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“Can I get out of my noncompete?” Probably not, but you still have options.
Some States, like California, do not allow noncompete agreements to be enforced or enforce them narrowly. Florida, on the other hand, is the Shangri-Law (pun intended) of noncompete enforcement.
Your best opportunity for protection is often before you accept a position or before you sign a noncompete agreement. Many provisions are negotiable, and failure to negotiate will likely be held against you should you end up in court. We will cover negotiating noncompetes in a separate post.
A little background on noncompete restrictions
Most noncompete agreements have three types of restrictions:
Noncompete: You can’t work for a competitor.
Non-Solicit: You can’t take business away from your employer.
Anti-poaching: You can’t recruit any of your former colleagues to your new employer.
Bonus Category – Nondisparagement: You can’t say anything derogatory about your former employer.
If you breach your noncompete agreement, your former employer has multiple ways to pursue an action against you.
They can file a lawsuit and ask a judge to issue an injunction to effectively stop you from performing your new job. You will spend a good deal of time and incur five figures or more in legal fees to defend yourself. In many cases, you will have to pay your former employer’s legal fees if they successfully obtain an injunction. Your former employer will probably not have to pay your legal fees if they lose.
They can send threatening letters to your new employer and potentially sue your new employer for aiding you in violating the noncompete.
They can send threatening letters to any clients you take with you and potentially sue your clients for aiding you in violating the noncompete.
Fortunately, there are practical steps you can consider taking to improve your position.
Talk to your current employer BEFORE you leave
Before you bring up your noncompete with your employer, make sure you first understand what you signed. At Gaunce Law, we frequently work with savvy professionals who reach out with questions before they leave their job. Common questions include: Can I take my new job without violating my noncompete? Are there any lines I should not cross? Are there any grey areas? Can I continue working with my old clients? Can I recruit one of my former colleagues or take my assistant with me? What could happen if I breach my noncompete?
You are never allowed to compete with your employer before you leave your job. This comes up most often when employees are leaving to start their own business but is also an issue if you share certain information about your current job with your potential new employer.
Unless there are emotional or interpersonal issues involved, consider setting up a meeting with your employer to discuss options for modifying your noncompete. At Gaunce Law, we typically “pre-game” this meeting with clients to develop talking points and strategy.
You may be taking a new position with a competitor but in a different department or with a different focus, or in a different geographical area than you worked in previously. Explain that your new position does not threaten your employer. Convey your motivations for leaving and how the new position will advance your career in ways you could not at your current employer.
You may have close relationships with your clients. If you leave, they will leave. Try to come up with a win-win situation. Avoiding costly litigation is good for everyone. In some cases, a revenue sharing relationship may make sense. Help your employer understand the potential reputational risk if they alienate your client base. Explain ways that you may be able to continue doing business with your former employer.
If your attorney identifies legal deficiencies that could make it difficult to enforce the agreement, it may be appropriate to bring these up at the meeting.
A pre-departure meeting isn’t appropriate or practical in all situations, but professionals we work with often have success taking this approach. In an ideal situation, you and your employer will reach a written agreement that modifies the noncompete and limits your legal risk.
Talk to your new company BEFORE you take the job
Many companies will ask during the recruiting process if you have a noncompete with your employer. This goes without saying, but you should be honest. If they ask to see a copy, start by providing a summary. If they want to see the language, provide only excerpts of the relevant portions. You want to avoid sharing any confidential information that may be in the agreement.
At Gaunce Law, we often work with employers who face this situation. There is no doubt that hiring someone under a valid noncompete comes with risk, but, depending on the circumstances, it may be a risk worth taking and we can help develop strategies to mitigate the risk.
If your new employer knows about the noncompete agreement and still wants to hire you, ask what would happen if your former employer tries to enforce it. Will the company pay your legal fees? If the company is also sued, will they mount a joint defense? Is the company willing to go on offense and help you sue to have the noncompete agreement declared invalid?
At Gaunce Law, we strive to leverage our experience and reputation to help our clients avoid litigation. Reach out to us if you have a noncompete and are changing jobs or if you are an employer considering hiring someone with an existing noncompete.