Currently on the credit buyside at an HF in Greenwich, CT. I have a 6-month non-compete and 3-month notice period, making it very challenging to find a new role. In processes, firms said they dont wanna wait 9-months. My non-compete is unpaid with no benefits and covers firms globally (friendlies say it's not enforceable cuz of these three things). Has anyone successfully voided a similar unpaid non-compete or negotiated it with their employer?
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Based on the most helpful WSO content, unpaid non-competes, especially those with global coverage and no benefits, are often considered difficult to enforce. Here are some insights and strategies:
Legal Enforceability: Non-competes that are unpaid and overly broad (e.g., global coverage) are frequently challenged in court. Many jurisdictions, including states like California, are known to invalidate such agreements. Consulting a labor attorney familiar with your state’s laws is critical to assess enforceability.
Negotiation with Employer: If you’re on good terms with your employer, consider negotiating the terms. Highlight the challenges of the 9-month restriction and propose a reduced non-compete period or a waiver. Offering to assist with a smooth transition or handover might make them more amenable.
Industry Norms: In hedge funds, non-competes are often tied to compensation or benefits during the restricted period. If yours is unpaid, it’s worth pointing out that this is not market standard and could be seen as unreasonable.
Alternative Strategies: Some professionals have successfully bypassed non-competes by:
Precedents: If you know of colleagues or peers who have voided similar agreements, their experiences could provide valuable guidance. Networking within the industry might uncover useful insights.
If you’re considering legal action or negotiation, ensure you document all communications and seek professional advice to protect your interests.
Sources: Long notice period makes me unattractive to recruiters, Help us determine a fair compensation structure and non-competes for a new HF, How do non-competes work when you want to quit?, Urgent: PE Offer after being fired, Leaving for another fund - How to deal with current employer?
I had an unpaid like yours (unpaid, no benefits, covered every financial company). Everyone here thinks that can't possibly be enforceable but when I hired a lawyer, he said it absolutely can be. (And even if it's not, they can just threaten to sue and you have to go to court to prove that. In the meantime, your new company will cancel your offer rather than risk getting involved.) Talk to a lawyer before you assume otherwise.
I did manage to negotiate a reduced period with my old employer though.
Thank you - this is helpful
non-competes pretty standard these days. surprised they're expecting someone with none
Ya problem is I continue with the process then towards the end the HH tells me “they went with someone that can start a little sooner.” So pretty much a RV exercise across candidates.
Unpaid non-competes are a hot topic in the industry these days. Unpaid ones are frowned upon as it promotes anti-competitiveness.
I disagree with mortantire. Based on my own experience you have a strong case to negotiate that away.
I have successfully, on two different occasions, been able to push back on unpaid non-competes. Two different employment lawyers told me the same thing on two different occasions.
If an employer wish to enforce your non-compete they would need to pay you to sit out during the cooling period. Or, if they don't wish to pay, they'd have to reduce the non-compete unless they can come up with a commercially motivated reason as to why. Unpaid non-compete is not in the spirit of employment law regardless of language in the contract.
They're usually standard language in employment terms - but it's put in there as a starting point for the employer to have negotiating power, and the courts & tribunes don't look favorably upon unpaid time to sit out the market.
Citadel recently increased their non-competes for some from 12 months to 18 months. They get away with it because they pay the leaver their base salary during the non-compete.
Thank you—this is very helpful! On the two successful occasions, did you get the entire non-compete waived, or did they just shorten it? When negotiating, I understand you spoke to employment lawyers, but did you have them write a letter or have them negotiate for you, or did you negotiate with your previous employer first and they said OK?
Waived down so that it matched the notice period. Lawyers dealt with it directly with my firm over email / phone calls to cover all sorts of issues (back payments, out of pocket expenses, etc). Fairly standard practise and was nothing controversial about it. High churn in this industry so this is everyday life for them.
On both occasions the employer was offered an option to either extend the notice payments to cover the non-compete period, or lower the non-compete period to match the notice as this is balanced. An employer would usually accept this unless there is specific commerciality.
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