What to consider before signing a noncompete agreement
Noncompete agreements restrict employment opportunities for employees after they leave their job. Thus, it is crucial to think carefully before agreeing to anything without consideration and legal guidance.
Before signing a noncompete agreement, you should ask yourself a few questions.
- What do these agreements do? A noncompete agreement may prevent you from working in various places and positions if you leave your job. Depending on the details of your employer and role, these clauses might prevent you from working for a competitor in a certain geographic area or from starting a competeing company for a certain number of years, or may impose any number of other restrictions.
- Is it a valid agreement?Noncompetes must meet specific criteria to be enforceable. Such requirements include being reasonable in scope, protecting a legitimate business interest, and not being harmful to you or the public. Agreements that do not comply with these rules can be invalid.
- Is there room for negotiation? You may be able to negotiate some aspects of a noncompete. For instance, you might want to reduce the amount of time the restrictions are in place or define companies where you will not work, rather than restricting broad categories of businesses and positions. Specificity is critical in these contracts, so negotiating these details can be wise.
- What happens if you do not sign it? You do not need to sign a noncompete agreement. However, you should know what happens if you choose not to. Your employer may fire you; a prospective employer may decide not to hire you. You will want to know whether the employer is offering monetary or non-monetary provisions in exchange for signing the agreement.
Noncompete agreements have become increasingly common. However, their use can be controversial, especially with respect to unnecessary or unreasonable contracts.
Because of this, it can be essential for employers and employees to have legal guidance as they navigate issues with these and other employment agreements.