Should You Sign a Non Compete Agreement?
|
Before you take a new job, or even sometimes afterward, you may be asked to sign a non compete agreement. You should know that under existing Massachusetts law, you should have ten days to review and consider the agreement, and you should be advised by your prospective employer in writing that you have the right to consult an attorney before signing.
That is a right you should take advantage of- though the new Massachusetts non compete law sets some "bright line" requirements for enforceable non competes, it can still be difficult to predict what will happen if the employer seeks to enforce the agreement in the future. That said, below are some things you should be aware of when considering signing a non compete agreement. |
Need Help With a Non Compete Agreement?OR
|
Can You Live With the Terms if Enforced?
The first thing you need to know is whether you can live with the terms of the agreement if it is enforced against you. You may find on your review that the agreement does not comply with the terms of the Massachusetts statute. You may be advised that it is likely unenforceable. At the same time, the non compete law is relatively new and there has not been much caselaw interpreting it. Historically, as well, there has been a lot of variation in how different judges treat different non competes. This means there is always a chance that you will have to live by the terms of the agreement.
Some things to consider:
Do you rely on a "book of business" in your work? If you are in an industry where people move from job to job and bring their contacts and clients or customers with them, both the non compete and the non-solicitation provisions could significantly limit you in a future job search.
How specialized is your field? The new non compete law does not affect or limit other provisions, like non-solicitation provisions, in employment agreements. If you work in a field with a narrow field of potential customers or suppliers, the non-solicitation provision in your agreement needs to be carefully reviewed to understand how limited your options will be when you leave.
Can you afford a 6-12 month gap in employment in your field? There are some jobs where things like technology change so rapidly that being out of the game for 6-12 months, even if you get paid for part of that time by your employer, can be a serious enough problem in terms of your own currency that you might consider turning down the new offer if the employer will not negotiate the terms of the non compete with you.
Some things to consider:
Do you rely on a "book of business" in your work? If you are in an industry where people move from job to job and bring their contacts and clients or customers with them, both the non compete and the non-solicitation provisions could significantly limit you in a future job search.
How specialized is your field? The new non compete law does not affect or limit other provisions, like non-solicitation provisions, in employment agreements. If you work in a field with a narrow field of potential customers or suppliers, the non-solicitation provision in your agreement needs to be carefully reviewed to understand how limited your options will be when you leave.
Can you afford a 6-12 month gap in employment in your field? There are some jobs where things like technology change so rapidly that being out of the game for 6-12 months, even if you get paid for part of that time by your employer, can be a serious enough problem in terms of your own currency that you might consider turning down the new offer if the employer will not negotiate the terms of the non compete with you.
Is the Agreement Enforceable?
Even though you should consider the agreement as if it were enforceable, you should also understand the likelihood that it will be considered valid.
The first question is whether the agreement is subject to the new non compete statute. If you live or work in Massachusetts, and you are offered a non compete in connection with a new job offer, it will apply to your agreement. This is true regardless of whether the agreement you are given says that it is governed by a different state's law.
Assuming you are subject to the Massachusetts statute, the agreement must:
Secondly, it is important to assess the reach of the restrictions, and whether they are reasonably necessary to protect a legitimate business interest. If you are going to service accounts in a limited sales territory and the agreement restricts you nationwide, that might be too broad, for example.
The first question is whether the agreement is subject to the new non compete statute. If you live or work in Massachusetts, and you are offered a non compete in connection with a new job offer, it will apply to your agreement. This is true regardless of whether the agreement you are given says that it is governed by a different state's law.
Assuming you are subject to the Massachusetts statute, the agreement must:
- Contain a "garden leave" provision providing for payment at 50% of your highest pay during the restricted period;
- Restrict you from competing for no longer than 12 months;
- Include, in writing, a notice that you have been given ten days to review the agreement and advised to consult an attorney.
Secondly, it is important to assess the reach of the restrictions, and whether they are reasonably necessary to protect a legitimate business interest. If you are going to service accounts in a limited sales territory and the agreement restricts you nationwide, that might be too broad, for example.
Can You Negotiate Terms?
Often a non compete is presented as a "take it or leave it" proposition, with little opportunity to amend or clarify any provisions.Larger organizations especially can be reluctant to negotiate different agreement terms for individuals, out of a desire to have a standard form of non compete whose terms they understand for all employees.
You should, however, have the opportunity to ask questions about your agreement and find out if there is any flexibility if there are provisions that concern you. An easy, non-threatening way to do this is to simply ask the person presenting you with the agreement if there is any room for discussion if you have questions or concerns.
If the answer is "no," you will know that you need to consider your own risk tolerance and, ideally with the help of an attorney, assess the likely consequences of signing the agreement. If the answer is "yes," then you have an opportunity to make the agreement something you can live with. A lawyer can also help you decide which issues to push, and advise you about whether your requests are likely to be seen as reasonable.
You should, however, have the opportunity to ask questions about your agreement and find out if there is any flexibility if there are provisions that concern you. An easy, non-threatening way to do this is to simply ask the person presenting you with the agreement if there is any room for discussion if you have questions or concerns.
If the answer is "no," you will know that you need to consider your own risk tolerance and, ideally with the help of an attorney, assess the likely consequences of signing the agreement. If the answer is "yes," then you have an opportunity to make the agreement something you can live with. A lawyer can also help you decide which issues to push, and advise you about whether your requests are likely to be seen as reasonable.
How Our Non Compete Lawyers Can Help
We offer a fast turnaround non compete review service, and can help you understand the terms of your agreement, and the risks you might face if you sign it, and assist with any negotiation of its terms. You can use the button below to request a free information call, or call us at (781) 784-2322. We look forward to hearing from you!
