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PERSONAL BUSINESS

4.13.99  
To Sign or Not to Sign a Noncompete Contract
Even when you don't really have a choice, try to negotiate the terms

The second in a two-part series

You've just landed a great job, and your new boss presents you with a noncompete agreement. No problem now. But in the back of your mind, you're thinking you'd like to start your own company in a few years. To sign or not to sign? Tough question.

Obviously, you don't want to start off in conflict in a new job. Yet contracts that prevent employees from taking a job with a rival or from starting a competing business are becoming commonplace. And such agreements can make it difficult for an entrepreneur to get going. The dilemma is one more and more people are facing. Once confined to top executives or senior researchers, such contracts are now an employment condition for many mid-level managers, technical staff, or anyone whose departure might create a competitive disadvantage.

Some people suggest you hang tough -- something that's easier to do in a great job market than a poor one. "I strongly recommend that you refuse to sign it if you can," says Steven Mitchell Sack, an employment attorney and author of Getting Fired: What to Do If You're Fired, Downsized, Laid Off, Restructured, Discharged, Terminated, or Forced to Resign (Warner Books). You may not have much of a choice, though, if you want the job.

You are in a better position to refuse to sign a noncompete agreement if you're already working at a company. That's because companies can't legally force you out for refusing to sign, says Barbara Kate Repa, an attorney and author of Your Rights in the Workplace (Nolo Press). It also means you're in a good negotiating position because you're obviously considered a valuable employee.

If you decide to sign the noncompete, try to narrow the time frame and geographic limit. In other words, don't get locked into a contract that keeps you out of your field for a long time and over a broad area. Whatever you do, don't accept something in return, such as a bonus or raise, until you've hammered out a contract you feel comfortable with. "You're better off trying to get it written as narrowly as possible before accepting something of value," Repa says. After all, you're trading your freedom to make a living long term -- something that's worth a lot more than a raise of a few percentage points.

By Laura Castañeda in Philadelphia

PART I: Noncompete Agreements: What's Enforceable and What's Not
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PART I: Noncompete Agreements: What's Enforceable and What's Not

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