How No Compete Clauses Can Hurt Former Employees

Many businesses use no compete clauses to make sure that their company secrets stay that way. As a business consultant, I often point out disadvantages that former workers can face when having to deal with a no compete clause. I have seen times in the past that these simple clauses can cause long-term issues for some people.

While a no compete clause might help keep your company secrets away from rivals, it also keeps your former employee from finding a similar job to the one that was just lost. In some specialized fields like marketing and accounting, this could be devastating financially for a person. I have seen no compete clauses that go on for three months to over a year.

If a worker is bound by a no compete clause, he or she has to decide to either wait out the entirety of the no compete clause, or find a job in a different field. Jobs in other fields can cause for questions by interviewers in the future. I have looked oddly at resumes when I see that an accountant worked a register for a few months at Target. Little did I know at the time that it was to get by during the run of a no compete clause.

Also, depending on how the no compete clause is worded, it might cause a worker undue stress when looking for a position. The example that I like to use is a former no compete clause of one of the major auto companies that stated that the company would reserve the right to pursue legal action against a former employee simply for, "suspicion of sharing sensitive company information with another company." I have had workers tell me that they were nervous because legal action could be brought to easily.

I have never been a fan of no compete clauses. I understand the reasoning for them when it comes to high-ranking officials in a company, but not for the common worker. These types of contractual clauses, in an extreme case could lead former employees to financial crisis. If your company secret was worth causing a person to lose a house, or worse, maybe it should have never been shared in the first place.

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