I’d love to accept a new job opportunity in my field. If I signed a non-compete agreement, am I stuck at my company forever?

Elaine Varelas advises on how to approach a job offer at a similar organization when you have a non-compete agreement in place.

Q:  I’m at a large life sciences company and have the opportunity to join a smaller firm in the industry.  I know they want me because of the contacts that I have in addition to what I’ve learned at my current organization. I have both a non-compete and a non-solicitation agreement. If I accept this offer, what will happen?

A: You are very smart to ask the question. Let’s start with the non-solicitation agreement because they seem to be more direct. Non-solicitation says you will not ask anyone to leave the company to join you, typically for 12 months. If a former colleague decides to call you once you have joined the new company, you can talk to them about opportunities, but your former employer will be watching for any kind of mass exodus to ensure that you aren’t actively recruiting your former colleagues.

Non-competes have been in the news lately because the Federal Trade Commission (FTC) has gotten involved and is trying to create a federal regulation, instead of regulations that govern each state.  As a result, employees will potentially find themselves in a much better position to leave organizations and take their knowledge and their contacts with them. According to the FTC, about one in five American workers are bound by a non-compete clause. In January 2023, the FTC proposed a rule to ban non-compete clauses. The agency estimates the new rule could increase workers’ earnings by nearly $300 billion per year. The public comment period on the proposed rule is open until March 10, 2023. As the regulation is still pending with the FTC, the opportunity to lobby regardless of what side you are on is available.

Specifically, the FTC’s new rule would make it illegal for an employer to:

·       enter into or attempt to enter into a noncompete with a worker;
·       maintain a noncompete with a worker; or
·       represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

According to FTC Chair Lina M. Khan, “Non-competes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation, and healthy competition.”

Currently, hiring organizations might pay you for the duration of your non-compete agreement or will put you in a job that doesn’t compete at all with your previous role. Many organizations have non-competes in place when they feel they invest in employees to develop customer relationships or technical expertise gained at the organization. Before you do anything, consult with the hiring organizations counsel at least, and potentially engage your own attorney. You want to make sure the new organization will represent you if any litigation occurs.  If you signed any of these agreements on the way in, when you leave your Human Resources people will bring out those same agreements and will ask you to sign a document reaffirming your commitment to abide by those documents. When accepting a new job, people need to save these documents, as asking for them at any point in your employment raises a huge red flag of potential departure.

The Job Doc is not an attorney and we encourage you to recognize signing anything can have consequences. Some organizations will release you from your non-compete and some have geographic boundaries that might be anywhere from 50 to 100 miles so that you don’t complete in the same territory in your new role. Your former company is not trying to stop you from working. They are trying to stop you from hurting their position in the market.  It’s a sensitive situation and the lawyers and the FTC will ultimately determine what you can do in your new role.