Negotiate That Noncompete Agreement

Let me play magician for a minute. Let me predict what my closing advice will be: “Make sure you get something in kind for everything you give.”

Negotiate That Noncompete Agreement

Question: I need advice about having a noncompete or nondisclosure agreement modified before accepting a job offer.

My interviews have gone well. Due to market forces, I’m probably the only person in this region that has the skills they want, so they offered me a very good compensation package. So far, everything is good.

Then they asked me to sign noncompete (NCA) and nondisclosure (NDA) agreements that would prevent me from working for another company in this field for three years worldwide. I mentioned to the guy I’d be reporting to that I don’t think this is enforceable and I’d rather sign something more reasonable. He agreed and said he’d try to get approval to limit the restrictions for one year, and in the U.S. only, per my request.

How likely is upper management to approve this? Three years is their standard that employees sign, so I assume they won’t want to change it. Common sense says they’ll make the changes, but I could use some advice.

Nick Corcodilos: NDAs and NCAs. Two of my favorite topics. Though there’s hardly a CMO that doesn’t know what these agreements are, let’s have a quick and very basic lesson.

When you sign an NDA, you certify that you will not disclose certain information you obtained while working at the company even after you leave. An NCA states that when you leave the company, you will not do anything to compete with its business—including accepting certain kinds of jobs with competing companies.

These agreements usually include limits on the duration of the restriction as well as geographic scope. This is a very basic explanation.

If you think you’re not special enough in your industry to merit an NCA or NDA, think again. Salespeople, middle managers, engineers, and all sorts of workers are being asked to sign these things. This could affect you. So let’s get back to this reader’s question.

Let me play magician for a minute. Let me predict what my closing advice will be: “Make sure you get something in kind for everything you give.”

Now let’s go through your whole story. Let’s see how clairvoyant I am.

Question Authority **

Very smart. Companies often hand a job candidate an NCA or NDA that may not be enforceable. The first thing to do when presented with such agreements is to talk with an attorney to determine their legality. (Trust me: The cost of falling victim to a bad NCA or NDA can be far greater than the cost of good legal advice.) The second thing, even if the agreements are enforceable, is to negotiate the terms. Many companies use rather extreme and highly restrictive boilerplate agreements that few people are courageous enough to question. Employers count on the intimidation factor. When a candidate balks, the company often backtracks quickly and offers to modify the wording. Good for you for suggesting it.

My advice is to be diplomatic but firm. Don’t sign anything you’re uncomfortable with, and consider carefully how such an agreement could affect your life later.

Negotiate And Avoid Trouble **

I’d say pretty likely. Other readers have shared stories of how they diplomatically negotiated better terms. Of course, I have no way of telling how this company handles such matters. Your challenge is to find out, and I think the effort will be worth it.

Remember: You hold some good cards. They want you. Don’t worry about what other employees have signed. Address your own needs. (That doesn’t mean you should be unreasonable. See “Leave Something On The Table When You Negotiate.”)

Are you taking a risk by trying to negotiate this? Sure, they may refuse to change the terms and they may rescind the offer. But consider that you will have to live with these people for a long time and with those agreements even longer. The time to get it right is now.

Turnabout Is Fair Play

I think a three-year restriction worldwide is insane. But as they say, everything has its price. If the company insists it has legitimate reasons for tying you up like that, you need to find out what these restrictions are really worth. In other words, what is the company willing to pay to keep you out of its bailiwick for three years?

Come back at them with this suggestion, which I think is reasonable. The company should give you an ironclad employment contract that guarantees a severance package equal to three years’ worth of compensation if you leave the company. They’re protected from competition and from disclosure of confidential information, and you’re compensated for what this could cost you in lost income. (Three years of compensation is extreme. But so’s a three-year restriction on you!) If they think that’s too much, well, now you’ve got a negotiation going. They’ve tacitly agreed you have a point. The question now is, how much is enough?

Now the magician will go back to the sealed envelope: “Make sure you get something in kind for everything you give.” That’s no magic. Just good business.