Written by Suzanne Hite, former publications editor serving the technology services sector.
Question: I was offered a job in my field, but they want me to sign a non-compete agreement. Is this a bad career move?
Answer: The Millennial generation is more likely to job hop, so questions about non-compete agreements are being asked more frequently. These offer advantages and disadvantages for the employer as well as the employee. Agreements vary widely in legalities and restrictions, which must be carefully weighed. A non-compete can be an indication that your employer has a vested interest in keeping you onboard. On the flipside, it can limit your career options if you decide to leave the company. Here are some pros and cons for you to consider before you sign on the dotted line.
In simple terms, the agreement is made between the employer and employee stating that you will not go and work for a competitor immediately after leaving your current job. This is very common for e-commerce firms, where job hoppers have access to proprietary information, says the webmaster at a coupon to pay site. The definitions will vary but can include prohibiting working for any other company in the industry, the length of time of the agreement, the geographic area covered, and any compensation awarded to you for signing it. If your employment is involuntarily terminated there may be an escape clause, but this is also part of the agreement.
For the employee, signing a non-compete agreement may be the only entry into some positions. Benefits and compensation are usually negotiated concomitant with them, and you may get a bonus for guaranteeing your loyalty to the company. Other terms and conditions are negotiable, such as the area it covers, definitions of competition, and clauses for termination. This last one could effectively reduce the risk of you getting fired.
From an employer’s perspective, a non-compete agreement protects trade secrets and confidential information. Additionally, employees are encouraged to stay at the job longer giving a better return on long-term investment in them, explains management at an auto transport firm, a highly competitive industry. Some strict agreements include payback clauses requiring repayment of training costs should an employee leave. Another advantage for the employer is the retention of key customers, if staff do not work for other businesses or start up competing ones.
Courts generally do not approve of agreements that restrict an individual’s right to work, nevertheless you want to avoid any legal battle. You should seek legal assistance when confronted with a non-compete contract, which is an additional expense.
If your position is in a highly specialized industry, finding another job may not be so easy. If the terms are broad, you could be putting your future prospects at risk by agreeing to the non-compete contract. Ask yourself how much is this job worth to you and how easy is it to find another one in the same industry without these restrictions.
Organizations have the right to protect their confidential data and client base, but workers have the right to earn a living, at this company or the next.
The bargain that yields mutual satisfaction is the only one that is apt to be repeated… B.C. Forbes.
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