The Crippling Contract Clause Holding You Back from Advancement

April 12, 2023

Do you have an employment contract? If so, when’s the last time you checked its terms? Dig it out from your files and take a close look, because you may have some restrictive covenants in it, such as a “noncompete” clause that could severely limit your next job search. 

According to the American Bar Association, a noncompete clause is one that “prohibits a former employee from competing against his or her former employer within a particular geographic area for a specified period of time.” So you can’t quit your job to go work for a rival company or start a competing business, usually for at least six months and up to two and a half years. Sometimes, as in the case of the sale of a business, the duration of a noncompete can be five years, while some states don’t even have time limits, says Wendi Lazar, a partner at specialty employment law firm Outten & Golden where she coheads the firm’s Individual Practice and the Executives and Professionals Practice Group, representing many high-level female executives. According to Lazar, depending on what contract law calls “adequate consideration,” which in simplified terms means the benefits each party gets or expects to get in a deal, you might not be guaranteed any compensation during the noncompete period.