THE FIVE COMMANDS FOR NEGOTIATING NON-COMPETE CONTRACTS
Lauren and I spend a great deal of time helping employees get out from under those horrible and unfair non-compete contracts. The battle can be won but it is fight and it can be expensive. Infrequently, we get the opportunity to consult with a client BEFORE he or she signs a non-compete. In this short article we outline for our readers our tips for negotiating with your employer when you are asked to sign a non-compete:
1. Limit the Geography: Employers want the agreement to be as broad as possible. Try to limit the geographical area to something reasonable…something you can live with (and earn a living) if your employment ends.
2. Limit the Time Span: Just like geography, employers would like to keep you from competing with them forever. Most courts, depending on the circumstances, look at restrictions of more than 2 years as oppressive. If you work in the computer industry or information technology, then 6 months may be more reasonable as the pace of change with these industries is much greater than with retail sales.
3. Suggest Other Restrictions: Offer to sign a “non-disclosure” or “non-solicitation” contract as opposed to a non-compete agreement. A non-solicitation agreement would prevent you from going after your employer’s current customers or clients. A non-disclosure agreement would prevent you from taking price lists, client lists, and other proprietary information with you when you leave your employer. Both of these agreements afford your employer some protection without taking away all of your future job prospects.
4. Make Money for Not Working: Tell you employer that you should be paid if you agree to be “locked up” and prevented from working for an agreed period of time and within an agreed upon geographical area. If you are highly sought after for your skills and knowledge, suggest to your employer that you should receive 50% of your salary for the time of the non-compete.
5. Find an Attorney: This should probably come first. Talk to someone knowledgeable about employment law and non-compete clauses. Each state has different laws and each industry is looked up differently by the courts. Spend some money up front!