Signing a Non Compete (Northern VA)

nothimagain

"Non-Competition. During Employee’s employment with Employer and for 18 months immediately after Employee’s employment with Employer ends, Employee will not, except on behalf of Employer or with the written permission of Employer’s CEO, solicit to provide or provide to any United States federal government entity anywhere in the United States any Competitive Services or Products (as defined in Section 11.6(a) below) with which Employee worked while employed by Employer."




[FONT=&quot]Im in the state of Virginia . I was wondering if there is any loop hole or am i pretty much out of luck? 90 percent of the employers are government agencies/departments so it would be pretty hard to find another IT job in my area if i ever decided to leave my company..[/FONT]

rwmidl

nothimagain wrote: »

"Non-Competition. During Employee’s employment with Employer and for 18 months immediately after Employee’s employment with Employer ends, Employee will not, except on behalf of Employer or with the written permission of Employer’s CEO, solicit to provide or provide to any United States federal government entity anywhere in the United States any Competitive Services or Products (as defined in Section 11.6(a) below) with which Employee worked while employed by Employer."




[FONT=&amp]Im in the state of Virginia . I was wondering if there is any loop hole or am i pretty much out of luck? 90 percent of the employers are government agencies/departments so it would be pretty hard to find another IT job in my area if i ever decided to leave my company..[/FONT]

I could be wrong but non-compete clauses are pretty difficult to enforce. It can/could be perceived as denying you a right to work. The best bet is talk to a labor lawyer.

N7Valiant

Too broad. "Anywhere in the United States"? I'd tell them where they can stick that non-compete.

EANx

Looks like it's a non-compete against providing Federal contracting as opposed to a broad US non-compete. A lot will depend on section 11.6(a). I would read this as a non-compete against direct contractor competition, say starting your own company using contact and pricing information gathered while you worked there, as opposed to simply being a contractor for another company. But the snippet doesn't provide the rest of the necessary context.

victor.s.andrei

nothimagain wrote: »

"Non-Competition. During Employee’s employment with Employer and for 18 months immediately after Employee’s employment with Employer ends, Employee will not, except on behalf of Employer or with the written permission of Employer’s CEO, solicit to provide or provide to any United States federal government entity anywhere in the United States any Competitive Services or Products (as defined in Section 11.6(a) below) with which Employee worked while employed by Employer."

[FONT=&amp]Im in the state of Virginia . I was wondering if there is any loop hole or am i pretty much out of luck? 90 percent of the employers are government agencies/departments so it would be pretty hard to find another IT job in my area if i ever decided to leave my company..[/FONT]

The Commonwealth is very business friendly. The deck here is stacked in favor of the employer.

That said, it looks like you can't do business (or attempt to do business) with any U.S. federal government agency, as an employer or as a contractor or even in a B2B transaction, with any services or products that you worked with while employed by this prospective employer.

Frankly, if I were you, I would go back and tell them that if they want a non-compete for eighteen months, they need to pay you a large cash bonus, especially since in Virginia, federal employment, direct or indirect, is much of the job market. If they balk, there are other Federal contractors who will hire you.

c5rookie

Is this Non-Compete used by every employer in Virginia? I find it hard to believe that you would not be allowed to look for another job as a contractor with another company. Sadly these are up to interpretation and are intentionally vague. When I read

solicit to provide or provide to any United States federal government entity

I think they are trying to say, "you will not go directly to a government agency and offer services". I doubt they are trying to prohibit someone from taking another job with a different company anywhere else in the country.

paul78

Wow - Are you dealing with a company that has a legal department? That's terrible language. Perhaps this type of covenant is common among public-sector service providers but I've never encounter such lame language in a non-compete. A lot would also depend on what's in 11.6.

BTW - In most states (including Virginia) there are tests on enforce-ability such as whether the restriction is less than necessary to protect legitimate business interest and that it is not excessively severe in restricting individuals from making an income.

There are several things that I usually look for that you may want to consider in a non-compete for it to be considered fair and equitable.
1. There is a time limit for the restriction. 18 months is actually reasonable.
2. The geographic restriction is limited to areas that the company actually conducts business.
3. The customer servicing restriction is limited to functions that the company actually conducts business.
4. There is a quid-pro-quo. I only except 2 types such as profit sharing or an equity stake in the company.
5. Usually I expect named competitors. All of my non-compete's have named competitors.
6. The area of work at a competitor is actually in the same or similar role (except for sales usually).
7. The role is actually one where material harm can be caused to the company if I go to a competitor. A non-compete will usually clarify that.

All that said - I suspect that the intent of this clause is probably as a non-solicit and it's just badly worded. You may want to ask for clarification. It looks like the company actually wants to restrict the scenario where you are working for a customer and you decide to ask the customer for a job. Or you start your own consulting company and you begin to solicit customers. Normally, there should already be a non-solicit between the company and the customer so this type of covenant should not be required in an employer/employee agreement. But in the case of the second scenario, that would make sense.

If that's the case, I would recommend that a fair agreement would be: 1. This clause does not apply if you are terminated by the company for any reason other than misconduct. This item would be a show stopper for me if the company won't agree to this.
2. The time restriction goes down to 6 months. But I would try to compromise to 12 months.
3. The clause does not apply if there is a material change in the management of the company or a change in employment policy. I.e. they sell the company or they decide to change something like vacation policies.


Note that even if this non-compete is not enforceable, some companies (if they are competitors) are sometimes reluctant to hire someone that has an existing non-compete.

Also - I would caution you about releasing too much more about what's in the Agreement. The Agreement may be govern by a non-disclosure and normally you can only share the Agreement to seek counsel.

paul78

c5rookie wrote: »

When I read I think they are trying to say, "you will not go directly to a government agency and offer services". I doubt they are trying to prohibit someone from taking another job with a different company anywhere else in the country.

Yeah, I took another look since I enjoy reading contracts clauses. And I would agree that the most likely spirit of this language are the 2 scenario's that I mentioned earlier.

And the restriction is only for entities that the person has worked at. The term entity isn't capitalized in the language so it means it's undefined in the Agreement. That part is vague and probably the word in this clause that I would zero in on. For example, let's say that the job is at the FBI Information and Technology branch. Is the entity the agency branch and OP could solicit a job at the Science and Technology branch, or is entity the agency. What if the job is at another agency within the Department of Justice or at an entirely different department like Department of Interior.

I would say that the key term to define in the Agreement is the word "entity".

This is the interesting part " Employee will not," - it doesn't actually prevent someone from going to work at a competitor except in a sales or account management capacity. That actually is probably the intent of the clause. And a lot would depend on what's in 11.6.

This isn't really as broad as it looks. The language is just terrible and needs work.

nothimagain

“Competitive Services or Products” means computing, communications, and networking
technology services or products which are the same as, or substantially similar to and competitive
with, the services or products provided by Employer to any person, organization, business, or
Government Entity at any time during the last 24 months of Employee’s employment with
Employer.
b. “Restricted Client” means any person, organization, business, or Government Entity (as defined in
Section 11.6(d) below) to whom Employee (or others under Employee’s direction and supervision),
on behalf of Employer, provided or sold Competitive Services or Products at any time during the
last 24 months of Employee’s employment with Employer.
c. “Restricted Prospective Client” means any person, organization, business, or Government Entity
with whom Employee (or others under Employee’s direction and supervision), on behalf of
Employer, was involved in soliciting or making a proposal to provide Competitive Services or
Products at any time during the last 24 months of Employee’s employment with Employer.
d. “Government Entity,” as used in the definitions of Restricted Client and Restricted Prospective
Client above, means the specific division, branch, department, operating unit, or other applicable
segment of a government agency (whether federal, state, or local), but not the entire agency. Where
a contract with Employer has been signed, the applicable segment of the government agency is the
division, branch, department, operating unit or other segment stated in the contract.

thomas_

I would probably decline to sign it unless they offered to me pay me my full salary for 18 months after I stopped working for them and that was specifically stated in the non-compete.

LordQarlyn

This was almost a decade back, but I do remember prior to the great recession, a lot of Silicon Valley companies made their hires sign very broad non-compete agreements. Once the recession began and startups were folding up and the established companies laying off, the non-compete agreements were ruled as not being worth the paper they were printed on (or the electrons on the screen). And this was mostly rulings in California. Can't say how it will hold up in Virginia.
If I were to sign a non-compete agreement that broad, I would want a good sign on bonus and a decent parachute.

Flyslinger2

It sounds as though a company is afraid that they can't keep business based on their own merits. If an employee would try to leave for a perceived better opportunity why wouldn't the company do everything in their will power to retain them?

When I was an employer I was always proud of the fact that I had trained my employee so well that they advanced beyond the technical needs of my customer base. I never needed non-competes. The employee that left would not want to do what they had just left. They want to do more!

McxRisley

I signed a non-compete once for my very first IT job. It stated that I couldn't work for any other IT servuces providers within a 50 mile radius of any of my companies offices. My mom(paralegal) and her boss(lawyer) both looked at it and said that non-competes are basically scare tactics and will not hold up in court. A company can not legally prevent you from making a living. When I took my next job it was inside of that 50 mile radius. My company attempted to scare me by reminding me of my non-compete. Long story short, they threatened to enforce it but never went through with it because they in fact knew that it wouldnt hold up in court.

paul78

nothimagain wrote: »

.... “Government Entity,” as used in the definitions of Restricted Client and Restricted Prospective Client above....

Thanks for sharing - is that 11.6? I want to again caution you about sharing too much. Based on these definitions, it doesn't look too bad. The language ought to be tighten up though.

The spirit of the agreement seems equitable. But it depends on what's in the rest of the Agreement since there may be other definitional items which are not in what you have shared.

BTW - you didn't share what kind of job this is for but I am presuming that it's a subcontractor arrangement.

If you like the job and the company, just ask them about the intent of these clauses.

@everyone else - there's nothing in these clauses that says that OP cannot get a job with another company to work with the federal government.

I'm kinda surprised by everyone's reaction. With the exception of one or two jobs very early in my career. Every job that I've ever had included a non-compete clause.

LordQarlyn

paul78 wrote: »

Thanks for sharing - is that 11.6? I want to again caution you about sharing too much. Based on these definitions, it doesn't look too bad. The language ought to be tighten up though.

The spirit of the agreement seems equitable. But it depends on what's in the rest of the Agreement since there may be other definitional items which are not in what you have shared.

BTW - you didn't share what kind of job this is for but I am presuming that it's a subcontractor arrangement.

If you like the job and the company, just ask them about the intent of these clauses.

@everyone else - there's nothing in these clauses that says that OP cannot get a job with another company to work with the federal government.

I'm kinda surprised by everyone's reaction. With the exception of one or two jobs very early in my career. Every job that I've ever had included a non-compete clause.

Interesting. I've never had to sign one, even for jobs that I had access to company trade secrets or proprietary company information. Of course I had to sign and agree to NDAs, which is fair and reasonable. I think the cause for concern is if these non-compete agreements are enforced, it can prevent an employee from earning a living, particularly the broadly-worded ones, such as the one the OP posted. I mean, seriously, he can't accept an IT job with the federal government for 18 months, even if the company lays him off?

And after a quick google search, it turns out non compete agreements are for all intents and purposes null and void in California after all.

Non-Compete Clauses In California | Law Journal Newsletters

TechGromit

I grudging signed a non-compete agreement when I was unemployed, and it caused all kinds of trouble when the client wanted to hire me. I would never sign another one again, but if I did, I would demand the language be changes to something more reasonable, like only government entries you did contract work with while in there employment, such as if you did work for the Department of Labor and Department of Commerce, which would leave you 13 other major government departments to potentially work for.

paul78

LordQarlyn wrote: »

Interesting. I've never had to sign one, even for jobs that I had access to company trade secrets or proprietary company information. Of course I had to sign and agree to NDAs, which is fair and reasonable. I think the cause for concern is if these non-compete agreements are enforced, it can prevent an employee from earning a living, particularly the broadly-worded ones, such as the one the OP posted. I mean, seriously, he can't accept an IT job with the federal government for 18 months, even if the company lays him off?

Thanks for actually reading my posts I often wonder if anyone reads them because I tend to rabble on.

I think that's where people are getting hung up. The language in this clause doesn't prevent the OP from accepting an IT job with the federal government or even another company that does business with the federal government. The language looks like typical language for a subcontractor or FTE of a service provider. It's intent is likely to prevent this scenario: someone takes a job at the company and the company places that individual at their government entity customer - the risk to the company is that the individual solicits the entity for a direct job because they are already embedded at the government entity. At worst case, the individual decides to start their own competing business and undercut the company using contacts and relationships that were introduced to the individual by the company.

For many businesses of this type - the toughest and most expensive investment is customer and contract acquisition. They are trying to protect that contract acquisition investment. I actually think that this was a very fair non-compete because it doesn't prevent OP from working at a competing company that may displace the company of a contract. The scenario is this - let's say that the company loses the contract to a competitor (that is not affiliated with the OP) where the OP works. The OP could go to work for that competitor and even keep the same job at the government entity regardless of whether the company lays off OP. There's nothing in the language that restricts that scenario.

As for my own experience with non-competes - I'm usually in a position where I can cause material financial harm to a company if I went to a competitor. But as I mentioned - there is always a quid-pro-quo. For example, it's common to pre-negotiate a severance if I am ever terminated for anything other than misconduct. As odd as it sounds - it's structured usually like a prenuptial. Also - because I am receiving either a profit-share or equity stake in the company, there is usually very little incentive for me to go to a competitor. It just won't not make sense for me to go to a competitor when I have a financial stake in the success of the company. For example, I have a non-compete with two previous employers that has expired. But I still would never go to a competitor because I still have a sizable equity stake in both former employers.

As for enforcement - it really depends on the role. In my experience, the incentive to enforce a non-compete and non-solicit enforcement is usually only if harm could be caused by the employee. At previous company, I am aware of attempts to enforce non-competes but it's rare. And in those case's, there were sales and account managers that left the company and went to work for the competitor. We only filed complaints after existing customers were being solicited by the former employee. And we backed off once the competitor filed that the individual's territory would change to companies which were not our customers.

Similarly, I have been on the receiving end. At my last job, I had purposely targeted the hiring of certain people from a competitor. After the third hire, we received a cease and desist from the competitor. It was expected. The company did not chose to enforce the non-compete with their former employees because it is usually considered poor taste since these are not sales people and they had a badly worded non-compete. Even if the competitor decided to invoke non-compete against the employees, we had already made the decision before hiring these people that we would pay those employee until such time that the non-compete expired and move them into a non-competing role as well as paying for their legal fees if any. We were upfront with these employees before hiring them on. I will freely admit that the action was childish and petty as the reason why we did it was because of some disparaging comments that the competitor's CEO had made in the press about our products.

TechGromit wrote:

I grudging signed a non-compete agreement when I was unemployed, and it caused all kinds of trouble when the client wanted to hire me.

Sure, but that's normal. The company won the business and had a contract with the client. What the client is doing is a bit under-handed. Basically, what the client did was reduce all their staffing risks by using your company and they had an opportunity to try someone out with little employee/employer risk. In a typical agreement between your company and the client, there would have been a non-solicit clause. If it is a subcontractor staffing type arrangement, it could include some type of buy-out clause usually equal to the prevailing recruiting fees can be 15-20% of first-year salary depending on the role.
If it wasn't a staffing arrangement, it depends on the company. Some companies will let the non-solicit slide because it builds good-will at the client plus there is an opportunity to have someone at the client that could be an advocate. Smaller companies could actually be financially burdened.

TechGromit wrote:

I would demand the language be changes to something more reasonable, like only government entries you did contract work with while in there employment,

The language already says that - and it even narrows it only to the entity that the company has a contract with. So if the contract is with a branch at an agency of a department, the restriction is only at that branch.

Ie. "any Competitive Services or Products (as defined in Section 11.6(a) below) with which Employee worked while employed by Employer."

WafflesAndRootbeer

I've never had to sign one in this area and haven't been asked to do so thus far, but Virginia law does not favor any company that does go down that route, because the burden is on the company to prove the validity, fairness, and necessity of the non-compete. There are non-compete agreements in place between staffing agencies and their customers, to keep temp hires and contract workers from going to a company without the agency getting their cut from the company, but that's a slightly different conversation. The idea of having you sign a non-compete is ridiculous because in the DC region, ABSOLUTELY EVERYONE is poaching everyone else's employees and contractors, whenever possible and because the IT market in this area is largely confined to government work, where competition is high. That's how things have been done for decades and it's not going away. The reason they throw it at you is to intimidate you, because it costs significant money to go to court to challenge these things and the general belief is that the company will always have the money to throw at it. Anyone who asks me to sign one is going to get a "Bye Felicia!" if they won't take no for an answer.

boxerboy1168

I have some experience with these in a previous industry and mostly the point of a no compete with my experience was to prevent you from stealing their business when you move on not to prevent you from working

let's say you steal half of their clients and start your own business, well they are going to sue you and win

Dojiscalper

I worked freelance for a while and most of the companies I did assignments with had non compete agreements. I just agreed and went about my business. I had a good laugh all the time when I'd do an assignment for company A in the morning at a client and by the afternoon I would go back to the same client working for company B, sometimes even company C.