Exploding Job Offer #3: Get it in writing

On January 10, 2022
Exploding Job Offer #3: Get it in writing

Question

Bait & Switch Corp. (not the real name) offered me a job and lied about what the work would be. When I tried to discuss this, my new boss told me they fudge job descriptions because they can’t get the kinds of skills they need. “We’ll still pay you what we promised.” He thinks his exploding job offer was pretty clever. I quit.

Aren’t we supposed to be in a very tight “worker’s market” that makes it hard for employers to fill jobs? So why do they lie?

Take a look at this article: Employee Finds Out The Job They Accepted Wasn’t Work-From-Home As Promised, Quits In Style. The worker in this story was conned much like I was. Is this a thing now?

Nick’s Reply

exploding job offerUnsavory employers are nothing new; nor is the exploding job offer. (Today’s column covers a third example.) But the company in that article and the company you quickly quit reveal a new motivation for bad behavior: they are desperate. When desperate people try to be clever they usually wind up worse for it.

Exploding job offer #3: Bait and switch

I expect we’ll see more bait and switch because most employers really stink at hiring. These are companies that go dumpster diving in the “job boards” for job candidates then have no qualms about treating them like trash. But what does that say about job seekers that are found in those dumpsters, waiting for just any employer to pluck them out?

The truth is, job seekers often lose control the moment a job offer is dangled in front of them. Most become so giddy that they’ll accept it without reservation. And that leads to what I believe is the main reason people go job hunting: They took the wrong job to begin with because they failed to negotiate the terms.

The only way to minimize the chance of such a catastrophe is to get it all in writing.

You have a choice: Get it in writing

Employers are loath to put everything they represented about a job in writing. They don’t want to be obligated to anything except perhaps paying you, although I’ve seen the “salary bait and switch,” too. I know people who were thrilled to get a job, only to learn when onboarding was over that they were assigned a lower-level job and a lower salary.

Anyone that reads this website knows employers try to get away with what they can. While laws to protect employees are creeping up on companies, short of a costly lawsuit the job seeker has little recourse today. (See attorney Larry Barty’s advice in Job offer rescinded after I quit my old job.)

The inscrutable economy we live in makes it difficult for even honest employers to fill jobs. Many are throwing away the playbook and taking extreme measures to find and hire the workers they need. The honest ones are offering higher pay, better working conditions, work from home, bonuses and other enticements. The dishonest ones are just plain lying.

The job seeker’s playbook used to say, “Employers don’t provide detailed employment contracts because they don’t have to, so don’t bother to ask for one. You have no choice.”

The new playbook: Get it in writing

Today, employers are indeed desperate to fill jobs, so it’s an excellent time to make prudent changes to the playbook. A good place to start: Request a detailed employment agreement, no matter what level the job is, rather than just an offer letter. Insist that the terms as you understand them — and I don’t mean just salary! — are spelled out in writing. Did the interviewers discuss job definition, work schedule and location, who your boss is? Get it all in writing. A contract is best; a signed, detailed offer letter is the bare minimum; a purely oral or informal job offer is off the table.

A verbal job offer is wonderful because it tells you where you stand while the company prepares the formal written offer or contract. But a verbal offer is like a wet noodle: It doesn’t stand up very well.

Get everything you’ve been promised in writing. Don’t accept a job offer — even verbally — until you have all the details that matter in writing. A good employer will comply. An employer that really needs you will make the commitment.

Will a good written agreement absolutely protect you? Not if the employer is completely dishonest. Lawsuits involving even top executives who have solid contracts are not uncommon. But you’re better off having it in writing, if only because your insistence on creating that document shows the employer you’re not naïve about the employment market.

Avoid the exploding job offer

What terms should be spelled out? I’d love to hear from our community what you’d add to this list (which is far from exhaustive).

  • The exact pay for each pay period
  • The job title
  • Definition of the work and objectives and deliverables expected from you
  • How you will be measured
  • Your work schedule, location and environment (this may include tools you’ll need, whether software or a hammer)
  • Whom you will report to directly
  • If a commission or bonus is involved, how much, when it will be earned and when paid, a clear and objective definition of criteria to earn it, and a clear definition of metrics to be used
  • What your vacation time and sick leave will be and how they are calculated
  • Term of employment, if it is for a set length of time
  • Terms of separation, whether you are terminated or resign, including severance
  • A clear definition of “separation for cause”

Recruiters, HR managers and career coaches will tell you, “The employer will never go for that!”

But, why would you “go” for a job offer without all of that?

You already did. Other readers please take note: The OP’s experience hurt.

Leverage today’s job market

In many corners of today’s economy it’s definitely a job seeker’s market. (That’s just one reason I think this article by Bernie Dietz was prescient: Employment Contracts: Everyone needs promise protection.) So use that. You get to set some of the rules. You get to negotiate terms that are good for you — not just for the employer — because employers may need you more than ever. Be reasonable, but be firm. Get some, give some. But know in advance which terms are non-negotiable and be ready to walk away if the employer will not meet them.

If all this sounds like pie-in-the-sky, and you believe no employer will agree to what I’m suggesting, I think that means you have no leverage in negotiations because the employer doesn’t need you enough — or that the employer is lying to you. Why apply for jobs like that? (“Because I found them on Indeed” is not a good answer.)

The actual terms you negotiate are clearly important and will vary. But the terms you get mean nothing unless you get them in writing.

Do you get your job offers in writing? Have you started a job only to find out it’s not the job you accepted? What terms do you negotiate? What terms do you consider deal breakers?

: :

Back to Top

Does severance pay make sense?

On May 3, 2021
Does severance pay make sense?

Question

I’m curious about how companies determine severance pay packages. I assume there are state laws that dictate minimum severance amounts, or it seems there would be no severance packages at all. But some companies give more than that. One recently gave its laid-off employees six months of severance, which is very generous in these times. But why? While that’s good news for the employees, why would a company or its shareholders want to give more than it has to?

I’m also curious why upper management receives more severance. I understand that CEOs and their echelon often have prearranged golden parachutes. But managers without such agreements or contracts sometimes get more severance (in terms of weeks of pay) than others. Again, I don’t understand the benefit to the company. What’s the deal?

Nick’s Reply

I hope some of the HR members of our community will chime in here. I’m sure they’ve got some good insights on this (and even better stories.) You’re asking a lot of questions, but not for advice. I’ll try to illuminate what I can, and I’ll offer some advice at the end anyway!

Why severance pay?

I don’t believe there are any states in the U.S. that require severance pay to be paid to a departing employee. For the most part severance is a company’s prerogative and an employee’s privilege — it’s not a right.

severance payHowever, severance always serves the employer — it’s not a gift. It’s always a form of handcuffs because the agreement you sign will tie your hands in some ways.

One of the main reasons companies offer severance is to avoid future legal problems. A company will offer severance in exchange for you signing an NDA or a non-disparagement agreement, or a release from any further liability to you. Call it a bribe, but it often works. Sometimes the severance offer is very aggressive: “We’re willing to drop big bucks on you, but you have to agree so some pretty unsavory terms.” The more they offer, the harder it is to say no.

While extravagant severance deals sometimes border on criminal, they’re usually negotiated at the time of hire. The employer makes the deal with eyes open. So what might seem irrational is a pragmatic way for a company to convince a desirable job candidate to accept an offer.

Severance pay is practical

It’s also a practical thing to do. When used properly and for the right reasons, severance is a company’s way of parting on good terms, especially when it’s the company that terminates the relationship. (Companies rarely pay severance when you decide to leave.) It’s the complement to an employee giving two weeks’ notice before quitting.

Negotiating a job offer? Don’t miss:
Employment Contracts: Everyone needs promise protection
While we all know parting company can be a fraught – even nasty – experience, it should be civilized, and we should try to respect one another’s needs when we can. We don’t want to leave each other in the lurch. Of course, that’s the best case.

Often, severance is paid to ensure a smooth transition. The departing employee getting a nice package is more apt to leave their workflow in good condition for their replacement — and perhaps to take a call or two with questions even after they’re gone.

Severance is often based on how badly the company needs the employee’s services between now and the termination or layoff date. For example, a company might need a manager to stick around until the last employee is laid off and until the last project is wrapped up. In exchange for having less time to look for a new job, the manager accepts more severance.

It’s also good public relations

Why do some companies pay more severance than others? They’re smart. When a worker leaves a company with a nice package, he or she is more inclined to speak favorably of it to other workers, probably for years to come. That’s a competitive edge. Good public relations are no accident, and they don’t require government incentives. A company that wants a good reputation works hard at burnishing its image as a responsible employer. Severance is part of that strategy.

Managers often get better packages than staff for a few reasons. To start, their compensation is higher and severance formulas are usually rational (if not outlandish). They’re based on compensation and time served at the company. Higher compensation usually means more severance.

Managers also belong to a club of sorts, and they tend to take care of each other because they never know when they’ll run into one another again. Today’s department manager might one day hire his or her old boss, and what goes around comes around. So it’s not just public relations. It’s also professional relations.

Some advice

And this brings us around to my advice. There’s a lesson you should take from all this: Not everyone gets a chance to negotiate a severance deal. But everyone should try. You might ask yourself, what will this company need from me when I depart, and what will they not want me to do? (For example, share something I learned at the job.) What’s that worth?

Don’t assume only executives or managers get severance pay. When you negotiate your next job offer, ask about severance. If you believe your job is important to the employer, you might even negotiate aggressively. Make it part of your written offer. Then you might not be so irritated about the severance deals others get!

To give you a head start on dealing with severance deals, I’ve included a special News I want you to use item this week. Don’t miss Hack that severance agreement! You’ll learn not just what you might ask for, but what to avoid agreeing to.

Do you have a good severance agreement with your employer? Are you in management? How did you negotiate your severance deal? Do you bring severance up when negotiating a job offer?

: :

Back to Top

Can employer clawback my $6,000 bonus?

On February 15, 2021
Can employer clawback my $6,000 bonus?

Question

clawbackThe company I worked for paid me quarterly bonuses for performance but the bonuses are based on the final performance of the entire team for the whole year. The final calculation determines whether you get even more bonus or give some back. The calculation was done after I left. I thought that I would be due more bonus but they claim I owe a refund. The bonus is $6,000; not a lot for them, but for me it is. HR sent a letter asking for it. I reviewed the policy. There is no clawback clause and nothing was signed. I don’t know of any other case where they took back bonus money from an employee who left. What do you think?

Nick’s Reply

I’m not a lawyer and cannot give you legal advice, so I advise that you talk with an attorney. It will likely be worth the few hundred bucks it will cost. All I will offer are some observations and opinions.

Avoid clawbacks to begin with

I don’t like any kind of compensation or bonus plan with clawback provisions. A clawback is when an employer pays you money, then wants some or all of it back. Use of the word “claw” says it all.

Clawbacks are contractual provisions. That means you agreed to it, usually in writing. Unless it’s an executive position, I advise people never to sign or agree to such deals. A clawback is usually a penalty, and that’s no way to establish a good working relationship. Because most people don’t have employment contracts to begin with, and your company already paid you the money, I think they are at the disadvantage — but it depends on the details.

What was the clawback agreement?

I also think there is an important distinction between the company re-balancing the bonus at the end of each year as you described, and paying a bonus and attempting to claw it back after an employee is long gone. The time to establish such a claim is in the exit meeting. (I discuss that further below.)

Review what you and the company agreed to upon hire and upon separation from employment.

  • Did you sign anything agreeing to this as part of your compensation and bonus plan?
  • Did the company notify you there would be a clawback on your departure?
  • Upon your departure did you sign any exit documents at all that might apply to this? Go back and read them carefully.
  • Now that you’re gone, how are they going to come after you if you don’t pay the bonus back?
  • Would they take legal action to collect $6,000? How much would that cost them?
  • What happens if you just ignore the demand and let them go suck rocks?

If you agreed to this in advance, I’m not suggesting that you stiff them just because you might get away with it. But it seems when you departed you honestly believed the slate was clean and your account zeroed out, because no one told you otherwise.

Parting terms

To avoid this and other problems when exiting a company, see Parting Company | How to leave your job. This PDF book includes a bonus mp3.
As I said earlier, the time for an employer to establish a clawback claim is in the exit meeting. I think the reasonable expectation is that all liabilities (on both sides) are settled upon your exit. A good HR department will make the terms of your parting clear, usually in writing, and ask you to confirm your understanding with your signature.

HR will reconcile all accounts just before an employee leaves, not after the fact. For example, they’ll take back the computer, keys, credit cards and other assets they issued to you. And they’ll give you a statement about what they owe you (e.g., an outstanding paycheck or expense reimbursement) and what you owe them.

What claim does the company have on that bonus now that you’re gone? That’s what a lawyer will help you determine based on the facts of your unique situation.

These are my observations and opinions based on what I’ve seen over many years. What you do is up to you, of course. A good lawyer can explain your legal options once you share all the details.

Have you ever lost money to a clawback provision? What happened? Does your employment include a clawback? What’s it for? What could an employer give you that would be worth you signing a clawback agreement? Are clawbacks even fair, or a smart tool for anybody?

: :

Back to Top

Guest Voices: The bogus-ness of employment at-will

On May 11, 2020
Guest Voices: The bogus-ness of employment at-will

SPECIAL EDITION

In the May 12, 2020 Ask The Headhunter Newsletter we launch the new Guest Voices section and get a lawyer’s view of employment at-will.

Top executives don’t often accept jobs without employment contracts in the United States. These contracts define the terms of employment including job title, compensation, what happens upon termination, and much more. It’s why you read about executives departing companies with tasty severance deals and money in their pockets without complaint. They work out these deals when they get hired and lock them in place legally.

guest voicesWorking without a net

Everyone else gets a job offer letter. This means you. Why are executives protected, while you accept a job offer to work without a safety net?

In some cases, you might not even get a written job offer. It’s purely verbal. Many job offer letters even negate their own terms with a big gotcha: They state that the terms may be changed at any time by the employer, and that the employee policy manual supersedes any other representations. (Ever accept a job to do one thing, only to find yourself assigned to a different job you never agreed to? That’s what I’m talking about.)

This is why employment in the U.S. — for most workers in most states — is referred to as “employment at-will.” That means you can quit a job at any time, and it also means your employer can terminate you at any time, for any reason or no reason, and you have no recourse.

Only in America

According to HR Daily Advisor:

The world’s employment law regimes really divide into two parts: there’s employment at-will — which is only the U.S. — and then there’s everybody else.

In Europe, for example, employment contracts (or agreements) are routine and run several pages long. Employers cannot terminate employees at will or without reason and severance pay is defined.

The reason employment contracts are used is simple: Good contracts make for good business relationships and ensure everyone plays by a negotiated set of rules from the outset.

The bogus-ness of employment at-will

I’ve seen it again and again. A company hires someone and rescinds the offer before they start the job, but after the new hire has cancelled their apartment lease and incurred the costs to move to a new city.

Or a long-time employee is terminated without explanation and immediately ushered out the door, right after the mystified employee received top scores in their performance review.

Or a worker is suddenly reassigned to a different job with lower pay and told it’s that way or the highway, and their only other choice is to quit — also known as bait and switch.

I’m sure you have your own examples.

Working without a written contract is bogus. And it’s entirely legal because the corporate lobby is more powerful than any bunch of employees. So at-will employment is the law. And that needs to change if the U.S. is to be a competitive power-house nation once again and have full employment. I’m going to let a leading employment lawyer explain it to you in just a moment.

Guest Voices: New feature!

This edition of Ask The Headhunter marks the launch of a new feature: Guest Voices. The purpose of Guest Voices is to share with you the thoughts, experiences and advice of smart people who will make you slap your head and exclaim, “Wish I’d known that!”

In the inaugural edition of Guest Voices, I’m thrilled to introduce you to Mark Carey, a partner at Carey & Associates, P.C., a Connecticut-based law firm specializing in employment law. Mark has strong opinions about the importance of employment contracts — and strong objections to employment at-will.

I’ll let him explain it in his new article, Employment At-Will vs. The LeBron James Rule. You can’t afford to miss what this leading employment lawyer has to say about your next job offer!

Add your voice!

Our job is to pile on in the comments section of Mark’s article and to share stories and opinions — pro or con — on employment at-will and on employment contracts. This is a controversial topic that deserves the scrutiny our community is known for.

I hope you’ll join us! We’ll be hearing from not just from experts, but also from regular people whose stories and insights will make you slap your head — in the new Guest Voices section of Ask The Headhunter! I welcome your comments and your suggestions for new topics.

: :

 

 

Back to Top

Employment At-Will vs. The LeBron James Rule

On May 1, 2020
Employment At-Will vs. The LeBron James Rule

By Mark Carey, Esq.

What do you mean I can be fired for any reason or no reason at all? Who made up this rule? Why do I have to follow the employment at-will doctrine? Well, you don’t, and there are several reasons companies and employees should shift to a modified approach that satisfies the expectations of both the employer and the employee.

Confusion about employment at-will

at will employmentOver the past 23 years I have handled employment law cases for both executives and employees. My clients are really confused and bewildered by the employment at-will rule, and about the significant financial impact it creates when employers decide to let them go.

Many clients say they understand the basic rule that they can be fired at any time (“at will”), and that they can leave a job at any time. But beyond that, they know absolutely nothing about why the rule came into being or, more importantly, how they can negotiate around it. When a termination occurs, the adverse impact of the rule becomes clear. They suffer from the break in their career trajectory and from the resulting financial uncertainty.

At the executive level, I routinely negotiate employment contracts that provide for termination “for cause” and “termination for good reason.” This is standard in the industry at the executive level. However, I also confront cases where the employer “shoves in” a provision identified as “termination for any reason.” If that sounds like the employment at-will rule, it is.

LeBron James has leverage

Enter the LeBron James Rule. (I made up this rule). Basketball superstar LeBron James can write his own ticket to work wherever he finds the highest bidder. He can demand that the “termination for cause” in his contract be accompanied by the “good reason provision” — and the latter must be accompanied by a severance payout. This makes the employer think twice about terminating an employee.

“Termination for cause” means you violated the law and company policies, so your employer can fire you without any severance. “Termination for good reason” means you can quit because the employer materially changed your title, for example, or your salary, reporting structure, or the location of your office —  and the employer must pay you a guaranteed severance.

You might say not everyone is as fortunate as LeBron. I disagree, and this is what has bugged me for many years. Too often, our knee-jerk reaction is to accept this stupid and ill-conceived at-will rule. Some say, just be grateful you have your job. Give me a break! There is a new way to handle this.

The new LeBron James rule

I propose getting rid of the employment at-will rule and replacing it with the modified LeBron James form we see in executive employment contracts.

When negotiating a job offer, employees (not just executives and LeBron James) need to negotiate employment contracts into the deal. Employees need to identify their leverage factor and use it. That is, what makes you the most desirable hire for the job? This is what makes the employer throw higher pay, equity, or severance at the job candidate in order to induce you to accept a job offer. (See the Comments section in How to Say It: How ’bout some severance pay?)

Under the LeBron James rule, employees could be fired only for “cause,” and the employee could terminate employment for “good reason.” Further, if the good reason event occurs, then the employer must pay a severance amount to take care of some of the financial issues related to your transition to new employment. If you land a new job, your severance stops, as this is fair.

Find your leverage and do not be shy about asserting it.

Everybody wins

Here are several positive effects of eliminating the employment at-will rule based on my research into this issue.

  1. End the divide between Management vs. Everybody: Eliminating the employment at-will rule will get rid of the great divide between management and employees. Literally, this is the trust divide. If management scares employees into believing they can be fired any time, management is not creating a loyal and trusting environment. Trust spurs the kind of innovation and creativity that will push the company forward in profound economic ways. Employers want employees to be focused on their work, but the at-will rule distracts them and kills their motivation. The rule erodes any semblance of entrepreneurial creativity among the team. Employers need to seriously rethink this one.
  2. End the divide between HR vs. Everybody: Honestly, did you really believe the Human Resources (HR) department was there to help you? I make it my mission to point this out to every client I have. HR has a duty of loyalty to the employer. It has absolutely no interest in doing what’s right for you. By eliminating the employment at-will rule, HR will be aligned closer with employees and HR will do a better job of “caring” for the very employees that make up the company. Without employees, you have no company. Where did all those employers go astray?
  3. Eliminate the politics of fiefdoms: Does your boss play favorites? Do they hire from their own last place of employment? Are there any “brown-nosers” on the team who believe the only way to the top is to “work it” — what ever that means? Such are the politics of building fiefdoms. This behavior is childish and it’s irritating to say the least. You know what I am referring to. Why do some employees play along, and why do supervisors encourage it? Eliminating the employment at-will rule will breed meritocracy. Employees will begin to feel compassion for their co-workers and work more closely as a team or family, instead of putting a knife in one another’s back at work. All employees will work with management for the good of the company, and all will prosper together — not just executives with good contracts.
  4. Reduce Discrimination: If you create trust, honesty, transparency and vulnerability, then you create lasting relationships where employees want to stay and work. Employment discrimination bias arises from many reasons. My theory is that if you get rid of the employment at-will rule, you will gut the walls that employees build in their work environments with the sole goal of getting ahead. Think about it. When you direct negative words or behavior against another employee to make yourself look better in the eyes of your employer, you will do it to get ahead. That negative comment or behavior could be motivated by differences in gender, age, race, or religion, or it might involve manipulation like seeking sexual favors in exchange for career advancement. We need a sea change to correct our current direction. The status quo just doesn’t work anymore, except perhaps for employment attorneys like myself as we are very busy policing this garbage. If we eliminate the employment at-will rule and we give you employment protections, when you see something, you will feel empowered to say something. You will be protected if you have the courage to speak out.

A Special Case: Older workers

Finally, here is my shout-out to older employees. Employers like to say, “We honor your wisdom and experience, you are worth every penny we pay you.” Many employees who are in their fifties and even sixties are well paid because they have many years of experience to offer, more than someone twenty years their junior. Some get fired (or not hired) simply because of their age.

I say we should apply our new rule to keep older employees on board. (See Age 70, working and job hunting again.)

We should focus on the positive economic impact these older, wiser employees can create for the company. Management must stop using the at-will employment excuse to terminate baby boomers because this abhorrent practice is not financially sound and never was to begin with. It’s like a bad drug addiction. Remember, wisdom still is a virtue for a reason.

Job security pays

When will we see elimination of the employment at-will rule? When management realizes they can make greater revenue multiples by providing better job security. They will have to stop listening to management-side defense lawyers  who lobby incessantly to maintain the employment at-will rule for every client. The world isn’t flat, but we believed it was until someone showed us it wasn’t. The same goes here.

Management should adopt this new LeBron James rule and maybe — just maybe — they will finally see that #employees_matter.

Mark Carey is an employment attorney at Carey & Associates, P.C. in Connecticut. He can be reached at mcarey@capclaw.com and at (203) 984-5536.

: :

Back to Top

How can I negotiate an NCA or NDA?

On June 20, 2016

In the June 21, 2016 Ask The Headhunter Newsletter, a reader doesn’t like giving up future opportunities by signing restrictive agreements.

Question

First of all, thanks for writing your columns and educating us folks out here. If we ever form a union, you’ll get my vote for union leader! Anyway, I was wondering about non-competes and NDAs. I know you’re not a lawyer, but I’d like to hear your thoughts on the subject.

valueI can understand why companies want and need non-competes and NDAs, but I feel signing such contracts limits my future job opportunities; at least the ones that would pay me the most. So, I could refuse to sign, and they can refuse to hire me. If I want the job, it seems I’ve gotta bite the bullet. Perhaps I could sign the contract as “Darth Vader” and they won’t notice.

Is there a fair, balanced deal that I could make here? Thanks for your thoughts.

Nick’s Reply

Ouch, you’re hitting a nerve. Non-compete and non-disclosure agreements (NCAs and NDAs) are a sore spot with me because I believe they’re over-used, misused and too often signed. Nonetheless, both documents are becoming more common. Heck, they’re such boilerplate that you might be right — you could sign as Darth Vader and they might never notice! Some companies might just file the darned thing without looking at it any more carefully than they expect you to. But, don’t bet your future on that.

What’s an NDA or NCA?

For those who don’t know what we’re talking about, an NDA is an agreement you sign as an employee prohibiting you from divulging sensitive company information while you work at the company and often after you leave. When you sign an NCA you agree not to compete with your employer (now and when you leave) by soliciting its customers, going to work for a competitor, or through other actions. Sometimes, an NCA and an NDA are rolled into one document.

I think companies often use NCAs and NDAs for no other reason than because “everyone else does it.” The fact is, these agreements are very controversial. In some states NCAs are illegal because they restrict a person’s right to earn a living. Nevertheless, when you take a job, it’s up to you to protect your rights.

There are some legitimate reasons for a company to ask you to sign such agreements; for example, when you’ve worked on a sensitive trade secret that, if leaked, could cost the company a lot of money. It’s up to you to decide what’s reasonable, or to discuss it with an attorney who represents you, not the company.

Negotiate the terms

There’s no reason to get into an argument with a prospective employer about an NCA or NDA. The best thing to do is negotiate it. Because these agreements are often legal boilerplate, a company that really wants to hire you may be willing to negotiate specific terms that you object to. You may be able to get both the compensation deal you want and a comfortable agreement.

Your goal with an NCA or NDA is to limit the constraints. Here are some terms to negotiate:

  • Geography: A 100-mile radius of non-competition may be reasonable, but a blanket “all of the U.S.” or “all the world” is just nuts.
  • Term: One year may be acceptable, but a five-year restriction is not.
  • Competitors: Prohibiting you from working for any company in an entire industry is extreme. Try to get them to list specific companies by name. Make sure the list is short and realistic.

In light of the limit that an NCA or NDA might place on your future job opportunities, I recommend getting quid pro quo. That is, get fair value for anything you relinquish — and work this out before you accept a job, not after you’re on board. An employer has no incentive to re-negotiate an overly restrictive NCA or NDA after you’ve already joined up.

Trade fair value

When a company wants an NDA or NCA to protect its interests, then you should get something to protect yours. Always trade fair value. If a company is going to restrict your ability to earn a living, it should compensate you reasonably.

Get a contract.
If you agree not to go work for a competitor for a year (by signing an NCA), then don’t agree to work “at will,” whereby the company can let you go any time it wants. In exchange for signing an NCA, request an iron-clad employment contract. That way, if the company terminates you, it agrees to keep paying you through the end of your contract. The NCA gives the company protection (perhaps for a year), and the employment contract protects you (for a year also). By asking for a year, you might be able to get six months’ pay, if you consider that sufficient.

Get a severance deal.
Another quid pro quo for an NCA or NDA is a significant guaranteed severance deal. Ask for it, since your choice of next employers will be limited. Negotiate a severance package as a form of compensation for relinquishing your right to compete or to “talk about your work.” (Be careful: A blanket NDA can actually restrict you from talking about work you’ve done that is not even proprietary to the company!)

What might be in a severance package varies. Usually, severance is one week’s pay for each year you worked at a company. But in this case, we’re not talking just about severance; we’re talking about a special deal that compensates you for relinquishing some of your freedom. In my opinion, if you sign a one-year NCA, the company ought to cover you for at least a year after you leave, or until you land a new job that does not violate the agreement. (If that sounds extreme, so is an NCA!)

If the company’s not willing to compensate for protection, then it should not require an NCA or NDA. It should instead keep better control over its proprietary information and avoid divulging to you anything during your employment that might compromise the company when you leave. It’s up to the company to manage its assets — not you.

If any of this perplexes you, it’s smart to consult an attorney. It will cost far more to defend yourself later than it will to protect yourself now. (For some valuable insights from my favorite attorney, Bernie Dietz, see Employment Contracts: Everyone needs promise protection.)

Thanks for your kind words about Ask The Headhunter. But, no thanks — don’t elect me as your union leader!

Have you ever signed an NCA or NDA? Did it come back to bite you? Or, did you negotiate compensation for a fair restriction? How would you advise this reader?

: :

Back to Top