An American Editor

January 29, 2014

The Business of Editing: Noncompetition Agreements

As I have discussed in the past, I rarely am asked to sign a contract. Yet lately it seems that an increasing number of packagers are asking for contracts. The terms are one-sided and onerous, and in some cases want me to agree to be bound by the law of a country to which I have never been and with which I have no legal or cultural connection.

But there is one particular clause that I find to be especially irritating, and unlike sand in an oyster, does not produce a pearl. I am referring to noncompetition clauses.

I am a freelance editor. By definition it means that I have more than one client. If I have only one client, the IRS is likely to look askance at my claim to being a freelancer and call me an employee, something neither I nor my clients want. Consequently, I sometimes wonder if my clients are confusing noncompetition clauses with nondisclosure clauses, although they assure me they are not.

The illogic of the noncompetition agreement is that clients are unwilling to divulge their client list. How can I possibly know who I should not solicit as a client because of such an agreement if I do not know who the packager wants me to not solicit? The answer is, all too often, that the packager basically wants me to stay away from everyone who could possibly provide me with work except them — even though they are unwilling to commit to giving me more work than the current project.

More importantly, from their perspective, I would think, is the possibility that the IRS would ask why a freelance book editor, someone who is supposedly not an employee of the packager, be required to sign a noncompetition agreement when by the very nature of being a freelancer, I am in competition with the packager, at least to the limited extent of the limited number of services I provide. The normal situation is that an employee who is leaving the packager’s employ would be asked to sign a limited noncompetition agreement because it would be expected that the leaving employee is leaving with knowledge about the employer’s clients and business.

I have raised this issue several times with those who ask me to sign a noncompetition agreement. I have even suggested that we submit it to the IRS for an advisory opinion, because if I am going to be made an employee, I want to bargain for all the benefits. Not only has there been a general refusal to discuss the matter, there has been universal refusal to get that IRS opinion. I am not surprised.

For the purpose of the noncompetition agreement, it is editing that is the subject matter. These agreements need to spell out exactly what areas I cannot compete in (which they do not), and it basically has to be limited to the services I actually provide the packager (again, which it is not), that is, limited to editing.

But then the packager would need to attest that my editing services are unique and particularly valuable. If they are run-of-the-mill, they cannot be restrained by a noncompetition agreement. When I raise this point, I ask if the packager intends to pay me a premium for my services, so that it would be clear that they value my editing skills much more than the skills of any other editor, which might make my editing skills unique, not run-of-the-mill. Alas, that has not yet occurred — but I keep trying.

Part of the problem is that some lawyer somewhere has given the packager a bunch of papers for freelancers to sign without stressing that the forms are appropriate for certain types of work but not for others. The people who do the freelance hiring at the packagers are told to have the freelancer sign the forms and so they become insistent, and impervious to any suggestion that the forms (or clauses) are inappropriate for the work I am being hired to perform.

So that puts us at a stalemate: the packager won’t hire me without my signing and I won’t sign.

I know that some of you are saying “just sign, get the work, and move on.” The problem is that there may be nowhere to move to. If I sign a noncompetition agreement without knowing who I am to avoid and without narrowing down the services involved, I could be putting myself out of business. The usual case is that the packager and I both often do work for the same client. Think about a publisher the size of McGraw-Hill, Pearson, Wiley, or Elsevier. They produce thousands of books and journals every year and have numerous divisions. How unusual do you think it is for both a packager and an editor to work with one of them? But if the packager’s agreement is signed as presented, you may be precluding yourself from working with such companies.

Besides, why should such a limiting agreement be signed without appropriate compensation? If you give up valuable rights, in this instance, the right to work with clients you may have worked with for years, should you not be compensated?

I am constantly amazed by editors whose job it is to deal with words, language, and meaning, yet who will blithely sign contracts without considering the ramifications of signing. Just as I give the manuscripts I work on a careful read and think about what message is being communicated, so I do the same on my own behalf when it comes to signing contracts for editing work.

Would you agree not to edit a spy novel in the future because you are being hired to edit one today? Sign a noncompetition agreement and you might be saying exactly that. Would you agree not to edit a book on pediatric medicine for McGraw-Hill because you edited one for Elsevier three years ago? You might be agreeing to that.

The point is that you need to read noncompetition agreements very carefully. You need to be sure that its scope is very narrow and that all of the entities you are not to approach are identified. Even more importantly, you need to negotiate compensation for the rights you are giving up. Finally, I would think about whether signing the agreement would change your status from freelancer to employee in the eyes of the IRS. Because I am averse to signing such agreements, I make it clear that I plan to send the agreement to the IRS for review. So far, that has been enough to have the agreement disappear without my signature.

Richard Adin, An American Editor

8 Comments »

  1. AE wrote: “Because I am averse to signing such agreements, I make it clear that I plan to send the agreement to the IRS for review. So far, that has been enough to have the agreement disappear without my signature.”

    Can we infer from that statement that you get the work anyway? Or does the job opp disappear with the agreement?

    Also, to what branch of the IRS would one send such a thing for review?

    Like

    Comment by Carolyn — January 29, 2014 @ 7:39 am | Reply

    • Sometimes I get the work and sometimes I do not. Not having sent such an agreement to the IRS, I cannot say which division. I would call and ask.

      Like

      Comment by americaneditor — January 29, 2014 @ 8:54 am | Reply

  2. I don’t work with book packagers, but I do sometimes get contracts for writing or editing work that include non-compete clauses. I just cross out those clauses. Same for the onerous insurance demands. Most such clauses are in there because, as you say, some niblick in accounting has no concept of what it means to work with a freelancer and threw in all kinds of language or clauses that are irrelevant to using freelancers; the company has one contract that it tries to use for all purposes with all vendors, suppliers, whatevers, even though one size doesn’t fit all. If a client doesn’t want to use me because I won’t agree to a non-compete clause, I’m probably better off without that client.

    Like

    Comment by Ruth E. Thaler-Carter — January 29, 2014 @ 10:55 am | Reply

  3. thank you AE for this valuable heads up. so far, i have not been asked to sign such a thing. now, if it happens, i will know how to handle it. i’d be curious to know if any of the editorial professionals organizations have posted any guidelines regarding this issue on their websites. if not, they should.

    Like

    Comment by aletheia33 — January 29, 2014 @ 11:46 am | Reply

  4. This reminds me of a joke, in dialogue form, I made to my dad when he was reviewing a book contract. King Herod: “I notice this agreement requires me to give you the head of John the Baptist.” Salome: “Oh, that’s just my standard contract.”

    Like

    Comment by Peter Galen Massey — January 29, 2014 @ 8:14 pm | Reply

  5. So far I haven’t encountered this, but it’s good to be aware and to read everything in a contract. I did receive a potential contract from a small publisher last year that seemed a poorly altered author’s royalty contract (It still said “author” instead of “editor” in some places). They were asking me to agree to a percentage of royalties for editing the book. When I asked if they’d sent an author’s contract by mistake, I never heard from them again. Just as well. The sample piece of writing they’d sent me as an editing test was horrific.

    Like

    Comment by Jan Arzooman — January 30, 2014 @ 11:02 am | Reply

  6. Reblogged this on Dara Rochlin Book Doctor.

    Like

    Comment by darar68 — January 30, 2014 @ 11:55 am | Reply

  7. Caution: Long Comment
    I’m not a lawyer or paralegal, but I do read contracts very carefully and reword sections that are objectionable. As I do so, I try to understand what the client’s actual concerns are instead of the often burdensome and overly protective language the client’s lawyers have insisted on. So far, I’ve been pretty successful in getting my changes accepted. Below is an excerpt from an email explaining some of the changes I’ve made to a particular client’s contract. Information in angled brackets is replacement text for redacted specifics about the client and its products.

    Letter of Agreement
    Attached are an executed letter of agreement with Exhibits A (Invention and Non-Disclosure Agreement) and B (Non-Competition and Non-Solicitation Agreement), a completed W9, and a copy of the first pages of my passport (per item 3 in the letter).

    I am unencumbered from any company’s or party’s restrictions on working for . However, I am morally and legally obligated to protect my past, present, and future clients’ privacy and proprietary information. That’s why I have added a little language to Exhibits A and B. Here’s a summary of my revisions.

    1. If I don’t know about a product or service that is developing or considering developing, I can’t protect it. I don’t need to know about it; I just can’t protect something I don’t know about.

    2. I have clients other than and anything I develop for them belongs to them and only them. This includes ideas, materials, and similar as described in Exhibit A, paragraph 3a.

    3. My clients want me to keep their work confidential, so I am bound by agreements that require me not to disclose any of their trade secrets or other proprietary information.

    4. My clients don’t want me to solicit any of their employees or clients whom I meet as a result of my work, so I am bound by agreements that require me not to solicit employees or clients.

    5. I will have new clients, and they will have similar requests that I not divulge trade secrets; work for their competitors while I am working for them; or solicit their employees, consultants, or clients.

    Independent Contractor Warrants and Representations
    I am currently working for a client who delivers . In no way does any of this work involve .

    I am currently working for clients who produce . None of the work I am doing for these clients involves anything that could remotely be connected to the products and services of .

    I am currently working for an author of . In no way would be suitable for .

    I have in the past worked for clients who develop materials that , but I will not accept any projects involving during the time I am working as a consultant.

    Like

    Comment by Susan M. Walker — January 31, 2014 @ 11:37 am | Reply


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