Perspectives

Negotiating Noncompetes

When starting a new job or being offered a promotion, it is easy to be wooed by the employer’s offers. You suddenly have cartoon dollar signs in your eyes and you are ready to sign on every dotted line in sight. The employer-employee relationship, like any other relationship, may start out wonderful; however keep in mind that it may not last forever. So when the employer starts placing stacks of documents in front of you, remember that a noncompete could have a significant and detrimental impact on your future. 

Although, historically noncompetes have been frowned upon, Minnesota Courts have increasingly upheld the enforceability of these restrictive agreements. Regardless of whether or not the covenant will be deemed enforceable, it will cost you time and money to defend yourself in a lawsuit if sued for a breach of the agreement.

Before you decide to lay the odds that you won’t be faced with a lawsuit, consider negotiating for a more favorable contract. Initiating negotiation may not only enhance your ability to remain employed within your field in the event you separate from your employer, but it also shows the employer your diligence, in that you took the time to evaluate the legal document rather than just signing away your rights. When negotiating a noncompete, keep the following in mind:

1. Don’t sign the covenant. If possible, it is best not be constrained by a noncompete. It may seem harmless, but a noncompete is only advantageous for the employer. Explain to the employer the specific issues you have with the terms of the document.

2. Request compensation. The employer effectively protects its business interest by limiting your ability to compete; you need to protect your livelihood. Negotiate a severance package or compensation during the restriction period.

3. Limit the restrictions. A noncompete restricts you from performing certain jobs or work, within a specific geographic scope, for a defined period of time. How long after termination employment does the noncompete extend? Does the noncompete prohibit you from working anywhere in the world, or anywhere within 10 miles of the employer’s business? Finally, will you be completely restricted from working in your field, as well as all similar fields? Negotiating to obtain the least restrictive terms may significantly enhance your odds of obtaining employment that does not violate the agreement.

4. Suggest an alternative agreement. Documents such as “non-disclosure” or “non-solicitation” agreements allow you to keep working immediately after you leave the company and serve to protect the employer’s business interest.

Before signing the noncompete, read it carefully and determine how limited your options will be in the event you separate from the employer. Even if it seems harmless, you should still consider the aforementioned negotiation tactics. However, before attempting negotiation, it is always recommended to consult with an attorney who can help you determine the best route to take for your particular situation.

Attorney Cristen C. Post