What Reasons to NOT Sign a Non-Compete Clause

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August 29, 2013BusinessNo comments

If you are an employee for any kind of company that has a lot of competition, your employer may try to get you to sign a non-compete clause so that they can keep you and your work there forever as a valuable resource. While it may seem harmless at first, signing such a clause can actually cause you a lot of trouble in the long run.

Here are a few reasons why you should think twice before you sign a non-compete clause:

May Prevent You From Finding a Job for Length of Terms 
Let’s say that you have been working for a company for some time and they specialize in electronics repairs. Then, your employer asks you to sign a non-compete clause. If you get offered another job that pays significantly more than what your current employer, but it is in the same industry, you cannot legally accept the new job. If you get fired or you quit because you are unhappy with your present employer, you cannot take a job in the same industry or in a related area for at least a year or more, depending on the terms of your non-compete agreement.

Competitors in this industry may not want to hire you anyway after they find out that you have signed a non-compete clause with a previous employer. This is largely because if they do hire you, the previous employer can force your new employer to either terminate you right away, or face legal trouble.

The new employer will not want to get into any legal action. So, most likely, they won’t hire you to begin with once they find out about the agreement you signed. If they find out about it after you have been hired, you can be immediately terminated.

You Could Land in Legal Trouble 
If you do go to work for another employer, you could land in some serious legal trouble if you are performing the same services for the new company that you provided for your previous employer. This then requires you to hire a lawyer, saving up money for court fees, and much more.

If you lose the court case, you could be forced to give up your new job and any benefits that come along with it. You could also be heavily fined and ordered not to return to any sort of work in that industry for a specified amount of time.

Lower Compensation for a Signature 
Many employers will use a non-compete agreement to their advantage while damaging their employees in the process.

Sometimes, after you have worked with a company for a while, they will throw a non-compete clause your way, threatening termination if you don’t sign it. In an effort to save your job, you frantically sign it and effectively sign your life away to that company.

You see, once you sign, the employer can pay you less than what you are actually worth. The reason why is that they know that you can’t go anywhere else even if you are offered higher pay. Therefore, their contract is forcing you to remain with their company, even under unfavorable conditions.

When being offered a job, or even after being employed for quite a while, if a non-compete contract comes your way, do not sign it. Doing so may harm you in more ways than one.

For references to this article, please check out: Litigation Over Noncompete Clauses Is Rising, Extended Education Programs, and Reducing Legal Risks in the Workforce.