How to negotiate a fair non-compete clause

I was cursing non-competes again yesterday.  Non-competes are those contract clauses that can keep you from earning a living.  Here in PA, lawyers cannot legally be held to a non-compete.  The rest of the world can.

The ultimate good desired is better reached by free trade in ideas [and] the best test of truth is the power of the thought to get itself accepted in the competition of the market. (Oliver W. Holmes, dissent in Abrams vs US, 1919)

What a non-compete really did

This happened.  The perfect manager had accepted the job.  He planned with his new boss how they would take over the market.  He tendered his resignation and got ready to shake the world.  Then he and his new boss got a phone call.  It was from a lawyer at his old company, always bad news.  “If you go to work for the new company and work anywhere within 150 miles of our office, we will start by getting an injunction to shut you down.  Then it is going to get nasty.”  That was it.  The opportunity evaporated based on a non-compete clause.

I am told that in Tennessee, if you sign a non-compete, you better be willing to live by what you signed.  In California they say non-competes are rarely enforceable.  No matter where you are, it is better to change the non-compete before you sign an employment agreement rather than try to get out of it later.

I’m getting old and disagreeable.  I would only sign a non-compete that says,

“You are not allowed to help steal customers you worked with directly for one year.”

I would also demand this qualifier,

“If the company cuts my pay, rearranges my bonuses so I earn less, or fires me for anything besides dishonesty, I can work for anyone I choose.”

In reality, you will never see those clauses in a contract.   Too bad.  It would make signing the contract much easier.

Never be afraid to cross out the non-compete clause before you sign a contract.  It will give your hiring manager or the HR person a heart attack.  That’s a great way to start negotiations, seriously.  If you have any questions, cross it out and tell them you either have to cross it out or let your lawyer look at it.  That really is the way I would negotiate.  Their lawyer looked at it, why shouldn’t yours?


Tomorrow:     Sand in the gears

Later:              A resume planner

The Heisenberg uncertainty principle

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