It is common for a person to start working in the staffing field and then later decide to open his or her own business in the industry. It happens so much that it is part of the reason staffing firms have non-compete agreements.
These agreements can lock you down and prevent you from doing what it takes to start your firm. You must understand your specific agreement before moving forward, as there are many details that could derail your plans to go out on your own.
Please note that while we provide you with some helpful advice, this is not legal advice. You should always consult with legal counsel about your non-compete agreement prior to making any decisions.
The Importance of Location
One of the first things you should do with respect to your non-compete agreement is to make sure it stands up legally. The National Law Review notes that some states have strict requirements for non-compete agreements.
For example, Louisiana requires specific details outlining where limitations apply and restrict the agreement to only two years. Other states, such as Maryland, Washington, and Massachusetts, have similar restrictions on these types of contracts.
States also put many other types of restrictions on these agreements, with laws often favoring employees. The idea is not to stunt workers’ ability to find and secure employment and keep the concept of free-will employment alive.
NOLO explains there are even states that do not recognize these agreements at all. They won’t stand up in California, Oklahoma, or North Dakota, for example.
Laws vary widely from state to state. If the company operates on a national level, this can cause issues with these agreements because even though it may be legal and valid in the company’s home state, it may not be in other states where employees work.
The Need for a Legitimate Business Interest
While the main point behind a non-compete agreement is to protect the interests of the company and to prevent employees from taking trade secrets and customers or clients when they leave, it often ends up that such agreements are null and void under the law. To be valid, an agreement has to have a foundation in a legitimate business interest.
According to the American Bar Association, a company needs to show that the protection under the agreement is essential to its livelihood. In other words, the company must have this agreement in place, or the act of starting your own firm could put it out of business.
Working Around the Agreement
One of the most significant points in your non-compete agreement is likely that you cannot work with customers or industries that the company does when you leave. You may be able to work around this by going outside of the industry until the expiration of your agreement.
However, there is always a risk trying to work around your agreement because if you make one misstep, your old employer could take you to court. Your better option is to try to avoid signing the contract in the first place.
Negotiate Out of a Non-Compete
Before you sign a non-compete agreement, you always have the option to negotiate. You can request changes to the document, and you also can try to negotiate out of the deal. It is much easier to get out of the agreement before you sign it than to try to get out of it later.
Your best chance of avoiding having to sign on the line is to show the agreement is not legal, according to UpCounsel. Refer to your state laws and consult with legal counsel to go over the document and highlight anything that goes against the law.
You can also object to unreasonable terms. If you feel it is too constricting or that it veers away from protecting the company’s business interests, then point that out and request a change.
Harvard Law School explains there are many points in a non-compete agreement that you can negotiate, so you can start by looking at those. These points may enable you to make the document less restrictive. For example, if there are geographic limits, try to negotiate the smallest limitation possible. The length of the agreement is also negotiable, so try to make it as short as possible.
It may also work to explain your concerns about signing it. If your employer wants to hire you and not lose you to a competitor, then your objection may motivate the company to change the document or forego it altogether.
Don’t Get Caught Up by a Non-Compete
You should not have to forego working because you sign a non-compete agreement. Thankfully, the law is often on your side, so make sure to have an employment attorney look it over. If everything is legal, you can work on other angles to find ways to make the agreement less restrictive.
Even if you have to go some time with limited ability to work with certain customers or in specific industries, in the end, it will be worth it because you will be able to branch out on your own. Don’t let a non-compete hold you back from going after your dreams and reaching your goals.
Thinking about starting your own staffing firm? Read our other guides to help you along the way.