Don't Sign Away Your Future

Noncompete agreements can hurt your IT career, unless you check the fine print.

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'd 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 position at another big company. But when he gave his notice, his original employer threatened to go to court to enforce 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 this happens often, because workers happy to be starting a new job will sign a stack of paperwork without considering the potential 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.

1. 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 having workers sign noncompete agreements, companies often have them sign nondisclosure agreements, antiraiding agreements and/or computer-use policy statements, 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.

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.

2. Study Your State's Stance on the Issue

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

Susan Joffe, an associate professor at Hofstra University School of Law in Hempstead, N.Y., says some states, such as Oregon, require employers to give hires the contracts before they start their new jobs. Some, including Massachusetts and Oregon, forbid employers from requiring existing employees to sign them without an additional "consideration," such as a raise or promotion.

If there's a legal dispute, the courts in some states tend to be more pro-business and are thus more likely to enforce noncompetes as they're written, while courts in other states want to promote the mobility of the workforce and might rewrite the terms or decline to enforce them, Joffe says.

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