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Crazy Non-Compete Contracts?
JL-b8 asks: "I've just encountered a (from what I know) strange occurrence. A group of friends who work for a small web design firm are being forced to sign a non-compete agreement with a clause that prohibits the employee from working with a competing company for 12 months, after the date of their leaving. The owners claim it's a standardly practiced clause, but I don't see how the hell a web developer/designer is supposed to find work in a city for a year, without moving to a completely different city. I'd like more input as to how this weighs in to the rest of the companies out there. Is this a common thing? If you've signed something like this, and had to switch jobs, how did it affect you?"
It's generally a pretty standard condition, most commonly when you are taking a redundancy package. I've never heard of it being used on internet related jobs before, but I don't think it's uncommon.
I'm not a lawyer, but these guys are. Hope that gives you some useful tips about what's worth fighting over.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
non-compete clauses are very common and yes, some companies will use them against you. Some states prohibit non-compete clauses, like CA. If you live in CA, you can sign a non-compete clause but it is unenforceable. Other states, like WA, TX and I think FL allow non-compete clauses, so I would be careful about what you sign.
You sound young and inexperienced... welcome to the real world. Don't sign it unless you are completely desperado for money.
I assume this is a US city? I don't know US law but under legal systems that follow UK common law that wording is almost certainly unenforceable. The leading case is about a blind piano tuner of all things.
Yes, it is important to be able to actually work and the law generally recognises that.
My suggestion is to consult a lawyer as to the exact legality. I would suggest negotiating with your employer to knock that down an aweful lot.
I'm a PHP/MySQL developer, and I get asked to sign those on a regular basis. I sign them, and then forget about them.
To be a bit more thorough in my answer, I have never flagrantly violated such an agreement. It's usually not that hard to find work for another company that isn't a direct competitor. Plus, (IANAL) I've heard that those sorts of contracts are mostly unenforceable. I could be wrong about that though, which is why I try to avoid flagrant disregard for the non-compete.
Matthew Walker
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I'd like more input as to how this weighs in to the rest of the companies out there. Is this a common thing?
It's probably pretty much bullshit, as non-competes are usually targeted at specific knowledge jobs (CTO, CEO, etc), not skill jobs (web designer/developer). Basically, it comes down to compensation for that commitment. If the firm's paying six and a half figures, go for it. If they're paying market rate, tell them to knob off: There are plenty of other firms that don't require a non-compete for a regular web developer/designer position.
The theory of relativity doesn't work right in Arkansas.
I have found such non-competes very common, and I've signed a few of them myself. The scope of the agreement is generally proscribed by the state in which it's signed: length of time after employment that other employment is barred, definition of the region, how close the work can be. etc. A 12 month period is a pretty common period. It's never stopped me from looking for work, though, as the burden on them is to prove that I've broken it, and if I don't return their calls, what will they do? Get employment records from my now-current employer? For real advice, consult a lawyer.
--
$tar -xvf
In my case, it's 6 months but it's a little forgiving since a specific industry was clearly stated. (my case: bpo) Although that still limits my options since our competitors are also one of the better places to go in case I would like to find another job.
I know people who work in an "all purpose IT Company" that offers services ranging from outsourcing programs to supplying servers. They got a 2 yrs non competing period, the funny thing (because it's not me) is that my friend can't find an IT job anywhere since it would violate the agreement. He "had" to work in a non-IT related field, I just bid him good luck.
And yes, such things are crazy.
I've seen non-competes like this in things like news media, but not often in software development. If someone is a news anchor at station A, when they switch over to station B they generally get a 6-month to 1-year paid "vacation" so the marketing that station A did to promote this person to their viewers would not give an advantage to station B.
Non-competes should only be accepted for this sort of reason, where some person working within the same industry for another company would have either proprietary knowledge or influence not due to their skill, but only to their association with a company. If I'm working as a cashier for -insert megalomaniacal chain store here- then there isn't really any possibility of having such knowledge or influence. If instead I'm working in their procurement department and negotiating deals with (and cultivating relationships with) outside vendors, it makes sense for the company to have a non-compete clause. If I weren't working for them, I wouldn't have had the contact with those vendors, it is only due to my work with the company that I would be as successful at another company.
Whether or not you accept the clause, however, is up to you. Do the benefits of working for this company outweigh the problems that a non-compete may cause you?
Our state law nullifies these sorts of contracts, even if you've signed them.
Speaking very generally here, my legal education was in English law, but googling for US cases reveals similar outcomes.
The clauses are presumed to be invalid unless they are reasonable in terms of the scope of work covered, geographical area and length of time. The burden will be on the employer to prove these three in any litigation. There may be specific state statutes limiting these, otherwise look for cases in your state to get an idea of what courts are finding to be reasonable. These tests may also be interpreted differently depending on circumstances, it should be harder to justify enforcing a non-compete where you are terminated without cause for example.
I'd say the real question is whether a legitimate interest of your employer is being protected or whether they just want to screw people.
I'm not a lawyer, and this is not legal advice.
There are a few similar cluases in my contract - most are completely unenforcable under EU and Dutch law - to follow them to the letter would force all my future work to go through the same agency, and not be able to work elsewhere without their permission - obviously nonsense.
About the only things they can enforce is that it would be very very difficult for me to switch to a different agency but still work in the same job at the same company (and its probably 50-50 in switching agency to do a different job at the same company) and it would probably be equally difficult to switch to a permanant rather than contracting role while doing the same job here.
Since as agencies go mine isn't too bad I can live with those limitations - and if they happen to be offering the next job I want then I would have no issue with signing with them again - but it certainly won't stop me signing with other agencies/companies if they have a better offer and I highly doubt they would even attempt to enforce it in court let alone have a snow flakes chance in hell of them winning.
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My non-compete didn't even have a time limit. I was forced to sign it after my company was acquired; previously I had no non-compete. I have a family to support and would have been terminated if I didn't sign, so I did.
Fortunately, non-competes are generally unenforceable in California, and after I was later laid off, I went to work at a direct competitor.
Who had me sign that draconian non-compete? A big software company that is not terribly popular on Slashdot.
I always said we're both for freedom, the big question is just 'freedom from whom?'.. and this question illustrates it perfectly. In Europe, this is a non-issue. I could sign all the non-compete contracts I'd want to, but they don't hold up in court. We have a 'right to work'.
You have the freedom to be screwed over by companies. You have the freedom to sign away your liberties to everybody but the government. Now, is that really freedom, or just really advanced serfdom?
"" How about taking the safety labels off everything, and let the stupidity-problem solve itself? """
Here we (still) have quite strong "restraint of trade" laws which prevent the vast majority of non-compete clauses. I have had legal advice on it. Hasn't stopped a good number of companies asking me to agree to them though.
Sounds to me like they're just trying it on. Almost every contract I've received has had something really unreasonable in it. Every one is different too, but they're all "just the standard contract". If you do contracting for any amount of time you'll hear those weasel words a *lot*.
My advice is strike it, explain that it's unreasonable and they'll very likely back down. Good luck.
One of these days I'm moving to Theory - everything works there
Oracle's Technical Consulting branch does this too, sort of: you can't go and work at any clients you've been to at the past year. I was green back then, signed it and wasn't happy at all, but when I left, it didn't affect me.
I suggest your friends just sign, but strike out the clauses that don't suit them. Put a signature left of the striked-out clauses for good measure, put them in the in-tray and you're done. If they complain, say you've done all you can. If they keep complaining, quietly look for other work.
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My employeer wanted me to sign that, I refused. They told me that 'Never would use that against me'. I told them 'Then why is it in the papers I have to sign?'. I still refused to sign it. So long time ago, dont realy remeber what happened. I think they change it anyhow. Not long down the road I switched to an other company cause I was sick off things like that. Respect your workforce and you will gain respet from your workforce, and the other way around... By the way, this was a webcompany.
I've had to make employees sign such things. They are there so that if we get an employee who is valuable to us in terms of their knowledge who leaves on unpleasant terms then we pull it out as an ace. If you leave the company doing the right thing, plenty of notice, nice and amicable then they aren't going to do anything unless the company is desperate enough for money.
The other thing to remember is that business owners tend to be very aware of each other in the local marketplace. They attend the same functions, give to the same charity balls and attend the same cigar club so they can burn $100 notes. It's the adage of keeping your friends close and your enemies closer. If your boss finds out that his mens club 'friend' has hired you, he'll take it personally and then use the clause.
Task Mangler
Such clauses are illegal in Europe (where law basicly states that one can not sign away chances on future employement), in the USA, they could probably add a clause where the CEO gets to keep you as a pet when you leave if they wanted to.
I'm currently negotiating with my client here in California to take full-time employment with them. They wanted a 12-month non-compete. My attorney told them to suck eggs, because it is unenforceable here in Cali -- you have the right to work. So they took it out of the contract. They still want an anti-poaching clause though (can't poach their employees after you leave to work elsewhere).
If you're concerned, spend $350 to have a labor lawyer (who specializes in employee agreements) review it. As someone's who's been screwed in the past by not having an attorney review a contract, it's worth it.
I'm a web designer/developer in a mostly print design shop, and we actually ran into a situation where one of our designers quit to work in-house with one of our clients. The effect being that she left, and having no more need of us, the client did too.
So what happens? Nothing really. We chose not to pursue the legal route because the client wasn't worth what we would've had to pay in legal fees, and secondly because no legal ruling would repair the situation. Sure, maybe we could bilk a little extra cash out of the client on the way out, but we couldn't seek an injunction against our designer working for them.
Ultimately, after asking a couple of HR people I know, I found out that these things are pretty much only valid if you're getting something in return. ie: If I ask this of a designer, then right there, in the contract there has to be spelled out some level of compensation for the direct act of denying them this revenue source should they leave. Otherwise you'd get laughed out of court for trying to enforce this, at least to my understanding (and ovbiously, IANAL).
Add a clause in the agreement that said the company will pay your full salary for the duration of the non-compete agreement, or until you landed another job, whichever is earlier. Tell them that is also "a standard clause for non-compete agreements".
If what you know is so important that the company will suffer if you work for a competitor, it makes sense for the company to pay you for it. That's fair.
Oliver.
It might help if the questioner told us where. IANAL, but I'm told that laws do vary from place to place.
It's true I tell you, feller at work's next door neighbour read it in the paper.
Having 10 years experience providing development and architecture services to startups, I've seen plenty of conntracts, so I might have a couple useful tips for you.
As far as non-competes go, you have to first look at what the laws of your State are.
If you are in a Right to Work State such as California, you can safely sign an agreement that says you may not compete or work for a competitor who competes.
This is because Right to work means just that, the State recognizes that you have the right to earn a living by your trade and that no entity save the State itself may revoke that right nor confine or restrict that right in anyway. So even if you do sign that document and you do go to work for or against the client later, there is nothing they can do about it.
Now, if you don't live in a right to work state such as Washington, the State will allow a contracts terms to restrict you from plying your trade.
In essence, they see you as the clients little bitch for signing such an agreement and your ability to be employed is now bound by those terms.
Here, you will need to negotiate through those terms. Simply inform the client that while you would like to assist them, you are unable to sign the contract as it is currently written because it would effectively prohibit you from practicing your trade as a means of livelyhood and cause you significant harm.
What do you do if they refuse? Then walk away. Personally, I've never had a client refuse to revise the contract to my liking.
I've sometimes had a few days of ping pong and negotiations, but in the end I've always gotten exactly what I ask for.
But there are other things to look out for as well.
Ownership and Assignment are the first things I look out for, and the areas I read most closely.
Look out for crap like this:
"Subject to the terms of this Agreement, Consultant hereby assigns and transfer to the Client its entire right, title and interest, including without limitation all copyrights, patents, inventions, trade secrets, trademarks, trade names, service marks, trade dress, and all other intellectual property rights, in and to the Deliverables. To the extent that such assignment and transfer may not, by operation of law or otherwise, fully convey to the Client the foregoing rights, Consultant hereby grants to the Client a worldwide, irrevocable, exclusive, fully transferable, unrestricted right and license to use, execute, display, reproduce, distribute, modify, publicly perform, publicly display, sell, lease, license, sublicense, and otherwise transfer, and to authorize one or more third Parties to do some or all of the foregoing, with respect to the Deliverables in any form or medium, whether now known or later developed."
Just a little one sided don't ya think?
What the bolded bit means is that any pre-existing code I may allow to enter the code that comprises the deliverable is now theirs as if they had written it themselves. Additionally, anything I may generate while working on that project, I would never be able to again utilize. Now, enforcing that is a different matter... but I prefer to sign all of my contracts in good faith.
So here is the language I provide as my alternative language if they are to engage my services:
"Subject to the terms of this Agreement, Consultant hereby grants to the Client a worldwide, irrevocable, exclusive, fully transferable, unrestricted right and license to use, execute, display, reproduce, distribute, modify, publicly perform, publicly display, sell, lease, license, sublicense, and otherwise transfer, and to authorize one or more third Parties to do some or all of the foregoing, with respect to the Deliverables in any form or medium, whether now known or later developed."
Essentially, it's theirs to use and abuse with my own interests and entitlements maintained.
Not at all as strong as the GPL, but that's the point, they get the unfettered usage they want, but I maintain my ownersip of my existing code and any new knowl
You must not alter the contract!
I'm sorry if I haven't offended anyone
Even if you don't care about the clause, your future employer must be told. If they go up against your former employer (FE) and the FE finds out you are working there, they might just invoke your clause and punish the new firm. All sorts of nasty things can happen, like not being able to use code you've produced. You most certainly WILL be fired then and most likely black-balled in that city.
I'm not a lawyer, but this is what I was told by the freindly HR staff at my former employer. Like everything here, take it with a grain of salt.
Do not sign ANY contract without having your lawyer look it over. Understand what you are agreeing to. I'm self employed and have been offered contracts that could have put me out of business at the end of the contract had I signed it. That's makes the lawyer a good deal. Don't know where to look for a lawyer, check my sig.
It amazes me how often business owners/managers have the arrogance to think they can stick something in an employee's face and order them to sign it.
Sheesh, evil *and* a jerk. -- Jade
But the terms are that I can't work for direct competitors in the industry. That is a list of only a handful of companies. They aren't precluding me from plying my trade as a developer overall, just as a developer for specifically what I'm doing now.
I'd read the non-compete again. It would be overly broad if it didn't specify a particular section of the workforce you couldn't work for.
If the company wants them to do something (i.e., use their knowledge and time), they have to pay for it. Likewise, if the company wants them not to do something (i.e., work for someone else), they should have to pay for it. I'd say, if you don't want me to work for someone else, give me a severance package that covers the exclusion period. For instance, ask for 6 months severance for a 12 month exclusion (half pay). Or argue that the non-compete is unreasonable. Or work for someone else.
This post expresses my opinion, not that of my employer. And yes, IAAL.
I've turned down a job because we could not reach agreement over a non-compete clause; it was very broad, and unreasonable-looking, and they insisted on the annoying language. I took this as a sign that they might make trouble if I ever did want to leave (and if I have to hire a lawyer to assert my rights, that's trouble, even if I eventually win). I've signed others that were not so insane, but I generally hate them, and wish that other states would follow California's lead.
So what if it's unenforceable _now_. Who's to say it won't be enforceable later?
Even if they say it's "nothing" or not enforceable, it's still stupid to have it in.
Or do they prefer to select employees whose signatures/words are worth _nothing_, while eliminating potential employees who actually are diligent (to read fine print in contracts) AND have integrity?
It can't be acceptable practice, otherwise what do you expect a baker to do if he leaves a bakery? Do web design?
Request that the clause (and other unreasonable clauses - e.g. unreasonable IP clauses[1] ) be struck out.
[1] Just because I work for a company doesn't mean it should own everything I think about. Do NOT sign up to be a slave. Sure the company should have rights to most stuff they tell me to create/make for them. BUT if a carpenter makes tools using his own materials and time to better build his employer's stuff, then the carpenter should own those tools. His employer should of course own what he made for them.
I've seen IP contracts where ALL ideas of yours past, present, future end up being property of the company whether or not they have any relation to the work you were hired to do, that's ridiculous.
Every position that I've had the last 15 years required a non-compete agreement as well as a confidentiality agreement. The good news is that because I don't know what I do, they can't prove I've ever violated it.
OTOH, if you are a mid-level or lower web developer, they won't bother coming after you because these agreements are really just corporate bullying. The company knows these are enforceable unless you and only you know about a specific method or technique. We all like to think we know something the other guys don't, but get real. Do you have a patent for any work? Could you? If not, forget the non-compete, unenforceable bunk dreamed up by lawyers to make good people afraid.
These agreements have been struck down over and over when anyone bothers to bring a suite. Use google, not slashdot. But don't be stupid. If you mainly work on a medical information web site, don't make your next job for the same type of site, rather work on a pet medication web site or a porn site or lumber yard site.
Asking Slashdot for any **real** legal advice is crazy, all you get are opinions, like mine.
In every recent job, I've required all agreements required for the position to be provided prior to accepting the job, when my ability to negotiate is strongest. There's nothing worst than showing up the first day at a new company and being handed a stack of "standard forms" to sign. Normal people don't get up and walk out, they have a mortgage, wife, kids to feed. Oh, get in writing that no new agreements will be required for at least 1 year and have an officer of the company sign it. That usually isn't the hiring manager, he has no power to enter agreements on behalf of the company. I haven't gotten many offers recently, as you might guess.
I went through this too (different field).
If your friends are already employed and are just now being approached with this document (after stable employment) then they are fully entitled to 'compensation' if they decide to sign this. For example I was offered 25000 more stock options as a 'bonus' when an employer tried this on me. Thanks god I was smart enough to know the game that was going on, and I called them out - which instead led to the stock and a 15% pay increase.
The other thing about non-competes is (and it sounds like this is the case here) if they try to enforce that you can't work with co-workers in the after period as well. This one is easily crossed by having a recruiter place you into the firm (where your friends work) and you want to go. Nice loop hole there.
Lastly, if you do not want to sign it (and I recommend you find an amicable way not to) and the employer gets real aggressive or fires you - they are in all sorts of legal trouble for these actions. Then you have to decide if the company you would sue is big enough to regain the legal fees of if your pockets are big enough to support them. Or just walk...
One more thing - another way to work this out is to be an independent consultant to the firm in question. Consultants cannot be asked to sign these things. (well they can be asked, but by no means should they ever). At most a consultant should sign a NDA.
This is just from my experience, your milage may vary.
As others have already said, it comes down to the specifics. The clause is there to prevent you from bringing their trade secrets to a competitor.
The contract I signed is a little overly broad, but it doesn't stop me from working in IT altogether. Just a very small subsection. When I read that portion of the contract, I thought, 'Would I consider working for someone this might affect?' The answer was 'No.' Besides the legal obligation, I would not feel right taking their methods and practices to a competitor, and I wouldn't want to work for anyone else that was forbidden by the contract.
The short answer is: If you think it will actually prevent you from finding any work after you quit, then you should not accept that contract. If it only takes a small chunk of the market away from you, it is probably an okay contract.
Of course, if you're the type to only stay at a job for 6 months, then you'll definitely want to keep all your options open.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
http://www.desmoinesregister.com/apps/pbcs.dll/ar
It can be a bad idea to sign even an unenforceable noncompete. In any industry where noncompetes are common (as in my case, finance), prospective employers always ask if you are subject to one. If you say "yes", they don't want to get involved, whether or not the noncompete is enforceable.
I once aborted a non-compete by agreeing to sign it if the company would agree to pay me for the non-compete period if I was terminated for anything other than performance related issues. Sort of a half-assed golden parachute. I got the job without the non-compete.
1 in 4 Maine children in struggle with hunger.
I had a rejected /. story on this topic a couple weeks ago. Details here: http://btetc.blogspot.com/2007/02/have-you-sold-yo ur-brain.html
Basically, it's normal for the co. to protect themselves against you going in there, learning how they do everything, then duplicating their business/technology models for their competitors. Not unfair, as far as that goes.
But the contract I was looking at overreached by a *shocking degree, claiming "exclusive ownership" of any *idea "capable of being used in, or in connection with, the business... " for a period of 6 months.
I was able to get them to adjust these terms, and in fact to admit that any programmer who signed such a thing had to be insane. But YMMV.
My turnips listen for the soft cry of your love
I have signed non-compete clauses, but they were specific. For example, when working at an online shopping portal, my non-compete clause prevented me from working at another online shopping portal for a year. Not really a problem.
A non-compete clause for "web design" is too broad. What aspect of web design -- conceptual design? layout? integration? sales? Is there a specific industry or set of industries your clients come from -- financial, medical, etc.?
$nice = $webHosting + $domainNames + $sslCerts
Don't follow the advice of the people who are saying sign it and forget about it that it won't or can't be enforce. While it is unlikely that it will be enforced and a good case can be made that a judge will strike the clause if it ever comes to trial, what happens when your boss/company is a jerk and tries to enforce the clause? Do you really want a legal cloud over you? It can take years to fight it. Do you have the money to pay a lawyer for that long? Heck even a speedy trial can run you thousands to tens of thousands. Plus your new employer might decide to drop you when they find out about your legal problems.
Demand that it be taken out or accept the fact your employment opportunities after this job will be limited. If you can get it modified that might be ok as well although I don't see how it could really be modified to be acceptable.
As for the actual question about what to do when your current employer decides to make you sign one...Well the job market isn't too bad right now. If they insist, you can probably quit and get another job pretty quickly. Of course you have to be willing to quit and risk being unemployed for some time.
I've seen NDAs that comprise algorithmic/mathematical insights gained on the job/task. While I can understand value of trade secrets, this is problematic because it's impossible to get algorithms/mathematics out of one's head later, and most NDAs default to eternal (which is perfectly understandable for say customer medical data but difficult for algorithms). Am interested in precedents (either law/case law or codes of conducts in professional associations in any legislation of this world) how to find a fair dividing line (maybe by disentangling the privacy and the business secret protection aspects mixed into an NDA and giving fair limits to the latter).
That's what NDAs are for. You could spill trade secrets all you want without ever violating a noncompete agreement, since you don't have to work for a competitor in order to reveal the information to them.
Remember, I am not your lawyer.
Read the contract. Take it to a lawyer. If you are in california, tell them straight up it's unenforceable and tell them you want it out of the contract because it could be damaging to the rest of the agreement should legal actions arise. Elsewhere, if you absolutely cannot find a lawyer, agree to the non-compete if you can get one of the following:
1) Specific mention of area of effect of the clause. Overly large areas are unenforceable. Look around your area and see if there are other places you could go to more than X miles from the employer.
2) Specific mention of specific competitors in the contract that you could not work for. If the contract has a completeness clause ("this agreement is the complete and final agreement between the parties," if I remember the wording close enough, which bars extrinsic evidence, such as a list), make sure it is in the contract itself, and not just an oral agreement or a typed-up list. Remember that what is said during negotiations likely will not have any effect upon how the contract is interpreted by any court at some (unfortunate) later date. The contract must be ambiguous for that, and non-specific does not mean ambiguous.
The larger the area/more employers, the more money you can ask for in severance during your noncompetitive period. If they try to get you to sign away longer than a year and a half or a couple counties of area, tell them up front that you can't agree to that and it is likely unenforceable. If they disagree, grab a lawyer for an hour and have him call them to tell them that it probably is. Generally, however, these clauses are allowed, and you have to be careful what you sign. Do not agree to a bad covenant not to compete in exchange for a lengthy period of "gauranteed" employment, because the gaurantee is... well... not a gaurantee. Even with a contract, unless it is worded extremely carefully, you are still an employee at will (to forestall questions: contractors are different, as they are not employees).
DO NOT, EVER, just cross out parts of a contract. That will not modify the contract unless the other party specifically agrees to the modification. The physical appearance of the paper is meaningless, as the contract itself is metaphysical. At best, you don't have a contract. At worst, you have a counteroffer that was not accepted by the employer, which may revert to the employer's version. Feel free to cross things out, add things, or whatever on your copy, but you ABSOLUTELY MUST go and specifically bring your concerns to the person you are negotiating with, draft a NEW copy of the contract for you to both review and sign. That is the only right way to do it.
To clarify the intention of the (not purely theoretical) question: Being able to a quote from a publicly available and quotable (model) contract that company xyz does with their employees, legislation abc suggests etc would be useful when negotiating with customers/employers. "(Respected) company xyz, legislation abc does it that way too."
A major ETL tool vendor (hint: The name is a latin phrase similar to ab ovo or in media res) once offered me a job. The non-compete stated that I would not take a position using their software for four years after termination of employment (regardless of reason), and that during that period I would notify them of any change of employment. One of the clauses was that I would acknowledge that I had a broad background and was able to find employment in other areas of expertiese (or words to that effect).
I understand why they had the restriction- there would be a huge temptation to work for them for two years then quit and earn upwards of $300/hr for high-level consulting using their software.
Warning bells, really really loud ones, should go off whenever you see a non-compete at this level. Something else has to be wrong with the company. You might never find out what it is even if you take the job. But anything that negatively affects your future employment, especially if you know about it ab initio, should always be considered very carefully. I turned down the job, by the way.
I had such a contract, forbidding me to work to any of the company's competitors for 1 year after leaving the company (video game industry). I got a much better job for their main competitor and just took my chances (a penalty of 6 month salary was specified in the contract). The hiring company assured me that the clause is not enforceable and that they will defend me in the event that I am sued. A simple calculation will show everyone that more $ is lost by suing, and the "example set" will not bring any goodwill from existing employees. In the end the old company was very nice about it, and no pressure was made on me, in fact they asked me to reconsider and stay. On my side, I kept everything very quiet, and only told a few people where I'm heading to, which was appreciated by management.
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I live in Missouri, and during the acquisition days of the 90's these were everywhere. When the company I worked for was acquired (in the ISP business) all the employees were handed a non-compete to sign for our new owners. Thing was, the non-compete was written for the holding company of the company that bought us. As such, they barred employment within 250 miles of the north leg of the St. Louis Arch in *ANY* business that competes with the any business within the holding company. The terms were broad to begin with, but the scary part was that the holding company had about 18 companies in wildly varying industries. As such, none of us could work in realty, any restaurant or bar, food distribution, web development, IT, ISP, or telco companies, to name a few.
I had a lawyer vet it and basically the answer was that a non-compete in Missouri cannot keep you frmo working in your chosen industry. Simply put, they can't bar you from working in your field, and the law here was slighted in favor of the employee. I get to define my career.
While IANAL, it basically means in Missouri that non-competes are bogus. That company was an ISP, and while we never signed that non-compete, there was another one that got swapped in (regarding custmoers and stealing them, and such) and we did all sign that. However, within a week of quitting, I was employed in the same position at an ISP, and no one was concerned.
Generally speaking, a contact can't keep you from putting food on the table. If you are a graphic designer, and you sign one, the contract can't really keep you from working for another graphic design firm, although they can keep you from stealing their customers.
Bill
i retired after 21 years from my employer in 2004, i cant get a job in the same field until 2014, 10 year no compete clause
also, anything i do until 2009 that is related to the field belongs to my employer
the standard NDAs also apply to any projects i worked on, any tech or software used, etc....
One time I took a job with such a contract. I simply handed it in to the HR department unsigned, along with the rest of the huge stack of papers I had to sign when joining them.
It took them six months to notice, and one fine day it arrived in inter-office mail with a sticky note asking that I sign it. I tossed it in the round file.
A few months later another copy again showed up in the inter-office mail. Likewise.
After a couple of years my boss called me in and pointed out that HR had their knickers in a bunch over this and demanded I sign it immediately. I apologized, and wondered aloud how such an oversight could possibly occur. I took the copy he gave me back to my office and round-filed it again.
This pattern continued for the entire 12+ years I worked there. When I finally left, I went to work for a direct competitor. I got a letter (presumably a sort of 'cease and desist') from their lawyer demanding I respect the non-compete agreement. I returned the letter to the lawyer with a note stating I knew nothing of such an agreement, and asked if they would simply send me a copy of my signed agreement, and once I read it, discussed it with my lawyer and understood my rights and obligations I would be happy to discuss how to address the issue.
Never heard from them again.
I repeated this process with every company I worked for over a multi-decade career with many silicon valley companies. I never signed a non-compete.
Factors in my favor were that in CA, such agreements are mostly meaningless (this was not the case when I joined the first company) and every company I have ever worked for was so disorganized that simple oversights can go undetected for years. YMMV...
I would never sign such an agreement under any circumstances. But I saw no point in making it an issue. Simply smile, nod and 'forget' to sign it. If I were ever faced with a 'sign it or resign' ultimatum, I would simply have moved to another job in another company.
Stony
Do not sign this. I've worked for some of the biggest companies in the world as a C++ developer and have never been asked to sign one of these, and if I would be, I'd tell them to either pay me a signing bonus of at least one years salary up front, or forget it. Unless you're being offered a bonus that's equivalent to one year's salary, they're just trying to lock you down.
These are only common among higher level management types and even in those cases these people get substantial compensation when the leave to make up for it. The only reason they're trying to get you to sign this is because they're trying to fuck you. If you sign it, it means they can cut your salary or even lay you off, and you're totally fucked for a whole year. They could even go completely out of business and still sue you after everybody is gone!!
You are not being treated with respect. Do you still want to work there? Maybe now is a good time to go work for their competitors.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
For a year after you leave? Typically in my experience these types of agreements are reserved for higher ranking management, not for typical engineers and developers.
nothing
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
http://www.lawteacher.net/Contract/Agreement/Agree mentLecture.html
My preference with these is to modify the contract AND put a condition on the acceptance. I've never been challenged on either, and I've handed in 5 such modified contracts and never been challenged about it (either about the modifications/acceptance, or after changing jobs), in spite of otherwise violating the language of the base contract.
"1. COUNTER OFFERS
If in his reply to an offer, the offeree introduces a new term or varies the terms of the offer, then that reply cannot amount to an acceptance. Instead, the reply is treated as a "counter offer", which the original offeror is free to accept or reject. A counter-offer also amounts to a rejection of the original offer which cannot then be subsequently accepted. See:
Hyde v Wrench (1840) 3 Beav 334.
"
also:
"
2. CONDITIONAL ACCEPTANCE
If the offeree puts a condition in the acceptance, then it will not be binding.
"
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
In the US, if I sign a document that says I give up something to which I am entitled by law, it can invalidate that part of the contract. It can even invalidate the entire contract. It's very much up to the judge.
For instance, I am a landlord, and tenants have certain entitlements granted to them by law. They vary from state to state, county to county, city to city, but they are there. Take, for example, my responsibility to provide heat in the winter. Between certain months (they vary), I have to make sure there is heating in my buildings above a certain temperature (it varies). Let's say I wrote in my lease agreement that the landlord is not required to heat the building at all, ever. Well, a tenant could take me to court, and the judge would look at me like I was from another planet before invalidating that clause.
Regarding non-competes in the US, the enforceability varies widely from jurisdiction to jurisdiction, industry to industry, etc. The bottom line: typically a judge will not deny a person a means for survival. If you have a non-compete that says you can't work for 12 months and the employer is paying your salary for those 12 months, that will normally be enforceable. Agreements that you can't work for a direct competitor due to your access to trade secrets can also be enforced.
This is a good thing. It allows for more flexibility in employment. Remember, you don't have the just sign the dotted line. You can, and should, negotiate. This is basically what other commenters are telling the OP: the employer has made their offer, now it's time for you to counter. Counter with striking the clause or with adding a clause that states that employer will pay the employee's full salary for the period of the noncompete. This is standard for nocompetes.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
In your case, your employee was protected by the reality of your company's business situation, but you can't depend on this. What if that client became a former client? What if having that employee go work for the client caused the severance of the business relationship? Your company would have suffered a (possibly) huge, quantifiable loss and it might then be worth the legal fees and burnt bridges to enforce the non-compete.
Another form of noncompete simply states that the employee must buy out the contract. Those tend to be viewed as much more reasonable and enforceable by judges. Say, "If employee wants to go work for a client, employee must pay employer $50,000." That way, you're not preventing her from working, you're just making her pay for your loss. If she, and your client, want her to go work for them that badly, they can pay the fee and be done with it. Client is happy, employee is happy, company is happy, and judge is happy.This varies widely by jurisdiction. Also, HR people tend to be conservative by nature. It's part of their job not to get the company in legal hot water, after all. Your HR contact is right in a way, of course. Because they are rarely enforced, he sees them as worthless as a practical matter. This is a perfectly reasonable outlook for an HR person.
On the other hand, my father in law is an attorney and he has litigated these before (although this is no longer the area of his practice). His take is that most people believe noncompetes are unenforceable since they are rarely enforced. But the fact of the matter is they are enforceable, and he has seen them be enforced, so don't sign anything you're not comfortable with. You don't know what the situation will be when you part ways with your employer. If the business situation warrants, or if you step on the wrong set of toes, you are going to find yourself in a courtroom paying $300/hr to your lawyer to try to explain why you signed something with your fingers crossed. Do this at your own peril.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
Generally it is a really bad idea to sign something you don't agree to. Judges hate it, and will screw you if they feel you were acting in bad faith. Signing something with your fingers crossed (oh, sure, I'll sign... and just get it invalidated if you try to hold me to what I just told you I agreed to) would be an example of bad faith, since your employer is then acting on the assumption that you agreed not to work for a competitor.
A judge's job when enforcing a contract, is to try to be as fair to the agreement as possible, within the confines of the law. So if the law says a noncompete can only be for 6 months, but the noncompete is for two years, the judge might just change the duration from 24 months to 6 and call it a day. After all, it was the intent of both parties to enter into a non-compete agreement, no? They must just not have known that 24 months was too long, so let's have it be the maximum allowable of 6 months.
All I'm saying is that on any given day in court, you do not know what a judge is going to do. Do you want to pay an attorney $300/hr for the privilege of finding out? Or would you rather just not sign something that you feel is unfair?
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
Right to Work means that you can't be forced to join a union as a condition of employment. It has nothing to do with non-compete agreements.
If you'd like to read more about Right to Work, I found 813 million articles here.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
You got lucky. In another courtroom on another day, the judge could have just as easily said, "You're a sysadmin, go work for a company that is not an ISP, as you agreed to do. This is not unreasonable. Plenty of such companies exist."
I'm just sayin'.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
This is correct (at least, the CA part).
Sadly, a lot of legal paperwork is actually invalid and done to intimidate or make people think that's the law...
Non-competes are not uncommon in the IT industry -- let's face it, we're companies' intellectual property. A non-compete is a loosely "legally binding contract" between you and your employer; the extent to which it is binding depends on your constitution and the depth of your pocket. I've lived in the non-compete world and, unfortunately, witnessed the ilk and pain it can cause when vindictive former employers decide to enforce them.
I live in Pennsylvania, a state that was traditionally a "right-to-work" state. Unfortunately, the winds of change have been quite blistering in recent past. I am a network engineer, who has worked for a number of consulting groups (small and large); one of my employers enforced non-competes with a vengeance.
A few items of note to consider:
1) NEVER, EVER sign something you don't agree with, nor feel you can abide to -- I saw a couple of posts from folks stating that they signed and promptly ignored them. This is wreckless and dangerous, and may result in trouble down the road.
2) If you aren't willing to accept the terms of the contract, discuss "reasonable" terms with your employer / perspective employer. Be ready to provide justification and reasonable options.
2) Unless you're filthy rich, don't assume the courts will uphold your interpretation of the scope of the contract nor reject it outright. Contesting non-competes can be a costly and painful process.
3) In PA, the court system has recently upheld Non-competes -- so long as the scope of them was reasonable (time, geography, terms). In many cases, after much back-and-forth (and lots of $$$ to lawyers), a magistrate has rewritten the terms to make them "more acceptable." I've occasionally seen 2-year contracts written back to 6 moths or a year, with a geographic stipulation of 50 miles.
4) Generally, employers don't want to lose business, so what I've seen and done in the past is the creation of a "no touch" client list. Barring working for a competitor is often difficult to enforce (man's gotta make a living), but limiting the scope of the employment is not uncommon.
5) If you violate the terms, don't be surprised if a magistrate imposes a new term on the contract. This can suck -- I've seen it happen.
General rules to live by:
1) Be open, honest, and forthright with the process -- with both existing and prospective employers
2) Don't agree to something you can't or won't accept.
3) At the termination of your old position, explicitly note that you understand, accept, and will abide by the terms of the contract. This small gesture often goes a long way to diffusing situations before they occur -- esp if it's in writing.
4) Keep your eye on the target -- if your intention is to go back to clients, do it at contract +5 days, not earlier.
Hope this helps...
God, I hate unnecessary and clumsy overuse of adverbs!
Also, how are they being "forced to sign" this? You mean, they're being asked to sign it if they want employment by that company? Then they should refuse to sign it if they aren't interested. I sincerely doubt anyone is being "forced" to sign a thing.
In my first position as an actual "Developer", I was presented with non-compete, NDA and IP documents on my first day of work. I found this particularly onerous, because I was not told about them before I accepted the job. I was basically told I could sign them or take a hike. At this point, I'd already quit my previous job, and I hadn't been out of school long enough to have a savings to live off. So, I had to bite the bullet and sign.
The worst was the Intellectual Property document which actually said that the company owned anything that I created in any medium whether as part of my job-duties or not. The way I read this, I couldn't make a peanut butter sandwich without the company claiming ownership. Heaven forbid I should father a child.
Anyway, I left the job within 3 months. My new employer was not a competitor in any way. I left a web-dot-com company and went to work for a company that developed warehouse management and manufacturing software. Incidentally, they too had a non-compete agreement. After 6 years at this company, I left for a new job at a company that was not a competitor. The new company actually used warehouse management and manufacturing software.
My point with this is that it is easy, especially for software engineers, to stay in the same line of work -- even the same field -- without going to a competitor.
If you live in California and you work for a company headquartered in another state like, say, WA, your case could be removed from CA state court into federal court. Once in federal court, for whatever reason, the 9th circuit don't really give a shirt about CA's anti-anti-compete law. The 9th will generally uphold any reasonable non-compete, whereas a CA state court will kill it.
Sounds like water under the bridge now, though.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
I live in Washington state and also had a non-compete agreement for my job as a software developer. However, the terms in my contract were much narrower. Working for what was essentially a software-for-hire, services-based company, my contract stated that for the period of 6 months after my employment I could not perform a competing service for any clients of my previous employer.
Essentially I could work for a competing company so long as I didn't work for any of my previous company's clients, and I could work for those clients as long as I was working on a different problem. I think that was very fair.
Your clause saounds much more draconian than that. It sounds more like it's meant to punish you for leaving, rather than to protect your employer's client and IP assets.
Maybe you could get them to accept similar terms to mine in leu of their "standard" clause, and maybe get them to adopt it instead?
As a software / web developer, many of our potential employers are NOT in competition with each other. Who are the competators? For example, I've signed similar non-compete clauses where there were only 4-5 "competators". Likewise, if the company is selling trinkets, the non-compete clause may not consider a company selling widgets to be a competator.
Thus, it's a good idea for your friends to understand who the competators really are. My guess is that the competators are a very narrow range of companies.
No, I will not work for your startup
In Communist Russia constitutional rights pedal you.
$diff terrorists hippies
$
$rm -rf *terrorists *hippies
Non-competes are standard and are typically used to curb employees jumping ship to quickly and to keep them from taking company property (ie information) to a competitor.
I have even seen Non-competes for Contract work stating I couldnt consult in a particular field for one year.
Typically they are specific to a roll or project and do not block you entirely from working in your general field.
Also, if one is overly restrictive and you are unable to find work because of it, it is non-enforceable. Meaning they can not force you out of work in your profession for any ammount of time. But they can still hold you and your new employer liable if they determine any of their processes or technology has made it into their competitors product. There have been several cases where companies have tried to enforce overly restrictive non-competes only to find them thrown out by the courts and in a few cases when enforced those companies were forced to pay benefits and salary to the person for that year they could not "work".
Example, if you are a hardware engineer at Intel working on the core architecture and jump ship to AMD, they can forbid you from working on the AMD core architecture for one year via non-compete clause. But they can not stop you from working at AMD as a hardware engineer in another department, as long as its not directly tied to the Core.
One thing folks havent pointed out (or maybe it was and I didnt spot it) there is a difference between enforcing no-competes in court and the actual practice. not long ago when I was shifting jobs I was contacted by a large contracting agency recruiter. He asked if I was still or recently had been working for another large contracting agency noted on my resume. He then asked if I was still under their NCA. I said no and that I will seriously examine any NCA put in front of me even though they are meaningless. His response: "We honor their NCA and if you are under it we wont even attempt to find a fit until it expires" So it dont matter what the law says if the companies are all on board with it.
IIRC, an NDA/IP signed after an offer of employment has been accepted is void. If this wasn't the case, companies would go round offering mega salaries to relocate and then slash benefits and add onerous conditions once a new employee has gone through the expense of moving and leaving their old job. In those circumstances, any contract becomes null and void, and immediate reductions in salary often end up with a lawsuit.
The first company I worked for had me sign one of these "don't work for a competitor or customer for 1 year". Since I needed a job I signed it. After a number of years, I discovered how limiting these documents can be if the company attempts to enforce them.
While working for the first company, I interviewed with another company, which provided an even stricter contract. I asked the interviewer to describe the document during the interview. After the interview, I thanked him, and then ignored the company.
I ended up working directly for a customer of both the 2 companies above. The first company made no attempt to enforce the document, and the 2nd company hounded me for months trying to get me to work for them. Your best bet is to ask the question about these up front, so you can decide before you leave your 'old' company. Otherwise, they only show you these *after* you get hired.
I for one welcome our new [insert main topic] overlords.
But those cobol specialist make an ungodly amount of money
I live in a relatively small, midwestern town. A Medical Doctor, who had been practicing for several years in a multi-doctor office, decided she wanted to spend more time with her young children, and went to work part time at the local branch clinic of the VA.
Her former clinic sued, claiming violation of her non-compete clause; the case was in court for nearly two years. A judge finally ruled (1. That the non-compete was a violation of public interest, as there's a well-documented shortage of doctors in the 50-mile radius the clause applied to, and (2. What she was doing in providing medical care to veterans, many indigent or nearly so, didn't compete with the clinic's largely high-end business.
But, like I said, it took two years for even something that obvious to be resolved.