Bullish Q&A: How to Negotiate a Noncompete

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Has anyone dealt with non-compete agreements as an employee? Have you negotiated or refused to sign?

Extensively! I once managed to get one negotiated down from “You can’t teach, write education manuals, design curricula, or otherwise work in education, anywhere, for two years” to “You won’t compete directly with us while still employed here and for 30 days after.” But by that point, I was already running a very large project, and making hundreds of thousands of dollars for the company. 

The smaller the company, the more likely you are to be successful negotiating. Smaller, independently owned companies and startups can make exceptions, especially if they really need or want you.

And, of course, the more valuable you are – and I mean valuable in terms of actual dollars, not special-snowflake magic – the more likely you can command some changes.

It’s also possible, though, that the agreement is boilerplate and the employer doesn’t actually care about it, in which case even an entry-level employee could get it changed. I once asked for a contract reading “the website owns your writing forever” to be changed to “the website has first rights for sixty days.” The lawyer called me, said he enjoyed my work, and suggested first rights for one year. Deal. Sometimes agreements are written to be excessively beneficial to the employer just because, if you’re the employer … why not? That actually creates a lot of wiggle room.

Finally, in a startup environment, founders often plan for an exit event (IPO or selling the company) in 2-3 years, so they may not have an interest in controlling your activities beyond that.

When actually negotiating, I tend to de-emphasize “If I don’t like it here I will quit and compete with you.”

Instead, I want to say things like, “This is an amazing place to work, but things change so often in a startup environment — it’s important to have the right situation set out on paper,” and “It’s important to me to work in a respectful environment, and part of having a respectful, mutually beneficial arrangement is that, if we need to part ways, we can, without bringing in lawsuits.” I say “lawsuits” as though I were saying “Mosh pits in the office, what? CRAZY.”

My overall attitude is something like, “Of course we’re friends here, and this dumb, mean agreement is getting in between us. Let’s toss it out so we can be buds!”

That said, if you do have to sign a noncompete in order to get the job, try to get it limited in terms of geographic area and time. If you end up leaving and don’t want to risk legal harassment (in New York, most lawyers will tell you noncompetes, and especially overly-broad noncompetes, are unenforceable, but that doesn’t mean a big company can’t sue you anyway), you could find yourself waiting out a noncompete, in which case it’s good to have multiple income streams and different facets of your expertise.