Sklover & Company, LLC
Serving Executives, Professionals and Senior Managers
9. Post-Employment Restrictions (Non-Compete’s, etc.)
“Many employers don’t appreciate their employees until they see them working for their competition.”
Sometimes your employment obligations do not fully come to an end even when the employment relationship has ended. That is the case when you face post-employment restrictions on your freedom to work where you want, for whom you want, doing what you want.
A. Types of Post-Employment Restrictions
There are many different post-employment restrictions, each posing a different degree of potential difficulty for you. They include, among others:
- i. Non-Competition restrictions – require attention
- ii. Non-Solicitation restrictions – often problematic
- iii. Non-Interference restrictions – depends on their wording
- iv. Continuing Confidentiality – generally not problematic
- v. Non-Disparagement restrictions – rarely problematic
- vi. Continuing Cooperation obligations – rarely problematic
- vii. No-Rehire/No Re-Apply Clause – not problematic
B. How Do These Restrictions Become Problematic? Not as You Might Expect.
Many people believe “These things are not enforceable.” Simply put, that is in error, based on a misunderstanding of the four different ways these restrictions are enforced:
1. By Your Fear (“Self Enforcement”): Some people limit their own work opportunities out of fear that if they ignore these restrictions, they will surely end up in court; we call this “self enforcement.” It is wise to be concerned about post-employment restrictions, but there is no need to be fearful. While the potential risks of cost, disruption and reputational harm are substantial, there is much you can do to reduce or even eliminate those risks.
2. By Your Next Offer Letter (“Representations Clause”): Offer letters and employment agreements often contain a clause that says, using a variety of words, “The employee represents to the new employer that he/she has not signed any agreement with any past employer that might limit his/her ability to perform the duties of this job.” This is often called a “Representations clause.”
If you are presented an offer letter or agreement containing such a clause, and you signed a Non-Compete or similar agreement(s), you have a choice to either (a) admit you did sign such an agreement, and potentially not get hired, or (b) not mention that you did so, and hope that it does not later come to light. However, if it does later come to light, it could potentially lead to your termination for dishonesty.
3. By a Mere Letter from Your Former Employer (“Postage Stamp”): It is not uncommon for former employers to enforce a post-employment restriction by means of a “first class postage stamp.” That is, by sending a letter to your next employer citing, for example, a non-compete agreement you signed, and threatening your new employer with a lawsuit for encouraging or helping you violate that agreement. Can a former employer send such a letter? Yes, and it is done quite often.
Will that result in your being asked to leave? Perhaps not, but perhaps yes, and that would leave you without a job and a two-month tenure on your resume to explain in future interviews.
4. In Court (“High Risk for All”): This route to enforcing a post-employment restriction is the least common path taken by former employers, due primarily to the fact that Paths 1, 2 and 3, above, usually suffice. And, too, because proceeding to Court is potentially risky for employers, for court proceedings are public, and have a potential risk of cost, disruption and/or reputational risk of “bad things” about them becoming entirely public.
C. Negotiate Before, When and After the Post-Employment Restriction Arises
There are four most common times a post-employment restriction may be negotiated:
- 1. When you are presented an employment agreement containing the restriction,
- 2. When you are presented with an equity– or bonus–agreement containing the restriction,
- 3. When you are presented a severance agreement containing the restriction, or
- 4. When you are engaged in a situation that might be a violation of that restriction.
In each circumstance, the restriction can be negotiated to reduce or eliminate its application – and thus risk – to you, and to your working freedom. As in all difficulties, the earlier the potential problem is addressed, the easier it is to do so with success.
We offer confidential telephone consultations as a first, preliminary step in providing counsel to those with workplace or career problems or opportunities. They are available days, evenings and weekends, depending upon urgency. For those with questions related to matters on which we were retained and worked with them during the preceding 12 months, brief discussions, without review of new documents, are provided without charge. For others, our Schedule of Consultation Fees can be found on our About page. Consultation arrangements can be made with Ms. Vanessa Mustapha or Ms. Phyllis Granger at 212.757.5000, or by email to Vanessa@ExecutiveLaw.com or Phyllis@ExecutiveLaw.com.
(If you have any thoughts, comments or suggestions about these Insights, please consider sharing them with us, by forwarding them to us at Vanessa@ExecutiveLaw.com. Thank you, in advance.)
© Copyright 2019 Alan L. Sklover. All Rights Reserved and Strictly Enforced.
1. Your Unique Career Brand
“Either you are distinct, or you will become extinct.”
– Tom Peters
We are enthusiasts when it comes to the practice and pursuit of branding and, of course, when it comes to employment, the notion of “career branding.”
Each of us has a unique personal brand, namely what others think of when they think of us. It is their sum total view of what we offer the world, our value to others, and to our clients, customers, employers and colleagues. Your brand precedes you, empowers you, and follows you, wherever you go.
Your “career brand” is what your present employer and all potential employers think of your potential value to them, and thus what they need to offer you in return for your working for them. Your knowledge, skills, relations and reputation have taken a great deal of time and effort to learn, acquire, and develop, and is a reflection of your personality, character and the standards you have set for yourself.
You create your brand each and every day, whether you know it or not. If you don’t proactively create and enhance your career brand, you leave that critical task to luck and chance, or worse, permit others to define it for you.
The employment marketplace is an increasingly competitive place. New York Times columnist Tom Friedman has written “Good enough is no longer good enough.” We could not agree more. If you don’t have a distinctive, attractive, outstanding career brand, in the employment marketplace you are likely perceived as little more than an easily replaceable commodity.
Most of our clients have devoted and continue to devote significant effort and imagination to creation and enhancement of their own, distinctive career brand, and enjoy the multiple and varied “fruits” of their efforts. Their experiences are as inspiring to us as they are rewarding for them, in the broadest sense and spirit of those two words.
- Your Unique Career Brand
- Managing Employment Risks
- The Recruitment Phase
- The Negotiation Phase
- Equity “Trap Doors”
- Climbing the Ladder
- If Difficulties, Disputes or Allegations Arise
- Navigating Employment Departures
- Continuing Restrictions
- Extending Career Longevity