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Fair Compensation For Non-Compete Clauses?

Posted by Cliff on Thu Mar 01, 2001 12:39 PM
from the getting-paid-for-enforced-time-off dept.
News
LL writes "This article notes how non-compete job contracts allows indirect control of one's actions, even after leaving the direct employment of a company. Apart from the business ethics of using them as anti-competitive measures (a separate topic by itself), the question is what should be a fair compensation for removing yourself from the technology environment where skills suffer alarming bit-rot? Other sectors (e.g. banking) have 'gardening leave' where they basically pay you to remove yourself from the 'inner fraternity' before joining a competitor, but what should be a fair compensation for an enforced pause in your career? 6 months @ 150% base pay? 200% @ 3 months? Or are there standard clauses that IT workers have widely accepted as the norm?"
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[+] News: Non-Compete Pacts Called Bad For Tech Innovation 190 comments
carusoj writes in with NetworkWorld reporting from a panel at Harvard last week. It concluded that employee non-compete agreements have stifled tech startup development in Massachusetts, where the pacts are aggressively enforced, but failed to hold back the tech industry boom in states like California, where they are mostly unenforceable. We've discussed non-competes often here in the past; Techdirt made much the same point a year and a half back.
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  • This knowledge comes from a law class I had, I am not a lawyer just a Comp Sci who as part of one of my degrees had to take some legal classes. The teacher was a lawer who had just won a case for an employeer who sued sued a former employee. 1) They are enforceable, if you told to sign one expect the employer to enforce it. 2) Generally they are limited by some geographical location, a common example for this are local news readers most will an agreement not to go work for another local tv station. 3) They have to be limited by some period of resonable time. Designed to prevent competition with the company. 4) You generally have to have a high skill level to make it enforceable. A burger flipper is unlikely to have a court enforce one however if you were the person who designed the food for some fast food restaurant expect to have a court prevent you from starting up a similar fast food restaurant. As expect a court to enforce it more if you have a PHd then if you never graduated HS, you were smart enough to know what you signed when you signed it. 5) They can only prevent you from a similar type of job. If you are a highly skilled network person, then they probably cannot prevent you from taking a job doing non-network C++ programming. That all said, there have been exception for example read the tale of the founder of Atari, who then went to form Chucky Cheese pizza or Perot after he sold his computer consulting company.
  • They can be it depends on which state you live in and how it is worded. They can not prevent you from earning a living. What you really need to do is talk to a lawyer because it depends a lot on how it was worded.

    They can prevent you from taking information you got inside the company (trade secrets etc) and using them else where.
  • Now, while the signing of a noncompete agreement doesn't make a lot of sense when you're working in a generic IT/maintenance job, it often makes a GREAT deal of sense when working in a more specific technology company.

    If I hire an engineer to develop products for me, I am absolutely within my rights and reason to ask that they do not perform the same services for a competitor for a certain time after their employment with me expires. Otherwise, it would be very easy for someone to come into my company, soak up my technology, business plans, and clients, and then give me the finger as he or she leaves to a cushy job at my main competitor, who would be happy to pay a premium for my business secrets.

    Proving that information was moved from one company to another is almost impossible - but a noncompete agreement can do a great deal to help maintain the employer's IP. Nothing wrong with that at all; I don't understand why people are decrying this so much.

    A possible compromise is to list, in the contract, the specific industries or product areas which are off-limits. This would give the employer the protection they deserve with the flexibility the employee deserves.
  • Offtopic?????

    This is INSANE! How can this be offtopic?

    I don't blame the moderators, I blame the meta-moderators. Get off your butt and police this place.

    Has anyone noticed an upsurge in crappy moderation lately? It seems that in the past month everywhere I look there's a goatse.cx troll marked insightful, or comments like this one marked down.

    Come on people, meta-moderate once in a while.

    Sheesh.
  • You're wrong about that.

    I saw my PERMANENT RECORD the other day and wouldn't you know, my /. karma was right there in black and white.

  • ?? an offer without mentioning a non-compete and you accepted it, you have a contract. If they add additional strings to it with a "do-or-die" clause, they have breached.

    That's pretty straightforward, no?

    In the case of a company that came by with a new "agreement" I simply point out that an agreement isn't binding without all six elements of a contract, one of which is that each side has "valuable consideration." If they want to offer me valuable consideration (continued employment is insufficient) for signing an additional agreement, well, we'll have to negotiate that.

    One example is the "agreement" passed around at Linuxcare about the new employee handbook. It purported to cancel all previous contracts (such as the one for salary and stock options). I returned my own form stating that I had read and unerstood the employee manual -- but not that I'd agreed to it. No one ever said a word.

    Unfortunately, I've *had* to learn to be tough as nails in this business because, over 25 years, I really HAVE seen every kind of sleazy stunt pulled.

    _Deirdre

  • That should read:

    "If a company makes you an offer without mentioning a non-compete and you accepted it, you have a contract."

    I previewed it and it looked fine, it just garbled upon posting. Gar.

    _Deirdre

  • From the point of view of contract law, "sign or be fired" is an offer of valuable consideration (continued employment) in exchange for valuable consideration to the other party (non-competition with them).

    No, because the fundamental concept of a contract requires that it be an arm's length transaction -- and that's not. It is instead a hostage situation.

    _Deirdre

  • Non-compete clauses in California (Score:5)

    by deeny (10239) on Thursday March 01 2001, @08:15AM (#391949) Homepage
    Since so many geeks are in California but are asked to sign non-competes anyway, I thought I'd give a pointer to California law. I remember another section but couldn't find it quickly.

    California Business & Professions Code 16600-16607 [findlaw.com].

    Special point of interest:

    16600. Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

    Note: IANAL

  • To put some perspective on the problem, if people from the [censored] community spill all they know, they'll be jailed and possibly be shot.

    But are the skills they have acquired working for that community useless and worthless? ... Hardly. Just ask the people who had to pay for the repair of the flawed Hubble mirror. If somebody had thought to ask for an open anonymous review of the lens polishing parameters, the whole debacle might have been avoided.

    The secret of, uh, pardon me, path to success is the ability to apply knowledge without revealing details about what was being worked on that required the acquisition of the knowledge.

    Its possible to have non-competition clauses that restrict one from a particular application domain without its impeding with employment in a related but non-competing domain for a specified period of time.

    In effect, if you work for A, you shouldn't go work for ~A to do the same thing for a while. Specially if you work in the [censored] community.

    That doesn't mean that you can't apply the skills gained while working for A to solving the problems of B or C. The marketing has to be done by skill not domain knowledge.

  • If you are stupid enough to sign an employment contract which contains a non-competition clause, then you've got noone to blame but yourself.

    Thinking that you can sign a legally-binding contract when it suits you, and then decide that it's not "fair" when it doesn't suit you is juvenile.

    At the end of the day, you're not being forced to sign the contract (and even if you were, signing a contract under duress invalidates the contract, in many jurisdictions). It's your decision to go work for the company.

    I have signed an employment contracts with a non-compete clause, when I went to work for a specialist company which targeted a particular niche. The clause effectively said that, for six months, I would not be able to go work for another company which competed directly with my employers in a certain subsector.

    I was fine with that, because it was all quite narrowly defined, and it made sense.

    However, when I was working for an ISP which had been taken over by a telco, and they wanted me to sign an employment agreement which would have prohibited me from working from another telco/ISP for two years, I very politely told them to fuck off.

    However, if I had signed that contract, and subsequently left that telco to work for another, and found myself the target of my old employers' lawyers, I would have had noone to blame but myself.

    You have to take responsibility for your own actions. Read what you're signing. If you don't like it, then refuse to sign it. If they try and whitewash you, then speak to a lawyer - and get them to pay. Don't let them make you feel guilty by insinuating that you would only refuse to sign the contract if you were planning to rip them off.

    There are other ways of making sure that an ex-employee doesn't clean your clocks - non-disclosure clauses, anti-recruitment clauses, and clauses which prohibit you from providing similar services to existing customers of the company.

    Anyone who is stupid enough to sign a non-compete agreement which forces them to take a break from their career doesn't deserve compensation.


    D.


  • At the end of the day, you most certianly are being forced to sign the contract.

    What the fuck are you talking about?!

    If you're being offered a job, on condition that you sign a non-compete agreement, then you Just Say No, I'm not signing that contract, you can take your job and shove it up you ass, thankyouverymuch.

    You are the weakest link. Goodbye.


    D.

  • It's not neccesarily as grim as PorcelainLabrador makes it sound...

    The laws regarding non-competes vary from state to state. In some states, the courts are very unwilling to enforce a non-compete agreement that would effectively require someone to relocate in order to practice their trade, or which has provisions they consider overly broad (prohibiting a former bank manager from working in any capacity involving finances, for example.)

    For the record, IANL; but I've consulted with a couple on non-competes I've signed while working in Pennsylvania. The above poster's comments are still entirely valid - get a lawyer to check the agreement before you sign, and don't sign any contract until you understand what it means to you and what the implications are.

  • In that case my number 1 option is this. My name and signature have several letters in common with the phrase "Won't Agree", so if I am forced into an agreement that I don't like I write cursively "Won't Agree", that satisfies HR and if I decide to do otherwise, in court I can say "I didn't agree to this, look at the paper it says that I "Won't Agree" to those terms"

    LK
  • Well, that's unethical, since you're "tricking" HR into believing that you agreed. But unethical or not, it's a cool trick.

    Not at all, if I don't lie. As long as I never verbally agree, it's their fault, not mine if they can't read.

    LK
  • A non-compete clause has two basic functions. One, it "protects" the company from its competitors (they can't hire the talent with specilized skills in the field) and from your market value, by innhibiting you from changing jobs (long time spent unemployed or working outside your field at lower wages).

    A non-compete compensation package that basically paid you for the period you were not employed would satisfy part 1 but not part 2, since you would have the ability to basically quit any time you wanted and pick up a pay check until you could go to work for the competitor. They're not going to pay you to fsck around until the competition can hire you.

    I'd ask for 3 weeks of pay for each year of service, and full health benefits for the entire non-compete period. This ensures that they give you something in severance to help tide you over, and gives you an incentive to not job hop often since the payout will be dependent on your long-term loyalty.

    I'd also negotatiate the non-compete to be contingent only on resignation or termination for cause, and not on involuntary economic termination. Who wants to get laid off AND told they can't get a job?

    If they can "require" a non-compete at all your bargaining power is probably weak to begin with. If you can negotiate something that "gives" them something without demanding a free ride from them, you're likely to get something in return.

  • A variation on the non-compete clause is one seen frequently in contracts that consultancies issue to contractors. Basically, if you get hired by one company to go do work for another, they will nearly always pursue a clause in the contract preventing you from going to work for that company for some period. So, if The A Consultancy hires you go to work for The B group, they'll probably insist that you not work directly for the B group for some period of time (a year is common). This prevents them from pulling a "cut out the middleman" maneuver.

    This can get interesting once the layers of indirection start to get thicker, though. Let's say, from the previous example, that The B Group is doing a contract job for C Incorporated. There's rarely anything in the contract that prevents the A employee from working for C, even though the effect is largely similar. I know someone who infuriated an old employer by doing exactly that, even though what she did was within the bounds of the contract, and even though her old employer had basically brought it upon himself by treating her like dirt.

    -----
    "You owe me a case of beer. Sucka'."



  • ...yeah you caught me...

    ...and yes, if you so annoy me I will post all of your source code on the net AND email it to every one of your competitors.

    So do you still want to make an issue of this?

    Go ahead and sue for damages - but remember you won't get amymore from me than what I have. Who will be hurting more after the dust has settled?

  • Bah. Socialist hogwash. The engineering field isn't saturated, except perhaps in comparison to the computer field. The teaching field, particularly in K-12, is facing a crisis due to lack of people. Unions are a crock of excrement, especially for skilled workers. And they can't stop employers for firing or laying off people at the drop of a hat anyway.

    What we absolutely don't need is unions or "professional" licensing in the computer business.

  • Yes, they can. They will sue you for a violation of the contract, and will probably win in many states (such as Massachusetts).

    -m

  • The majority of non-compete clauses, especially for standard IT jobs are completely unenforcable. Most jurisdictions have laws that, contract or not, nobody can prevent you from performing your trade.

    In cases where your position is unique enough (read: VP or other important position) where such a clause is applicable, and in any other case, such contract should involve:

    Your asking your former employer if you can take the new job you want. If it's in the same field, they can decide to not allow you to take that job. If they DO decide not to let you, and you don't want to contest it, they should have to pay you according to a fair salary to stay out of that job.

  • Right. But it sounds like your contract wasn't as simple as most of the BS ones in the IT industry that simply say 'whenever you leave here for whatever reason, you cannot work in the IT field for 2 years'.

    You suspended them for three months, with prior-agreed compensation... sounds like a relatively fair contract.

  • I am absolutely within my rights and reason to ask that they do not perform the same services for a competitor for a certain time after their employment with me expires.

    Actually many states make this practice illegal. In other cases the ability to enforce this is very difficult. Saying you are 'absolutely within your rights' is quite questionable.

    I don't understand why people are decrying this so much.

    Why? It's very simple. A non-compete interferes with your ability to feed your family and can ruin a person's career. This is why they are illegal in many states, and are so hard to enforce.

    a noncompete agreement can do a great deal to help maintain the employer's IP

    There are other laws on the books that prevent misappropriation of trade secrets. Saying the non-competes are needed for this is wrong.


    MOVE 'ZIG'.
  • That sounds like an invalid contract. Any contract signed under coercion is valid on its face.

    Proving coercion may be tough, however...

  • In the original post, it was a condition of continued employment. Depending on the state, that could very easily be considered coercion, at will or not.

  • Make sure you go for not just 100% of your salary current salary during the non-compete timeline (if you have to), but enough extra to keep your insurance current, payments into your retirement going, and everything else.
  • They may be hard to enforce, but at least it's something that might give an employee a brief moment of thought before jumping into a competitor's lap.

  • Full Pay (Score:3)

    by Shotgun (30919) on Thursday March 01 2001, @07:57AM (#391977)
    I was asked to sign a NDA that would have put me out of commission for 3yrs. I had been working at the company for about 9 months. My condition was that 3yrs salary at my starting rate be put in a trust fund.

    I was given leave soon thereafter.

  • >Crossgain is a startup that aims to "create a service that runs a company's big software programs over the Web" (in competition with "we know who").

    Competition? with what? MS doesn't offer a service like that... IMO it's a pretty weak charge.

    >Micro$oft sued the guy ( and the other Micro$ofties ) and they had to fire themselfs from Crossgain.

    No, MS threatened to sue and offered them a deal requiring them to use MS software instead of Sun and Oracle stuff. They decided the legal battle wasn't worth the time and money, but they didn't want to be forced to use MS software, so they fired themselves instead. Thus, giving them the freedom to choose their own software... pretty evil shenanigans from MS IMO.
    ---

  • I repeat MS doesn't offer a service like that... they've said they will be, but how can you compete with something that doesn't exist yet. (OK, so IANAL, but it seems pretty dumb)>
    ---
  • I think that's true. Companies that put that in there because they don't think it could hurt. I don't like the suggestion of it regardless of whether it can be enforced or not. I think the idea to to just re-inforce the trade secret stuff.
  • I'm not so sure about that. I know this is truly pathetic, but I remember when the Charlie's Angels show was on they talked about Farrah Fawcett's contract. She was signed up for three years, and wanted to leave, and somehow the studio didn't have a signed contract from her. However, they had been paying her according to the terms of the contract, and so the studio sued her for breach of contract. The studio won, and she had to come back and do guest appearances on the show. I'm not claiming this is relevant, but it's a clear case of a situation where there was no signed contract and yet a judge ruled there was a breach. All the posters who talked about tricking HR might think twice about that as a legal tactic.

    Walt
  • Somewhere between "Live Free Or Die" and "Famous Potatoes", the truth lies.

    So the truth is and? That's not very insightful!

    --

  • More from the California Business & Professions Code 16600-16607.

    16601. Any person who sells the goodwill of a business, or any shareholder of a corporation selling or otherwise disposing of all his shares in said corporation, or any shareholder of a corporation which sells (a) all or substantially all of its operating assets together with the goodwill of the corporation, (b) all or substantially all of the operating assets of a division or a subsidiary of the corporation together with the goodwill of such division or subsidiary, or (c) all of the shares of any subsidiary, may agree with the buyer to refrain from carrying on a similar business within a specified county or counties, city or cities, or a part thereof, in which the business so sold, or that of said corporation, division, or subsidiary has been carried on, so long as the buyer, or any person deriving title to the goodwill or shares from him, carries on a like business therein. For the purposes of this section, "subsidiary" shall mean any corporation, a majority of whose voting shares are owned by the selling corporation.

    Is there a lawyer out there? It looks to me like if you're in the stock plan, they can screw you, even in California.

  • Don't non-compete clauses apply if you quit the company? Fine. stop working (don't quit, just stop doing work). Eventually they will fire you, which should void the non-compete clause.
    Yes? No?

    As far as compensation goes, I say a valid compensation would be 100% of your salary at termination for the duration of the non-compete clause.

  • That could be pretty sweet. Work for them a few years, then I could resign and go back to grad school for the life of the non-compete!

    Yeah, but then you'd have to live in New Jersey and work for Dendrite. I don't see either of those things as very attractive. But maybe that's just because I worked in the call center there. Almost anything is better than working in a call center.
    _____________

  • Non-competes & horror comic books? (Score:5)

    by SecGuy (75963) on Thursday March 01 2001, @08:36AM (#392003)
    After following this link I came across the following amazing non-sequitor:

    16603. Every person who, as a condition to a sale or consignment of
    any magazine, book, or other publication requires that the purchaser
    or consignee purchase or receive for sale any horror comic book, is
    guilty of a misdemeanor, punishable by imprisonment in the county
    jail not exceeding six months, or by fine not exceeding one thousand
    dollars ($1,000), or by both.
    This section is not intended to prohibit an agreement requiring a
    person to purchase or accept on consignment a minimum number of
    copies of a single edition or issue of a magazine or of a particular
    book or other particular publication.
    As used in this section "person" includes a corporation,
    partnership, or other association.
    As used in this section "horror comic book" means any book or
    booklet in which an account of the commission or attempted commission
    of the crime of arson, assault with caustic chemicals, assault with
    a deadly weapon, burglary, kidnapping, mayhem, murder, rape, robbery,
    theft, or voluntary manslaughter is set forth by means of a series
    of five or more drawings or photographs in sequence, which are
    accompanied by either narrative writing or words represented as
    spoken by a pictured character, whether such narrative words appear
    in balloons, captions or on or immediately adjacent to the photograph
    or drawing.

  • A data point from quite a few years ago... (Score:4)

    by shakah (78118) on Thursday March 01 2001, @07:49AM (#392004)
    I was presented with one a few years ago (the company was Dendrite) that provided for a 50% salary for the life of the non-compete (2 years, I think). It was worded something like "I agree that 50% base pay during the non-compete clause adequately compensates for the hardship of the non-compete clause..." (probably to avoid a court challenge over whether the clause was fair, prevented me from making a living, etc.)

  • Good Luck (Score:5)

    by PDG (100516) <pdg@webcrush.com> on Thursday March 01 2001, @07:46AM (#392014) Homepage
    If you can get a company to agree to that, you must have some special skill. Non compete's put you on the defense from day one at a new company and chances are the company doesn't care. Fortunately, they are extremely hard to enforce (which is what every HR person says), but at the same time, if they are so hard to enforce, why bother with them. I wrangled with my current employer for 6 months refusing to sign unless they gave me a contract or a severance package because their non-compete was so vague it included the entire industry. In the end, I had them reword the document to specifically list their 'direct' competitors, which could not change without my approval, and remove any mention of working with corporate partners.

  • Re:Is non-compete even legal? (Score:4)

    by Mordred (104619) on Thursday March 01 2001, @08:00AM (#392019) Homepage
    I don't think non-compete could hold up in court...isn't it a violation of your right to the pursuit of happiness?
    Non-competition clauses can and do hold up in court if your previous company decides to hold you to one.

    In regards to non-competition clauses there's a very good reason for a company having them. Say you work at a real-estate company (X) handling several large corporate accounts. You decide to leave company X. Since you are the prime contact for Company's A & B, you can call them up and say "Hey, I've left X, but I'm moving to Y and would love to work with you there." Thus A&B leave X and they lose millions of dollars. Now a lot of times a company will lease restrictive clause that says "for a period of 18 months after leaving our firm you can't talk to any of your old clients". This is actually reasonable and quite fair.

    Another good example of a no-compete clause was the one Ross Perot signed when EDS removed him from the board. He was given something like an $8 million severance package and told he could not compete for a period of 2 years (I think). After those two years were up, he started Perot Systems and now vies with EDS for many of the same clients.

    When technology comes into play it gets a little more tricky. If you work at company X & then move to Y you can actually use knowledge of the product from company X to build a competing product at Y. This can't really be covered by normal patent protection which is why the no-compete clauses have come into play. A broad no-compete clause is ridiculous, especially one that covers the entire IT industry. One that says you can't work at a streaming media player company for 12 months after leaving is not. Courts will uphold these although I'm not sure who would get sued if you violate it. It's possible the new company would pay damages but I'm not sure.

    Mordred
  • I covered this during my employment law courses in the UK (what follows will therefore probably not apply elsewhere).

    A non-competition clause in a contract is enforceable so long as it does not fall under the definitions of a bunch of other laws, among them the "Unfair contract terms act", and a few others more specifically dealing with employment law.

    A non-competition clause must be

    - Limited and reasonable in time - it cannot exceed a period that the court deems "reasonable"
    - Limited and reasonable in scope - this is complex and I'll cover it below
    - Fair - you can't cripple a person's future career unless the compensation is there, kind of like a waiver to the usual consideration laws - here consideration has to be both present AND sufficient, whereas usually it only has to be present.

    In cases that have been tried, what usually makes the clause non-enforceable is the scope argument. The scope is a kind of function of the type of industry, the role the person had in their last company, the size and presence of that company and the number or market size of the markets in which the individual is prohibited from exercising those skills.

    For example, if you were chief technology officer of a tiny development company that worked off a single product, they can't enforce a clause preventing you from working in the IT implementation industry in an entire country, because the broadness of the exclusion is far greater than the broadness of the role given up.

    This rule seems to be constantly open to re-interpretation, but in almost all cases the court leans towards individual rights rather than those of the company. My guess is that this is because the companies rarely need the clause to protect themselves - if they have proprietary technology, then their copyrights and patents ought to protect them, and they shouldn't need specific individuals, and the loss of those individuals should not be a threat. Where the courts back the companies up is where the leaver takes with them a huge list of contacts that were developed using the prior employer's resources and services, or where the leaver takes with them a knowledge of the industry that is significantly ahead of it's time because the company they joined gave it to them - then an exclusion clause for that specific area will be enforced. Of course it can only be enforced for a few months because technology moves on, and it can only be enforced over very specific and narrowly-defined areas otherwise it's not considered fair.

    Writing clauses like this for key personnel is very difficult and it is done for two reasons. Firstly and most usually, they are to scare people into staying. Secondly and more rarely, they are there to protect what is seen as an "excellence in thinking" in a specific area of expertise. For example, the head of technology development for Oracle probably has some clauses about working on web-enabled enterprise database delivery systems or some such junk because Oracle will have stuff in pre-patent conceptual phases of development that they want to protect, that is insufficiently defined to be awarded a patent or copyright.

  • Re:Don't do it. (Score:4)

    by RalphSlate (128202) on Thursday March 01 2001, @07:48AM (#392040) Homepage
    Problem is, you need to specifically ask for the non-compete before accepting the job (and leaving your previous job).

    In the past, I've been made an offer from a company and accepted. Then on my first day they hand me this form to sign, and if I don't sign it they will let me go. At that point my options are limited.

    I've also been in a situation where my company came up with a new non-compete and said "we're not holding a gun to your head, but if you don't sign this we won't be employing you anymore.". Again, not much choice.

    The only defense is, upon receiving an offer, to ask for a copy of the employment agreement. Then use that to negotiate or base your decision to work. Don't let them spring it on you once you've already burned your bridges.

    Ralph
  • Alternatively, instead of answering the question, you can do the old politician's soft-pedal:

    Interviewer: "How much were you making at your previous position?"

    The Truth: "I am making ten bucks an hour changing back-up tapes while reading the K&R book and surfing Slashdot, but I think I can figure out how to do the job and should get paid $105 thousand per year for it."

    What You Tell Them: "I'm looking for something in the range of $115 thousand per year, but I might be willing to accept slightly less. I've been doing a lot of training beyond the required skill-set of my current job, and I am ready to move up."

  • Of course, there is nothing stopping you from lying to them if they are short-sighted enough to ask.

    If you are making $35K per year, and applying for a job that pays $105K per year... tell them that your last job payed $98K per year. There's really no easy way for them to check on it, and probably wouldn't bother if there was.

    Worst case, they find out and fire you... in which case, you can now honestly go to other employers and say "my last job payed $105K per year."

  • Abuse of the system (Score:5)

    by Alien54 (180860) on Thursday March 01 2001, @08:22AM (#392069) Journal
    Ths Section from the story is fascinating. It shows how MS not only uses Non-ompete clauses to stop people from leaving, but how they use it to enforce their monoply.

    my reaction is not printable in a family oriented medium.

    There's a saying in techdom about Microsoft: Don't moon the giant. Crossgain mooned Microsoft every which way. First, the ex-Microsofties poached some of their former colleagues to join them at the startup. Then they raised $10 million from investors, including The Barksdale Group, a venture firm run by Microsoft's chief nemesis at the antitrust trial, former Netscape Communications Corp. (AOL) CEO James Barksdale. A few months later, Crossgain named Mitchell Kertzman, an outspoken critic of Microsoft's business practices, a director. Kertzman is CEO of Liberate Technologies (LBRT), an interactive-TV software maker that competes fiercely with Microsoft interactive-TV technology

    The last straw was Crossgain's decision to base its technology on non-Microsoft software. Instead of using such Microsoft products as the Windows 2000 operating system and SQL Server 2000 database package to develop its service, Crossgain opted for software made by rivals. ''It doesn't look very good for Microsoft if a company run by its former vice-president of developer relations is using software made by Oracle,'' says a former Microsoft executive.

    With a potential lawsuit looming, Microsoft offered a deal, according to Crossgain and Microsoft. If Crossgain committed to building its service with Microsoft products, the company wouldn't pursue the noncompete claims. Crossgain sources say Microsoft specifically wanted to preclude the company from using Oracle database software. Microsoft sources deny that. Switching to Microsoft technologies meant huge delays and the loss of months of work for Crossgain, which hopes to launch its first service in March. But the deal also meant avoiding months, or perhaps years, of litigation with one of the wealthiest companies in the world. Crossgain execs thought they could win the litigation, but the time and expense to do it would be a huge drain.

    The system is obviously open to abuse, and I am going to have to think long and hard on how best to sort this out.

  • Out of sight, out of mind... (Score:5)

    by FyreGryffon (182789) on Thursday March 01 2001, @08:09AM (#392070)
    When I showed up for my first day at one company, I was presented with a non-compete/intellectual property agreement. I was told that my employment was conditional on my acceptance of the terms of the document and my signature. I never signed the document, but I continued to work there for months.

    How did I accomplish this remarkable feat? I reasoned thus: Essentially all non-compete agreements are worded in ways that are grossly unfair to the employee. Accepting the agreement a company puts under your nose as written is roughly equivalent to accepting the first price quoted to you by a street merchant in a middle-east bazaar.

    Further, I reasoned, lawyers are like ferrets; they have short attention spans and more teeth than is strictly necessary. So I refused the agreement based upon a few clauses I found objectionable (it's not hard to find something to bitch about in one of these documents). The company sent the thing to their lawyer to have him review it in light of the objections I had made. He made some changes. I found more things to whinge about in the new document. I sent it back.

    We played this game for about two weeks until (as ferrets will) he wandered off and found a new toy to chew on.

    Problem solved.
    --
  • Back when I worked in broadcasting, the industry thought they could get away with no-competes for everything. Right down to the minimum-wage people they had answering phones. As my attorney told me, if you live in a right-to-work state, the only way a no-compete clause is valid is if there's quid pro quo. That is, they buy from you the work time that you'd spend at another employer. If they chose to let you spend that time watching Jerry Springer or flipping burgers, that's up to them. But they have to *purchase* that ability. Generally, I've seen negotiated rates from 100% of salary to what I negotiated in my no-compete which was they make up the difference if my non-broadcasting job was paying less than what I was making in the industry. So, when the company was bought out, I found myself a posh job in the bookstore at a community college. I was paid a paltry sum of $9 an hour for 5 hours per day and due to (the all to common) ineptitude of the broadcast outfit, they made up the difference for my old 8 hour-day job. Best two years I've ever spent!
  • When I joined the Army, they told me right off the bat that I couldn't go off and join another country's army without getting arrested for "treason." And get this, I could even get sent to the electric chair.

    And I can't even leave the Army whenever I choose. They said that if I was "absent without leave," the MP's might shoot me on sight.

    From all the books I've read about getting ahead in your job, it seems the best way to advance is to hop from job to job every five years. Now, how am I supposed to do that? Private Phil McCrakkin [ridiculopathy.com]

  • Turnabout (Score:5)

    by blair1q (305137) on Thursday March 01 2001, @08:57AM (#392113) Journal
    Try this:

    Next time they try to get you to sign a non-compete clause, whip out one of your own for them to sign that says they will not hire anyone who does what you do for 12 months after you leave...

    --Blair

  • This is a very important issue that many technology professionals get caught up in. Kids out of college are most harmed by a non-compete waiver that most companies will impose (at their discretion).

    People should be very aware that these contracts are indeed legal, and binding. They will hold up in court and I've seen it happen.

    One story I have is of a guy who had been working at a tech firm for a year when a VP invited him into his office. The VP passed a document over the desk, casually, and said that he would need it returned within a day. Of course, the document was a non-compete waiver that the company was instigating. In it was provisioned that this man, should he leave his current job, could not compete directly/indirectly with his current company, and could not use knowledge that he gained at the company for 2 years. He was told, that if he did not sign the waiver, he would be fired. The sad thing is that this is perfectly legal for a company to do. It's very important for people to ask about non-competes when they first jump into a job, because it may turn up and bite them in the arse at any time.

    Also, I have strong advice for young techies to be careful about signing these things. You could very easily be locked into your job permanently.

    Better advice, is to find a friend or relative that is a lawyer and have them take a look at any waivers before you sign on the line.

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