Non-Compete Agreements

forkvoid

My boss is asking me to sign a non-compete agreement now, after working here for six months. Personally, I think it's a crock of crap, and I don't think I'm going to sign it. Here's some wording:

For good consideration and as an inducement for [REDACTED] (“Company”) to employ the above employee (“Employee”), the undersigned Employee hereby agrees not to directly or indirectly compete with the business of the Company and its successors and assigns during the period of employment and for a period of 1 year following termination of employment and notwithstanding the cause or reason for termination.

The term "not compete" as used herein shall mean that the Employee shall not own, manage, operate, consult or be employed in a business substantially similar to or competitive with, the present business of the Company or such other business activity in which the Company may substantially engage during the term of employment.

The Employee acknowledges that the Company shall or may in reliance of this agreement provide Employee access to trade secrets, customers and other confidential data and good will. Employee agrees to retain said information as confidential and not to use said information on his or her own behalf or disclose same to any third party.

This non-compete agreement shall extend only for a radius of 150 miles from the present location of the Company and shall be in full force and effect for 1 year, commencing with the date of employment termination.
This agreement shall be binding upon and inure to the benefit of the parties, their successors, assigns, and personal representatives.

Not at all a fan of this, as it limits where I can go afterwards, and pretty much kills all my own business aspirations for a year(or even assisting someone else's).

So, folks, what do you think about these non-compete agreements?

earweed

Don't like them at all.
It pretty much covers your presnt employers interests and leaves you with few options. It almost tells you that you must either a) when you leave your new compnay and position should be substantially different from what is here b) you can relocate out of this area and do whatever you want.
One of the big reasons for this type of non-compete is so you don't go private consultant (all Jerry McGuire) and take your clients with you.

forkvoid

earweed wrote: »

Don't like them at all.
It pretty much covers your presnt employers interests and leaves you with few options. It almost tells you that you must either a) when you leave your new compnay and position should be substantially different from what is here b) you can relocate out of this area and do whatever you want.
One of the big reasons for this type of non-compete is so you don't go private consultant (all Jerry McGuire) and take your clients with you.

Yeah, I get how it benefits them, but from what I've read, the courts rarely agree with them, because it "hinders free trade".

And I do fully intend going private consultant... I just don't want the customers I have now. They all suck. I don't even want the industry this company is in, because the clients all suck to work with.

earweed

haha..sounds like the non-compete shouldn't affect you then.

forkvoid

earweed wrote: »

haha..sounds like the non-compete shouldn't affect you then.

It actually does... the explanation I was given says I am unable to work as a consultant or for any company that operates like my company(a VAR), regardless of target market.

eMeS

I wouldn't worry about it. You're in a state that doesn't have an exception to at-will employment law, which renders it as you've posted the details somewhat un-enforceable. A former employer cannot stop you from earning a living, even if you are earning that living by working with a direct competitor and doing the exact same job.

The restrictions on distance and time make it more enforceable, however, you're specifically trained to do a certain job, and a former employer cannot stop you from earning a living as per your qualifications.

These are generally nonsense, and I don't know why people bother with them. In California they're pretty much illegal except for key persons with a certain amount of equity.

If it said things about confidentiality and no disclosing your current employer's trade secrets, then I'd say that's a little more realistic.

MS

forkvoid

eMeS wrote: »

If it said things about confidentiality and no disclosing your current employer's trade secrets, then I'd say that's a little more realistic.

MS

That's actually what was in the ellipses, as well as a separate NDA I signed(which was standard, nothing to be concerned about).

The more I read on these, the less I'm concerned.

EDIT: Modified the original post to include the full document.

Devilsbane

I have heard stories of employees fighting the agreement and winning, but who wants to go through the trouble just to make money?

I really would like to say that I wouldn't sign it (even with no intention of leaving) but I'm not in a position where I would feel comfortable losing my job if they decided to let me go for not signing it.

forkvoid

Devilsbane wrote: »

I really would like to say that I wouldn't sign it (even with no intention of leaving) but I'm not in a position where I would feel comfortable losing my job if they decided to let me go for not signing it.

My main concern as well.

eMeS

Devilsbane wrote: »

I have heard stories of employees fighting the agreement and winning, but who wants to go through the trouble just to make money?

That's the thing though, the burden of proof will not be on the employee to prove that they didn't break the agreement, rather, it's on the employer to demonstrate that the employee broke it. That's part of what makes these things somewhat pointless; they're incredibly costly to enforce, and you might lose anyway if you try.

Devilsbane wrote: »

I really would like to say that I wouldn't sign it (even with no intention of leaving) but I'm not in a position where I would feel comfortable losing my job if they decided to let me go for not signing it.

That would be ideal, but it makes me think of this quote:

Unknown wrote:

Pretend inferiority and encourage arrogance.

There are better battles to choose, IMO.

MS

sambuca69

...and if you don't sign?

You've already worked there for 6 months and now they are approaching you with this? Did they perhaps get wind of something, such as your desire to strike out on your own now? I find it odd that now they are presenting you with this.

forkvoid

sambuca69 wrote: »

...and if you don't sign?

You've already worked there for 6 months and now they are approaching you with this? Did they perhaps get wind of something, such as your desire to strike out on your own now? I find it odd that now they are presenting you with this.

"I was going through the personnel files, cleaning up for the ERP install, and realized I didn't have an NDA or non-compete for you." -- CEO

Devilsbane

forkvoid wrote: »

"I was going through the personnel files, cleaning up for the ERP install, and realized I didn't have an NDA or non-compete for you." -- CEO

Ok, I'll sign your NDA. No problem!

Devilsbane

eMeS wrote: »

That's the thing though, the burden of proof will not be on the employee to prove that they didn't break the agreement, rather, it's on the employer to demonstrate that the employee broke it. That's part of what makes these things somewhat pointless; they're incredibly costly to enforce, and you might lose anyway if you try.

You're still going to want to show up in court for it, and that is valuable time out of your day. Not to mention the stress that you are going to feel wondering what is going to happen.

Conversely, a business might abuse a non-compete covenant to prevent an employee from working elsewhere at all. Most jurisdictions in which such contracts have been examined by the courts have deemed CNCs to be legally binding so long as the clause contains reasonable limitations as to the geographical area and time period in which an employee of a company may not compete. Courts have held that, as a matter of public policy, an individual cannot be barred from carrying out a trade in which (s)he has been trained except to the extent that is necessary to protect the employer.I][URL="http://en.wikipedia.org/wiki/Wikipedia:Citation_needed"][COLOR=#0000ff]citation needed[/COLOR][/URL][/I
The extent to which non-compete clauses are legally allowed varies per jurisdiction. Some jurisdictions, such as the state of California in the US, invalidate non-compete-clauses for all but equity stakeholders in businesses.

Paul Boz

No one enforces them because it costs too much money. 50% of the people I used to work with at my last company (a security vendor) now work for direct competitors in the exact same market space. We all signed NDAs but they're scare tactics and many employers see them as a function of due diligence. Most of the verbiage about limitations on employment are crap and are unenforceable and the only content worth paying attention to is protection of trade secrets which should technically be a separate document. Further, these documents generally provide provisions for protecting the customer base of the employer. For example, if I left my previous employer and started my own company, I couldn’t knowingly directly market to my previous employee’s customers. The verbiage about limitations on similar employment are designed towards serious stakeholders in the business but everyone winds up being forced to sign them. They’re designed to prevent the plant manager for Coke for going to Pepsi with Coke’s recipe. Not to prevent a sysadmin from working as a sysadmin at a similar company.

eMeS

Paul Boz wrote: »

No one enforces them because it costs too much money. 50% of the people I used to work with at my last company (a security vendor) now work for direct competitors in the exact same market space. We all signed NDAs but they're scare tactics and many employers see them as a function of due diligence. Most of the verbiage about limitations on employment are crap and are unenforceable and the only content worth paying attention to is protection of trade secrets which should technically be a separate document. Further, these documents generally provide provisions for protecting the customer base of the employer. For example, if I left my previous employer and started my own company, I couldn’t knowingly directly market to my previous employee’s customers. The verbiage about limitations on similar employment are designed towards serious stakeholders in the business but everyone winds up being forced to sign them. They’re designed to prevent the plant manager for Coke for going to Pepsi with Coke’s recipe. Not to prevent a sysadmin from working as a sysadmin at a similar company.

Paul is right on here. It's costs too much because you'd not only have to incur all of the legal fees, you'd also incur expense in collecting the evidence and building your case.

MS

Devilsbane

eMeS wrote: »

Paul is right on here. It's costs too much because you'd not only have to incur all of the legal fees, you'd also incur expense in collecting the evidence and building your case.

MS

They would also need to find out that you are working for one of the other companies in the first place. Not extremely unlikely (thanks to linkedin and word of mouth), but it is another barrier.