Do You Know Where Your Non-Compete is?
You’re a financially responsible person, aren't you? You double check your paycheck and bills and review your investment portfolio regularly. And, if you needed to, you could quickly put your finger on your insurance documents, your tax returns and your employment docs, right?
Wait. What? Employment documents?
Yes, that’s right. The documents that you signed when you started your new job.
What does that have to do with you financial health? A lot!
In the past eighteen months or so, I’ve been shocked and dismayed to see how many people, who signed binding legal documents that directly affect their livelihood, have NO IDEA what is in them.
The non-compete agreement you signed when you were hired can put a pretty big crimp in your financial future by restricting when and where you can go to work. The language in that document (that you probably signed without a moment’s thought) can make the difference between accepting the next amazing opportunity that comes your way, or being limited to companies and markets outside your field.
Don’t beat yourself up. When you receive a wonderful offer from a great company it’s natural to be a bit blinded by the afterglow. You are excited for the future—as you should be. But it’s during that rosy, hopeful period when a large stack of docs arrive in your inbox, needing signatures. It’s easy to shove them all in the back of a closet somewhere, out of mind, because you NEVER plan to leave your awesome new company.
Now, fast forward a few years. A recruiter calls you with the dream job, the nirvana company, the perfect title, function and paycheck. You didn't think it existed and yet, here it is...shimmering and golden, and you're being considered for it; however, before you interview, you’ll need to show your non-compete to make sure there will be no legal complications for the new employer. If you don't have that doc ready to shoot over ASAP, the process came come to a screeching halt for you, while other candidates move on.
In December, I worked with a candidate who had spent eight years with his company, becoming a bona fide expert in his market. He was successful, but tired of being away from home so much due to his international travel schedule. When I called him with a local opportunity in his market that would have him home most nights, he was thrilled. Now he could use the years of expertise he had earned through hard work and continued education and still make his kid’s soccer games.
Before the first interview, the candidate was asked if he had signed a non-compete. He was certain he hadn’t. Interviews progressed, the company loved him, his family was getting excited about having dad home… then finally, an extremely generous offer was made and happily accepted. But, when the candidate went in to resign, HR reminded him about the non-compete he had signed eight years prior that precluded him from working—for two years-- with any “similar products and markets” any where that his current company does business.
The new employer couldn’t risk hiring someone who might become embroiled in legal battles, or who might be restricted from doing his job fully. The offer was rescinded. Now, not only was the candidate unable to make the move he and his family were looking forward to, but also the his current company knew he had been interviewing and was prepared to leave… AND he had burned a bridge with the new employer. Lots of wasted time and professional awkwardness all around.
Note: I’m not issuing an indictment on non-competes; if they are reasonably written, they are fair protection for employers who have invested a great deal of time and money into their employees. (Of course, some are ridiculously restrictive, but that’s a topic for another day).
What I am concerned about are all the employees out there who don’t know what their non-compete says, or worse yet, don't know if they’ve signed one at all.
When I address this with candidates, I get a few different responses:
1) I can’t ask HR for a copy or they’ll know I’m looking.
2) I don’t think I signed one.
3) I may have signed one, but I don’t think it will apply here.
4) I signed one and it probably applies, but they won’t go after me.
So let me address these one by one:
1)You certainly can ask HR for it, and the time to do that is now, before you actually are interviewing. That way you can honestly say, “I’m not looking at making a change right now, I’m just organizing all of my financial documents and contracts and want to add these to my records. And now, you can honestly add: “I just read an article that advised me to collect and review all of my legal documents on a regular basis, and it specifically mentioned employment documents such as non-compete agreements.”
2) If you don’t know if you signed one, see #1. There’s only one way to know. 3) If you think the non-compete terms won’t apply, see #1 and #2.
4) If you think your company won’t come after you, think again. You may have a great relationship with your boss, but management changes. And, remember it’s expensive and time-consuming to replace someone. Especially if there has been a lot of attrition, the company might be in a panic to stop the hemorrhaging. Making an example of you might protect them from additional losses. Holding an employee to a non-compete is a great way to prevent a vacant position. And just because your company didn’t chase down the last guy who left for a competitor, doesn’t mean they won’t come after you. Often, the more valuable the employee, the more aggressively a company will fight to keep him or her.
Great career opportunities can pop up at any time. It’s smart to be cleared to jump quickly if you are presented with a career-enhancing role. Your potential new employer will appreciate that you are on top of your situation and can answer definitively when asked about your non-compete status.
So, take charge of your career and your financial life. Get a copy of your non-compete and review the terms carefully so you know your options in the future.
And the next time you take a new job, keep that signed non-compete handy for when opportunity comes knocking.
Cambridge Consulting Service, Inc.