From the Graphics Artists Guild, Philip I. Frankel explains the variuos types of non-competition agreements (NCAs), what they mean and whether they are enforceable. Philip writes:
“Should You Sign an NCA?
Aside from the legalities of these agreements, employees and independent contractors must consider the reality of client issues. While an independent contractor may not be asked to sign an agreement that restricts working for competing companies, he or she has to consider the politics of customer relations. For example, if a graphic artist provides services in a particular facet of a particular industry, his or her client may consider it bad faith were the artist to start doing similar work for a competitor in the same industry. While an independent contractor would not be restricted from providing these services either legally or ethically, he or she cannot ignore the fact that their client may consider this an act of bad faith and seek to discontinue the business relationship.
Therefore it’s vital for graphic artists to consider all the ramifications of an NCA’s restrictions before signing one. Negotiating equitable terms with a client may be a critical phase in developing a good working relationship with that client. On the other hand, some graphic artists believe they should never be required to sign any type of NCA. They contend that every client should trust them to work in each particular client’s best interests. There is no hard and fast rule governing NCAs. Each independent contractor needs to set up their own studio policy on this matter.
The reality of the working world is that professionals — both employees and independent contractors — move from job to job or client to client in the same industry, and their departure from one job for greener pastures or one client for another one cannot be prevented by an employer, but it can be limited by the provisions of an NCA. However, a reasonably drafted NCA can protect both the employer and the employee or independent contractor without restricting the employee’s or contractor’s future options…”
Read the full story at Covenant Gardens: Demystifying Noncompetition Agreements