What is a Non-Compete Negotiation?
A non-compete is a clause that appears in various contracts between employees and employers. It prevents an employee from working for the company’s competitors or starting their own business in a way that competes with the company, and it will list a duration of time in which this rule is effective.
Although it is meant to protect the company owner, a noncompete can sometimes be unfair to the employee.
If you want to negotiate a non-compete clause, you should do this before signing the contract as it will provide you with more leverage during discussions. There are some effective strategies to help you achieve more favorable terms.
Read the rest of this article to learn about non-compete negotiation, how it works, how to negotiate non-competes with your employer, and when to consult with a lawyer for help.
What are Key Terms in a Non-Compete?
It’s common to find the following terms in a non-compete clause.
- Duration. The clause needs to specify how long the restriction will be effective, such as six months or one year.
- Geography. In some contracts’ non-compete clauses, there will be information about geographic location. This states that an employee won’t be able to work in a certain area or region for a certain amount of time after leaving the company.
- Scope. This outlines the work an employee isn’t allowed to do under the agreement, such as specific techniques or practices that are reserved to their current company.
- Competitors. The employee might not be allowed to work in certain industries so as not to compete with the company’s business.
- Damages. This explains the damages an employee will be responsible for should they violate the contract.
What are Tips for Negotiating a Non-Compete Clause?
When negotiating a non-compete clause with your employer, there are some important things to identify and possibly challenge so that you’re not locked into an unreasonable or unfair contract.
Here are some tips to help you through the process.
Reduce the Scope
You want to look for any clauses that are too restrictive concerning competitors. It’s fair for the competitors the employee can’t work with to be direct competitors, but there shouldn’t be a ban on an entire industry. This will hamper the ex-employee’s chances of finding work.
Decrease the Duration
Challenge long-term non-compete clauses that can be too restrictive for employees. You don’t want to struggle to find work for months or years after leaving the company, reducing your earning potential. Try to negotiate for a six-month duration instead of a one- or two-year restriction.
Consider the Location
If the clause mentions geographical limitations, you should ensure it only includes a specific area, not an entire city or state, which can be too harsh for the employee’s future career opportunities.
Include Protective Clauses
As an ex-employee, you want to ensure that you won’t have to follow through with the non-compete restrictions in certain situations, such as if the employer sends you away without cause.
Consider Alternatives
Perhaps your employer doesn’t want to reduce the duration of the non-compete, but this shouldn’t end the discussion. Consider an alternative, such as having the opportunity to earn money via a side gig. Creative solutions can ensure you’re able to earn income without feeling stuck in a dead-end strategy when your contract ends.
Request Compensation
You don’t want to feel limited by the non-compete clauses. While this might not always be possible, you could ask the employer if they would consider compensating you for the period in which the non-compete clause is active.
Suggest Other Clauses or Contracts
If you know that your employer’s main focus is to prevent you from taking other employees with you when you leave, you could suggest that the contract has a non-solicitation clause instead of a non-compete clause. This could help you avoid harsh or restrictive clauses.
To help you figure out what’s most important to the employer, discuss the non-compete with them prior to starting negotiations. Pay attention to what they highlight and what they seem to prioritize in their company.
Do You Need a Lawyer for a Non-Compete Negotiation?
There are good reasons to hire a lawyer to help you navigate a non-compete negotiation. They can provide a range of services, depending on what you need.
At the basic level, you should hire a lawyer to review your contract containing the non-compete clause. This is especially important if the clause lacks clarity or seems one-sided to favor the company. A lawyer will be able to spot any unreasonable or unfair terms, providing you with the confidence to negotiate them. This will also prevent you from signing a contract that doesn’t serve your interests.
To request a contract review, post your project on the ContractsCounsel marketplace.
Include details about the request and what you need. Lawyers will send you multiple bids for the project. You can select the best lawyer to work with based on data provided on the platform, such as their credentials, client ratings, location, and years of experience.
Contract review aside, you can also hire a lawyer for other assistance with non-compete negotiation, such as:
- Keeping you informed of all appropriate laws governing your non-compete clause.
- Helping you assess which terms are negotiable and which ones aren’t valid, depending on your situation.
- Explaining all non-compete clauses and terms so you’re not signing an agreement you don’t fully understand.
- Assessing if the non-compete is legally valid.
- Proposing fair restrictions. This can include negotiating with your employer on your behalf for shorter durations or smaller geographical locations.
- Protecting your future career aspects by suggesting carve-outs. This can include limiting the non-compete to a specific type of client or job role.
Where Can You Find a Lawyer to Help You with a Non-Compete Negotiation?
If you need to find a professional, reliable lawyer to assist you with a non-compete negotiation, you can hire one on ContractsCounsel, an online legal marketplace that connects clients with vetted lawyers who have been vetted on the platform.
With their years of experience in similar projects, they’ll be able to help you navigate the challenging process of negotiating non-compete clauses before you sign the contract.
