Got an interesting note from a commercial freelancer recently:
Recently (and perhaps because of the recession) I’ve been asked to sign non-compete agreements from agencies I work with. The first time I was asked, I said no—and lost the account. Now I’m being asked again, and it happens to be a fairly substantial client.
I have no problem signing a confidentiality agreement, but this non-compete states:
For two years after the date your relationship with (agency) ends, you may not solicit any contractor, independent contractor, or agent of (agency) to work for you or on behalf of any competing business; or solicit any client or customer of (agency) to purchase from you any product or service which competes with any product or service provided by (agency).
My client is obviously paranoid; I think he has been burned in the past. While my town is a reasonably major metro, we only have a handful of large household-name corporations. Essentially, if his clients are one or more of those big companies, then I wouldn’t be able to do any copywriting business with any department in those firms – even those the agency isn’t directly working with.
Some of these companies probably use six different agencies in town. If I sign this agreement, and get a call from one of those other agencies (quite possible), I’d have to turn down that work. Or, if one of the companies themselves wanted to hire me to write, say, internal communications (work outside the agency’s scope), I’d have to turn that down as well. Help!
PB: Maybe I’ve been lucky in my commercial writing career, but I’ve never been asked to sign anything so draconian as this, so in my experience, it’s not at all common. Non-competes are typically used for employees who leave a company and, understandably, that company is a bit hesitant to have them go to work for a competitor for at least a few years. But to require a contractor to not solicit work from their clients or even competing agencies that might work for those clients, for two years? That’s downright preposterous.
Now, I have encountered the wrath of a copywriting client who thought I was going around them to solicit work directly from the client – a BIG no-no, and I get that (talk about paranoid; they saw me swapping cards with an account exec from the client, and made the totally wild leap that I was soliciting work directly from them).
So, this is similar but exponentially more far-reaching, and in a much more locked-down form. I wouldn’t sign it unless you’re okay with being shut out from doing any commercial freelancing jobs for any of these other companies, which I kinda doubt you are. My first instinct is to tell them to go jump in the lake. After all, according to this agreement, you do one $250 job for them, after which they drop you, and you’re shut out from all this potential work for two years. That’s laughable.
But, there’s definitely something else going on here, and a little digging ought to unearth it. You need to craft some sort of win-win. Ferret out their real concern and get to some middle ground. In addition to the quite conceivable inanity of the “one-$250-job” scenario described above, explain that each of their clients might have dozens of people/departments who could potentially hire you, and to do work THEY (the agency) had zero interest in (like collateral, internal communications, etc).
As such, how fair is that they put this blanket rule on ALL business? That’s heavy-handed, greedy, and not at all acting in good faith (just an editorial aside; I probably wouldn’t say that to them, but then again, I just might…).
Why not say you’ll get permission from them before taking on any other work from any division of any of their clients? Or, as a last resort (and not a habit you should get in), if you really want to work with them, and feel the upside potential with them is great (a gamble, obviously), why not offer, say, a 10% “royalty” on any work gotten from within that company?
Assuming their main concern is that you might poach work from them that would be up their alley, if they KNOW they won’t be interested in X kind of work, under the royalty situation, they might actually be motivated to get you in those doors so they make their piece. Not an ideal situation, and if they don’t agree to either of those, I’d absolutely walk.
By the way, I got an update from the freelancer recently:
“My client has agreed to let me propose some changes to that part of the agreement. I have done that, and now I’m waiting for his reply. He is clearly fearful that I am going to solicit his clients, which I think is the result of some past experience he had that is totally unrelated to me. However, I think there is generally a growing paranoia as competition has escalated in the days since the recession hit. I’ll email you with a full update as soon as this is resolved.”
Have you ever run into this situation before?
How did you handle it?
What would you suggest she do?
If crazy-restrictive agreements like these are indeed becoming more common, why do you think that’s the case?
I have signed non-competes as a freelancer, but never for more than 1 year. I think this freelancer should counter the agency’s 2-year period with 6 months and then settle on 9 months or 1 year. Two years is excessive and unreasonable.
I’d also revise the end-of-relationship language so that the non-compete clock starts running at the completion of every project for the agency, and resets with each new project — like the shot clock in basketball. The point here is you never know which project is going to be the last. You don’t want to find yourself in a situation where the agency hasn’t given you any work in 6 months so you then contact them to officially end your relationship and effectively extend the non-compete period.
I also like your idea of negotiating freedom to contract directly with parts of large companies that the agency isn’t serving.
I don’t know if crazy-restrictive non-competes like this are becoming more common. I was under the impression that courts have found similar ones for employees to be unreasonable and unenforceable. At a certain point they can be seen as collusion and restraint of trade. I’m pretty sure that in the case of federal government clients, these agreements are void. Every government RFP I ever responded to in my agency VP days required our certification that we were not party to any agreement as to who will and won’t compete for the work. Any non-compete seems inconsistent with this type of requirement.
But if they are becoming more common, I can believe it has something to do with agencies’ fear for how to maintain their business in tough times. They will do anything to protect their turf and over-reach as much they can get away with. Unfortunately, freelancers are easy to push around.
Finally, I need to say that I have one design studio client who encourages her clients to use me directly for projects that don’t involve her. Mine is the only name she gives out when people ask her to recommend a writer. In this case, my experience has been exactly the situation you and I have addressed: I have done work for parts of large organizations that she wasn’t working with. This year, I got to return the favor. I was able to help my designer friend get the design assignment for an annual report that a mutual client had hired me to write.
The agency in the original post is not considering the possibility that an unrestricted freelance writer could be a conduit to work they might not ever see.
The original proposed language presupposes that the freelancer is aware of who the agency’s clients are, and will remain aware of the identities on that client roster as it changes. Did the agency agree to advise the freelancer every time the client roster changes? Ha.
I saw these clauses frequently when I was contracting because they are standard contract verbage, although it was usually 6 months or a year. Two years is excessive. When I questioned the noncompete clause, as I always did, the person hiring me would admit that their Fortune 500 client was a big company, and I could get work with another part of the company after my contract ended, but not with their contact, for a year, unless it was through them. They know that no single agency can have an exclusive relationship with a large client, because large companies welcome competitive bidding. The clause you cite is different though in that it prohibits prospecting the agency’s entire client list. I don’t see how they can do that unless you worked on projects for every one of their clients. Otherwise, you would not know their entire list of clients unless they told you, and nobody can just tell you who you can’t work for! That’s ridiculous, but luckily they’ll have a hard time getting anybody to agree to that, so I think she should take a stand for a fair businesslike negotiation. If she’s a good fit for what they need, they should be able to strike a deal. If they can’t, I would walk away.
I’ve consulted with a lawyer on freelancing contracts and working with other freelancers because of my team agency business model. I’ll give you the sound bytes of what I know.
A non-compete is fairly typical, from what I understand, and it’s a legitimate request: Come work with me, but don’t burn my ass and steal all my clients if you quit.
To be legal and stand up in court, a non-compete must meet two conditions: it must not prevent the person from earning income, and it must be for a realistic period of time. The norm is 6 months, and because of that “can’t stop you from earning money”, it has to be carefully worded or it’s invalid.
Your example – the “this is fine” is in bold and the “this is not fine” in italics (though bear in mind I’m not a lawyer):
For two years after the date your relationship with (agency) ends, you may not solicit any contractor, independent contractor, or agent of (agency) to work for you or on behalf of any competing business; or solicit any client or customer of (agency) to purchase from you any product or service which competes with any product or service provided by (agency)
It’s too long a period to be valid. But if it were for six months, say, it would be fine, in that it’s saying “don’t steal our clients or our staff”. If you’re an ethical person with good work morals, it shouldn’t be an issue. Even in a small, tiny town.
I’ve been asked. In most cases, it’s clients thinking they have such earth-shattering secrets that they must protect themselves from evil writers. I signed one “non-compete” agreement that was obviously a scare tactic only – the only place the word “non-compete” appeared was in the title of the document. Without specific language behind it, that word alone isn’t standing up in any court. So sure, I’ll sign it. I’m losing nothing.
In another case, again, the client wanted the non-compete, but it was worded so badly I pushed back. I can’t sign a document stating I won’t compete by writing for the company’s competitors when I don’t know who those people are. So I had it amended to say “will not knowingly work for” said competitors. Those are the ONLY two times I’ve signed a non-compete.
I won’t do it for magazines. That’s absurd. If they’re not going to put me on staff or give me exclusivity, they’re not going to tie up my ability to earn a living.
I would suggest she push back on this. In a few cases, it could be the language is there because the lawyers put it in. She may be able to get it removed altogether. Also, it says she can’t solicit these people. However, if they come to her, she’s free to do business with them. Keep that in mind.
If they want this kind of exclusivity, they have to pay for it, and they have to guarantee her a certain amount of work for her loyalty. I know writers who have exclusivity contracts, and they’re paid handsomely for them. She should first try to get this ridiculous clause removed, then ask for a more substantial contract that guarantees her specific dollar amounts and work loads for her trouble. No way that client should demand this without giving something in return.
I was asked to sign a non-compete for a graphic design company I worked for once. The contract said that I wouldn’t work for any company that did any kind of similar business to theirs for over a year. Considering that they did graphic design, web design, print collateral, marketing consulting and SEO among other things, that would cut out most of my client base. I explained the problem to them and got them to agree to remove that clause entirely.
I have been confronted with these several times. The problem is, how do you know who their clients are–down the road or even at the time?
Great comments, all. And yes, my general feeling is that such a non-compete wouldn’t be enforceable as you start getting into affecting one’s ability to make a living. I DO understand a company’s fears of having clients poached, but this seemed to go way beyond that – swinging the pendulum way too far in the other direction.
Incidentally, I asked the person to keep me posted on developments and she just sent me this update:
“Peter: As it turns out, he doesn’t seem as anxious as he once was to have me sign the agreement. However, after further discussion it seems that he is afraid I will take names and contact information that I obtain while working for him and use them to solicit business—either for myself or for another agency. Apparently he had a bad experience in the past. So, he asked me to re-write the section, and here’s what I sent him:
When soliciting business independently or when working with other agencies, the independent contractor may not use any names or contact information he/she obtained while working with XX.
He seems to be pretty content with this language. I haven’t signed anything yet (still hoping it will just go away), but at least this does not prevent me from doing business with these companies. The truth is, I’m becoming more valuable in his eyes as I continue to deliver quality work.”
As I thought, once she delved a bit deeper into the situation, she could get at his real fears vs. his imagined ones, and address the real ones in a more practical way. And note her last comment. Once the client starts seeing the value she’s delivering (and ergo, builds trust with him), his fears start largely evaporating. Amazing how that works… 😉
PB
A good outcome. But if that language represents the totality of it, there’s no time limit. Even the most onerous non-compete expires at some point, freeing the contractor or former employee to solicit anyone. Or maybe she’s fine agreeing never to use the agency’s contact info as a way to demonstrate her intent not to steal the guy’s business.
I had a prospect send over a a non-compete worded almost exactly like the one in this blog post. The only difference was they wanted me to refrain from working with any of their competitors three years after I stopped working with them. I felt like that was a little extreme considering that I had no way of knowing who their clients were or would be for 3 years after I no longer worked with them. I turned down the project.
A client once asked me to sign a non-compete agreement with somewhat similar language to what others here have seen.
I sent it to my lawyer – he did our wills and house purchase docs – and asked him what I should do.
He asked, “Where’s the quid pro quo”? Apparently, if people want to tie you up in an agreement they have to recompense you for the limitations they want to impose.
And, indeed, that is how that client’s agreeements with on-site employees worked – they got a rather nice severance package with their non-compete.
It was on that basis the I refused to sign. I told my client that his non-compete could cost me $____ in income over the stated period and how did he intend to compensate me for that. The subject was dropped and never raised again. (It helped, of course, that I am honest and trustworthy and had no desire to take advantage of him or the contacts I gained working for him against his interests. Trust does matter.)
I just started doing contracting after years of full time work. I started a 2 day a week contract for 4 months, and its just ended… the employer, who has been erratic in paying, is holding 2 months of invoices hostage in exchange for signing a non-compete that blocks me from the industry for a year. The non compete was not a part of our original contract and was sprung on me today. If I sign it, she’ll pay me my final 2 months invoices. There is now bad feeling between us as I told her I did not recognize this document. Aren’t these things supposed to be introduced at the start of a relationship? Do I really have to take her to small claims to get my money? Is this what freelancing is like??????? This is my first experience contracting.
Yes, it is inappropriate for the client to be making payment to you contingent on your agreeing to new terms after the fact that were not part of the original agreement between you. And, yes, if you don’t want to sign the non-compete, you’ll have to sue her to get your money. If the amount in question is within your state’s limits for small claims, then do go that route.
I assume the defendant you’ll name in your suit is the client company and not this woman personally. That in itself may be enough to get you paid because the company may not want to spend money on lawyers defending itself.
Along those lines, you might first try sending a couple of demand letters. The first letter is to your client contact. Keeping it fully objective and facts-based you simply state that you did the agreed-upon work, the company’s payment is now overdue, and that her condition that you now sign a non-compete in order to get paid is not consistent with the original (oral or written) contract under which you performed the work. Therefore, you won’t be signing the non-compete and you now respectfully demand to receive their payment by (fill in date 5 or 10 days out). Send this registered mail or FedEx. Something with delivery confirmation.
When they don’t pay, your next letter goes over her head to the company president or their top legal officer if you can identify that person. You again lay out the factual basis of your situation and claim. You can probably use the bulk of the previous letter, updating it to say that you wrote to Ms. X on (date) demanding payment by (date). This time, besides demanding payment by (a new date 5 or 10 days out) you say something to the effect that “or I have no choice but to pursue all legal remedies available to me.”
Then when they don’t pay, sue.
Is it worth going to this trouble to get paid? Only if the work was worth doing for the pay that was being offered.
Good luck.
I’m with Ken, Kubda. No, this is NOT how freelancing works, and it’s total B.S. for them to pull this on you after the fact. Sounds like she’s just bullying you because she thinks she can get away with it, because she assumes you’ll just fold.
So, yes, if you refuse to sign the non-compete, and I wouldn’t blame you for a nanosecond if you did, you’ll likely have to sue them to get your money…
Another option is one you’ll have to undertake carefully… If this company has a Facebook page or a Twitter account, well, perhaps you see where I’m going with this….
There are many many stories coming out of the modern ultra-networked-and-connected age of ours of companies behaving badly, who suddenly and miraculously starting acting like model citizens when the threat of public humiliation (“X Company hoses their vendors thusly:…”) is dangled in front of them. It’s actually been a wonderful equalizer against a—–les who think they can set onerous and capricious terms with any vendor and do it with impunity.
Now, many out there may say, “Whoa, be careful when considering potential libel against a company.” And I agree. And it’s my understanding that it’s not libel if all you’re doing is sharing the truth, the whole truth and nothing but the truth. What are they going to sue you for? I know, a company can sue for ANYthing frivolous, but as Ken notes, is this one woman acting on her own or is the whole company behind it.
If the former, you may have leverage with larger powers-that-be that simply won’t be keen to have their name righteously dragged through the mud when the upside (i.e., you don’t write for another competing company for a year or two) just isn’t remotely a battle worth fighting.
Just the threat of it without actually having to do it can get some movement…
PB
She is sending me a series of escalating in tone emails so I’m simply saying I don’t recognize the non compete, and that there is no relationship between it and me getting paid. My getting paid is a condition of the contract that we signed at the outset. So this am I got an email asking for my key and passcard by TODAY or she would have no choice but to change the locks and deduct the costs from what was owed to me. There is no service in the world that will get this to her unless I drive and its (50kms away from where I live). And she said no need for me to correspond further unless I signed her non compete. I’m sure she intends to trash my name now. I wish I’d never met her. What a b*tch.
Wow. This all seems so unreasonable, only opened THAT email
I didn’t finish my thought there … she’s given me a few hours to drop off her keys and passcard since I only opened the email at 1:44pm and now its 2:24 and I have stuff to do! She’s really jerking me around.
Maybe you need a lawyer.
I’m no lawyer, but one piece of advice I will give is stop sending email and start corresponding only by written and signed letters sent with delivery confirmation.
Take your time and do exactly as I suggested before. That you have a signed contract puts you in an even stronger position because that clearly identifies the deal between you and this woman. In your letter refer to the contract as “legally binding.” If the contract has language describing itself as the full and complete agreement (which it probably does) then refer to that as well. It’s further support that the non-compete is not necessary.
Her b.s. about the keys is meant to scare you. Once she’s in front of a judge that will fall apart. As long as the non-compete and return of keys are not in the ontract, she doesn’t have a leg to stand on.
Good luck.
Ken
Thanks for all. I contacted an employment lawyer and he confirms the non compete and told me to take her to small claims. I sent her back her keys & pass by registered mail today, and a note asking her to respect our one and only contract and that if I did not receive my cheques promptly I would be pursuing legal remedies available to me. She’s the managing director of this company, so I’m at the top already.
I doubt it will get there tomorrow. Wow, she really hates me. What a waste of her energy, so guess I’ll have to wait for the small claims award for my cash. In Ontario there are provisions for interest, legal fees & other fees incurred for filing. And I’ll certainly be asking for those. This whole thing surprises me as she made such a huge deal about how “warm” and “family oriented” her business ideals where. Must have been the affirmation her therapist gave her…
Want me to keep you posted? See what kind of sickos are out there preying on contractors? She has the money, its just she’s not getting her way so its a kind of spoiled brat response. Each of the emails she sent was getting shriller and shriller. I am so proud to have kept level headed, low key and friendly sounding. Guess I’m in shock…
Kubda,
In the interest of not making life any more difficult for you, I made the executive decision to remove your reference to the company name from your earlier comment.
And Michael, you’re absolutely right that their website might as well have a “Go Away” sign on it to have it set up like they do, but I’ve removed your comments about it as well. If on the off chance, this company does a search for their company name (and smart companies DO just that on a regular basis, to keep a pulse on anything negative being said about them), and they find this exchange, it could complicate Kubda’s efforts to get paid. I don’t want to give them ANY ammunition whatsoever.
PB
Thanks Peter, appreciate it. Extremely wise advice and really I should know better given how this whole thing is turning out. Thanks. Michael, I had the same thought as you, normally you’d want to extend a warm welcome not scare the bejeezus out of visitors! 😉
I saw the site before Peter took down the link and I have to say that here in the States, as well, it is not unheaerd for companies in that same business to require you to agree to the site’s terms and conditions before being able to see its content. I have also seen sites that instead of making you agree to all the terms and conditions, present instead a simpler statement such as you agree that this site offers a certain type of information but that whatever use you make of the information is your own business , the company presenting the site has no responsibility for what you do with the information, and no business relationship exists between the two of you.
So as bad as we think these people are in some respects, I’m going to give them a pass on this one.
Thanks Ken,
Appreciate the clarification. Should have figured that was the case. While I’ve seen some clueless clients in my day, but few are that bad. In retrospect, that had the look/feel of an obligation as opposed to a discretionary decision.
PB