No Deal: Non-Compete Clauses are Freelance Kryptonite
Don't sign anything that limits your ability to do creative work for others
You'll often find something tucked into the fine print of a freelance contract: The non-compete clause. It typically reads something like this:
You agree that during the term of your work with this company that you will not take part in any business activities which is competitive with this business. You will also not work with any business which is competitive with this company. This non-compete applies for one year after you complete work with the company.
In my opinion, avoid these clauses at all costs. As a self-employed contractor or freelancer, signing a contract with a clause like this could cause you significant issues down the line.
Here's why.
You're limiting who you can work for right now
A non-compete clause typically demands that you cannot do similar work for anyone else. As a content creator or freelancer, you should have the freedom to work for anyone who needs your services. Non-competes prevent you from doing that, typically by threatening legal action for breaching the clause.
This is even more of a problem if you're a specialized freelancer working in a narrow niche. There may not be that many clients in that niche, so you need to protect your ability to do work for others. A non-compete clause puts that in jeopardy.
II some cases, I can see why companies might put non-competes in place for high-level employees, but freelancers rely on being free.
You're forbidden from doing similar work in future
Of course, it's not just your current ability to work that's under threat. Many non-compete clauses prevent you from doing work for a period after you're no longer working with the company, sometimes up to a year or two.
This means you won't be making any income from the company you used to work for, and you're prevented from seeking out similar income opportunities in future. You’ll have to dig into your savings—not ideal.
Diversifying income is critical for content creators
One of the best ways to build resilience as a content creator is to have multiple clients and work on multiple projects. That way, if it doesn't work out with one client, you're not losing all of your revenue. A non-compete stops you from having some of that diversification, increasing your risk of not having any money coming in.
It's difficult to define what counts as a competitor
A non-compete clause is designed not to allow you to work for the company's competitor, but who decides whether another business is a competitor or not? Does the other company have to create identical products and services, be in the same marketplace, or just a similar industry? As a freelancer, you don't get to define that. And because you can't define it, a non-compete becomes very ambiguous and open to interpretation—which means you won't know if what you do breaches the terms of the contract.
Promises of future work may not come to pass
Some businesses that include a non-compete may tell you that you'll get so much work for them, that you won't even need to find another client. Don't believe it. In my experience, a promise of future work very seldom works out. If a company is that confident of future work, have them commit to it in a contract as a retainer agreement, and get a guarantee of payment.
Non-competes can still be expensive and a hassle to defend
Some non-compete clauses may not be enforceable. The strength of a non-compete may be based on the exact language, what it restricts people from doing, how narrowly it's defined, and all sorts of other areas. So while you might be able to fight a non-compete, doing so is likely to take a lot of time and effort. And hiring a lawyer is an expensive proposition. Best not to get into that situation in the first place.
Pushing back on non-compete clauses
Alright, so you've found a non-compete clause in your contract. How should you handle it? Assuming you still want to do the work, you don't want to burn bridges with your client. You could:
If you feel out of your depth, get professional legal advice on the contract.
Email your point of contact at the company and explain that you can't sign a contract with a non-compete in it.
Strike through the clause in the contract, initial it, and send it back stating that you want the clause removed.
If the company still insists on having a non-compete, you'll need to decide if you want to be bound to the contract. Think carefully about the downside of a non-compete.
Some types of clauses that are similar to non-competes are fine
Non-competes are pretty specific—they limit your ability to do similar work elsewhere. But, there are a couple of clauses in a similar area to non-competes that I don't think are an issue: Non-Disclosure Agreements (NDAs) and Non-Solicitation Agreements. I've been happy to sign contracts that contain both of these types of clauses.
Non-Disclosure Agreements
An NDA prevents you from revealing private or proprietary information, trade secrets, or similar details. In other words, your client expects you to keep their private stuff private. That's a completely understandable and reasonable request, as it protects them from their competitors.
As a reliable, trusted, and professional content creator, you'd be expected to keep that information to yourself. An NDA simply protects your client from you revealing information they want kept secret. It has no impact on your ability to find future work, and doesn't limit your ability to do your job.
Non-Solicitation Agreements
A Non-Solicitation Agreement says that you cannot steal customers or employees from your client. For example, if you work for a marketing agency, you may have a Non-Solicitation Agreement stating that you cannot go after their customers. Again, this feels totally reasonable to me. The company I am working for has gone through the time and effort to acquire customers, and they don't want me poaching them. That feels like a deeply unethical thing to do.
You may choose not to do work for companies similar to your client anyway
Here's the thing—even if you don't sign a non-compete, you can still choose not to work for other clients in areas that directly conflict with your current client. Why might you choose to do that?
Not competing is your choice, not the client's. You decide on any restrictions you place on yourself, and when to lift them.
You may have plenty of work from a single client in your niche, and you don't have the bandwidth or interest in taking on more.
If a client finds out that you are working for a competitor, that could damage your relationship with them, and result in them dropping you.
Dedicating time and effort to a single client per niche helps you to build a good reputation and develop trust—these are strong foundations for repeat work and better rates.
It might be good for your conscience and sense of ethics to not be creating work for different clients where your content could be in direct competition.
All of those comes down to where you are in your career, the value you place on client relationships, and how much you need the work! For example, I only work for one client in each niche where I freelance—that keeps things straightforward and is good for my peace of mind.
But, that's just what works for me. Choose the approach that's best for you!
Please note that I am not a qualified professional and I do not provide tax, legal, accounting, or similar advice. These guides are provided for informational purposes only. Always consult with a qualified professional on your unique circumstances.
Agree 💯. I turned down a one year contract to write blog posts for a well known mental health website partly because it had a non-compete clause for the duration of that contract. When I asked for a specific list of which sites or other publications were competitors I couldn’t write for, they wouldn’t provide one. The other reason I declined the offer was the ridiculously low pay - $25 per blog post - which was also not disclosed until after I had submitted free samples!
I was just starting out and needed the money and name recognition that gig would have provided, but I also knew I would regret agreeing to those terms.
Completely agree, this is so important to understand, especially when you’re younger.