Should Freelancers Sign a Non-Compete?

In the world of freelancing, the contracts we sign can play a critical role in what our day-to-day workflow looks like. Among these contracts lie non-competes.

A non-compete is a legal agreement or clause specifying whom you can work with and the kind of information you can share. These agreements often outline a specific duration during which they remain effective.

In most cases, non-competes occur between an employer of some kind and an employee, but they’re also known to show up in freelancing contracts. So, how should you navigate these clauses?

Let’s take a look at why non-competes may actively work against your own development and growth and what to do if you just can’t avoid them.

Why You Shouldn’t Sign a Non-Compete

First, let’s look at why non-competes can actually restrict your business. Here are three reasons you should avoid non-competes:

1. Non-Competes Can Restrict Your Income

Many freelancers have carved out specializations. As a freelancer who specializes in a very specific field, non-competes can drastically limit your ability to make money within your own specialization. I consider this unfair.

Suppose you're a freelance content writer for eCommerce and SaaS businesses. If a major company, say, Stripe, proposes a non-compete preventing you from collaborating with industry competitors, you would be severely limited in the clients you can work with. In this case, you likely wouldn’t be able to work with companies like PayPal, Square, Zelle, or Verifone, which leaves you with a seriously limited pool of potential clients.

2. Non-Competes Can Restrict Your Growth

Non-competes can sometimes limit freelancers' and contractors' entrepreneurial endeavors. For instance, a podcaster affiliated with a production company might be prohibited from initiating new podcasts for a designated period. Whether that’s one year or three years, these kinds of limits can amount to a considerable loss.

Time is a valuable resource, and if you’re confined to one outlet without the ability to grow elsewhere, you can lose out on a lot of audience and financial growth.

3. Non-Competes May Not End with Your Employment

Many non-competes remain operative for a stipulated duration, regardless of your active affiliation with the company. A tech firm, for instance, may request that you refrain from collaborating with competitors for up to a year post-relationship termination.  This kind of agreement will still apply, even if they let you go.

How to Avoid Signing a Non-Compete

Now that we understand how non-competes can be harmful let's look at how you can avoid signing these if a potential client sends one your way.

1. Leverage Your Role

For isolated projects or short-term collaborations where you're unlikely to encounter sensitive company data, non-competes are often excessive. As a freelancer or contractor, you can use this to leverage the removal of the non-compete clause or contract.

2. Be Transparent

I’s okay to be honest and open with your client, especially if you’re someone who specializes in highly specific fields. Articulate the importance of preserving both their privacy and your business interests.

Consider saying something like, “I want to respect your privacy, but I also have to make sure I can manage my business accordingly. As a specialist in this field, part of what makes me attractive to clients is that I have experience with companies in this industry. A non-compete removes my ability to specialize. For this reason, I’m happy to sign an NDA that protects your business’ privacy, but I can’t accept a non-compete contract or clause at this time.”

What to do if You Choose to Sign a Non-Compete

Now, in the event that the experience or offer is just too good to pass up, you may find yourself in a situation where you have to work with a non-compete. In these cases, I have a few tips for you:

1. Limit the Time Constraints

If you’re committing to a non-compete, make sure the time limits within the agreement are actually agreeable to your business. For example, a non-compete that lasts 3 years is far too unreasonable for a freelancing social media role.

2. Seek Legal Definitions

As a reminder, non-competes are legal agreements. So don’t be afraid to ask your client to be specific. The goal is to avoid ambiguity in your clause or contract.  

Say, for example, they state that you can’t work with companies in the wellness industry. At first, that might seem straightforward, but it could actually be used to include cannabis, mental health, sexual health, or even luxury spa services. Asking your client to be specific about who you can and cannot work with will give you a clear path forward so you can work within the agreed-upon terms without fear of breaking that agreement.

3. Go After Commitment

When a company asks you to sign a non-compete, they’re asking for a certain level of commitment on your behalf. It’s not unreasonable to then counter with a request for a commitment on their behalf.

For example, if they’re limiting your ability to work with competitors for a year after your relationship ends, you should be able to ask for a contract of similar length.

Final Thoughts

Safeguarding your flexibility and growth potential is critical. While non-competes can easily seem like unimportant fine print, their implications can have a significant impact on how you conduct business and your bottom line. Approach them with caution, and if they can’t be avoided altogether, advocate for yourself, your business, and your future.