Before you say “yes” to your dream job, read the fine print.
Non-compete agreements that prevent workers from starting their own business in the same industry and working for a competitor for a set period of time after their employment ends can have devastating consequences, says wedding dress designer Hayley Paige Gutman.
Gutman shared her testimony Monday before a Senate economic policy subcommittee, three and a half years after she began litigation with her former employer JLM Couture over non-compete agreements and three months after the U.S. Trade Commission announced a new rule banning non-compete agreements.
Hayley Paige. Photo by Dia Dipasupil/Getty Images for Runway Heroes
Due to the non-compete clause, Gutman was not allowed to work as a wedding dress designer for five years after leaving the company.
“I could start over under a new name, I could open new social media accounts and rebuild everything, but I couldn't work in my chosen craft,” Gutman said.
The FTC estimates that about one in five Americans, or about 30 million people, are affected by non-compete agreements. According to the agency, banning these agreements would create 8,500 new businesses each year and increase the average worker's wages by $524 per year.
The non-compete agreement was due to come into force on September 4, but legal action could delay or even prevent its implementation.
Related: Selena Gomez says she won't sell her $2 billion cosmetics company
Opponents of the ban, however, believe that companies could benefit from non-compete agreements because employees could not use their knowledge to start competing companies. The agreements also help to protect trade secrets and keep employees at the company longer.
In her deposition, Gutman detailed how she signed an employment contract with a non-compete clause at JLM Couture in 2011 at age 25. Nine years later, JLM alleged that Gutman violated the non-compete agreement by using the @misshayleypage social media accounts, which had more than a million followers, to promote other companies without JLM's permission.
JLM also claimed that the company was the reason for Gutman's social media fame and that appearances on TLC's reality TV shows “Say Yes to the Dress” and “Say Yes To America” only came about because Kleinfeld Bridal, where “Say Yes to the Dress” is filmed, is one of JLM's biggest clients.
“I have spent every dollar I ever made designing wedding dresses to fight for my right to do so again,” Gutman said in her testimony, later adding, “I want to show how shamelessly non-compete agreements operate on a one-way street: If we don't restrict competition between companies, why do we restrict it between individuals?”
@sheischeval
Let a girl design a dress ?????
♬ Original sound – CHEVAL | Shoe designer
Gutman and JLM finally reached a settlement in May that gave her the rights to the name “Hayley Paige” and social media accounts. Gutman agreed to pay JLM $263,000.
Gutman, now a small business owner, reflected on her long legal battle in an interview with the Independent Business Podcast in June.
“The thing you're working on affects you,” Gutman said in response to a question about what advice she would give to other small business owners. “The obstacle is the path.”
Related: Serena Williams launches a new business she's been working on for 6 years