Should you worry about a non-compete? In short, it depends upon your specific situation. If you have signed an employment agreement or in many cases, an independent contractor agreement, most of the time it’s going to contain restrictive covenants, and those are essential things you either can’t do during the contract or after the contract ends. The most common restrictive covenants would be non-compete, non-solicit, non-disparagement, and some confidentiality. So, you need to look closely at what these say, because this could affect your professional career after the contract is terminated. Let’s just talk about non-compete. One of the, I’d say biggest misconceptions I hear from professionals is when they say, well, my friend, my colleague, or whoever, told me non-competes aren’t enforceable anyway.
So, why does it matter what it says? That’s not true. There are a few states where non-competes are completely unenforceable, but there’s only a handful. It’s likely that you’re in a state where non-competes are enforceable. So, you need to take that into account. I would never suggest that someone sign a contract, I guess with the expectation that, oh, well it won’t be enforced, so don’t have to worry about it. Well, okay. But you might have to go through litigation or if there’s an arbitration clause in your contract, arbitration and then you may lose if you try to push it. You need to go into any employment agreement or independent contractor agreement that you’re going to sign, willing to follow the terms of the agreement. And that includes the non-compete. What does a non-compete do? A non-compete will stop you from working in a specific specialty for a specific amount of time within a certain geographic radius or location, depending upon what profession you’re in.
Most non-competes would be one to two years long, and then the kind of geographic restriction can vary wildly based upon the profession. Now, if you’re a healthcare provider, normally it would be 10 to 15 miles from your primary practice location, maybe two locations if you’re maybe working in an outpatient clinic and then you do surgery in the hospital or something like that. Whereas if you’re in sales or maybe an executive, it might be much broader. It could be counties; it could be a state. The ones that kind of cover an entire state are much less likely to be enforced than those that have a tighter geographic restriction. But here are some things you need to think about. First, as far as the specialty listed. This is very important. It will state that you cannot do X for whatever amount of time.
And so, the X part is important. Let’s say you’re in sales and you do banking software. Well, you want it to say, you cannot provide sales in banking software for one year and three counties or something. If it just says sales, you have no alternatives as far as what’s in the geographic restriction. So, you want to tailor very narrowly. And the same thing goes for, let’s just say, it’s a physician who does internal medicine. You don’t want it to say internal medicine. You want it to be specific to whatever you’re doing for that employer. If you’re an IM, you can be a hospitalist, you can do urgent care, you can do an emergency room, you could do primary care. So, you have a bunch of different options. And you just want it to be whatever it was you were specifically doing for that employer.
That’s what it should say as far as the scope goes. As far as time goes, one to two years is standard. I would always lean obviously more towards getting a client one year instead of two, but it’s going to be somewhere between that. Sometimes I’ll see sales agreements that are like five years in length. No, you can’t accept more than two years. And then as far as geographic restrictions go, as I said before, this kind of varies from state to state. Maybe 20 miles in one state would be completely unreasonable in another. And then it also has taken to account the setting that you’re in. Is it rural? Is it urban? 20 miles in New York City is much different than 20 miles in a rural town in Idaho. So, you need to think about whether you’re willing to accept and whether you’ll have to move. When I talk to a client, many of them will accept a job, move to a location, and they’ll say, no matter what happens after this agreement terminates, we are leaving. So, the non-compete does not matter to me at all. Whereas I’ll have another client that says, my family’s there, I grew up there, my kids go to school, there is no way that I can move from the city that we’re in after this contract ends.
And in that scenario, the negotiation for the non-compete can be incredibly important. Many people obviously don’t want to have a complete disruption in their lives for a year or two. They must travel far distances to do their work just because of the non-compete. So, should you worry about the non-compete? It would depend upon your situation and whether you plan to stay in the area or not after the contract terminates, but yes if it matters to you, it’s likely going to be enforceable, and it certainly can stop you and can be enforced in most states.
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