Signing a non-compete agreement comes with the territory for certain industries, especially if you’re a mid- or senior-level professional. Maybe you didn’t think much of signing one if at first you had no intentions of working with the competition, any time soon — but once you consider looking for new employment, you might be wondering exactly where you stand. How can you apply for a new job with a potential competitor when you’ve agreed not to do exactly that?
WHAT IS A NON-COMPETE AGREEMENT?
If you’re reading this, chances are you have at least a basic concept of non-compete agreements. However, it’s worth clarifying this before we go further to avoid any potential misunderstandings.
A non-compete agreement is a contract that legally stops you from working with a competitor (or starting a new business that could be considered a competitor) for a certain length of time after you stop working for a company. Usually, you’ll sign it as a condition of starting your employment, or when you onboard a new freelance or contracting client.
The idea is to protect a company after it has shared sensitive information and insider knowledge with an employee, which could benefit a competitor if that employee went on to work for them. Though non-competes are especially common for higher-level employees who are likely to have access to more crucial information, they can apply to anyone.
NAVIGATING THE JOB SEARCH WITH A NON-COMPETE AGREEMENT
If you’ve signed a non-compete agreement and you’re thinking of jumping ship, what exactly does it mean for you?
As you’ll soon realize for yourself, non-compete agreements are complex, different for everyone, and the rules are ever-changing—but here are a few pointers to keep in mind.
1. TAKE A CAUTIOUS APPROACH
First, think your situation through carefully and avoid doing anything drastic. Even if you’re not yet at the stage of signing a contract with a new employer, you can still start to get yourself into dangerous territory if you don’t proceed with caution.
For instance, if your current employer realizes you’ve been browsing openings at a competitor while at your office or on your workplace computer, this could lead to bad news. It’s okay to seek out another job in your own time, but you shouldn’t use the resources of your current organization.
2. WORK OUT IF YOUR CONTRACT IS ENFORCEABLE
As soon as you reach the stage where you’re considering looking for alternative employment, make sure you get familiar with the contract you’ve signed.
Most people who have signed a non-compete agreement want to know if they’re facing an empty threat or if breaking the agreement could actually land them in trouble. Unfortunately, that’s not a simple question to answer.
For one, state laws determine non-compete agreements, so there’s a lot of variation depending on where you’re living and working. Florida happens to have one of the highest enforcement rates. In contrast, non-compete contracts are practically unenforceable in North Dakota, Oklahoma, the District of Columbia, and California. Other states fall somewhere in between.
If you find your contract has vague, broad terms or asks for you to wait an unrealistically long period of time before working for a competitor (more than five years), this is a strong sign that your contract may not be enforceable.
Regulation surrounding non-compete agreements is changing fast—in fact, President Joe Biden has proposed banning or limiting non-compete agreements to encourage more competition in the economy. Although this is mostly targeted at less senior employees, it could also impact other levels.
3. CONTACT A LAWYER
Just because there are certain cases when non-competes aren’t enforceable, it doesn’t mean you should brush them off and assume everything will be okay. The consequences of breaking a non-compete agreement can be very high—you could be taken to court, meaning you’d have to pay the legal expenses for your previous employer plus any other penalties.
If you have any doubts in your mind, or want to ensure you fully understand an agreement, it could be worth consulting with an employment attorney.
4. BE TRANSPARENT WITH NEW EMPLOYERS
It’s tempting to think you can simply pretend your non-compete agreement doesn’t exist, but this isn’t a wise way to proceed. Instead, it’s best to be transparent with a potential new employer. The question may come up in an interview, but even if it doesn’t, it’s best to be forthcoming from the get-go.
Being honest won’t result in you getting into trouble. Rather, the new employer could help you understand the contract and come up with any potential solutions or loopholes. It’s certainly a more appealing prospect than having to pay out for a lawyer.
However, be sure not to mention any sensitive information related to your current employer in an interview.
ONWARDS AND UPWARDS
Non-compete agreements can be serious business, so it’s essential to navigate them carefully and study their terms before you go ahead with a job search that may involve breaking your contract. Yet while they’re a significant hurdle, non-competes aren’t always an absolute barrier to securing the new job you want.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.
Tim Madden is an Executive Coach and former Headhunter. Founder of Executive Career Upgrades, he’s on a mission to help accelerate careers.