Be Smart: Ways to Negotiate Your Non-Compete

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When starting a new job, it is easy to overlook clauses in an employment agreement or contract. For a lot of people, the key is “how much am I getting paid?” However, most executives don’t stay with the same company forever. The other clauses in the contract become very important when an employee – especially an executive – leaves a company. By overlooking the non-compete language in the initial agreement, executives are putting themselves in a very costly predicament that could also negatively impact their ability to start a new job.

Non-compete and non-solicitation agreements can be drafted very broadly to prevent an executive from working within a certain amount of miles from the initial employer, or even within the same industry for a period of time, sometimes more than two years. Fighting a non-compete in court can be very expensive. These clauses can also include language requiring the executive to pay for the company’s attorneys’ fees or the company’s lawsuit related expenses.

There are several aspects of non-compete clauses that are important to understand. First, there is a recent case in Illinois that indicates a non-compete will be invalid if an employee works for an employer for less than two years.See Fifield v. Premier Dealer Servs. Inc., 2013 IL App (1st) 120327. An employer might attempt to circumvent this ruling by providing additional money or benefits to an executive for signing the non-compete, or potentially by applying a different state’s law.

Second, if a non-compete is too unreasonable, courts will either modify the language or find the clauses invalid. However, going through the legal process is still very expensive. Thus, it is much more cost effective for both the executive and the employer to negotiate the issues at the forefront. These negotiations can help draft a fair and reasonable non-compete clause that will not lead to a lawsuit later.

Finally, be careful about language giving the company its attorneys’ fees. Sometimes the language used is very broad, and can put the executive in a difficult – and costly – position.

Ultimately, hiring an attorney that will adequately review the non-compete clause and negotiate the key issues is a very valuable investment. It will prevent spending a substantial amount of money later in a lawsuit.