Don't sign away your future with a non-compete

Can signing a standard workplace document derail your career plans? Yes, says Jerry Luftman, executive director of graduate IS programs at Stevens Institute of Technology in New Jersey. He says a former student almost lost out on a big break because he'd signed a noncompete agreement. When he gave his notice, the former student's original employer threatened to go to court to enforce the noncompete agreement he had signed when he first took the job. "The company was willing to fight to keep him from going to this new company, even though he had accepted the new position and given his resignation," Luftman says. The new company was also willing to fight for him, though, and its lawyers helped settle the dispute, in part with assurances that the IT manager would disclose no proprietary information regarding his former employer. Luftman says this happens often, because workers happy to be starting a new job will sign a stack of paperwork without considering the potential consequences down the road. "It's the kind of thing people don't think about until they get into this situation like this one," he adds. Lawyers say they see plenty of workers who don't know what they've signed. "People come in and say, 'I signed a noncompete,' and I look at it and say, 'No, it's not really a noncompete. It's a nonsolicitation,' " says Brad Schleier, managing partner at Schleier Law Offices. In addition to having workers sign noncompete agreements, companies often have them sign nondisclosure agreements, antiraiding agreements and/or computer-use policy statements, says C Forbes Sargent III, co-chairman of the employment law group at law firm Sherin and Lodgen. Although these are all legal contracts, each one puts different restrictions on departing workers, Sargent says. A nondisclosure agreement says you can't divulge proprietary information, while an antiraiding agreement says you can't hire your former colleagues to work with you at your new job. A nonsolicitation says you can't seek out your current employer's clients once you depart. Your employer can't dictate whatever it wants in all situations, lawyers point out. Courts aren't going to blindly enforce noncompete agreements, says Susan Joffe, an associate professor at Hofstra University School. They look at how long the noncompete lasts, whether the prohibited work is defined and whether the geographic area where the work is prohibited is fair. They also consider how the relationship ended, since they're less likely to enforce a noncompete against a laid-off worker. "Fairness is a very, very big issue, and courts are looking at just how much companies are trying to restrict someone," Joffe says. In theory, a noncompete agreement is a contract negotiated between two parties — both of whom should feel free to clarify terms, Joffe says. "But in the real world, there are many more pressures when people are out of work and the job market is shrinking, and some employers might be tempted to take advantage," she says. So how much leeway do you have in negotiating a noncompete? It depends, Joffe and others say. The higher up you are, the more you can negotiate the terms, Schleier says. You also might have some pull if you have unique skills or were recruited. If you're going to negotiate, you should start by finding out what your employer really wants to protect, says Sargent. For example, if your boss wants to ensure that you won't disclose proprietary work when you leave, you might be able to get the company to agree to just a nondisclosure agreement, he says. Even if your employer is set on having you sign a noncompete agreement, Sargent suggests that you might be able to negotiate the length or geographic restrictions or even additional severance to compensate for the time you might be sitting on the sidelines.