“Sign this Non-Competition Agreement, or Leave” – Is that Legal?

Question: I have been working for this company for 3 years now. We’ve never had “non-compete” agreements here before. Recently, a VP left, and went to work for a competitor. Now everyone is being told that we have to sign non-competition agreements, or leave. They have not given me any incentive or payment to sign this non-compete agreement. Is this legal?

Jackie, Coral Springs, Florida

Answer: I wish it wasn’t so, but as a general rule, it is entirely legal for an employer to tell its employees “Sign this non-competition agreement, or leave.”

How come? The reasoning goes like this: employees and employers are free to set the terms and conditions upon which they deal with each other. Employees can leave when they want to, and employers can ask them to leave when they want to. Employees can say, “Pay me X dollars, or I am leaving,” and employers can say, “Sign this, or leave.” It is a type of mutual freedom. When it comes to non-competition agreements, employers can say “You must sign this, or leave,” and employees can simply say “No, thank you” and leave. Or they can sign, and stay. It’s their choice.

I know this sounds very unfair, and to my mind it is so unfair, it SHOULD be illegal. It is not so easy to find a job, or a job near where you live, or one that you can do well and enjoy. “Just leaving” is not at all “just easy.”

Do employers have to give employees something in return for their signing a non-competition agreement? The simple answer is “No.” In legal theory, the answer is that they actually did give you something: “continued employment.” In fact, most non-competition agreements handed to employees who are on the job say something like this, “In exchange for your being permitted to continue to work here, you promise not to work for a competitor for a certain period of time (usually a year or two) if you ever leave here.”

You can try to negotiate with your employer if you represent sufficient value to him or her. Say, for example, you are the only person in the company who knows how to work the most important piece of software on the computer. You can say, “If I leave, you will not know how to work the computer.” That is, the best way to negotiate with a boss is to be critically important to him or her, so he or she DOESN’T DARE say that to you again. Think about it: if Tiger Woods worked at a golf school, would his boss dare say that to him? Most of us, though, are not that important. But that is the best alternative.

Perhaps one of the most vexing situations at work is when you are asked to sign a Non-Competition Agreement, and you really don’t want to. How can you respond? How should you respond? Our “Model Letter: Response to Request You Sign a Non-Compete” shows you “What to Say, and How to Say It.™ To obtain your copy, just [click here.] Delivered by Email – Instantly!

I know it’s not what you wanted to hear, but it is the truth. Thanks for writing in. Please tell your friends about our Blog.

P.S.: For those wanting personal attention and counsel, Al Sklover is available for Private Telephone Consultations on the subject of Non-Competition and Related Restrictions on your working freedom. Choose 30-, 60- or 120-minutes. If interested, just [click here.]

Best, Al Sklover

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