You’ve just scored the most talented instructor in town. They want to work for you, and you’re hopeful that this is the ticket to help your studio really take off. You want this superstar all to yourself, so you’re going to add a non-compete clause to their contract, right?
Well, maybe. Here’s what you’ll want to consider as you’re creating agreements or working with a lawyer to draft their contract. And if your studio is in California, know that these sort of clauses are unenforceable — so it might not be worth including in your employment agreement.
It will cost you
If you are hiring a celebrity trainer or even just a local celebrity, asking them to sign a non-compete will, by its nature, limit where else they can teach. By placing constraints on where else they can teach, you’re also hindering their earning potential. Accordingly, you may need to compensate them more when asking them not to work somewhere else or show them additional ways you’re investing in them, such as extra training or covering their continuing education credits to keep their certifications current.
“You can’t just say ‘you can’t teach at any other studio anywhere else in the world forever,’” says Jennifer Gaudette, an attorney at Eisner, LLP. “You need to be specific in this language. For example, if you’re hiring a cycling instructor, you might want to say that they can’t teach cycling at your competitors’ studios for six months after leaving your studio.” She adds that it’s also legally important to be specific — the agreement may not be enforceable in court if it’s too broad.
This should go without saying, but you don’t want your superstar instructor to also be your competitor’s superstar instructor at the same time. In order to protect this, be sure that your non-compete clauses cover the time of employment, and not just afterwards.
Know the risks
While these types of clauses protect you, they’re not particularly appealing to instructors. If you are a newer or smaller studio, consider the impact that not allowing your instructors to teach elsewhere might have on your recruiting. Is protecting yourself from your instructors being poached worth potentially repelling new talent?
Be sure to get an IP agreement
“Sometimes when a studio thinks they want a non-compete,” says Gaudette, “what they really want is an intellectual property agreement.” This assigns those IP rights to your studio, meaning that Instructor X who creates The Best Method Ever class can’t just take it to another studio, because you own it. If you’re an established studio that hasn’t done this yet, you can still have your instructors sign an IP contribution agreement, according to Gaudette. This type of agreement protects any type of class format they might have already created.
And remember — the work doesn’t stop after a signed contract. Keeping your instructors happy and feeling supported is the key to retention and overall staff fulfillment.
This article does not constitute as legal advice. Contact an attorney for concerns related to your specific situation.