In the wake of landing that dream internship, many students don’t question what their new employers ask of them. After all, the company you’re applying to seems legit, and they wouldn’t have you sign anything particularly shady – would they? In fact, though, more and more internships require students to sign non-compete agreements, which can be questionable at best and legally unenforceable at worst. If you receive a non-compete agreement, should you sign?
First off, what is a non-compete agreement (abbreviated as a non-compete), anyway?
“It’s a contract in writing that prohibits an employee from taking a job after they leave their current employer that involves competitive activity against their prior employer,” Jesse Wing, an employment lawyer with the Seattle firm MacDonald Hoague & Bayless, said
In other words, a non-compete can restrict your employment options down the line. What exactly they prohibit, and how long the limitations last, vary from agreement to agreement.
“It really depends on what the actual agreement says,” added Andrew Ayers, an employment lawyer who runs his own firm based in New York and Minnesota. “Normally these agreements can be a little bit much.”
Why? Due to the nature of an internship. Interns are “extremely unlikely to have special knowledge or insight into how the company or entity they’re working for does its work,” Wing added.
“It’s more common to see a noncompete as part of a full-time job offer,” said Susan Smith, Associate Director for Employer Relations at Vassar College’s Career Development Office.
Why might companies hand them out?
Often, companies give non-competes to workers in industries like tech and pharmaceuticals, where trade secrets hold extreme importance and departing workers have the potential to do enormous amounts of damage. It doesn’t seem to make a lot of sense to ask a student to sign such an agreement. Ayers pointed out, however, that there may be situations where it makes sense that a company would ask interns to sign a non-compete.
“A lot of people who are in college these days are much savvier,” Ayers said. “I can see where business owners are going to be concerned, because if you have an internship digging deep into the business and who seems like they’re going to start their own business, that business owner’s concern may be justified.”
“The next generation are so much more connected,” Ayers said. “Data is so much more portable these days.”
If you landed an internship in an industry where workers regularly handle sensitive information, it might make sense that they’d ask you to sign.
Are non-compete agreements always enforceable?
Non-competes may not even be legally enforceable in some states. According to Wing, Washington state law now prohibits non-competes for those who earn less than $100,000 a year.
“If you’re making less than that,” Wing says, “you cannot be subject to a noncompete.”
If you live in Washington and receive a non-compete to sign before an internship – unless said internship pays very, very well – you should know that such an agreement cannot legally apply to you. In any case, non-competes should not be taken lightly. They can restrict your employment options, and you could even end up in legal trouble for violating one.
“My own personal experience with a non-compete was that it did hinder me from seeking employment in the same industry…but that was a full-time job, not an internship,” Smith said.
So, what should you do when faced with a non-compete?
Wing has a clear message to students who find themselves in that situation. “It’s unfair that a student would need to go get legal advice…but I think you should. I can’t tell you how many people sign things that, with legal advice, they could’ve pushed back and gotten the entity or employer to drop or modify the noncompete.”
“If they’re not comfortable with what they’re given, they should find someone who can sit and go through it with them,” Ayers said.
Ayers adds that some colleges, like Harvard, now offer services to help students decide whether or not to sign a non-compete – so you should reach out to your career services center if you need to.
“Anytime you have a job offer, whether it’s an internship or full-time, always read the paperwork,” Smith said. “I would say, ‘be curious’ and know what it is.”
In the end, you should approach non-competes carefully, just as you would any legal document. It may be a bad sign, or at least a bit confusing, if a run-of-the-mill internship asks you to sign a non-compete. However, if you reside in a state where the agreements are legal and your search for an internship leads you to an industry that regularly uses non-competes, it may be commonplace for companies to hand them out.
“It may be the way to get your foot in the door,” concluded Ayers.
