This is a very good question. I have some experience here...
Years ago during the era of irrational exuberance I worked for a company very briefly before deciding I had made a mistake and resigned. In the exit interview they insisted I sign a newer, more restrictive non-compete agreement... and I mean they INSISTED. I declined but since they were freaking out over it I agreed to hire a laywer and have him advise me.
Of course, the lawyer told me not to sign anything since I no longer worked for the company but I learned quite a bit. First off, in 19 years of doing software development I have never worked for a company that did not require me to sign one of these agreements. I did learn, however, that a non-compete agreement is about as enforcable as a pre-nuptual agreement. That is, it's a very, very gray area. As has been stated here, you can't enforce something in a contract that is illegal. For example, I signed the agreement here in MA... the agreement prevents me from working for competitors for a period of 12 months after I leave... and the term competitor is *always* left generic. Now here in MA, that's a gray area. You see, the state of MA has a law that prevents an employer from restricting my ability to be professionally employed in my field. See, more gray area. My lawyer told me it really depends on the specific situation and sometimes even what judge you get.
My advice... sign it if you want a job... and if the company ever tries to enforce it, fight it to the full extent of the law! Don't assume the company is telling you the truth. Get a lawyer and FIGHT! Of course, after 19 years in the business, I have never had to fight one. The company that was trying to force me to sign a new agreement promptly dropped the subject after I consulted a lawyer. That should tell you something right there.
