Non-Compete Agreements Are The New Black, Part 2

Non-Competes Ne Black
Non-Competes Ne Black

Last week I discussed the fact that non-compete agreements are becoming an ever-increasing threat to employees throughout the country. Recent statistical studies indicate that one in four workers have signed a non-compete in their lifetime and 12.3 percent all workers are bound by one right now. Those numbers might be even worse here in Texas, where non-compete agreements have become extremely enforceable in recent years. So, given this state of affairs, what is an employee who is presented with non-compete do to protect himself or herself? Here are some thoughts on the subject:

  • Inquire About Non-Compete Agreements Before You Accept A Job

The time to talk to an employer about a non-compete agreement is BEFORE you take a job. Once you quit your current job, accept a new position, and possibly move your family to a new locale, your bargaining power as it relates to a non-compete agreement drops dramatically. Many employers wait until after you start working to bring you the proposed non-compete agreement for your signature. By then it may realistically be too late for you to refuse the agreement.

During the interview process, you will be asked if you have any questions. Most people say "no". You need to say "Yes. Will I be asked to enter into a non-compete agreement?" Get it out in the open early. The fact that one exists doesn't necessarily mean that you can't take the job. But by addressing it before you accept the position you will be able to review it and possibly seek modification of the terms to something that everyone can live with while you still have bargaining power with your prospective employer.

  • Don't Blindly Sign All Of That "New Employee" Paperwork

At the beginning of every new job, every employee is presented with many documents for their review and signature. Most employees don't really review them carefully. The HR officer handling the process seems to be in a hurry. As a new employee, you are eager to make a good impression. So you just flip through the documents and sign off on them.

Let me be clear: Don't Do This. It is a very bad idea.

Take the time to actually read the documents that are put in front of you. These documents might be asking you to waive your right to a jury trial in the event of a wrongful termination. They might be indicate your agreement to draconian non-compete provisions. They are important. So, please read them carefully. If you have questions about what they mean then ask the person who is running the on board process what they mean. If you still have questions then respectfully ask for time to take them home and review them and bring them back. Will the busy HR rep be miffed? Maybe. But who cares. This is your career and your family's welfare we are talking about here. NEVER sign anything you don't 100% understand and agree with.

If you ignore this advice and them come to me after you get fired to try to help you get out of something you signed way back when, I won't be able to do near as much good as I could have before you signed the agreements.

  • Consult With An Employment Lawyer Before You Sign The Agreement

The time to consult an employment attorney about a non-compete agreement is before you sign it. Not after. I routinely am asked to represent employees regarding non-compete agreements and unfortunately 90% or more of these clients come to me after their employment has ended regarding a non-compete agreement they signed years ago without giving the matter enough thought.

If you don't 100% understand what a proposed non-compete means, don't sign it. Call an employment lawyer and come in for a quick consultation. Non-competes often are not a big deal given the situation but you need to know exactly what it means and just how enforceable it is before you lock yourself in.

  • When Possible, Negotiate As A Group

I recently handled a non-compete situation in which a company was purchased by a larger company and, following the purchase, all 30 employees in the local office were sent non-compete agreements and told (not asked) to sign them. Two of these employees came to see me and we quickly communicated to the rest of the 30 employees in the office.

The non-compete agreement would have required employees to agree not to work in the industry for a full year if they quit or were fired for any reason. This is not an unusual restriction but can be very hard on an employee if they later leave or are let go by the company.

The two employees didn't want to sign the agreement but were worried that if they didn't then they would likely be terminated. I told them they were likely correct about that. Fortunately we were able to get with the rest of the employees in the local office and the entire group decided as a unit that they would all refuse to sign the agreement.

Guess what happened when all 30 employees in the local office refused the non-compete. That's right: the company backed off.

There is strength in numbers. Use it. Even if you don't have a union at your workplace (and most employees in Texas unfortunately do not) there is nothing stopping you from discussing workplace terms and conditions and working together as a group. As Ben Franklin said, "[w]e must hang together or we shall surely hang separately."

  • Don't Be Afraid To Walk Away

Lastly, don't be afraid to refuse to take a job or to quit an existing job if the employer is demanding you sign an unfair and overly restrictive non-compete. Walking away from a job or potential job feels risky, I know. But believe me, signing an overly restrictive non-compete without adequate severance payment protection is even riskier.