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Don't sign away your future: Noncompetes done right

Should you sign a noncompete agreement? Experts weigh your choices.

By Mary K. Pratt
April 23, 2009 12:00 PM ET

Computerworld - Can signing a standard workplace document derail your career plans? Yes, says Jerry Luftman, executive director of graduate IS Programs at Stevens Institute of Technology in Hoboken, N.J. He says a former student almost lost out on a big break because he had signed a noncompete agreement, a contract that prohibits employees from doing certain work for a set period of time following the end of their current job.

The former student had been an IT manager at a Fortune 500 company but didn't feel that he was moving up fast enough. So he accepted a higher-up IT management position at another big company. But when he gave his notice, his original employer threatened to enforce in court the noncompete agreement he had signed when he first took the job.

"The company was willing to fight to keep him from going to this new company, even though he had accepted the new position and given his resignation," Luftman says.

The new company was also willing to fight for him, though, and its lawyers helped settle the dispute, in part with assurances that the IT manager would disclose no proprietary information regarding his former employer, Luftman says.

Luftman says this happens often enough -- workers happy to start a new job sign a stack of paperwork without realizing the consequences down the road. "It's the kind of thing people don't think about until they get into this situation like this one," he adds.

Here's what you should know to ensure that you don't sign away your future.

Know the different documents

Lawyers say they see plenty of workers who don't know what they've signed.

"People come in and say, 'I signed a noncompete,' and I look at it and say, 'No, it's not really a noncompete. It's a nonsolicitation,'" says Brad Schleier, managing partner at Schleier Law Offices PC in Phoenix.

In addition to noncompete agreements, companies often have workers sign nondisclosure agreements, antiraiding agreements and/or computer-use policy statements -- all of which seek to protect companies in different ways, says C. Forbes Sargent III, chairman of the corporate department and co-chairman of the employment law group at Sherin and Lodgen LLP in Boston.

For more information

Web sites with more information about noncompete agreements include the following. Be advised, though, that these are for general information purposes only; if you're in the midst of a contract dispute, your best bet is to hire a good employment lawyer.

Although these are all legal contracts, each one puts different restrictions on departing workers, Sargent says. A nondisclosure agreement says you can't divulge proprietary information, while an antiraiding agreement says you can't hire your former colleagues to work with you at your new job. A nonsolicitation says you can't seek out your current employer's clients once you depart.

They're not the same as a noncompete agreement, Sargent adds.

Study your state's take on the issue

If you live and work in California, you've got it easy: The state has banned noncompetes in all areas except for limited cases involving the sale of a company. But if you work elsewhere, know that the laws governing noncompetes vary from state to state.



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