Should You Sign the Non-Compete Agreement? | Articles & Tips | | Rochester




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 Should You Sign the Non-Compete Agreement?

By Joe Stein

During the process of joining a new employer, you may be asked to sign a variety of documents. An on-boarding employee is used to signing tax forms and other paperwork of this type. It is also pretty routine to sign a confidentiality agreement that prohibits you from sharing sensitive information specific to your new employer.
There is a document, however, you may be asked to sign that may not have been on your mind. This form is a non-compete agreement which, when agreed upon, prohibits a person from working with a competing company within a specific geographic location for a defined period of time.
Before we go any further, I must reinforce the “disclaimer” at the end of this column stating that this is not legal advice and I am not an employment lawyer. If you have any questions regarding a non-compete agreement (or any employment related document) presented to you, then I encourage you to seek the guidance of legal counsel.
Non-compete agreements have been controversial since their creation. Many feel that they are unfairly slanted against the employee, and actually hurt the marketplace and economy by constricting the free movement of labor talent. Some states, such as California, generally do not allow these agreements to be enforceable. Those in favor of these agreements feel that they are necessary to protect a company from losing their significant investment in training and developing its employees (in particular, when that knowledge goes to a competitor).
You may wonder how many employees are currently working under a non-compete agreement. It will probably surprise you that an estimated 30 million U.S. workers (approximately 18% of the U.S. workforce) currently have a non-compete agreement in place. These are not just highly paid executives with these agreements, as 14% of employees earning less than $40,000 a year have a non-compete in place.
So what are the factors for you (and your lawyer) to consider when deciding whether to sign the agreement? Let’s consider some of the main questions you should ask yourself.
·        Do You Have Other Options? - If you are in your job search and you have multiple companies seeking to hire you, but not all want a non-compete signed, then that should be a factor in deciding who to join. You may want to ask, prior to accepting the offer, whether you will be asked to sign an agreement such as this one. This is because some employers wait until after you have given notice and are ready to start the job to present you with a non-compete.
·        Will It Impact Your Ability to Find Another Job? – If you are someone who relies on your specific industry knowledge, then a non-compete will significantly impact you in your current geographic market. If, however, you are geographically mobile, then the restrictions of the non-compete is less likely to be impactful. For those who work in areas of the business such as Human Resources, Information Technology, Finance, etc. then you are probably not bound by industry and a non-compete will restrict you very little if signed. You may want to sign it knowing that it will not come into play if you decide to resign, since you will not be staying in the industry.
·        Are the Terms Fair? - This is certainly for you to discuss with an employment lawyer, however, the longer the time period of enforcement and the wider the geographic range, the more restrictive the terms are to you. I have typically seen the terms being one-year after your departure and a 50-100 mile range where you are not allowed to seek employment with a competitor.
·        How Do You Feel About the Company? – As noted earlier, the point of view regarding non-compete agreements vary greatly. If you are someone who feels these agreements are unfair, you may believe that this is a negative indication of the employer in general. If, however, the company has treated you well during the process and the terms appear fair, then you may not have any concerns about signing.
·        Do You Have Enough Time? – In my opinion, this document is not one to rush into signing. If you need a little time to consider, then ask for a day or two to review. This will give you time to have someone else review it and then decide if signing is right for you.
·        Are You Getting Answers to Your Follow-Up Questions? - You may want to consider whether to ask for additional compensation (or something else) in exchange for you giving up this employment flexibility. One final question you may want to consider is what companies would currently (knowing that they may change as the market changes) be considered as a competitor?
A non-compete agreement is one of the most important, yet miss-understood, documents involved in the employment process. In New York State, these agreements are generally enforceable, so it is important that you fully understand and are comfortable with the terms of the arrangement. I suggest you seek the guidance of an employment attorney before entering into any such agreement with your new employer.
As always, best of luck in your job search.