How to Negotiate Mutually Beneficial Noncompete Agreements

How to achieve a win-win result with noncompete agreements

By Katie Shonkon / Win-Win Negotiations

noncompete agreements

If you’re looking to get more leverage out of your next job negotiation, noncompete agreements that may very well be tucked inside your employment contract could provide an opportunity to achieve the mutually beneficial win-win situation you desire.

Discover how to handle complicated, high-level business negotiations in this free report, Win-Win or Hardball? Learn Top Strategies from Sports Contract Negotiations, from Harvard Law School.

Negotiating a Contract: Negotiation Tactics for Handling Noncompete Agreements

Previously limited to the domain of corporate trade secrets, noncompete agreements as having cropped up in a wide array of fields in recent years, from hairstyling to sales to yoga instruction.

One summer camp even included a noncompete clause in its teenage counselors’ summer employment contract, reports Steven Greenhouse in a New York Times article on the growing prevalence of noncompete agreements. Counselors at the Linx-branded camp in Wellesley, Mass. who signed the contract were barred from working at a competing camp within 10 miles.

Employers that have staff sign noncompete agreements are motivated by the desire to limit turnover and protect proprietary information such as client lists. After devoting significant resources to training new workers, organizations are loath to see them take their new skills, knowledge, and experience to their competitors.

But some argue that noncompete agreements stifle innovation and economic development. Entrepreneurs may delay or abandon plans to start a new, potentially job-creating start-up, for example, because they are bound by a current or past employer’s noncompete.

A hairstylist named Daniel McKinnon told the Times that after being fired by the salon where he had worked for years, he took a job at a competing salon. A judge filed an injunction ordering him to leave his new job after finding that McKinnon had violated the terms of his previous company’s noncompete agreement. “I basically had to give up a year of working,” he said.

California and North Dakota have outlawed noncompetes in their states. That may be why a group of Silicon Valley high-tech firms, including Apple, Google, Intel, and Adobe, allegedly agreed to a secret, informal pact not to hire from one another. (As we described in the July 2014 issue of the Negotiation Briefings newsletter, these four companies settled a lawsuit filed by disgruntled employees who said they lost out on job opportunities and higher wages because of the pact.)

If your employer asks you to sign a noncompete agreement, how should you respond to achieve a win-win deal and reach a successful agreement.  Begin by consulting with an employment attorney in your area, who can help you determine whether the agreement is lawful and fair. If any red flags arise, such as vague language or onerous restrictions, bring them to your employer’s attention.

If you are reluctant to sign a noncompete agreement altogether, explain your concerns and ask for more detail about the company’s reasons for asking you to sign. This information might lead you and the employer to a less restrictive agreement. A company that is primarily concerned about protecting trade secrets might be willing to have you sign a nondisclosure clause instead, employment attorney Mark J. Girouard told Or if a company is concerned you’ll poach its clients down the road, you might simply sign a nonsolicitation agreement.

Through this type of research and negotiation, you may end up with a contract that better balances your interests with those of your future employer—a win-win deal for all.

What has been your experience with noncompete agreements? Share your story in the comments below.

Discover how to handle complicated, high-level business negotiations in this free report, Win-Win or Hardball? Learn Top Strategies from Sports Contract Negotiations, from Harvard Law School.

Originally published in 2014.