) to find out if the non-compete will be enforced when just starting out, you can find this information out as you go along. This is helpful to anyone that has already signed the non-compete and wants to move to another firm.

Final Thoughts

Overall, a non-compete hurts your future job prospects. It doesn’t seem like it at the time of signing it, but it definitely limits you. Do whatever you legally can to avoid signing the non-compete. You never know when a better job might come your way. You don’t want to miss it by signing a piece of paper.

One Response to Understanding Non-Compete At Work

  1. Michelle says:

    I signed a non-compete when I had my day job and didn’t even really know anything about it. I just signed my life away but thankfully I didn’t end up pursuing a career in the same field.

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