The Non-Compete Clause

It doesn't mean what their lawyer says it means.

Today we’re going to go over a dirty publisher trick: the non-compete clause.  

A non-compete clause is an agreement or covenant not to compete:

…a term used in contract law under which one party (usually  an employee) agrees to not pursue a similar profession or trade in  competition against another party (usually the employer). As a contract  provision, a CNC is bound by traditional contract requirements including  the consideration doctrine. The use of such clauses is premised on the  possibility that upon their termination or resignation, an employee  might begin working for a competitor or starting a business, and gain  competitive advantage by abusing confidential information about their  former employer’s operations or trade secrets, or sensitive information  such as customer/client lists, business practices, upcoming products,  and marketing plans.

So how does that work with a freelancer?

For the most part it doesn’t, which is why when you see one of these stink bombs in your freelancer agreement, you really need to give it a closer look.

I’ve had a number of young creators come to me over the years who  were so intimidated by this clause in their contracts that the creators  had turned down work repeatedly for fear of violating this agreement –  even after they were repeatedly told it was not legal! Some have even  gone so far as to ask the client’s permission to take on other work!

In  some cases, the client has refused to let the creators take many jobs,  even though the ex-client had not hired the creators in five years or  more.

Non-compete clauses are usually intended for employees who  have access to confidential information which could harm their former  employer’s business. The force of the clause is not only limited by geographical area, but time and scope, and the court must find that those considerations are reasonable.

For example, if you worked at a pizza joint and had access to the  amazing secret sauce recipe, you could be restricted from opening up a  shop next week right across the street and selling pizza using that  recipe.

Here’s a letter I sent to a freelancer who inquired about a client  who was trying to stop them from working for other clients four years  after they had freelanced for him.  The freelance job lasted only a few  weeks. The client wanted to enforce the non-compete clause up to seven  years. It’s also a matter of public record that this client does not  create much of his own work.

I know, I ghosted a fat load of that work for him on two of his books.

You had no access to confidential information,  you cannot  reveal any trade secrets of his. You did not work in his office. You did  not have access to his private files.

Non-competitive clauses have geographical and time limits and cannot  restrict one’s ability to earn a living. The purpose of the agreement is  to protect an employer against your revealing confidential information.  What confidential information? The book is published, and — can’t even  draw his own work. What are you going to reveal? The mystery of his lack  of talent? 

—‘s contract had huge  time limits…seven years and more! No way!  Almost NO state in the entire country considers anything beyond two  years reasonable. If I recall the time limit, and the last time you  worked for — correctly, you are well past that.

The fact that you were never an employee and had no access to trade  secrets should invalidate the whole clause, frankly. That’s how we dealt  with it, and the weasel couldn’t do a thing about it. If he can’t show  requisite loss, and he can’t show what secrets you are supposed to have  absconded with, he doesn’t have squat.

You are not even in his state. You’re in another COUNTRY. Makes it  especially hard to complain about the geographic competition thing.

—‘s attempt to enforce this would be a restraint of trade. No doubt in my mind.

And BTW: if  he wants to enforce the non-compete clause, he may then be required to  have TREATED you as an employee and therefore, be liable for your taxes  and benefits.

This client wanted to restrict freelancers from working on ANYTHING that was in the same style as anything he had ever published, regardless of whether the freelancer had worked on those projects or not! 

If the artist worked on Book A, and he published Book B, he wanted to  keep freelancers who worked on Book A from working on anything like  Book B, even if Book B had been published ten years before the  freelancer had ever worked with the client!

He also wanted to restrict freelancers from appearing in public, on  television, teaching, lecturing, and a long list of other things that  freelancers do as a matter of course to supplement their art income! 

So not only could they not paint or draw in the same style  as anything he had published, they could not talk to people about their  work! At least, not without his permission, which he often refused to  grant. It’s a little hard not to work on books in the same style when the style is manga art, to which this client had no business staking a personal claim. 

It’s not like this white guy invented manga or anything.

This clause effectively put some freelancers out of work, because  they simply did not know that the non-compete clause they had signed was  illegal. 

Ladies and gentlemen, I beg you. Please get good legal representation  for yourselves and never, ever listen to legal representatives for your  client. They are paid to represent your client, not you. 

Yes, the client’s lawyer will lie to you. They will drop things into  that contract which are unenforceable by law. They will do whatever they  have to do to get you to sign something to their client’s advantage.  It’s their job. 

Their lawyer is paid to tell you whatever they think they can get away with. Your lawyer is paid to tell you what your rights are.

You can get a low cost attorney through the Volunteer Lawyers for the Arts,  and if you don’t qualify for free assistance, they can direct you to an  attorney who can help you.