There’s been a lot in the news about Non-Compete Agreements being outlawed. I got stuck with one when I took a job about 10 years ago. When I quit and got another job, they claimed I joined a competitor and threatened to sue me. (I didn’t consider it a competitor.) Things got nasty but they finally backed off after my lawyer sent them a nasty-gram. I’m interviewing again, and the matter of an NCA has come up again. Is there a way to escape these things until the law changes?
Many years ago I worked for a time at a small, nimble, regional technology company. We were successful because our managers and employees were very smart, hardworking and highly competitive. There were no NCAs. Until a bigger, national company bought us out.
Soon, all managers received an e-mail and an NCA. We were instructed to sign and return it to HR. Every manager signed it. Except me. I ignored it completely. HR called me again and again to remind me. All they got was, “Okay, thanks for your call.” They finally gave up.
Sitting around shooting the breeze with other managers, it came out that I didn’t sign. They were all stunned: “You’re gonna get fired!”
“They won’t fire me. They want me to sign an NCA to stop me from joining a competitor and taking business with me. Since I have not signed, they’d be foolish to fire me because then I’d join a competitor and compete with them —and they won’t be able to do a thing to stop me because I never signed.”
Nobody fired me. And not long after, I joined a competitor.
You have the power right now to just say no, and I don’t think it’ll hurt your chances of getting hired.
What is a Non-Compete Agreement?
A Non-Compete Agreement is a contract that in essence interferes with a person’s right to work where they want and for whomever they want. Employers used to require NCAs primarily for new executive hires, but today even fast-food workers are sometimes required to sign them.
Except in one case, which we’ll discuss because it’s the only reason to sign an NCA, these agreements on one-sided, protecting only the interests of the employer. NCAs have been controversial for decades. A few states have outlawed them. While NCAs have proved difficult to enforce, few departing employees can afford the legal costs of fighting to protect their rights.
NCAs can’t hurt you if you don’t sign
Now, the Federal Trade Commission has proposed a rule that would forever ban NCAs in employment for an estimated 160 million working Americans. But it’s not law yet.
Whether the law is on their side or not, many employers will try their luck getting you to forfeit your right to work for a competitor — simply because it costs them nothing to try. And they know most job applicants are likely to give in and sign an NCA. They rely on the ages-old fear job hunters have of being rejected. Many job hunters quickly rationalize that “I can’t worry about this — I need the job” or “they’d never come after me.” In either case, intimidation works wonders.
Certainly, even if they have an NCA, some employers will not come after you if you go to work for a competitor. And some will fold their cards if you firmly but politely decline to sign an NCA. They will hire you anyway.
But employers that are serious about NCAs will throw their legal might at you and you probably can’t afford to fight that battle, whether you can win it or not. Few people are willing, or able, to spend money on lawyers.
So why risk it? If you don’t sign an NCA, they can’t sue you for violating it.
Of course, if you decline to sign, you might not get hired. Still, my advice is to decline, because you’ve got a lot in your favor, especially right now.
- Unemployment is way down (which means it’s harder to fill jobs).
- The number of new jobs being created is way up (which means it’s harder to fill jobs and job seekers are likely to have more options).
- Employers are paying higher salaries because… it’s harder to find workers and to fill jobs.
You’re in a good negotiating position because an employer likely needs to hire you today more than it can afford to worry about losing you to a competitor tomorrow. So negotiate. (See also: Salary Negotiation: How much to ask for.)
There’s only one reason to sign an NCA
If you feel you really must comply and sign the thing, there are two ways to protect yourself. First, consult an employment attorney that works only for executives and employees. Spend the money to get help negotiating.
Second, consider what an NCA really does. It protects the financial interests of the employer. Not yours.
The only reason to sign a Non-Compete Agreement is if the company pays you to sign it.
Two can play at this game. If a job offer is made contingent on you signing an NCA, ask for a severance agreement. Consider this approach.
How to Say It
“I understand that you need to protect your company’s financial interests. And I need to protect mine. If you’re concerned that you’ll lose money if I compete with you, then we’ve established this NCA is worth money. Now the question is, how much? If you want to restrict my ability to make money so you can avoid competition, you need to compensate me. A one-year NCA that prohibits me from working for your competitors is worth at least my salary for a year, plus whatever raise I’m likely to get in today’s market. So I’ll sign if you give me a severance package to compensate for locking me out of the industry.”
By the way — employers routinely give this severance deal in conjunction with an NCA to executives they hire. If they’re going to apply this to managers and other employees, employers need to pay for that which is worth money — your NCA.
If they won’t?
How to Say It
The next time you’re faced with a job offer that requires an NCA, just say, ”No thanks, but I’ll take the job without it.” If they balk: “In that case I’ll take an offer elsewhere and be your competitor.”
If you’re good enough to hire, you’ll also be a formidable competitor.
Still nervous about refusing to sign an NCA? Please consider again the three truths I listed above about the job market today. I believe the job seeker has the distinct negotiating advantage. But as always, don’t just do it because I said to. Consider what I’ve said and use your best judgment to do what’s right for you.
Did you sign a Non-Compete Agreement as a condition of getting a job? Why? Has an employer ever come after you for violating an NCA? Do you believe job seekers today have the negotiating edge?