Non-Competes Might Mean Loss Of Benefits

Skapare writes "WashTech is running a story about how having a non-compete agreement could cause loss of unemployment benefits. While non-compete agreements are addressed in unemployment benefits policies, it seems you still get shafted because it forces you to accept any employment outside your field, making it much harder to find work in your field. Personally, I think the employers with whom you have a non-compete agreement should be the ones paying you unemployment benefits."

Comments

Simple Fix

[epiphani]

Dont sign the non-compete agreement. I've never had an employment offer widthdrawn because of it.

Re:Simple Fix

[TENTH SHOW JAM]

One place tried this on me, I simply pulled out a black texta, removed the section I did not like, initialed the changes, and signed the remainder of the contract. The HR girl signed off on the revised contract and there was much rejoicing. I now work for an organization whose contract was so openly worded, I can do anything I like provided my boss approves

It is so simple...

[jonr]

Want to put non-competitive clause in my contract? Fine, but then I want you to pay me salary during the perioid.
It has to be a balance in the system.

Re:It is so simple...

[Copid]

Better yet, tell the company that if they fire you, the agree not to produce the same goods or services they produced for a period of one year. Work for a memory manufacturer? Get it put in your contract that once you're gone, you'll stop working for memory manufacturers for a year and they can produce baskets and sock puppets for a year. Fair enough, yes?

Are they really legal?

[realmolo]

I seem to recall reading a few years ago, during the boom, that "non-compete" clauses COULD NOT prevent you from taking a job for fear of getting sued. That they were basically bullshit, in fact. A whole "right to work" thing.

Anyone have the facts on this?

Re:Are they really legal?

[CommieLib]

I remember hearing a lecture on this very topic a couple of years ago. The main point was that as you proceeded westward across the U.S., the non-competes became less enforcable, until California non-competes are virtual oxymorons (Google the term).

I think that the idea of a non-compete is an idea that's going to fade away; it justn't seem intellectually tenable to me. It's certainly reasonable for a company to protect its trade secrets and intellectual property (don't mean to troll here), but labor mobility is a force of public interest (supports wages and other positive economic effects).

I'm what most people would consider a radical free marketer, but even I realize that certain agreements foul up the system by their very nature. For example, I should theoretically support the right of a worker to sell himself into slavery; after all, if it is his very own freedom, is it not his own freedom to sell? Obviously, this gums up the works very quickly and destroys the system. Kind of like Hofstader's self-destroying record - record player combo. Anyhow, I think non-competes may be a less extreme version of this.

Oddball situation

[fluxrad]

Generally speaking, I don't believe you have to take any position offered you. I was unemployed for five months and was offered a new position at an extremely lower wage than the position I had previously held. In order to circumvent the problem of either taking the job or losing my unemployment benefits, I called the company back and told them that my "requested salary" was much higher than what they were offering. At that point, they rescinded the job offer and I, of course, reported that I had had no job offers since technically I hadn't ;-)

All you have to do is make the company "aware" of something that makes you look unattractive for the current position. They'll rescind the job offer and you won't lose your benefits.

Re:$15 trill economy dosent have a real welfare sy

[Snork Asaurus]

You're right of course. Killing the economy is the domain of government, coporations, their boards and CEO's, not the common man.

A view from the other side

[2Bits]

Non-compete agreements (NCA) are not necessarily bad, not all of them. If you are careful to read the details, and understand the real meaning of each sentence (i.e. don't be afraid to ask questions!), it's ok to sign NCA if it's not abusive.

I rememberd that I was once offered a job at a network security company, which required me to sign a background clearance agreement which stated that they can check every detail of my life, including all emails I've sent before, all news postings, all phone conversations, etc. Basically with one signature, I would have signed away my entire life's information. On top of that, I had to sign an NCA that said if I leave the company, I can't work in the computer security field for two years, or until their patents expire, or some BS like this. It was incredible. But the salary and benefits and stock options were all incredible too. I was making already 6-figures, and this gave me another 45% raise on top of my previous salary, plus stock options in the 6-figure range too. The offer was attracting, but I didn't sign the agreement. They were willing to modify the background checking requirements to my acceptance, but not the NCA. So I just turned it down.

Now that I've started my own software company, we also have a NCA, but it's very comprehensive. When an employee leaves the company, he can't compete directly in the exact same field, doing the exact same work, developing the exact same functionality. And that's only six months. He is not obviously barred from working in the same industry. Frankly, I don't know the legality of this agreement, but we do emphasize this aspect to new employees, as a precaution measure so that they understand the problems. One thing we want to achieve is to make our employees understand the ethical aspects of working in the hi-tech industry, and that's all.

ps: If I had accepted the offer I mentioned, I would be multi-millionaire by now, as the company had been acquired by a larger entity, and the stock options have been converted into the stock of that larger corporation. That's the price for sticking with your principles in life!

Consider the Source!!

[bethanie]

This article is so unbelieveably biased that I didn't even have to look at the source to realize that it was Union rag.

Note how it starts out by getting you all riled up about this poor guy's plight -- his role as the beleaguered sole supporter of his special-needs daughter and the hopelessness conundrum proposed by his circumstances. But if you read it thoroughly, you also see that he was completely vindicated by Excell, the Washington State Employment Security Department, and later, by Volt.

And then, of course, the article launches into the obligatory attack on Microsoft and its evil feudalistic business practices, because who doesn't hate MS, right?

Listen up, people. We live in a FREE country. You don't HAVE to sign a contract with an employment agency if you don't want to, and before you do, you'd sure as hell better read the fine print before you sign up! If they aren't making you a decent offer, then move on to the next agency!! Evaluate them as carefully as you would a prospective employer -- because, in effect, that is what they are.

The knowledge you have and the skills you can leverage are your currency in today's economy. When you accept a job or a contract with someone, it's because you are willing to provide what you know in exchange for what they offer you.

These businesses won't STAY in business for long if they can't recruit quality talent. Hell, if you're good enough, you can negotiate the damn non-compete out of your OWN contract!

Next time you read an article like this -- remember: Always consider the source!

....Bethanie....

But it takes $$$ to fight

[Anonymous Coward]

Whether or not non-competes hold any legal water, you still have to be able to fight them in court if your ex company tries to persue it. And, in order to effectively fight, you have to have money and time. But, if you're out of a job, you're probably not in the best position to fight anything. And, if you are willing to fight, odds are that the case will be dragged out for months or even years while they bury you in paper work (BTW, IANAL. insert more anoying acronyms here, etc. etc.)

I just went through this situation last year when I was looking at switching jobs. It ended up not being an issue, but the prospect of having to deal with it in court was just a little unnerving. It's not enough to be right. Unfortunately, you have to have enough money and time to prove you're right in court. And, a private citizen just doesn't have to resources a corporation has.

So, needless to say, with my last job hunt I learned from my mistakes. When one of the companies I was interviewing with gave me an offer and asked me to sign a non-compete, I turned it back on them. They wanted all these things including 3 weeks notice before leaving. And, if they couldn't find a replacement for me in those 3 weeks, I had to pay their lost consulting revenue until they found one - or I could stay on until they found someone. So, I told them that I wanted 3 weeks notice before layoffs, firings, or any other termination of employment, and if I couldn't find a job in those 3 weeks, I wanted paid until I could find a replacement position. I didn't wait for their answer and just took another offering, but I wonder what they would have said. It's really not a great IT job market to be negotiating these sorts of things.

Re:$15 trill economy dosent have a real welfare sy

[darkov]

Actually, things like welfare and universal health coverage are good for the economy. The former does things like flatten out the business cycle by increasing spending counter-cyclicly (to people who will spend all the money on goods and services instead of saving it) and the latter reduces costs to the overall economy by improving health standards (it's cheaper to prevent illness than cure it)

But more importantly, they're a sign of a civilised society.

Don't be a fool.

[Fished]

It's like this. The rent on my house (low for the area) is $900/month. I have four small children. From what I hear, unemployment will give me a whopping $800/month, for which I cannot even rent an apartment, much less feed my kids, buy clothes, shoes, keep up my car payment, etc.

My wife went straight from college to mothering, and has never worked, so has few job skills. The company for whom I work (who shall remain nameless) just sold my position to a contracting company, with one weeks' notice. Despite their company policy, they are not giving me any severance whatsoever if I don't take the job with the contractors. The contractors *require* a two-year NCA, and stated unequivocally that anyone who would not sign would lose their job immediately. The contracting company is *huge*, and it is quite likely that any potential job I get may conceivably compete with them somehow.

Did I mention that there aren't really any jobs out there right now? Do you think I'm in a position to fight the contract? No, I signed, and I will try to tough it out as best I can. If I have to leave (or get fired) from the contractor, I will get a new job as quietly as I can, not tell my former boss, and hope they don't notice.

The idea that everyone has free choice in signing contracts is foolish. The bottom line is that a disproportionate amount of power is placed in the hands of employers during hard economic times. They should not be able to do anything they chose because of that. The solution you propose -- which as I read it is pure Laissez-faire -- was more or less tried in the 19th century. It resulted in horrible abuses, and horrible conditions for working people. It resulted in the unlimited importation of cheap labor from foreign countries (every read "The Jungle"?) It resulted in 60 hour work-weeks for 12-year-old kids. All this was done as good examples of "free enterprise". It was in reaction to these conditions that labor unions were formed and fair labor practices laws were passed.

It is no coincidence that these abuses started at a time of great economic growth (the Industrial Revolution.) The laissez-faire approach might work in a smaller economy. However, the creation of shared-stock companies has the effect of watering down the process of making ethical decisions so that no one feels personally responsible. Instead, everyone operates on a scheme of plausible deniability. It is correct and appropriate in such cases for the government -- who created the shared stock company as a separate persona in its own right in the first place -- to take action to ensure just and moral practices.

Re:$15 trill economy dosent have a real welfare sy

[stephanruby]

Your premise is flawed. Something good for the economy, as we measure it, is not necessarily good for me. You can burn down my house, that will be good for the economy, but it certainly won't be good for me.

Please think of this next Christmas when you're watching the Corporate News.

Finland enforces compensation by employer

[Quietti]

IANAL, but I have this textbook concerning Finnish business law, which is written as a series of FAQ meant to be easily understood by small business owners and self-employed people. One point specifically deals with non-compete agreements:

• The total duration cannot ever exceed 1 year, under any circumstance.
• If the duration is 1 month or less, the employee is not entitled to any compensation.
• If the duration exceeds 1 month, the employer must continue paying the full salary and benefits until the non-compete agreement has expired.

IIRC other EU countries deal with this in a similar way.

Sorry, still good reason not to sign

[MickLinux]

Actually, there's a problem here. America is technically a common-law country, and also has laws prohibiting ex-post-facto decisions. However, the way our government has behaving, it may as well be a written-law country.

What I am saying is that it is currently unenforceable. However, you need a specific judgement to get your contract in specific thrown out, and to go after a specific judgement, you need to challenge the company and get fired. May as well not sign, then. Without the specific judgement, if the country later changes its laws to say that it *is* enforceable, then you've just been sold up the river.

Further, the boss may have been truthful, in that the bank requires these agreements, then it is the bank that wants the slave-owners. It is also the bank that is slowly taking control of the company. So if that is so, then they clearly have more than enough assets to harrass ex-employees out of any useful labor. See some of the other posts in this line, and you will see that some of these companies really do use their contracts to violate the law.

It might be interesting to go into a class action lawsuit against all companies that require these NCAs, and -- where applicable -- specifically reflect the class action lawsuit to the banks, if the NCAs were required by the banks as terms of loan agreements, since the loans are often forced on the small business (that is, it is a case of take the loan, or get seized in foreclosure). But when I say interesting, I don't say good. Theft in response to theft doesn't really solve anything. It just makes the problems bigger and deeper. The best response may be to just start publicizing lists of slave-driving executives, unjust executives, and weak executives who don't protect their people. In other words, have a list of "who is currently being evil or weak". Then submit that list to Forbes magazine every year, as well.

That way, investors can stay away from companies driven by such leaders. Would that make sense to investors? I really think it would make sense to the smartest of them, since a business is properly viewed not as an investment, but as a reaction chamber that has to maintain 4 ingredients in a proper mixture: investors, workers, customers, and working fluid[$]. Destroy too much of one or another, and you have a business that cannot last.