Share this page
Pin It

March 2012

Would I Be Foolish to Sign a Non-compete Agreement?

 

By Carrie Myers

Q: “The gym I really want to train and teach at requires their independent contractors and employees to sign a non-compete agreement. Should I sign it?”

A: “It doesn’t benefit anyone to sign a non-compete,” says Jonathan Parker, an attorney, GNC franchisee and former personal trainer, “unless they receive what lawyers call ‘consideration’ for it. For example, it might be a good idea if the person receives a signing bonus or an exorbitantly large salary.”

Michele Olson, Ph.D., a professor of exercise physiology at Auburn University at Montgomery, agrees. “I once did sign off on an optional non-compete with a new fitness facility that had wonderful equipment and studios. However, they paid top dollar and provided $200 worth of CEC money each year as an incentive to those who agreed to sign it.”

Olson says she no longer restricts herself to one facility, however. “Overall, I have found it to be more lucrative for me to teach in a couple of different places.”

Non-compete Clauses Defined

A non-compete clause (NCC; also referred to as a covenant not to compete, or CNC) is a term used in contract law under which one party (usually an employee) agrees not to pursue a similar profession or trade in competition against another party (usually the employer). These clauses are usually put in place to prevent the possibility that an employee might begin working for a competitor or start their own business, and gain competitive advantage by abusing confidential information about their former employer’s operations or trade secrets, or use sensitive information such as customer/client lists, business practices, upcoming products and marketing plans. These types of clauses may also be used to prevent an employee from working elsewhere at all.

While English Common Law originally made this level of constraint unenforceable, contemporary case law permits exceptions, but generally will only enforce these types of contracts to the extent necessary to protect the employer. Most jurisdictions in which such contracts have been examined by the courts have deemed CNCs to be legally binding so long as the clause contains reasonable limitations as to the geographical area and time period in which an employee of a company may not compete.

The extent to which non-compete clauses are legally allowed varies per jurisdiction. Some jurisdictions, such as the state of California, invalidate non-compete clauses for all but equity stakeholders in businesses.

Source: http://en.wikipedia.org/wiki/Non-compete_clause#California

Parker suggests if you are considering signing a non-compete, that there be a time limit to it, and it should be concise and not too restrictive. “While you may feel you can sign a non-compete because you [don’t foresee yourself leaving that facility], there are many unforeseen circumstances that might arise.”

For example, what if the owner of your gym lets the facility fall into disrepair, and there is a mass exodus of members to the gym across town? If you signed a non-compete that stated you could not train at another facility within a radius of X number of miles and X number of years of leaving their facility, you couldn’t follow your clients to that other gym, even if the old place is no longer desirable to members or yourself.

“I have signed a non-compete at an all-women gym that didn’t want me to teach at other all-women gyms in the area,” admits Amanda Vogel, M.A., owner of Active Voice in Vancouver, BC. “I didn’t enjoy signing it, because as an independent contractor, I like to keep my options open for where I am able to teach.”

Vogel says she signed it because she enjoys teaching at just that all-women facility, plus the clause had a timeframe to it, allowing her to re-evaluate the agreement later on if she was no longer happy with the arrangement.

“Now if the non-compete had stipulated all other gyms in the area—including co-ed—I wouldn’t have signed it,” she adds. “There are all kinds of non-compete contracts, but a gym that proposes very restrictive non-compete contracts must be able to offer you a specific number of classes at a very competitive rate and perhaps other perks. Otherwise, all the benefits are to them with none to the independent contractor.”

Ultimately, you have to decide if the benefits of signing a non-compete agreement outweigh the potential drawbacks and restrictions on your ability to train clients and make money. Before signing any agreement, be sure that:

  • It has a time limit.
  • It is reasonable in its expectations.
  • It does not prevent you from making a living.
  • It provides you with a satisfactory salary and schedule, as well as extra perks.
  • You are comfortable with all aspects of it and it is as beneficial to you as it is to the facility.

Carrie Myers is owner of CarrieMichele Fitness, author of Squeezing Your Size 14 Self into a Size 6 World: A Real Woman’s Guide to Food, Fitness, and Self-Acceptance, and presents, teaches and trains in N.H. and Vt.


Search This Issue
Keeping You Posted

Train Like MMA Fighters, Dietitian's Pantry, Live Online Fitness Classes

If you missed the six most popular posts from ACE's blogs this past month, you may not be current on cutting-edge fitness information and the latest news. See what you may have missed and watch the latest videos.
Read More »

Functional Training: What It Means For Your Clients and Your Business

Functional training continues to grow in popularity as the foundation for fitness and sports-conditioning programs. If you’re not sure what functional training entails, you’re not alone. Learn what’s really behind functional training, how it can benefit all clients—from sedentary clients to highly competitive athletes—and how you can use it to enhance your services and business.
Read More »

Outsourcing Workplace Wellness: A Growing Trend

More employers are outsourcing their workplace wellness programs to fitness facilities and health clubs. This opens unprecedented career opportunities for fitness professionals. Read how you can best serve this growing clientele and gain a competitive edge.
Read More »

Sign-up Today

Sign-up to receive Certified News, ACE's free monthly certified professionals e-newsletter.

Ace Certified News

ACE's Certified News is produced 12 times per year by the American Council on Exercise. No material may be reprinted without permission.

Publisher: Scott Goudeseune
Technical Editor: Cedric X. Bryant, Ph.D.
Editor In Chief: Christine J. Ekeroth
Art Director: Karen F. McGuire