This transcript was generated from the episode audio and may contain minor errors.
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How do you handle a non-compete that potentially harms your side hustle? This is an interesting problem. Yesterday we had an interesting problem with a viral hustle, somebody receiving 500 orders all of a sudden in a manual labor business. And what do you do? Well, today we've got a listener with a side hustle taking off.
I don't know if it's quite viral level, but it's doing really, really well as well. They're making half their salary in under a year. And why is this a problem? Well, because an opportunity at their day job comes with a non-compete. Basically they have to sign something that says that they're not going to side hustle effectively, or at least not in this category or this industry or so on.
So, you know, what do you do? Non-compete clauses used to belong just in tech startups and C-suites, but now they're kind of in mid-level offers as well, especially when management roles touch product strategy. So how do you know what is negotiable, what is enforceable in your state or province or region? And how do you approach HR in this situation without sounding adversarial? So for a listener who is wondering, how do I handle a non-compete that hurts my side hustle?
What should they do? I'll do my best to be helpful, detailed question in my answer right after this. [Music]
Hello everyone, I'm Michael calling from Charlotte. My evening side hustle, selling custom car detail kits, has grown to half my salary in just nine months. That's awesome, except my day job just offered me a promotion into management.
And the contract comes with a stricter non-compete that broadly covers automotive accessories and supplies. I don't want to sabotage my career or burn bridges, but I also don't want to put the brakes on my fast growing hustle. How do I navigate this conversation with HR or legal? And is there room to negotiate carve outs so everyone stays happy? All right, so no legal advice of course, but I can give some general advice that will give you some next steps.
So I think first thing is you read the exact language, like what exactly does this proposed non-compete say? And then consider the overlap between the two things. Like a lot of non-compete clauses list both industry scope and geography. So if it says automotive accessories worldwide, well, you note that. And then note the duration.
Is it 12 months? Is it two years? Just try to get really specific on it. And maybe also do a little bit of research in what is it North Carolina in this case, Michael is in Charlotte. A lot of states require a non-compete to be narrowly tailored and to protect a legitimate business interest.
So if your employer doesn't sell car care products, then their blanket cause is weak. So just knowing that gives you leverage again, not legal advice. But I think practically maybe the most important thing or the most helpful thing could be to request a friendly carve out before signing where you actually have a conversation about this. And just note, I have an existing micro business in car detail kits. It doesn't pose any competitive risk.
It also doesn't affect my job. Obviously you believe in my ability to do my job because you're offering me a promotion. So can we just be really clear and add a little carve out clause saying that this non-compete doesn't apply to maybe revenue under X dollar amount from that venture. So that's clear for the employer, but also clear for you. And maybe as a worst case fallback, is there some way you could convert to passive income where you're basically like licensing your kit formula to a friend or a third party LLC to where you are now apart from that business, you're receiving royalties, which is usually allowed in these situations while distancing yourself from daily operations.
Maybe that's not as ideal as actually just being able to do it in the first place. But again, as a worst case fallback. Whatever you do, of course, good to get it in writing and keep some records. These non-competes are negotiable more often than most people think, especially when the core business doesn't overlap. It's also always good to kind of provide solutions as opposed to bringing a problem forward, like you want to be solution minded in your conversations with your employers instead of being difficult, right?
So give them something that works for them and hopefully that'll help. Let us know, of course, how it goes. Listeners, if you have a question, a comment, sidehustleschool.com. We are almost at 3,200 total episodes of the podcast. You can access all of them, download them, stream them completely for free at sidehustleschool.com.
And of course, new episodes out every day, wherever you get your shows. My name's Chris Guillebeau, this is Side Hustle School. [Music]
