How to Get Out of a Non Compete Agreement
Get a copy of the agreement you signed., Review your state's law., Organize your information., Schedule a sit-down meeting., Negotiate the terms of your release., Get any agreement in writing.
Step-by-Step Guide
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Step 1: Get a copy of the agreement you signed.
Closely reading the non-compete agreement you signed can give you a better idea of the interests the company seeks to protect and what you need to stress in asking for a release.
Make sure that you actually signed the agreement, and that a corporate representative with power to bind the company also signed the agreement.
Without the signature of both parties, a contract such as a non-compete agreement is not binding on either party.If the non-compete agreement in your HR file wasn't signed (either by you, by a corporate representative, or both), a court won't enforce it.This can give you great leverage in negotiations to get a release from the agreement, because essentially there is no agreement.
Assuming the agreement was properly signed, next study the provisions detailing your employer's responsibilities.
If any of those things didn't happen, or if they changed, the agreement is likely no longer enforceable.
The same holds true for any designations of your employment or your role in the company.For example, if you signed a non-compete agreement when you were a sales representative, but you are now a sales manager, that original non-compete agreement may be unenforceable – unless you signed a new agreement for your manager position.
Put simply, although the agreement bound you as a sales representative, it may not bind you as a sales manager.
The key for courts is whether your employment relationship changed.
Any change of job duties, authority, or compensation may invalidate your old agreement.You also should carefully read the scope of the agreement.
The job you want to take may not, in fact, violate the non-compete agreement.
For example, if you have a non-compete agreement that prohibits you from working for another company that uses "the same or similar technology" as your old employer, and the new employer actually uses different technology, the non-compete agreement probably doesn't cover your new job – even if the two companies provide similar services or are involved in the same industry.Consider what your job at the company entailed.
Non-compete agreements exist to protect trade secrets, or to protect business relations.
The company has you sign a non-compete agreement because they're worried you'll take their clients to your new company, or use the trade secrets you learned and use them to benefit the new company.
However, if you didn't have any direct relations with clients, and didn't learn any trade secrets, the non-compete agreement probably isn't enforceable against you.For example, some companies just require every employee to sign a non-compete agreement, regardless of their role in the company.
If you were hired as a receptionist for one company, and you've now been offered a position as an executive assistant in another company, it is unlikely you have any trade secrets or client relationships that you could take to the new company.
A non-compete agreement, like any other contract, must be supported by valid consideration.
This means your employer must have provided you with some additional benefit or compensation in return for your signature on the non-compete agreement.
If you weren't provided any additional benefits, or if you were promised a bonus or other compensation that you never received, that would invalidate the agreement.In some situations, simply making your continued employment contingent on your signing of the non-compete agreement constitutes valid consideration.
This could be the case if, for example, your employment was categorized as "at-will" employment, and you didn't sign any other employment contract stating otherwise. -
Step 2: Review your state's law.
Some states have passed tough laws regarding the enforcement and legality of non-compete agreements.
It may be that your agreement was signed before such a law when into effect, and hasn't been updated to comport with the law.
Some states such as California and North Dakota no longer permit non-compete agreements regardless of the terms of the agreement.If you live and work in one of those states, the agreement is legally unenforceable.
Other states have placed legal limits on the specific rights or interests an employer can seek to protect through a non-compete agreement.
For example, a non-compete agreement is only allowed in Washington to protect customer information and contacts or a company's goodwill such as particular relationships with customers.In some states such as Tennessee and Texas, non-compete agreements are permitted but physicians are exempt from them.
A few other states exempt other professional employees such as attorneys., Outline all your points and issues so you're prepared to have an objective discussion about being released from your agreement.
If you've found defenses you could use in court to defeat the agreement, you should present these points to your employer up front.
The company already faces an uphill battle to enforce the non-compete agreement, since judges don't like to enforce an agreement that hinders your ability to procure gainful employment.
If you can demonstrate that you would win at trial, the company may be more willing to negotiate with you ahead of time and spare the expense of trial., You should sit down face to face with someone such as your manager or a human resources representative who has the power to release you from your agreement.
Open your meeting by focusing on what you want, using the outlines you've made and the research you've done.
Go through your defenses, and stress your desire to leave on good terms.
If you're willing to concede on some points, you may be able to come to a compromise that would enable you to take your new job.
For example, if you previously worked as a sales representative, and the company is worried that you will lure clients to your new firm, you might be willing to sign an agreement in which you were allowed to work at the competing firm if you agreed not to have any communication with any of the company's clients. , It may be possible to craft a new agreement that both protects the company's interests and allows you to take the new job you want.
When negotiating, pay attention to the length of time the agreement's prohibitions are in effect, the geographical boundaries it covers, and the activities it prohibits.
The scope of these terms is the primary focus of legal arguments, and a court will strike down or limit unreasonable terms.Since you already have a new offer, limiting the amount of time the agreement applies likely won't help you much.
For example, if the agreement prohibits you from engaging in competing activities with another company for 10 years, cutting it down to five years still won't mean you aren't violating the agreement when you take your new job.
In certain circumstances, you may be able to use geography to carve out an exception for your new job.
For example, suppose your current employer operates solely in Tennessee, and you have a job offer in California.
Your non-compete agreement prohibits you from working for a competing firm anywhere in North America – but on a practical level, the company in California can't be considered to compete with a company whose business doesn't extend outside of Tennessee.
In that situation, you might be able to get your employer to settle for a new agreement that prohibited you from working for a competitor in Tennessee.
Since you're moving to California, this probably isn't an issue for you. , Since your original non-compete agreement was in writing, any amendment to or release from that agreement must also be in writing.You also should make sure that the agreement is signed both by you and an employee of the company who has the power to bind the company in that instance (such as an executive or a hiring manager), and that the original non-compete agreement is referenced and addressed. -
Step 3: Organize your information.
-
Step 4: Schedule a sit-down meeting.
-
Step 5: Negotiate the terms of your release.
-
Step 6: Get any agreement in writing.
Detailed Guide
Closely reading the non-compete agreement you signed can give you a better idea of the interests the company seeks to protect and what you need to stress in asking for a release.
Make sure that you actually signed the agreement, and that a corporate representative with power to bind the company also signed the agreement.
Without the signature of both parties, a contract such as a non-compete agreement is not binding on either party.If the non-compete agreement in your HR file wasn't signed (either by you, by a corporate representative, or both), a court won't enforce it.This can give you great leverage in negotiations to get a release from the agreement, because essentially there is no agreement.
Assuming the agreement was properly signed, next study the provisions detailing your employer's responsibilities.
If any of those things didn't happen, or if they changed, the agreement is likely no longer enforceable.
The same holds true for any designations of your employment or your role in the company.For example, if you signed a non-compete agreement when you were a sales representative, but you are now a sales manager, that original non-compete agreement may be unenforceable – unless you signed a new agreement for your manager position.
Put simply, although the agreement bound you as a sales representative, it may not bind you as a sales manager.
The key for courts is whether your employment relationship changed.
Any change of job duties, authority, or compensation may invalidate your old agreement.You also should carefully read the scope of the agreement.
The job you want to take may not, in fact, violate the non-compete agreement.
For example, if you have a non-compete agreement that prohibits you from working for another company that uses "the same or similar technology" as your old employer, and the new employer actually uses different technology, the non-compete agreement probably doesn't cover your new job – even if the two companies provide similar services or are involved in the same industry.Consider what your job at the company entailed.
Non-compete agreements exist to protect trade secrets, or to protect business relations.
The company has you sign a non-compete agreement because they're worried you'll take their clients to your new company, or use the trade secrets you learned and use them to benefit the new company.
However, if you didn't have any direct relations with clients, and didn't learn any trade secrets, the non-compete agreement probably isn't enforceable against you.For example, some companies just require every employee to sign a non-compete agreement, regardless of their role in the company.
If you were hired as a receptionist for one company, and you've now been offered a position as an executive assistant in another company, it is unlikely you have any trade secrets or client relationships that you could take to the new company.
A non-compete agreement, like any other contract, must be supported by valid consideration.
This means your employer must have provided you with some additional benefit or compensation in return for your signature on the non-compete agreement.
If you weren't provided any additional benefits, or if you were promised a bonus or other compensation that you never received, that would invalidate the agreement.In some situations, simply making your continued employment contingent on your signing of the non-compete agreement constitutes valid consideration.
This could be the case if, for example, your employment was categorized as "at-will" employment, and you didn't sign any other employment contract stating otherwise.
Some states have passed tough laws regarding the enforcement and legality of non-compete agreements.
It may be that your agreement was signed before such a law when into effect, and hasn't been updated to comport with the law.
Some states such as California and North Dakota no longer permit non-compete agreements regardless of the terms of the agreement.If you live and work in one of those states, the agreement is legally unenforceable.
Other states have placed legal limits on the specific rights or interests an employer can seek to protect through a non-compete agreement.
For example, a non-compete agreement is only allowed in Washington to protect customer information and contacts or a company's goodwill such as particular relationships with customers.In some states such as Tennessee and Texas, non-compete agreements are permitted but physicians are exempt from them.
A few other states exempt other professional employees such as attorneys., Outline all your points and issues so you're prepared to have an objective discussion about being released from your agreement.
If you've found defenses you could use in court to defeat the agreement, you should present these points to your employer up front.
The company already faces an uphill battle to enforce the non-compete agreement, since judges don't like to enforce an agreement that hinders your ability to procure gainful employment.
If you can demonstrate that you would win at trial, the company may be more willing to negotiate with you ahead of time and spare the expense of trial., You should sit down face to face with someone such as your manager or a human resources representative who has the power to release you from your agreement.
Open your meeting by focusing on what you want, using the outlines you've made and the research you've done.
Go through your defenses, and stress your desire to leave on good terms.
If you're willing to concede on some points, you may be able to come to a compromise that would enable you to take your new job.
For example, if you previously worked as a sales representative, and the company is worried that you will lure clients to your new firm, you might be willing to sign an agreement in which you were allowed to work at the competing firm if you agreed not to have any communication with any of the company's clients. , It may be possible to craft a new agreement that both protects the company's interests and allows you to take the new job you want.
When negotiating, pay attention to the length of time the agreement's prohibitions are in effect, the geographical boundaries it covers, and the activities it prohibits.
The scope of these terms is the primary focus of legal arguments, and a court will strike down or limit unreasonable terms.Since you already have a new offer, limiting the amount of time the agreement applies likely won't help you much.
For example, if the agreement prohibits you from engaging in competing activities with another company for 10 years, cutting it down to five years still won't mean you aren't violating the agreement when you take your new job.
In certain circumstances, you may be able to use geography to carve out an exception for your new job.
For example, suppose your current employer operates solely in Tennessee, and you have a job offer in California.
Your non-compete agreement prohibits you from working for a competing firm anywhere in North America – but on a practical level, the company in California can't be considered to compete with a company whose business doesn't extend outside of Tennessee.
In that situation, you might be able to get your employer to settle for a new agreement that prohibited you from working for a competitor in Tennessee.
Since you're moving to California, this probably isn't an issue for you. , Since your original non-compete agreement was in writing, any amendment to or release from that agreement must also be in writing.You also should make sure that the agreement is signed both by you and an employee of the company who has the power to bind the company in that instance (such as an executive or a hiring manager), and that the original non-compete agreement is referenced and addressed.
About the Author
Helen Stevens
Creates helpful guides on hobbies to inspire and educate readers.
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