September 8, 2008 at 4:04 pm
At a previous job my company was bought out and the new management wanted everyone to sign new employment agreements that had a harsh non-compete clause i.e. can't use the skills I used for them for a new employer. I went to a solicitor that specialised in employment law and got his opinion on the contract. Essentially he said that the clause wasn't enforceable even if I signed the agreement as it would leave me unable to earn a living, therefore contravening employment law. I was then able to let the other people in my team know and relieve the stress we were all feeling (take-over accompanied by rounds of layoffs!).
At my present company we sign non-disclosure agreements and this is felt to be more important than non-compete clauses.
Nicole Bowman
Nothing is forever.
September 8, 2008 at 4:40 pm
It's a tricky thing, trying to protect secrets. There are also potential public domain and public disclosure issues. I've been previously told that, working for government, anything you make is technically public domain as the government can't file patents and it's subject to FOIA requests. So where do I draw the line when blogging? I won't use names of people, I won't use names of databases, I'll even obfuscate table names to reduce potential attack vectors against my systems.
So non-compete clauses? My self-respect/honor will prevent me from copying something whole-cloth that I developed from a previous employer, but code? If I write a maintenance routine at one site that can be used against any database, I think it is near the definition of not being a business process, it's more of a system process, so why not use it at my next job? It becomes part of my administrative/maintenance code base, and if I'm in touch with the person who took over my job when I left, I'd be glad to share it with them. If it's a specific process that gives my employer an edge on his competitors, then it's counter to my honor to go to work for a competitor and give them that process, I'm violating a trade secret and potential patents. If I want to work for a competitor, then it would probably be in my best interest to go to a different business unit to avoid the appearance of impropriety. If I'm an engineer and work for Ford and want to go to GM, then maybe I should change from car design to plant design for a few years, plus the change in field will broaden my resume and make me more valuable for future job hunts.
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[font="Arial"]Knowledge is of two kinds. We know a subject ourselves or we know where we can find information upon it. --Samuel Johnson[/font]
September 8, 2008 at 5:38 pm
The non-competes I have been asked to sign also ask/insist that I assert that my ability to find work has not been impaired. When my last employer came up with a harsher version of the original document, I just ignored it, hoping HR would let it fall through the cracks, which they did.
One of the problems for me is the caprice involved--they will waive a non-compete for some employees but not for others, and even if it is unenforceable, they probably have more resources and willingness to proceed than you have, or even than your new employer might have. The new employer might simply decide it is more hassle than it is worth.
September 8, 2008 at 6:38 pm
First there was slavery - that was an abomination. Then there was indentured servitude - considered 'fair' at the time but rife with abuse. Now there are non-compete agreements - preserving 'at will' for the employer but not for the employee.
I'll sign something like this:
"You agree to not engage in employment with any competitor for a period of six months after leaving The Company"
When they include something like this:
"We will not retrench, make redundant, outsource, fire, or otherwise terminate your employment with The Company without paying the equivalent of six months remuneration to cover the non-compete period stipulated in your employment agreement."
It's only fair, right? You expect me to sign away my basic rights without any kind of compensation? This is probably the main reason the courts are dismissing non-compete agreements. They are seen in the same vein as slavery and indentured servitude.
James Stover, McDBA
September 9, 2008 at 1:48 am
Non disclosures is justyfied and reasonable and would hold up in court here in sweden, Non compete hold here only as long as you pay the employee. That is you can fire your emploee for doing competing work at their free time. While working in Ireland I was faced with a non-compete vailver (american company) and blatently refused to sign it. If they would have fired me I would have been ok with that as I was looking to move back to sweden already, but they didnt push, possibly due to Irish laws. Not that we had any information that would have helped their lokal competition that was poaching workers other than our skills, and in the end its all about what you are willing to pay or in other ways make your workers happy.
September 9, 2008 at 2:36 am
Non-compete clauses are a way for your employer to say you are worth more to the business than the value of your salary. This means we should be looking at how the employer judges how much someone is worth to the business.
Starting at the top, employers reward senior executives handsomely, often with bonus, share options and pension arrangements not available to other employees. The employer is definitely saying these senior people are worth more than the value of their salary. Yet when these people leave it is very rare for them to be bound by any non-compete clause. In many cases they will demand additional compensation on departure for not joining a competitor (even when they had no plans to do so), and it often seems that even trade secrets can get copied to the new employer.
If the people the company value the most (because they get the most money) are effectively not bound by non-compete clauses, then applying them to lower-grade staff is merely a restriction on trade. As such, I agree with the court ruling that they are invalid.
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September 9, 2008 at 4:48 am
I see two separate issues here:
One - non-compete as part of a business sale - this you are negotiating as part of the price of the business, and the buyer has to have a reasonable expectation that the business he is buying won't disappear if you do.
Two - employer/employee relationships - this is where there is typically a gross imbalance of power and non-competes should be unenforeceable as there is much more chance that the employee would become unemployable than the company become unviable due to one employee taking his knowledge elsewhere. If someone is that important to your business, you better treat them well!
September 9, 2008 at 6:12 am
Good points on your value and something I hadn't considered.
As an FYI, I actually have a balanced NCA where the I have to give xx notice and the company must as well, so it's fair on both sides.
September 9, 2008 at 7:24 am
In Louisiana non-compete clauses are governed by Louisiana state law if you work in Louisiana. The law specifies that a radius cannot be used to define the geographic area covered by the clause. Parishes and/or municipalities must be named. This has been missing from every contract I have silently signed. They are null and void.
September 9, 2008 at 7:48 am
I had a discussion about noncompetes with my ex who is an attorney (in Texas) and he said at least in Texas a non-compete that prevents a person from making a living could not be enforced. The only thing it can do is keep you from actually taking business and/or IP from your current employer to a competing business in the strictest sense.
In other words, being a DBA for Company A doesn't prevent you from being a DBA for Company B, except in the case that Company B is a direct competitor of Company A and you have proprietary knowledge from Company A that would hurt them were you to go to company B. Even that might not fly with the courts if Company B were the only other game in town -- but you still wouldn't be able to call your old clients from Company A (if you had any) and encourage them to come to Company B.
Other states may have different rules but according to my ex, in Texas, more often than not the non-compete would fall apart unless you were actually doing something shady. I was a consultant for a long time, who had a non-compete. I didn't actually leave for another consulting firm but if I had, the only thing the non-compete would prevent me from doing is calling my clients and encouraging them to use the new firm's services. It couldn't prevent me from being a consultant and seeking new projects with clients I didn't know, even though technically we could compete with my old firm over them.
But, if you have questions, talk to a lawyer, I'm not a lawyer, just passing on the gist of my conversation with one. Don't rely on me for legal advice 🙂
--
Anye Mercy
"Service Unavailable is not an Error" -- John, ENOM support
"You keep using that word. I do not think it means what you think it means." -- Inigo Montoya in "Princess Bride"
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September 9, 2008 at 7:56 am
this is all well and good but if company B won't bring you on as a contractor being represented by company X because you worked at company B before, being represented by company Z because of a non-compete clause you were forced to sign with company Z then you (or in this case I) are out of luck - and out of work
September 9, 2008 at 8:32 am
Seggerman (9/9/2008)
this is all well and good but if company B won't bring you on as a contractor being represented by company X because you worked at company B before, being represented by company Z because of a non-compete clause you were forced to sign with company Z then you (or in this case I) are out of luck - and out of work
Very true, and that isn't fair, I agree.
Unfortunately unless a person is told before they accept a job about the non-compete agreement, and they have another choice that does not involve one, I'm afraid they have us by the shorthairs.
One thing I do is make sure the clauses I sign aren't too restrictive and I have been known to make alterations before I sign them. One thing that I commonly find is statements that "they own everything I create" rather than "everything I create that relates to the company's line of business". I always use the example of them not owning any games I design while I'm working for them as a business programmer. They usually agree to let me add an exclusion clause.
One thing you can do if you end up in a situation like you discuss is try to get permission to "violate" the clause. If the employer that gave you the non-compete can see that what you're doing isn't truly competitive sometimes they will sign off and give written permission for you to go anyway. Obviously they don't always agree, but it's worth trying if you left on at all good terms.
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Anye Mercy
"Service Unavailable is not an Error" -- John, ENOM support
"You keep using that word. I do not think it means what you think it means." -- Inigo Montoya in "Princess Bride"
"Civilization exists by geologic consent, subject to change without notice." -- Will Durant
September 9, 2008 at 8:57 am
Instead of exclusion clauses, I'd rather insist on what's "compete" and "disclosure". Let the company define each: let them put names of competitors, companies, places, programs, etc. Review it annually or periodically so its updated. Same with disclosure: tell what I should not disclose, then I won't. Having a blanket non compete or non disclosure is a no no. Once they came back with specifics and I then agreed to those as they were reasonable. Otherwise, this is meaningless. Moreover, signing blanket statements can make it difficult for employees to defend against accusations of violations. Future employers have to come into the picture and defend you, which may or may not happen.
Bottom line, even if I go work for a direct competitor, it does not mean that I disclose or compete directly. I could be working in totally unrelated areas/markets. For example, moving between a small company and a multinational.
In any case, all such non-compete and non-disclosures have to be equitable in terms of time. If they want 6 months non-compete, then they have to give me 6-months notice or 6-months severance. Laws protecting employees don't offer such parity. It's up to individuals to negotiate each time. Most companies are reasonable when confronted. It's the HR folks who refuse to step outside of a template that their attorney would've given them.
September 9, 2008 at 9:29 am
Of course, one problem is that the company may view their competition more broadly than any reasonable individual would--they may see it as the entire sphere (e.g. healthcare, retail clothing, communication) rather than their specific competitors ( insurance overpayments, children's clothes, cell phones, respectively). So, even updating the list may result in unacceptable additions, even if the list was conservative when you first signed your non-compete.
And, of course, even if you have a right and the clause in unenforceable, it may have a chilling effect on you or a prospective employer--most job apps ask "Are you covered by a non-compete?"
September 9, 2008 at 2:47 pm
If a company isn't willing to sign a no-hire for X months, where they won't hire someone to do your job for that period of time then they shouldn't require you to not work for someone else during this time. ANy company worth it's weight will not have a problem with people constantly leaving and need to resort to legalkized bullying to keep their staff.
The problem is with how to be fare for both parties; the employee and the employer. In most situations the employer has the right to protect proprietary property but not skill or knowledge. Unless something can be copyrighted it shoudn't be part of a non-dosclosure and I say this because too often employers go over board in defining what is proprietary to their business. If company 'A' increases it's sales by moving all cold calls to Tuesday morning at 10AM does that now mean no employee can work at any other company that will require them to make a call to a clent around 10AM on a Tuesday morning? Of course not but don't be suprised to see something like this listed by an employer as part of the non-compete.
I was bullied into signing a non-compete by my former employer. They had been in business for over 20 years and never even thought about something like this. Then when the wrong persons got promoted up the chain till they reached a level they could not do the job (aka inmcompatence) and were left there, more persons begain to leave for a better job at a better environment. the company went from being the place that no one ever wanted to leave to the place that had to resort to leagl tactics to bully some into not leaving. WHat was worse is the attitude by upper management was "how dare you leave, after all we've done for you", like as if they had been paying people for doing nothing and now they were mad because they were going somewhere else.
If an employer is treating tehir employees right they will get top notch work and keep a good staff on hand for a long time. It's when someone on the management side gets greedy that we all end up paying.
Kindest Regards,
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