What Is a Non-Compete Clause?

Definition & Examples of a Non-Compete Clause

Female journalist in front of a camera.
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A non-compete clause restricts the future work you can do for competitors of your current employer for a set time frame. 

Learn more about how these clauses work.

What Is a Non-Compete Clause?

Non-compete clauses are included in many business contracts, and they're a standard part of most media contracts. They're designed to protect a media company by restricting where the person signing the contract may work in the future. 

Most people who work in media have some form of employment contract. In the past, only on-air broadcasters or well-known print columnists had contracts, but now contracts also cover many managers, behind-the-scenes professionals, and freelancers.

Other industries also have non-compete clauses. They may restrict your employment to protect company secrets, and they may also prevent you from starting a business in the same industry.

How Non-Compete Clauses Work

While media companies' standard contracts may differ widely in length and detail, most include non-compete clauses. Alternatively, media employees may be asked to sign a non-compete agreement, which is a separate, standalone contract. Regardless of whether it's a clause or a separate agreement, the language prevents you from leaving your current media company and jumping over to a competitor, usually for a specific time frame.

For example, in local television, say you are a TV news anchor in Dayton, Ohio. A non-compete clause in your contract would keep you from joining the news team at any of the other stations in town. You might not be able to go to another station for six months to a year after your contract expires. If you do, the former employer could sue and ask for you to leave your new employer. It could also sue for monetary damages.

Some differences in contract language might allow you to go to another station in Dayton immediately after your contract's expiration, provided you're not on the air for a certain length of time. That change in wording is sometimes negotiable before the contract is signed.

Because Dayton is close to Cincinnati, a non-compete clause might also include Cincinnati stations. That's because there is likely overlap in the broadcast signals between the two television markets. That point may also be negotiable because of the limits it puts on you in furthering your career.

Surveys estimate that 16–18% of employees are covered by a non-compete clause or agreement. Many of these are employees who make less than $40,000 per year.

Criticism of Non-Compete Clauses

Non-compete clauses are put in place to protect companies, not you. For example, a TV station doesn't want to spend a fortune advertising someone as its top anchor through billboards, print advertisements, and other media just to see them on a rival station six months later.

These clauses impact more than just high-profile journalists. Media employees at all levels are asked to sign these clauses, which prevent mobility. Although many see them as unenforceable, not everyone has the resources to challenge them.

Due to the restrictions they place on employees, they're increasingly being scrutinized. Federal agencies and state attorneys general are investigating these clauses, and they're illegal in three states: North Dakota, Oklahoma, and California. In California, employers can be sued if they force an employee to sign one. 

Negotiating Non-Compete Clauses

If you're asked to sign a non-compete clause, start by reading the clause carefully. Ask for time to review it, and consider having a trusted advisor read over the clause. If the clause concerns you, bring your concerns to your employer. For example, you might ask what happens in the case of an involuntary layoff or termination.

You can also ask why the non-compete clause is in place. If the employer is concerned about trade secrets being released, consider asking if you can sign a non-disclosure agreement instead of a non-compete. A non-disclosure would prevent you from revealing company information without restricting your employment.

You could also negotiate by asking for a shorter time frame or additional compensation in light of the restrictions on your employment. You could also request a smaller geographic region. For example, instead of not being able to work for competitors in Dayton and Cincinnati, you could ask for it just to cover Dayton.

Key Takeaways

  • A non-compete clause restricts the future work you can do for competitors of your current employer for a set time frame. 
  • They may restrict your employment to protect company secrets, and they may also prevent you from starting a business in the same industry.
  • Non-compete clauses typically restrict your opportunities within a specific geographic area. 
  • These clauses have been criticized for preventing employee mobility.
  • You can negotiate the terms of a non-compete clause. 

Article Sources

  1. Federal Trade Commission. "New Decade, New Resolve to Protect and Promote Competitive Markets for Workers," Page 3. Accessed Sept. 6, 2020.

  2. Nolo. "Understanding Noncompete Agreements." Accessed Sept. 6, 2020.

  3. The National Law Review. "Competition in U.S. Labor Markets: Non-Compete Clauses Increasingly Under Fire." Accessed Sept. 6, 2020.