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Asked to Sign a Non-Compete Agreement? Here are Three Options

Presently, I know three people actively looking for work after a lay off. Despite their best efforts, securing suitable employment has been a real challenge. And unfortunately, this situation is all too common.

I recently read that it takes on average seven months to find a job if unemployed; and after a year of unemployment, the chances of finding a job “falls to just 1 in 10 per month.”

If you’re actively seeking work, an employer may eventually offer you a position. But there’s always the chance that you’ll have to deal with less than favorable terms. To illustrate, as an account executive for a media company, my husband is required to sign a non-compete agreement. These are basic agreements that protect a company’s trade secrets and other confidential information; and by signing the document, my husband promises not to work for a competitor for a specified length of time if he’s fired or leaves the company, nor can he start his own company in a related field.

I've been a self-employed freelance writer for nine years; therefore, I’m not aware of everything that goes on behind corporation doors. However, after some digging I discovered that non-compete agreements are commonplace in the workplace.

The idea of signing a non-compete agreement might leave a sour taste in your mouth. On one hand, you need a job; but on the other hand, signing the document can greatly impact your future job prospects. You may accept a job, sign the agreement, and then realize a few months later that you dislike the people or the company culture. However, getting a job with a competitor is out of the question, which means you might have to start over in a new field.

Of course, if you don't have any other job offers on the table, you might reason that a job with a non-compete agreement is far better than unemployment — just make sure you know what you’re getting into.

The truth is, there are options available to you. Refusing to sign a non-compete agreement will compel the employer to select another applicant — and you don’t want this. However, if you put on your negotiating hat and ask the employer to include additional terms within the agreement, you’ll have better protection after a job loss.

1. Request That the Agreement Excludes Termination

If your job skills are specific to a particular industry, the fact that you might be unable to seek employment with your employer’s competitor after a job loss can significantly affect your income. Therefore, if you must sign a non-compete agreement, the agreement should only be enforceable if you voluntarily leave the company. Ask the employer to include a clause that voids the non-compete agreement if you're laid-off or fired.

2. Reduce Time Parameters of the Agreement

The length of a non-compete agreement varies by employer, and the contract is typically enforceable starting from the last day of your employment. Read the document carefully, and if you feel that the length is excessive, ask the employer to reduce the time parameters. For example, if the employer asks that you sign a two-year non-compete agreement, see if you can get the time period reduced to one year or 18 months.

3. Ask the Employer to Be Specific

To further protect yourself, don’t sign a broad non-compete agreement. If the agreement isn’t specific, it might apply to a large geographic area, or prohibit many types of work. Therefore, ask the employer to be as specific as possible. For example, can you work for a competitor if you’re performing a different task? Also, the agreement should only apply to the employer’s immediate competition — perhaps companies within the same city or a certain radius. If you move outside the region, the contract should not prohibit working for companies that offer similar services.

Bottom Line

A non-compete agreement protects the employer, but this doesn’t mean that you have to agree with unfavorable terms. Although negotiations are risky, the employer may understand your concerns and make needed adjustments. If the employer won’t negotiate, consider the pros and cons of signing the agreement, and then do what you feel is best.

Image Credit [Flickr]

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