In Defense of Non-Compete Agreements


Although non-competes make lots of sense on paper, in practice they can be sticky stuff. In my industry, especially, they can be the death knell when layoffs, buyouts and publications abruptly shut down but you’re still under contract. But still, they can be sorta like the prenupts of the business world.

It’s been a while since I’ve written about non-competes, and what comes to mind first is Groupon’s mess with them early last year when some of the daily deal’s employees left to go work for Google, and Castle Groupon accused Nikki Dorough, Brian Hanna and Michael Nolan of “taking confidential trade secrets in moving to the world's largest Internet search company.”

Hold for dramatic irony there on Groupon, who seems to think Google is so intent on stealing Groupon’s winning secrets they would allegedly woo employees to come work and spill the daily deal beans.

But anyway, in plain English, non-competes are a form of contract law where “one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer).” (Thanks, Wikipedia.) And if you’re the boss writing those checks, it makes sense that you’d want one. You don’t want your employees taking your trade secrets to your competition.

Non-competes are polarizing, but if you’re in favor of them, it helps to start thinking of them as employee-retention tools. So says, which has a lengthy post extolling their virtues, some of which are obvious (though need to be stated) and others are less so.

For example, this is pretty interesting, that non-competes can improve your company’s value:

When in connection with the sale of a business because the purchaser someone purchases a business they want wants to be assured that they are getting what they paid for. If they believe that key assets have been shared with competitors the value of your business declines quickly. Whenever you start a business, have owners, partners or key investor employees employees sign non-compete clauses because afterthought covenants are a legal battle of their own.

Anyway, hop over to for the full post.

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. His first career aspirations were to be a game-show host.

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