What Should you Consider Before Signing a Non-compete?
Employers may demand you to sign a non-compete when you are hired. These agreements restrict employees from working with competitors during employment and for a certain period after the employment ends. Employers require you to sign this for a variety of reasons like protection of intellectual property, trade secrets, and goodwill. Considering the fact that it limits your ability to earn a living, you may wonder whether or not you should sign a non-compete. While you may be tempted to get the job, it is best to understand the elements of a non-compete before signing the dotted line. These features of a non-compete must be thoroughly considered before you sign it.
Competition as Defined in the Agreement
A valid agreement can only protect the legitimate business interest of an employer. Thus, an employer cannot create an agreement covering every single business aspect. If the non-compete restricts you from working for any company that manufactures same goods, for e.g., any company into electronic goods, then you must refrain from signing it. Such a clause will restrict your ability to work within the industry. You can propose to change it to more reasonable terms and disagree if the employer does not budge.
Consider Geographic Restrictions
For courts to validate a non-compete, it should be reasonable in terms of geographical restrictions. As an employee, ensure that the agreement provides reasonable geographical restrictions. For example, if the employer serves customers in one province, then it is not valid to restrict you from working in any province in the country. Negotiate terms to include only areas in which you actually worked and resist restrictions that go beyond the areas where the employer does business during your tenure.
Examine Customer Restrictions
Certain non-compete agreements may limit you from working with or having contact with your employer’s customers. Such limitations must be limited to those who you had contact with during the employment or if preferable in the past few months. Make sure it does not include customers that were in touch with you preceding the employment.
Ensure a Reasonable Duration
It is best for you if the restrictions are imposed for a short period. Vague durations or restrictions that do never permit you to work within the scope of business must be disagreed with. You must also check for protections against being fired. Terms of involuntary termination can be negotiated to gain maximum benefit.
Compensation and Provision for Damages
A contract usually provides consideration or benefit in exchange for what a party gives up. Because a non-compete is a part of the job, employee consideration is deemed to be the job itself. However, for a valid non-compete that is signed at a later date in during employment, you must ensure you receive compensation. Moreover, if there are any unreasonable damages to be borne by you in the case of violation of the agreement, you must refrain from signing it.
As features of a non-compete restrict employees from earning a living, Courts closely scrutinize them. In order to prevent damages to your career, consult a lawyer to run through the elements of a non-compete before entering into the agreement.