What You Need to Know Before Signing a Noncompete Agreement

A recent New York Times article points out that noncompete agreements, traditionally reserved for high-level executives, are popping up more frequently in surprising industries. Yoga instructors, hair stylists, and camp counselors are being asked to sign away their rights to move around in their industry.

“What started out as a scalpel for companies to protect their very valuable trade secrets and customer lists . . . has turned into a bludgeon that exploits all types of workers,” says Michele Grant, a lawyer who represents creatives, such as artists, authors, performers, and musicians, in Philadelphia.

For companies, the agreements are a way of retaining top talent and protecting intellectual property. People are valuable capital after all. “The people side of the business is one of a business’s most important products,” says Jennifer Bevan, a career coach. This was true for Sandra Contipelli, as she launched her denim company, Siwy Denim, in 2004. As a precautionary measure, she handed a five-year noncompete agreement to her designer. “This was to keep my designer and partner from starting her own line if she were to leave,” she says. “Sort of a dissuasion. I wanted the noncompete to protect our creative intellectual property.”

“You’re trapped. They can treat you poorly; they can pay you poorly. Why give someone a raise if you know they can’t leave? “

While noncompete clauses may be good for a business, they can have serious, long-lasting implications for one’s career. Contipelli found out the hard way; she signed a noncompete alongside her partner.

“I didn’t really think it would ever pertain to me because I didn’t ‘plan’ at that time to ever be uninvolved in the company,” she says. But when the company was purchased in 2009, Contipelli left and had to comply with the terms of the noncompete agreement. As a result, she was locked out of her industry. “I went from one unfulfilling business idea to another in the last five years; only to find myself still longing to be back in the business,” she says.

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