Non-Competes With Restrictions/Clauses You Should Never Sign
Workers, especially foreign software experts and pharmaceutical workers sign non-competes that may be illegal but the cost of getting out of them exceeds the value of proving them illegal. Also some clauses are just outright Draconian and will box you in.
Wording that I have seen that you should have changed or look elsewhere for work
1. "If you break this contract and we [employer or staffing company] sue you you will pay our legal fees and cost."
1. A. Possible rewarding, "If you break this contact and we sue you, the party that loses will pay all legal fees and cost." [still if you are up against a large company, they can squeeze you because there are no guarantees you will win even if you are in the right."]
2. If you leave our company, we want to know where you are going, title, and the type of work you will be doing.
2. A. In reality the company you are going to will have you sign a confidentiality agreement so it is impossible for you to conform to that requirement to tell your old company everything.
3. If you breach this agreement, you will pay us one year's pay. The reality is that a staffing company is only making about 10% as profit based on your pay. However, if you sign it, some judge may enforce it.
4. If you breach this agreement, you will pay is $100,000 (or $50,000). This is known as liquidated damages and it must bear some resemblance to actual damages. But it could cost you $20,000 in legal fees to prove that.
5. You cannot work for any competitor. (Now you can't work anywhere with you skills.)
6. You cannot work for a competitor within 100 miles. (now you have to relocate)
7. The term of not working with a competitor or anybody is three years. (that is long time and some courts might enforce that. Go for a shorter time or look elsewhere.)
8. We can hold you last paycheck. ( to make sure you are not going to a competitor.) If you sign it, especially if you are an international worker, guess what, you are unlikely to ever see that money.)
9. At an exit interview you may be asked to sign a "new" non-compete. I saw it. And the company threatened the employee. The employee did not sign it. There are some technical issues as to why that most likely will not stand up in court, but again, you may have to spend $20,000 to defend it.
10. You cannot work for any company that we might have an interest in, in the future. [What does that mean??? [Might cost you $15,000 to find out in court even if you win.]So what should I do about signing a non-compete?
Invest between $300 and $500 in a lawyer to review it and explain it. If the employment agreement is 39 pages long [the longest I have seen to date] maybe $800. The tech industry and banks have the longest. I have seen a non-compete written on a piece of paper that was one paragraph and 5 lines long. It failed to be enforceable because they gave no consideration for signing it. It would be valid though in some states as continued employment is consideration, but not all states. The employee was already on-board for a year.One last word about type of worker. Employee or Independent Contractor and last word
If you are going with a staffing company and you are there for years with them, you would be a W-2 and receive benefits. If you are there on an off for "spot" assignments, maybe you are a contractor.
If you are being hired by a regular company and they say, we are going to make you an Independent Contractor for 90 or 120 days, that is a BIG RED FLAG. Either you are doing work as an employee or you are not. At the worst, have in your contract that at 90 days I become an employee.
NEVER SIGN AN EMPLOYMENT CONTRACT ON THE DAY IT IS SHOVED IN FRONT OF YOU
HAVE AN ATTORNEY REVIEW THE CONTRACT THAT PRACTICES IN THE STATE YOU WILL BE WORKING IN
OR A LAWYER THAT PRACTICES IN THE SECTION THAT SAYS WHICH STATE LAW WILL BE APPLIED.
Rate this guide
About the author
Recommended articles about Employment
Can’t find what you’re looking for?
Post a free question on our public forum.
Ask a Question- or -
Search for lawyers by reviews and ratings.
Find a Lawyer