When starting work at a new company, or even when being promoted or receiving a severance package, you might be given a non-compete clause (NCC) to sign. This is your company saying to you, “For a period of time after you work for us you can’t work for our competitors.” Maybe it adds on, “even if we fire you,” or other provisions specific to the clause. Although this may seem like a practice exclusive to corporate jobs, MarketWatch reported that not only is the number of companies asking employees to sign these agreements increasing, but the breadth of industries is as well. Employees working in medicine or service, for instance, are increasingly being presented with non-competes. And unfortunately, there are plenty of myths floating around about what a non-compete does and does not mean.
Myth 1. Non-competes aren’t enforceable
That’s true… in California. In most states, non-competes are very much enforceable, and although they won’t usually be enforced to every last letter, former employers often seek monetary compensation for a violation. Some non-competes will be deemed unenforceable by a court if they are unreasonable, for example if the timespan or geographic area of restriction is too great, in which case, consulting with an attorney could provide you with valuable insight on whether or not a non-compete is unreasonable.
Myth 2. If a company sends you a notice that you’re violating a non-compete, they’re probably just bluffing.
If you leave a company and receive a letter that they think you’re violating a non-compete or trade secrets agreement or misusing corporate property, it’s important to speak with a professional employment lawyer rather than winging it or assuming it’s a bluff. An attorney is especially critical if you’re leaving a place of work and starting a new business, in which case you have a lot to lose if charged with a violation.
Myth 3. It’s a take-it-or-leave-it deal.
Nothing is set in stone, and your options go much further than ‘to sign or not to sign.’ Whether the document was written by a well-resourced legal department or downloaded off the internet, a lawyer may see leverage points in it that you don’t.
Myth 4. If you haven’t done anything wrong, you don’t need to see a lawyer.
Many people mistakenly think that “innocent” is equal to “not in need of a lawyer.” Just as in a criminal context where you’re historically advised not to speak to law enforcement even if you’re innocent, talking to an opposing attorney in a civil, non-compete issue can be a big mistake. The truth is that even if you have nothing to hide, you don’t know where your employer is coming from. In a criminal context, someone may have falsely named you, or you may associated with the wrong person. The same is true here, and you may need guidance on how and with whom to have the conversation.
Myth 5. You can work it out through a friendly chat with your former employer.
If you’ve received a lawyer letter, whether it’s directly from a company’s lawyer or simply has a lawyerly feel, it’s risky to think you can work it out independently – your former boss isn’t acting without an attorney, so you shouldn’t either. A professional may be able to help you negotiate or negotiate on your behalf, and feel more secure with a full understanding of everything you’re signing.
Thanks to our friends and blog authors at NachtLaw for their insight into non-compete myths employees should be aware of.