✨Subscriber Bonus✨: Freelancer Non-Competes 🔊
✨Subscriber Bonus✨: Freelancer Non-Competes 🔊
Non-competes do not belong in freelancer agreements. Here's why and how to avoid them.
Note: I’m not a lawyer. This is not legal advice. Consult an attorney.
Mike Monteiro’s awesome book “You’re My Favorite Client” starts out this way:
“I don’t know anything about design.”
Bullshit.
He goes on to remind us that we make design decisions every day. We know more about design than we give ourselves credit for.
The same goes for business. If you know something about fairness, then you know more about business than you think. Business is complicated, and so are contracts. But fairness is easy — you learned it on the playground. You know it when you see it. And if you don’t see it, chances are it isn’t there.
Over my time in this business, I’ve probably read more than a hundred freelancer agreements. Large corporations can be especially difficult to work with. They often have a raft of mandatory terms and conditions that they require their freelancers and vendors to agree to, and their contracts can be long and hard to read.
That’s understandable, because big companies (especially public companies in the US) are subject to complicated labor, finance, and accounting laws, many of which carry extraordinary penalties. We all share an interest in helping companies stay on the right side of the law.
Unfortunately, though, big companies often put certain things into the agreements that they send to their freelancers and vendors which, frankly, are inappropriate, unfair, and just plain wrong.
Non-Compete Clauses
I’m talking of course about non-compete clauses, which turn up in the agreements that companies offer to freelancers all the time.
And it’s not only big companies who do this. I routinely see startups and tiny “virtual” agencies put non-competes in their vendor agreements. It’s a stupid, shameful practice. If you’re a freelancer or an independent creative company, you shouldn’t tolerate it.
Here’s an example that turned up in a contract offered to a designer friend of mine by a prospective client. The client was a tiny web agency with only a handful of full-time employees, for a job that would last about four weeks:
During the Term that Consultant is providing any services to the Company and for three years after the end of the Term, Consultant agrees (except with the prior written consent of the Company) that it will not, directly or indirectly (a) solicit or appropriate to or accept on behalf of itself or any other company, or (b) attempt to solicit, appropriate to or accept on behalf of itself or any other company, any business from the Company’s client GIANT MEGACORP
Even grading on the curve of obfuscated contractual jargon, this is poorly written and unnecessarily confusing. If you read it carefully, after mopping the blood from your eyes, you’ll find that what it boils down to is this:
For two years after this project ends, you will not do any work for GIANT MEGACORP. Also, any company that you might work for (or are even associated with) also cannot work for MEGACORP. Because reasons.
The worst thing about this isn’t even that it’s plainly unfair, unnecessary, and ridiculous. It’s much worse.
Your client is papering their paranoid fear that you — their hero, whose talents they have calibrated as being perfect for this project, who they have courted and romanced to partner with them in this endeavor — will at the opportune moment plunge your knife into their backs, in order to steal the affections of this client.
Did it not occur to your client until now to ask instead that their own clients agree in advance not to steal YOU? That would be pretty reasonable.
In fact, it’s a totally standard thing for agencies to include in their client agreements a “non-solicitation of employees” clause. This could easily cover freelancers and vendors. That would get all the same benefits as this dastardly non-compete, without impeding your ability to put food on your table.
How to Business
Here’s something I’ve learned. The company that sends you an agreement like this probably does not have smoldering evil in their flinty hearts. In fact, whoever sent the contract to you it probably didn’t put this nonsense in there. The person who you’re going to talk to about it will probably lack the conviction to try to defend it.
If you get a freelancer agreement with a non-compete in it, just take your pen and simply strike it out. Say to the client — plainly and dispassionately — that you don’t think it’s appropriate for this kind restriction to appear in a freelance agreement, and just keep on going like it never happened.
Here is how that should sound:
Don’t make a big deal about it! Just act natural, like you don’t expect an argument. This will resolve the matter about 80% of the time.
If the client objects or wants to argue about the non-compete, you should ask them to explain to you — ideally on the phone or in person, never by email — why they feel it is fair or necessary.
Ask them if they personally believe that it’s fair. Remind them that you wouldn’t ask them to agree to something they don’t feel is fair.
Often, I’ve heard clients say things like “Yeah, I hear you, but this is just something we have to have because we’re a big company.” That’s disingenuous, not all big companies do this. In fact, the vast majority do not.
An independent freelancer should insist on a higher standard of fairness when dealing with a bigger, more powerful company. Those of us with experience in business know that corporations expect fairness when they do business with each other. There’s no reason they can’t do the same for you.
If your client can supply an explanation for why they need a freelancer to sign a non-compete, and if that explanation makes any kind of reasonable sense, call me immediately. I have never heard such a thing justified in a way that wasn’t eye-rolling nonsense. If you can supply such a justification, I will print out the page on which these very words now appear, I will slice it into ribbons with a very sharp knife, and I will eat it right before your eyes.
The Beverage Test
If you ever feel apprehensive about challenging a client or company on something that you feel isn’t fair or reasonable, I suggest that you utilize the following procedure, which I call “The Beverage Test.”
It works like this: Imagine that you are sitting at a bar with a friend who trust, enjoying a cold beverage together.
Imagine this trusted individual asking you to agree to the non-compete provision (or to work for free, or to only get paid once they get paid, or whatever.)
Let’s imagine how that conversation might go:
Agency Owner Maureen: So I have some great news, my new startup agency has just won a project from GIANT AUTOCO, and we’d like to hire you to do some design work on it. We think you could help us do a really excellent job with it!
Jeremy: Hey Maureen, that sounds great! Congratulations!
Maureen: Yeah, we’re really excited about it. We’d like you to do about five design concepts for their mobile app. And we can pay you $10,000 over the next six weeks for your work.
Jeremy: Ok, that sounds about right. What else do I need to know?
Maureen: Well, we’ll need you to show up for the kickoff meeting in Detroit next Thursday.
Jeremy: Ok, I think I can make that work. Anything else?
Maureen: Yes, one thing. If you take this job, you won’t be able to do any work for GIANT AUTOCO for two years after the project ends.
Jeremy: Oh, wow. Why is that?
Maureen: Because we’re worried that they might like you more than they like us, and that once they see how great you are, they’ll fire us and hire you directly.
Jeremy: [Spits beverage out]
If the client’s request passes the beverage test, you should consider it. If not, well, don’t.
Stand Up For Yourself
I know that it can be difficult for you to say no to a client. You have bills to pay, and clients have money. It’s easy to fall into a trap of believing that because the client has the money, they have the power.
Remember that every client comes to you because you have something they need. That means you have some power as well.
In every conversation, listen to your instincts about what’s fair and what’s right. If you’re feeling coerced, it’s unlikely that you’re making a decisions you’ll feel good about later.
Leave a comment with your feedback about my writing.
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