Many salon owners try to protect their business by having their professionals sign non-compete agreements or contracts that contain a non-compete clause.
A non-compete is an agreement on the part of the employee to not enter into or start a similar profession or trade in competition against the owner.
Generally, these agreements are bound by distance (for example, a non-compete might only be limited to a 5 or 10 mile radius of the business address). Salon owners create these clauses mainly to protect their client lists, believing that if a professional quits or is fired, the clients will not follow them if they are forced to work too far from the owner’s location.
The states vary in their laws regarding the enforceability of non-competes, but often, unreasonable contracts will be seen as such and will not stand, especially if the salon owner chose to write the document themselves instead of having a qualified attorney do it for them.
If you are considering employment at a salon that requires you to sign a non-compete or if you are planning on having your staff sign non-competes, continue reading for more information.
Generally, a non-compete:
1.) must be reasonable,
2.) must be extremely detailed,
3.) can only apply to employees, NOT booth renters or independent contractors (if you’re not paying their employment taxes–they’re self employed)
No matter what, a non-compete must conform to the laws in your jurisdiction regarding non-competes.
Defining Distance & Dates
Be considerate of your employee when drafting your non-compete. A non-compete that states: “Employees agree not to work in any beauty industry profession in [CITY] for the rest of their lives,” is not reasonable for several reasons.
- The “beauty industry” covers many different professions,
- The entire city is too broad of an area, and
- The rest of the employee’s life is too long.
Those non-compete terms make it seem as if the employer is trying to restrict that employee from working in any beauty-related field for the rest of their lives unless they work in another city. A judge will very likely declare that to be unenforceable.
Write an agreement that you wouldn’t have a problem signing if you were the employee.
In our industry, a reasonable distance is a 1-3 mile radius from the location of the salon at which they were employed. (If you own a franchise or run multiple locations, it’s not wise to set terms that include those locations that the employee did not work at.)
A reasonable time period during which the employee may not compete is 6 months to 1 year. Any longer than that, and you’re likely going to have a really difficult time enforcing the non-compete if you have to.
The conditions of the non-compete need to be spelled out explicitly, leaving no room for interpretation. If you hired someone as a stylist, you can write in the clause that they cannot take employment as a stylist in the radius you specify, but you probably should not state that they cannot work as a cosmetologist in the radius. Let’s say your stylist leaves you and takes a job next door working as a nail tech. A judge is not likely to enforce the non-compete because cosmetology is too broad of a field. The stylist, in her new position as a manicurist, is not competing with your hair salon business in that situation.
Alternatives to Non-Compete Agreements
A non-compete is not the best way to protect your salon’s clients, in my opinion. I have repeatedly seen these agreements struck down, regardless of how reasonable and specific they are. Data Theft Protection and Non-Solicitation Agreements are far more specific, don’t restrict the worker’s ability to earn a living after separating from your business, and protect what really matters (the salon’s client records).
Appropriate Applications of Non-Compete Agreements
I consider non-compete agreements to be necessary and appropriate for employees in executive management positions. These employees are privy to internal company secrets that other employees normally are not. They know your vendors, your product formulas, and the intimate details of your business operations. If anyone were capable of leaving your salon and establishing a business designed to compete directly with yours (armed with the information they gained during their employment with your business), it’s them.
In my role as a manager, I was routinely expected to sign non-compete agreements, and did so without complaint or argument. Management employees often have proprietary information that gives them a serious competitive advantage, should they choose to leave your business and establish their own, so hire an attorney to properly write a binding, restrictive NCA to keep them from using that information against you.
“I applied to a salon but the owner wants me to sign her non-compete! Should I?”
I get this question a lot. The simple answer is, “It depends.”
Don’t agree to unreasonable employment terms out of desperation and do not be overly optimistic when entering an employment agreement. If you don’t feel comfortable signing, you can negotiate the terms.
1.) Are the terms reasonable?
2.) Will I be able to comply with the terms of the agreement?
3.) Am I 100% comfortable signing this?
4.) Is the contract appropriate with regards to how I’m being classified? (booth renter, independent contractor, employee)
Remember, if you are a booth renter or freelancing independent contractor, you’re a business owner yourself. You are INDEPENDENT. A non-compete restricts competition and strips you of your independence, so typically, it’s not an appropriate document for your classification. You’re not the owner’s employee.
If the contract “feels wrong,” it probably is.
If there are any term you don’t feel right about agreeing to, mention it and attempt to renegotiate it. If the owner is unwilling to compromise, walk away.
In my state (South Carolina) non-competes rarely ever stand up in court, especially in the beauty business. Most judges here feel that an employer wanting to addle the employment of someone else as un-American especially during this recession.
The beauty business in our area is also so rife with over reaching non-compete contracts that as a rule most judges strike them down from the get go, especially if there has been no form of compensation given to already employed people who were essentially forced to sign them to maintain their employment. As a matter of fact I don’t think we have had one case settled in the positive for an employer since I moved here in 2003.
I am from the uk and I am having this problem. I was employed and signed a non compete contract, I then was forced to be self employed or I’d loose my job. After 6 month she wanted to employ me again I agreed on new terms, that fell through as she had changed our agreement, I gave 2 weeks notice of leaving for another salon as I needed more income I have not yet signed a new contract but she is using the old non compete contract against me
I don’t know what the rules on this are in the UK, but since they tend to be more protective of employees there than here, I’m willing to bet that she wouldn’t receive a favorable judgement if this were to end in litigation.
I has a booth renter open a salon less then a mile away. She tried to get my hole salon to go with her. only two went. But she keeps texting my other renters and having customers come in and try to talk them into going to work for her. Is there anything I can do about this?
As icky and unethical as this is, you likely cannot, especially if you didn’t have an arrangement prohibiting solicitation of your employees/clients.
I work in canada at a stylist. as I was hired at the salon I’m working at now we HAD to sign an read a procedure manual. Which has the meaning of non compete in it an that we can not work with in a 15km radius. But no end date. So does this mean I can’t work in my area for the rest of my life? Or if they took me to court would they be missing something in the contract and the judge would dismiss it?
I’d consult with an attorney about this in Canada. I know in the US, that agreement wouldn’t stand because it doesn’t meet the criteria for being properly written. Here, all non-competes must be reasonable, with a specified end date.
I am an esthetician in Ohio. I worked at a spa for 11 years, had a non compete (5 ml, 1 yr), written in language specific to hair stylists (a salon & spa location) and I made the decision to leave a year and a half ago to pursue a career at a dermatologist practice.
Going from a cosmetology business to a medical business is not competition. The medical board supersedes the cosmetology board & the services are 90-95% different in a medical practice. Yet I’ve been in court since my departure.
Am l right?
I’m actually shocked you’ve been to court at all. I’m guessing that even though the radius is absurdly unreasonable, the time frame isn’t. That being said, I completely agree that the services are so remarkably different (and the clientele as well) that the two can’t even be compared similar for the purposes of assessing a conflict.
Comment: I am currently employed at a Lash Studio in Austin Texas. When hired I had to sign a 2yr 50 mile radius non compete contract. I am a licensed Cosmotologist and was already licensed to do lashes. I was actually licensed 2 times before I was employed by them. I am being bullied by a few girls at the salon and I decided to rent a booth and quit the Las studio. Will they be able to sue me?
Without seeing your contract, I have no idea. (Even then, I’m not qualified to give you an answer on that, since it would very clearly fall into the “legal advice” area I’m not legally permitted to give). I can give you legal information though. That contract sounds unreasonable to me, and in my experience, contracts with terms that broad and long are unlikely to be upheld in court. Contact an attorney in your area. You can also petition a judge for a ruling on it before violating it, which is what I would do if I were in your position.
I’m currently going through this, it was amazing lash studio correct? I feel iffy about it because 50 miles for 2 years is insanely ridiculous, I’d have to move 50.freaking miles away just to make some money for my family.. I’m not sure what to do
That non-compete doesn’t sound enforceable, but even then, never sign contracts that are unreasonably restrictive. This contract is one you know you’re unlikely able to comply with in the event of a separation, so don’t sign.
I’m in Indiana licensed in nov 2016 and hired April 2016. I wasn’t sure and really needed a job and at the end of the rules and expectations it staited that if voluntarily quite I couldn’t work within 5 miles that is competition to their salon for a year. Once I started talking around every stylist has never heard of such. Then thought maybe it’s more about their clientele. So I’ve made the decision that I would not touch the cash drawer or computer so I would have no knowledge of their clients personal info. This salon is the bottom of the barrel but I am worth so much more. I’ve decided to stay for a year for good reference but if they do not benefit me by then I’m leaving. Do you think I’ll have any problems? There are 30 salons just in my town and I would have to travel 30 miles outside of town for work which I don’t want to do if I don’t have to. Thanks
You’ll want to talk to an attorney about the non-compete. Most will advise you to petition the judge for a determination on whether or not it’s legally binding. To me, it sounds like it wouldn’t be. It’s unreasonable and seems intentionally designed to keep you from working in town at all. I don’t see that standing, to be honest.
Hello, Im a year late on this post but ive now come to a situation where i am concerned about the non compete i signed. I expressed my concerns about it since I was coming from a mens shop that closed. I brought my clientelle over and and am fully booked with my own people. I hardly get any new clients so pretty much I brought my iwn business. I also have been in the area 1 year before this shop opened. due to my specific clientelle and now making less money working at this salon due to service charges taken off my services. The non compete covers 25mi radius and i dont remember what the due date is. I believe 3 years. I am in the process of starting my own business but cater to men specifically. I am in the state of PA and so far from reading your answers to questions this contract seems “unreasonable” I really like the owner and mostly everyone here and I want to keep a good relationship. I ve always tried to be a loyal and honest empliyee and I want ti share with my employer my goal to move on to for my iwn benefit and to be back in a place more my fit. I chose this shop due to the location (was right next door to my old shop tgat closed) and the beautiful salon and quality of service provided. But Im really not fitting in. Fyi, when I moved over I was the boom ti their mens business. when I leave that part of their business will decline. what are your thoughts and advice in my situation?
I recommend bringing that to an attorney who specializes in employee rights. That non-compete sounds like a whole lot of unenforceable bullshit to me, and I’m willing to bet the owner wrote it themselves. However, you don’t want to breach it until you get a determination for a judge. An attorney can walk you through the process for that. It’s generally pretty straightforward. You petition the judge for an assessment on the enforceability of the contract. My guess is that it’ll be struck down or severely reduced in length and distance.
Personally, if I were you, I’d talk to the owner myself before getting an attorney involved. It seems to me like they might be willing to be reasonable with you if you’re really interested in maintaining that relationship so long as you express consideration and appreciation for their business. Since you’re going to be a men’s shop, there’s a very real opportunity for an ongoing referral relationship that both of you could benefit from. If that fails, then call the attorney.
thank you. that helps. i really do want to keep a relationship that is beneficial for us both and i want to continue supporting their business.
Make sure you tell them that. Appreciation really does go a long way. Focus your conversation on the fact that you want to cater to men exclusively again and that you have no interest in hurting their business or competing against it. If you can, put your business in a place that’s 5 miles or so out of the radius of the salon (aim for at least 3 if 5 is too far). Their radius is insane, but if you tell them you’re willing to establish your shop a reasonable distance from theirs, you should get a better response from them regarding the non-compete.
thats the challenging part. where i want to be is within 1 to 2 miles because of the size of town. anything outside of that is out of town already.
Okay, so in that situation, you’re on even more solid ground. A judge won’t enforce a non-compete that was designed to push people out of town in most cases. It shows intent to force someone into obscurity.
thank you! that really gives me confidence
What happens if you are an independent contractor and you didn’t know that the non-compete doesn’t apply to you? If you sign it does that matter, does it still not apply to you?
It’s highly unlikely that a non-compete would ever be enforced against you. Like, EXTREMELY highly unlikely. The only IC’s non-competes stick to are people who have access to very sensitive business information/trade secrets and are therefore in a position to harm the business by violating the contract. Tech industries use non-competes with their independent contractors successfully, but they’re the only industry those terms are appropriate for.
I been working in the same nail salon for several yrs now as a Independent contractor.I had to recently sign a non compete contract, is it true that its not actually valid since Iam considered self employed?Im in Ohio by the way
If you were improperly classified (read this post), then it’s extremely unlikely that you’ll be held to it. Snowball’s chance in hell. If you’re self-employed, you can’t be held to non-compete agreements because you’re operating your own business, likely in direct competition with the salon owner’s already. It’s absurd. To protect her client lists from theft from renters or employees, the owner needs to drop her NCA’s and get data theft clauses instead. The odds of a non-compete being held up in our industry are slim to none.
What happens when you have sign a non compete agreement over 20 years and company has had name change And did not make us re sign another ?
You’ll have to speak with an attorney about whether or not the NCA is enforceable. I’m not an attorney, I haven’t seen the terms of the agreement, and I don’t know what state you’re in so I can’t pull up any relevant case law for you.
I was a booth renter in a barbershop in NC. She was sabotaging my clientele and hours, so I quit as soon as I found another job in a salon. I had “agreed” to a non-compete clause stating that I wouldn’t work in another barber shop in a 25 mile radius for one year after I started (which she later said would be one year after I started paying boothrent) and I never got a copy of the contract. In order to make my bills, I did have to start work at another barber shop. My former boss found out and is telling me I owe her booth rent from when I quit to whenever the contract says, if it even says anything about it. From what I read, the non-compete clause didn’t apply to me. If this is true, is there a link that can help me legally?
She can “say” whatever she wants. Until she “does” something, I wouldn’t take anything she says seriously. For legal help, you will need to contact an attorney. Contract law is extremely complex and is generally decided on a case-by-case basis. I highly recommend you find an attorney and have them advise you. However, I personally wouldn’t pay her anything or give her the time of day until she had me served with legal documentation. That entire situation is sketchy (25 miles is insane and you were a renter, which is even more ridiculous). In the future, don’t sign anything you don’t agree with, sign every page of each document you do sign (so the landlord doesn’t edit the text and slip in clauses later), and keep copies of everything you do sign.
I am condsidering leaving the salon I’ve been with for 10 years. Mainly because the owner violates many of the issues you have put forth on here. By the way, thank you for giving all of us stylists, no matter how we choose to be employed, a voice. I believe in ethics and costumer service before anything else, that’s why I love what I do. I am here because I’m researching how best to leave without hurting my clients, my self, or my employer. During my ten years, I have had no benefits, I.e. Insurance, sick time, vacation, or overtime. I’m on commission, with product charges being withdrawn from each interaction. The only paper I have signed was 7to 8 years ago envolving my formula book. Now I signed this under duress, meaning, if not my job was forfeit. The paper stating that I may not bring my formulas with me. Do you know within how this lies pertaining to intellectual property? I created each and everyone of my formulas, with no help from owner or outside source. It is my own art. But I’m unsure of how I stand with this. I does make me upset that I’ve taken my own personal artisan and knowledge to create these formulas and they may not belong to me. Is this an issue with anyone else? I appreciate any insights you may have, thank you…
Well, if you were employed properly, there’s a good likelihood the employer has ownership of incidental products of your labor, including the right to any intellectual property produced during the course of your employment. This tends to come up in the technology industry pretty often, when software developers create apps of their own while being employed by a software company. Generally, their contracts protect intellectual properties developed on their own time, on their own equipment, but should it be determined that the employee used company time or resources to produce the intellectual property, the company may have a claim to it. In your case, you were hired to serve clients, and part of that service includes color formulation. Although the employer didn’t help you or direct you, the task was incidental to job performance, so making a claim to the formulas would be difficult at best. You’ll get a better answer from an attorney, though. 🙁
I understand, and I appreciate you taking your time to address my question. I will be continuing to read all of your wonderful information. I’ve been in the business for 17 years and a lot of the things of read on here are a real eye opener. I would like to be as well informed and professional as you. You are taking this business and holding to the higher standards that only makes it better for everyone. Have a great weekend!
Thanks so much Marsha! 🙂
Just looking for an opinion here, I realize that the internet doesn’t count as legal counsel, haha! I’ve been employed by a salon in Chicago for one month (assisting/apprenticing while waiting for my Cos license to transfer from another state – 2 yrs of prior experience) and I did sign a NCA at the time I was hired (can’t work for 18 months at a “location providing similar services or goods” within a 10 mi. radius). I have no clientele, as I am not yet licensed in Illinois and moved alone from another state, but I am having second thoughts about the company for various reasons. The compensation is barely livable for assistants and stylists (hourly wage, no commission), not very good benefits, promises made to me at time of hire that have not been kept, uncomfortable work environment, etc. Not really a huge deal but could be in the future type of things. My question is, do you think the company would have reason to “enforce” the NCA since I wouldn’t be taking any clients with me? Or would a judge even enforce the NCA since I’m not really a liability to the company? Any advice is welcome and appreciated!
To me, the NCA doesn’t sound enforceable as you were in an extremely low-level position. You’re right to consider the arrangement dangerous–listen to your gut on this one. Unkept promises in particular are a huge red flag.
Should the company enforce the NCA, the judge would enforce it unless you could provide a compelling reason why it shouldn’t be enforceable (and I consider the broad scope and the crazy wide radius–especially in a metropolitan area–enough to shred it and publicly shame the owner), but it depends on the judge. Arrange for a consult with an attorney before you violate it. The “location providing similar services or goods” thing is WAY too broad and your job role was so minimal that the NCA really didn’t seem appropriate in the least. You may be able to challenge it before breaching it and have it struck down in advance, that way you don’t ever have to worry about the salon attempting to enforce it. (In those instances, you basically bring the agreement to a judge and present your argument for why you think it’s not valid and the judge either agrees or disagrees with you.)