Non-Competes In Client Contracts

Have you ever seen a non-compete in a freelancer contract? Every blue moon, I run across a contract with a non-compete, and I always try to remove it before I do the work. Here’s what I do to remove those non-competes from contracts.

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In today’s episode, we’ll be chatting about non-competes in client contracts.

Always Read Your Contracts

First and foremost, always read your contracts. Yes, contracts can be long and tedious, but they are essential. You should always read every page of a deal and get clarification on parts you don’t understand. Contracts are legally binding documents, so you want to make sure that you are signing something you agree with. Contracts are not just terms of service you likely agree with without reading. Take your time and read the agreement.

Try To Negotiate Non-Competes Out, Don’t Sign Until It’s Out

Whenever I run across a non-compete, I usually try to negotiate it out of the contract. If you find a non-compete in a contract, email your client and let them know that you don’t think the non-compete will make sense for your contract.

Your clients might not even know non-competes are involved. I’ve asked clients about non-competes before, and they were stumped that one was there. They may have you sign a general contract, and it might not be tailored for your position.

If they agree to take the non-compete out, don’t sign it until you get a new document where the non-compete is taken out.

What Is A Non-Compete?

A non-compete helps protect a company’s intellectual property. Intellectual property like software, content calendars, patents, formulas, launches, etc. can all be considered when creating a non-compete. As a freelancer, you might be privy to the inner workings of a company, especially if you are a software engineer or even a graphic designer. For example, as a software engineer, you have access to proprietary information on how a company builds its latest app or software. You could walk off and sell that to another company unless you signed a non-compete. As a graphic designer, you might be creating the packaging or labeling for a product that isn’t out yet.

Companies like Tesla likely have non-competes. Tesla has created a ton of self-driving car technology, that they don’t want in the hands of competitors. If you work on these types of projects at Tesla, you likely have a non-compete in your contract.

Indefinite Non-Competes Are Usually Not Held Up In Court

According to Morse Law, “Noncompetes must be reasonable in duration and geographical scope.” This means that the client shouldn’t put out a non-compete that lasts forever. Instead, it should be specific. Some courts do scale back indefinite non-competes to make them reasonable, but some courts throw out these non-competes altogether.

Make Sure Client Competitors Are Clear

Before you sign a non-compete, make sure you understand the terms and that your client’s competitors are clearly defined. Who are they stopping you from working with? If one of their competitors is someone on your list of dream clients, you may want to avoid taking on that client.