Non Compete and Non Solicit Tips

As business competition heats up and the economy (not to mention the weather) cools down, we are being asked to review both non compete agreements and non solicit agreements for executives and companies.

 Companies don’t want valuable information walking out the door and business professionals want to know they can earn a living elsewhere.

Whether it is a non compete (you may not go to work for a competitor for a specified period of time) or a non-solicit (you may not solicit customers, clients and employees from your former company or client) or both, you should be wary of such provisions.

Top 10 Non Compete Non Solicit Tips

 Here are our tips should you be asked to sign such restrictive provisions whether it is in a customer contract or an employment agreement.

1. If you sign an agreement with a non compete or non solicit provision, be prepared to live with it as written. You are likely unable to afford the costs of challenging the clause. And, even if you can, judges vary widely on how they apply them because they are so fact dependent.

2. Try to avoid signing the contract with such provisions. If the employer wants you badly enough, they may back down. Or they may agree to just a trade secret provision.

3. If you must sign a contract with a non compete, narrow the scope. The amount of time, the scope of the business and the geographic limitation are usually broad in these provisions.

4. Make sure that the non compete or non solicit contained in the contract is linked to a business interest, i.e. protection of trade secrets, confidential information and/or investment in training and education for employees. If you are not exposed to such information or don’t get the training, the non compete may not be enforceable. The employer has to protect more than general job knowledge in order for the non compete to be enforceable.

 5. If you must sign a non compete, try to get extra compensation for it if possible, e.g. a signing bonus or a severance package. If the employer balks, tell that them that such compensation or “consideration” makes this covenant enforceable. You should note that in most states, the signing of a covenant not to compete at the beginning of employment is sufficient.

We'll cover Tips 5-10 in the next blog post.