Must I sign my employer's noncompete agreement?

QUESTION:

My employer is insisting that I sign a noncompete agreement, preventing me from working for competitors if I leave. Is there anything I can do to make it less onerous, or do I have to sign whatever my employer hands me?

ANSWER:

You certainly aren't alone. A growing number of employers ask employees to sign noncompete agreements promising they will not work for a competitor after leaving their current job.

These agreements are legal in many -- but not all -- states. (One notable foe of the noncompete agreement is California, where such arrangements are prohibited unless they're part of the sale of a business.)

Even states that allow such agreements impose a few limits on them because the legal system puts a high value on a person's right to earn a living. Noncompete agreements won't be enforced if they're found to be unreasonable. An agreement may be held unreasonable because it:

• lasts for too long a time
• covers too wide a geographic area
• is too broad in the types of business it prohibits, or
• applies to employees who never had access to the employer's trade secrets or other valuable information in the first place (in this case, there's no compelling reason to allow the employer to prevent the employee from working for a competitor).

If you're asked to sign a noncompete agreement, your best first step may be to negotiate the finer print with your employer. Here are a few pointers for crafting your arguments.

• If your employer asks you to sign a noncompete when you're promoted to a new position, it's not too cheeky to ask for money to compensate you for signing. Keep in mind, though, that this will almost certainly prevent you from later claiming that the clause should not be enforced against you. Because you got something valuable for signing the agreement, you probably won't be able to get out of it later.
• If presented with a noncompete clause, demand to have it worded to take effect only if you leave the job voluntarily. Otherwise, the clause could limit your employment opportunities if you are fired or laid off.
• Ask for the prohibited competition to be clearly identified and limited. Many employers, for example, fear competition with only one or two specific companies and will readily name their names in your agreement.

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