Non-Compete Agreement Beyond Term of Employment?

stellar7 writes "I work in IT for a large company. They have recently asked me to sign a new non-compete and confidentiality agreement. I signed an agreement when I began employment, but now they want me to sign an updated one. Behind the link are a few paragraphs from the new agreement. It states that the company has a royalty-free license to any 'Invention' I create including up to six months after leaving (and the company fully owns any Invention that relates to the company in this same period). Has anyone signed a similar agreement that reaches beyond the end of employment and includes things not related to the business?"

A. Employee shall promptly and fully disclose in writing to [Company] any inventions, improvements, discoveries, operating techniques, or "know-how", whether patentable or not (hereinafter referred to as "Inventions"), conceived or discovered by Employee, either solely or jointly with others, during the course of Employee's employment with [Company], or within six (6) months thereafter.

B. Employee shall, on the request of [Company], and hereby does, assign to [Company] all of Employee's right, title and interest in any of the Inventions which relate to, or are useful in connection with, any aspect of the business of [Company], as carried on or contemplated at the time the Invention is made, whether or not Employee's duties are directly related thereto. [Company] shall be the sole and absolute owner of any of the Inventions so assigned. Employee shall perform any further acts or execute any papers, at the expense of [Company], which it may consider necessary to secure for [Company] or its successors or assigns any and all rights relating to the Inventions, including patents in the United States and foreign countries.

C. [Company] shall be the sole judge as to whether the Inventions are related to or useful in connection with any aspect of the business of [Company] as earned on or contemplated at the time the Invention is made and as to whether patent applications should be filed in the United States or in foreign countries.

D. [Company] shall have the option of taking a permanent, royalty-free license to manufacture, use, and sell any of the Inventions conceived or discovered by Employee during the course of Employee's employment with [Company], or within six (6) months thereafter, that are not assigned to [Company] under paragraph B. of this Agreement.

ask a lawyer

[Trailer Trash (60756)]

Seriously, ask a lawyer, not slashdot. I highly doubt a contract like that is enforceable (seriously, they own work you create for your next employer?) but I would talk to a lawyer. And I wouldn't even think of signing it.

Re:ask a lawyer

[belmolis (702863)]

The answer is going to vary from state-to-state and presumably from country to country. California, for example, has laws that greatly reduce the effect of non-compete agreements, but many other states do not. Furthermore, the question of whether they can insist that you sign a new agreement as a condition of continued employment will depend on whether you are in an "at will" jurisdiction or not.

Re:

[ShieldW0lf (601553)]

I've had such agreements placed before me before. I specifically demanded that they be removed, and that I have specific assurances to the contrary. One time I even got it.

I wouldn't sign such an agreement with anyone, personally. Money is too easy to find to justify indenturing yourself in such a way just for a job.

Re:ask a lawyer

[Garridan (597129)]

Yup. I saw that in a contract, told my soon-to-be boss that there was no way in hell that I'd ever sign such a thing, he talked to his lawyer, and we got it stricken from the contract. That easy.

Re:ask a lawyer

[Svartalf (2997)]

Fair warning, it's not always that simple. I've been dismissed 12 months into a job because I wouldn't sign (That wasn't the stated reason- I was "laid off"; which in reality was they let me go, they "let go" someone in the California offices and "hired" a contractor for the position that was strangely the same person they "let go".)- be prepared to get told "NO" on this. My situation will probably be resulting in a lawsuit as it's pretty much illegal for them to pull this stunt in the first place- you can't pull the "you have to sign" thing after you've let me work for you any length of time (magic deal there...).

As it stands, there's far, far too many "clever" corporate counsels, too many businesses that think they own you and they're entitled to shake a stick at. Thankfully, there's more than enough places that aren't idiotic about this that it's only moderately problematic.

Re:ask a lawyer

[stellar7 (309788)]

I'm the original poster. I spoke to a lawyer, and he told me that in my state this type of contract would hold and that the employer can punish employees in any way for not signing. So, I'm thinking I just need to find a better employer.

Re:ask a lawyer

[Lwood_at_COG (253506)]

Or a better state...

In Ontario, this might be construed as "constructive dismissal". From what I've experienced here, signing any employment contracts is a bad idea. Without an employment contract, you'd be covered by common-law, which is generally favourable to the employee regarding severance amounts, etc. Employment contracts usually replace all that with explicit terms that favour the employer.

IMHO, you'd have to be NUTS to work as an employee in high tech outside of government or unionized employers. Ontario's labour laws are terrible for "technology professionals". As unemployment rates are very low, and there is plenty of unfulfilled demand for skills, you're far better off subcontracting, where the legal relationship is between corporate peers. Some of the rights you retain as a subcontractor include:

- pay by the hour, if you so arrange. No unpaid OT.
- the right to conduct business with other clients

normal employer rights that are NOT applicable in contracting:
- the right to supervise and direct
- the right to set hours of work (duration and timing)
- exclusivity to all the employee's production, intellectual or otherwise, regardless of whether the efforts were during paid working hours.

There is a lot more variation and flexibility in terms, and you still have to keep your clients happy - i.e. they won't be happy if you openly compete against them and work 3h/week, and your contract will be cancelled.

If you are a non-unionized employee, remember, the only real power you have is to quit.

Re:ask a lawyer

[sumdumass (711423)]

No right to severance, regardless of length of employ. No right to appeal a termination. No right to notice of a termination. Around here they don't even have to give a reason for firing you. They can just tell you some day "You're fired, get out" without any further information. I actually had someone tell me "We don't have to tell you" when I asked why I was being let go. Your ex-employer can also fight your unemployment claim for no reason whatsoever other than it makes their unemployment insurance premiums go up.

This tends to change with a variety of factors. For instance, the employee handbook and internal company policy in most cases provide for severance pay and restricts the ability to let you go except for certain reasons. This hand book or internal company policy is viewed as a contract by most all courts and would supersede the states requirements if they are less. Of course they usually place something in the handbook that included insubordination or something that lets them dismiss you without an actual cause. That's where unemployment kicks in.

Now unemployment can be contested for any reason but, they have to have a reason to fire you. I'm in Ohio where you don't necessarily get unemployment if they had reason to fire you. It has to be a good reason too. They can fight it all they want but at most, they will only delay when you receive the unemployment if they don't have a substantial reason to fire you. The employer sometimes thinks that you will get another job and forget about it and they won't have it effect their premiums. But you can still fight their claims after you start working another job in most cases. There are around five states that you have to have cause for to fire someone and their laws are generally different including the right to sue for wrongful termination. Each state has a labor board that can levy fines on most employers with more then 15 employees according to practices that are either against the state law or employee handbook. For some reasons, they don't tall you that in school when they train you to become an employee somewhere.

Even employment contracts that give you more rights than the law requires are unenforceable in this state. At-will employment trumps all of them. Your employer basically has impunity to screw you 17 ways without so much as buying you a drink first.

While technically true, it is wrong to some degree. Even in Massachusetts, contract law is just that. You might not have a job at company X because of the At-Will status but that doesn't mean you don't have recourse. Of course then you are back to finding who either thinks your case is worth something to take it on commission or one who will take your money up front. Some of the stuff can be taken care of by you too. I have a cousin who lives in Mass. She took 4 weeks off to have a baby and after returning to work, they wouldn't give her position back because the person who filled in did a better job. So she had to take another position that required more physical labor and they fired her two months later for no reason after writing her up for not doing the job in a timely manor. It was true that she didn't get her job back but she took it to court and got back pay from the time they let her go up until the time she received her first paycheck from her new job and attorney's fees. She didn't really look hard for a new job because she was taking care of the kid so it was about a year or so that she had been paid.

Now you might think it has something to do with the family medical leave act but the reality is that the only thing related to that was she had a doctors slip limiting her lifting and repetitive motion for 2 or three weeks after she went back to work.

The bottom line is there is more recourse then people think. They are often discouraged in taking some of that recourse because of funding or they just don't know about it or it becomes a hassle or they have already moved on or what ever.

Re:ask a lawyer

[torkus (1133985)]

My Suggestion:

Require an additional clause added where they guarantee you 6 months severance pay should you leave the company for any reason while that agreement is still in effect.

Yes...refuse to sign. Or better - just ignore it. Put it off, defer them, 'will get around to it'...till they either forget or you find a new job.

New job...good call. On your exit interview point out that you're leaving because the company clearly has no interest in treating people fairly or even caring in the slightest bit about them.

Re:ask a lawyer

[mrbluze (1034940)]

Seriously, ask a lawyer, not slashdot. I highly doubt a contract like that is enforceable (seriously, they own work you create for your next employer?) but I would talk to a lawyer. And I wouldn't even think of signing it.

A friend of mine had to sign one in order to start work at Agilent / HP. They can't really 'own' you, but because they own any ideas you come up with during your time at the company, they can screw you for any derivations on your previous work .. at least they say they can. I haven't heard of a case where this was challenged in court, but frankly, any company that wants this from an employee shouldn't have an employee. I think it was Oscar Wilde who said something like, "If this is how the Queen treats per prisoners, then she doesn't deserve to have any!".

Re:ask a lawyer

[stormj (1059002)]

Not enforceable in California. Bus & Prof Code Section 16600.

Re:

[bm_luethke (253362)]

I knew someone about 10-15 years ago that it happened too - they lost (in Tennessee).

Of course, not being a lawyer I can't say - however I rather suspect it is quite enforceable if you create something the company works on. That is - if you work for Microsoft and you invent some nifty software at home you have little to stand on (especially if you are a software engineer). I think it would be fairly easy for them to argue that you, at the very least, used company resources to learn and you are payed to writ

You are also free to say NO!

[Savage-Rabbit (308260)]

In both cases I can see the point of the employer - they do not want you to have advance internal knowledge of their product, quit, and go "sell" yourself to their main competitor (and that could very well happen given how much some software is worth, how much money several companies have, and that those companies aren't the most honest places on the planet). I can also see why a software company would feel they own your software if you are a software engineer, they are paying you to do that and there is no way you can totally separate yourself from the company.

The way I see it, if you work for somebody and do coding in your spare time it is only reasonable that you don't contribute to products that compete with your employers product with your spare time activities and that your spare time activities don't get in the way of what you are doing at work. Other than that I feel that the company I work for has no business telling me what I can and cannot do in my spare time. Draconian broadly worded contracts are something I will refuse to sign unless I absolutely cannot find another job and even then I will bail on the company in question at the first possible opportunity. It is simply a matter what the law says and a matter of you deciding how much abuse you are willing to put up with.

I was once asked to sign a new contract to replace my old one. This new contract contained very broadly worded IP ownership clauses that stated among other things:

• The company owned any and all software I developed during the time they employed me.
  
• The company forbad me to work on software projects for anybody else during the time they employed me.
  
• If I quit my job company forbad me to go to work for a competitor for 6 months after I left them to protect them from "competition".
  

I felt the first two demands were way to broadly worded. The first one seemed to extend to anything I coded in my spare time even if it didn't compete with my employer's products in any way shape or form. The second point was so broadly worded it forbad me to contribute to any Open Source projects at all even though the company it self was only to happy to use open source software. This is a brand of hypocrisy that really pisses me off. The last point was simply outrageous since seemed to clash with freedom of employment laws in my country, an EU Nation. At the time they presented me with the contract this hadn't been tested in court. I refused to sign the contact along with several other developers. Eventually the PHBs and their legal weasels came back with a revised contract. After much arguing and several revisions it stated something along the lines of the following:

• The company owned any and all software I developed during the time they employed me but only If I developed it during working hours. What I did in my spare time was my own business as long as I didn't create or contribute to a competing product. Basically, since they were in the database business, I could develop anything I wanted in my spare time except database software.
  
• The company forbad me to work on software projects for anybody else during the time they employed me but this was now mostly restricted to working for competitors. As long as I didn't contribute to competing products, Open Source or Proprietary, I could do what I wanted to. Contributing to Open Source projects was OK as long as it wasn't a competing product. If I wanted to take a second job for pay I had to get permission and of course it could not be a competing product.
  
• If I quit my job the company forbad me to go to work for a competitor for 6 months after I left them. They didn't want to drop this so we let them keep it since this clause had been successfully challenged in court by the time we were done arguing and thus it had become basically meaningless.
  

Re:ask a lawyer

[lena_10326 (1100441)]

And I wouldn't even think of signing it.

Good luck on your job search. Keep us updated.

Re:ask a lawyer

[hyc (241590)]

Been there, done that. Their idiotic agreement would have claimed ownership of *ANY* intellectual property I created, even on my own time and my own gear. And it was so general it would have applied to all the music I've composed for my band, as well as software I wrote in my hobby activities. (Both totally ludicrous; I was still developing on Atari STs back then. Stuff that would have absolutely zero relevance to my day-job enterprise software coding. But it's all "IP" and that contract would have laid claim to it.) I refused to sign, left, and started my own company. Today we market commercial support for the fastest LDAP server in the world, and my code totally obliterates the performance of anything that other company makes. And of course, all my code now is open source. No more proprietary bullshit.

Some things must never be compromised.

Re:ask a lawyer

[lena_10326 (1100441)]

If they state nothing, then take a copy home and do not sign it. When, later, they ask you for the signed copy, inform them that you never signed it and are not getting anything from the signing of it. They are free to fire you, however you *will* take this to the unemployment office to get full compensation as it is illegal to your employer has fired you for an outright illegal reason.

Nobody wants to fight that fight. Most employees with families need to know that paycheck will keep coming, so they won't do anything to jeopardize that. The reality is many of these contracts are unreasonable and would be seen as such by a judge, so it's easier to sign and worry about the consequences later. Most of the time there are no consequences, but you can always take precautions to minimize the chance. Things like making sure your next employer is not a direct competitor or not telling co-workers where you're going. Make-up a story and lie. They generally won't question you too much if your lie sounds plausible. The less your current employer knows, the lower the chance of being pursued.

I know of 3 people my last employer sued, but to be honest, they deserved to get sued. They went to work for highly visible competitors who had exactly the same type of product (and they were sales people, not developers). One even tried to take his client list with him. Bad idea.

Re:ask a lawyer

[lena_10326 (1100441)]

he

God, I hate that. It's she.

but if you really prefer to sign away your freedoms than to stay unemployed for a couple of months, then that explains why the US is so screwed up.

Anyway. I must believe you don't work in USA then, because I've never seen an IT job without a non-compete requirement in the last 13 years of my career.

The only difference between this non-compete and non-competes I've signed is their claim of ownership on new products developed after termination, however I've seen non-competes laying claim on very general things from everything created after hours to things created on your personal desktop.

First, it's a bullshit scare tactic. Second, signing doesn't mean you're signing your freedoms away. Here, if a contract violates the law, it's unenforceable regardless of your signature. And third, you really have no choice but to sign if you plan to work in USA. I suppose you could find a very small IT company that doesn't push non-competes, but it'll be hard to find that. You won't be unemployed for a "couple of months", you'll be unemployed for YEARS with that sort of search criteria.

Re:ask a lawyer

[daVinci1980 (73174)]

God, I hate that. It's she.

You must not write on the tubes much. Newsflash: if you go to a site that has 95%+ male readership and are surprised when people assume you're male when you have (at best) an ambiguous handle then... Well, I have nothing. You probably get surprised easily. Boo. Did that surprise you? I expect it did.

I must believe you don't work in USA then

I work for nvidia. My employment contract said:
a) Any inventions I invent on my own time with my own equipment are mine.
b) Any inventions I invent on their time and/or with their equipment are theirs.
c) I can leave nvidia whenever I want (duh) and go work for whomever I want, on whatever project I want.

All they ask is that if I'm thinking about leaving, I let them know so they can see if they can make the reason I want to leave go away.

You can have my job when you pry it from my cold, dead fingers.

Re:ask a lawyer

[ultranova (717540)]

Then maybe people should just stop assuming and write in a gender-neutral way. It really doesn't take much effort. "He or she" takes half a second more to type.

But what about hermaphrodites ? After all, they aren't "he or she", but "he and she". You need to write "he and/or she". But even then you run the risk of offending the odd person who has been born without genitalia of any kind, or perhaps asexual aliens who may be reading Slashdot; so better use "he and/or she or it". But what if the aliens have three genders ? Two of them get referred to as persons - "he" and "she" - while the third is referred to as "it", likening it to an animal or object.

So, in the interest of political correctness, call everyone "it". It's the only way to guarantee equal verbal treatment of all possible gender combinations, altought it of course still horribly discriminates against nonentities, since "it" can only refer to an entity.

That, or simply ignore the people who take personal offense when someone doesn't know their gender and doesn't go out of his way to not have to guess.

Re:ask a lawyer

[imp (7585)]

While the answer varies from state to state, I'll quote what my lawyer told me when I took him one of these employment agreements. "Warner, never hesitate to sign a vague, badly drafted employment agreement." Basically, for my situation, the upshot was that the agreement was so vague as to what it covered that read literally one would have to tell the company everything I ever thought. New idea for a flavoring for brownies, tell the company. New sexual position to try with the wife, tell the company. Plot for a sitcom staring 13th century spanish cardinals talking about the philosophical conundrum the Islamic occupation of the Iberian peninsula presented, tell the company. Clearly, no court in its right mind would enforce such an over-reaching and broad contract.

In addition, certain states, such as California, have laws that say, as a matter of public policy, that if you do something on your own time with your own resources, you own it.

Also, since you didn't post the entire agreement, there's no way to know if there's anything else in it that might be bad, or worse than what's presented here.

However, without having both a license to practice law, or the entire text of the document in question, the above is prelude to the following non-legal advice: See a lawyer. It cost me about $300 when I needed to get a couple of different documents reviewed.

Re:ask a lawyer

[littlerubberfeet (453565)]

I have dealt with some smaller music contracts that are 25 pages. 5 of those pages are definitions. Definitions are where artists either get screwed or get well-paid.

I have had glimpses of financial deals between large (Fortune 50, yes, five zero, not five hundred) financial institutions. One contract ran 30 pages. The definitions for it ran almost 100 pages.

The point is, talk to a lawyer. It is worth the $300-$500 it will cost.

My personal lawsuit experience with contracts

[by Anonymous Coward]

"Warner, never hesitate to sign a vague, badly drafted employment agreement."
Yeah, legal fees galore.
Look I recently dealt with a dickhead that screwed me out of ~$30k. And ~10 others out various amounts ranging from $10-$90k. We were all contractors. We all signed the same contracts. All of the contracts are mostly unenforceable.

But here is the deal, if your opponent is irrational and has lots of money ... you lose even if you win.

let me repeat that.
If your opponent is irrational and has lots of money ... you lose even if you win.

This guy was willing to play hundreds of thousands of dollars to make sure none of us collected a dime. He has a mental problem with admitting he is wrong. He would counter-sue for millions of dollars. Claims that were probably losers (you can never be 100% sure in litigation) but would have still cost $100k in attorney fees to defend. And it isn't just attorney fees it is your time. And in a profession where I bill by the hour, my time is my money.
The $90k guy and the $20k guy sued (separately) and all of us waited to see what happened. The suits settled for a waiver of claims and no money. Basically the $90k, and more so the $20k guy, decided it wasn't worth risking their house to win. Plus even if they won it would have cost more in attorney fees (especially for the $20k guy) then they would have won.
It is like in poker when you are forced to fold, despite your winning hand, because you don't have enough money to match the bet.

This dickhead had enough money to piss away a good deal of it on making everyone miserable.

If in the 6 year statute of limitations I win the lottery and can play on equal footing with him, I'll sue the bastard, but until then it isn't worth my trouble to be right.

But keep this in mind if one party is rational and the other isn't and has money to afford to be irrational, the irrational party wins.
If it is a big company they will either do (a) be rational, settle and walk away or (b) be irrational and fight forever because they have the money to do so.

It may backfire.

[www.sorehands.com (142825)]

I had the same type of agreement when I was at MSI. When the workers comp. insurance turned me down -- claiming that the injury was not solely from work, I used that agreement to argue that all computer related work belongs to my employer, therefore work related.

Yup. It's doable. Just be polite and reasonable.

[apankrat (314147)]

Yup. First, talk to a lawyer. This costs 30 min of his time, so it's not expensive.

If he confirms that this is unenforcible, propagate that to the company and see what they have to say. If it's a company with multiple offices, they may in fact be asking to sign a paper drafted for another country. In which case they may back off and come up with a revised version. I've been through this and it does in fact work.

If the lawyer says it's an OK as per local laws, ask company for a list of exemptions. Basically

Before you sign an agmt.: What is your idea worth?

[killmofasta (460565)]

BEFORE YOU SIGN AN AGREEMENT:
( obl: Ask a lawyer, not slashdot )

If you are involved in solving any problems creatively,
and have to do any SOP work for the company in question:

1. Get a stamp, ( DATE: NAME: WITNESS, in boxes )
2. Get a notebook, and STAMP EVERY PAGE.
3. Write down EVERY IDEA YOU HAVE HAD THAT RELATES TO THEIR WORK.
4. DOCUMENT EVERYTHING, AND WHEN YOU TALK TO THE LAWYER, have him initial all the pages. ( EVEN BLANK PAGES)
5. have a copy made, and send one to yourself, and one to the relative nearist you. Make sure you completely cover the entire package with clear tape.

Note: This is from the 'how to protect intellilectial property' book by Nolo press.

Then when something comes up at your work, that you already have invented. You mearly state that its prior art, but you own the idea.

I worked for a company that did the same thing. I had an agreement in place for non-competition. They asked for 7 years, I told them that they had aready agreed to others for 5, and a few instances where they were starting to get the swing of things 2 years. I told them I would sign for 1 year. I had heard that a lot of discussion went on behind the scenes, and after three days, they accepted the 1 year limit. They asked about 'Prior art' and I gave them the business card of the lawyer.

When the eventual day came up that I had to tell them there was prior art, they screamed and yelled at me for about 1/2 hour, and had a vice-president come and give me the soft talk. I asked for 10,000 stock options. The Chairman of the board came and talked to me. I asked him for 10,000 stock options. He said no. I then told him 'Why is the founding and running of this company predicated on not paying people what they are worth?' "Ahh Eee Ohh? Can I get back to you on that?" And I told everyone at the monday morning meeting about it. Monday afternoon, the first person who had asked me for the agreement, said 'One year is acceptable, and we are granting you 7,500 stock options for use of these three ideas.' I ran into the VP years later. He thold me that they had a boardmeeting about this, and someone said, "Were screwed, if we dont do this, we will esaily loose most of the loyah staff. And if we do this, we are actually rewarding the best of the best. Its going to cost us a lot of money, but how much money are we going to make on this? Actually on all of it?"
( That is what happened Monday when they heard about the morning meeting! )

Later on, two of the ideas turned out to be total duds, and were actually based upon other prior work. The one idea that paid off, got me $25,000 in cash, $2,500 for the patent application, and paid for the lawyer ten times over. I PATENT MY IDEAS NOW! THe patent hangs on the wall beside my degrees. Not worth much now, but it was fun.

Another Patent I have seen hang on a wall is the Gene Amplification Patent owned by a guy at Chiron. He said "Its worth about 4.3 billion dollars over the life of the patent" He of course is a multi-multi-millionaire. Drives a toyota station wagon.

You just have to judge... What is your idea really worth?
( HA! The Capatia is 'fr**tf*l' Best fortune cookie this month!

Take it home.

[Silverlancer (786390)]

Take it home.

Cross out the parts you think are ridiculous.

Sign it.

Return it.

Re:Take it home.

[hcmtnbiker (925661)]

Cross out the parts you think are ridiculous.

Sign it.

Last I knew all that achieved was voiding the entire contract unless they initialed all the parts you crossed out. And I assume the old one would still be binding in that case.

Re:Take it home.

[Moofie (22272)]

Right, so until they accept your changes, the new bogus contract is void. That's about perfect, innit? The old contract that had already been agreed to will still be in force, and the new ridiculous one will be void.

Mission accomplished.

Re:

[ScrewMaster (602015)]

The Microsoft culture hates people that don't do everything they're told to do even when it is stupid and useless.

Well, we all know what happens to malfunctioning drones ... they are immediately cut off from the rest of the collective.

I worked a full-time job as a game developer (this was some twenty years ago) and they had a particularly nasty employment contract (among other things, that after quitting I was enjoined from working as a game developer for a period of five years, they owned any game-re

What do you get in return?

[rastoboy29 (807168)]

Contracts must be a two way street to be legally binding.  What do you get in return for signing this?  More money?  I'd guess not.  If you want to see an interesting blank look on your boss' face, ask him what you're getting in return.

Ask if you'll be fired if you don't sign it.  That'd be interesting, too.  Contracts made under duress are also not binding.

I would say that I'm not a lawyer, but I'm not a fucking lawyer and so I don't have to put stupid legalese into my posts!

Re:

[sharkb8 (723587)]

he gets to keep his job in return for signing the new contract.

Re:What do you get in return?

[renegadesx (977007)]

I'd sign it if they agreed to pay me for 6 months after employment, otherwise I would tell them to get stuffed

Not Enforceable in California (for the most part)

[triclipse (702209)]

California Business & Professions Code 16600 states:

"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."

The rest of the relevant chapter addresses mainly those instances where one sells an interest in a business. In those cases noncompetes are enforceable.

California courts routinely void noncompetes under B&P 16600.

Things to try

[plover (150551)]

You obviously have two choices: sign it or don't. I'm guessing "don't" probably comes with the spectre of termination. But there are things you could try.

You could modify the agreement by striking out the "or within six months thereafter" clauses and sign it. There's a chance that it'll be sent only to a paper-stamper who is responsible for checking signatures off a list, and he might not see your modification. Of course it's more likely your boss is on the hook for collecting signatures, and he'll note your changes. You could try convincing him that the agreement is unfair, and that your changes are just.

You could try ignoring it. See if they follow through on their threats.

You could talk to your coworkers and organize yourselves to collectively say "we're not signing this." If an entire group said "no" you'd scare the crap out of management. Of course you'd likely all be labeled "troublemakers" or "union organizers" and be lined up for rapid replacement.

Or you could shut up and sign it. Unless you've got another job in your back pocket, the market's kind of thin these days.

Depends where you live

[stox (131684)]

If you lived in Illinois, these paragraphs would be completely null and void. I can't speak for other states.

Sign it if they pay up.

[Kenrod (188428)]

Figure out what the agreement is worth and ask them for compensation. If they want 6 months of your "inventions" after you leave employment, they need to pay you 6 months salary, or a reasonable portion thereof, up front.

Since you didn't agree to this new contract when you were hired, you should have your pay adjusted accordingly.

I got one and didn't sign it.

[wrook (134116)]

One of the companies I used to work for tried to get me to sign an "updated" contract.

I told them, "I already have a contract and I'm happy with it. There are termination measures in the contract, but I don't think any of the issues apply (gross incompetance, etc)."

Legal freaked out. They told me I must sign the new contract or else my employment would end. I said, "The contract I am working under has no expiration date and I don't see any provisions for updating it. As I said, I'm happy with this contract, so unless you offer me large concessions I don't really feel it's in my best interest to sign another one".

Legal freaked out again. They said, "Everyone has signed this contract. You are the last person. You must sign it."

I asked, "Are you saying that you will fire me if I don't sign this contract?"

"Well, no."

"Good because I like the old contract better."

End of story. Never heard from them again.

Re:I got one and didn't sign it.

[oxygen (403)]

It's shocking how few people realize that this is an option. There may be consequences for your actions such as termination, but you do have the option to not sign it.

I had the same thing happen to me a few years back. I had an NDA/non-compete dropped on my desk by the HR manager and I looked at it and handed it back to her and said no. She said I had to sign it, required, firings, I looked back and said Okay and put it in my trash.

A few hours later my boss came over and asked why I didn't sign it. I explained my issues and after three rounds with legal, they came back with a very narrow agreement that I was willing to sign.

Later on, I was talking with some other employees and happened to mention what happened and they were all shocked.

Re:I got one and didn't sign it.

[by Anonymous Coward]

I'll do you one better. My last job fired me a month ago for the neurotic reason of missing a meeting. Not an important meeting. Not even a one time meeting. Just a routine Friday morning meeting which never divulges any useful information what so ever and is pretty much a waste of an hour. Now that's not the amazing part.

The amazing part is sitting there the Monday morning after the meeting listening to HR read me the termination letter. They've brought in the previous HR lady AND the company lawyer (which they don't routinely do) because they're scared of me. Mysterious powers of network admins, I guess. Then after reading me a specially written termination letter (this is a company with a 100%+ yearly turnover rate, so their typical letter is a form to save time) the HR lady has the following to say:

"Typically, when we hire an employee, they sign a confidentiality agreement."

"OK."

"You don't have one in your employee file."

I begin to smell where this is going, but due to sheer disbelief, I play dumb, "OK. Are we done?"

"Could you please sign this one now?"

Yep. They actually asked it. WHILE they were firing me. I didn't know which impressed me more... the amount of nerve it took them to tell her to ask me that, or the stupidity it would require to believe in a million years somebody might comply. "Uh, no?" I responded.

Now at this point, the lady seems visibly shaken. The big wigs watching her are obviously not pleased that she couldn't work a miracle. "Is there uh... is there a particular reason why you don't uh... don't want to?"

A million things run through my mind. Illegal things they've done, mostly. But I decide it's best not to let them know what I know and respond, "Beside the fact that you're asking me for a favor as you fire me? I just don't feel like signing anything right now."

Still makes me laugh. I've never worked at a more neurotic, incompetent, worthless company in my entire life. Had a previous employer before the last one that tried to float a non-compete to all the employees after we were working there. We got together and all said "Nah, we don't like the terms. We're not signing." and they never asked again.

But asking someone while you're firing them to sign a confidentiality agreement? Amazing.

You can't force a free mind

[Quadraginta (902985)]

I know a lot of people will advise you to consult a lawyer, but my advice, as one who has consulted lawyers far more often than I'd wish to have had, is not to.

First of all, the law is not nearly as clear-cut as geeky programmer types think it is. As a rule, the law is roughly speaking some mash-up of what the legislature wrote, what the judge thinks ought to be so, and what a jury of random folks majoring in theater and journalism at the local community college think it ought to be. Hence a good lawyer is probably not going to be able to give you an precise and definitive answer on all your what-if scenarios. Instead, he'll probably agree with you on general grounds that the contract is evil, vicious, and you are a noble person dreadfully wronged blah blah (this is just advertising, an appeal to your vanity, so you won't forget him when you someday need a lawyer). If you press him on specifics, the most he's likely to do is tell you roughly how he would argue the case against the contract if he needed to, but he's unlikely to guarantee it will work.

Secondly, aside from satisfying your injured pride, what would be the result of asking a lawyer and setting yourself back $500 or so? Suppose the lawyer agrees it's a smelly contract, and a court might rule this or that aspect unenforceable, if push came to shove? What are you going to do with this information? Go to your boss and say Ha! All your base are belong us! and he's just going to say Curses! Foiled again! and tear up the NDA, maybe give you a raise for showing initiative and helpfully pointing out the folly of the company's ways? I mean, as opposed to marking you down as a pain in the ass who needs to be shitcanned at the first opportunity, like maybe right now? Your feelings would probably be more effectively soothed if you spent that $500 buying pretty girls drinks in a club.

Finally, if you just have enough mental discipline to keep your mouth shut when you need to, this doesn't matter anyway. Suppose you do have some kick-ass wonderful idea while you're working for this bunch, and you decide you want to take it elsewhere. All you need to do is not keep notes on your idea in your office (duh), not work on it using company computers and networks (duh), not talk boastfully about it around the water cooler -- this is the hard part -- and just generally keep your thoughts to yourself as long as you work there and for six months afterward. When your killer idea takes the world by storm it's going to be up to your former employers to prove in court that you had the idea eight months earlier, when you still worked for them. But without the evidence you've carefully avoided providing, they're screwed. They can't read your mind.

As for the ethics involved: anyone who gives you a contract like that to sign has made their lack of morals completely clear. You owe them no consideration in return whatsoever. Indeed, if you used them to pay your rent while secretly working out your brilliant idea at home, they'd have only gotten what they deserve.

Go Ahead and Invent Anyway

[Hoi Polloi (522990)]

I suggest you invent a new form of crack cocaine after leaving.

If it's software, make sure it uses GPL code

[jamesh (87723)]

If it's software you are working on in your own time, make sure it includes GPL code. That at least would make any legal action they might like to take so difficult that they probably won't bother.

Re:

[lpq (583377)]

It depends on the state in the US -- specifically, in techno-centric California, such non compete agreements are not only unenforceable, but are also *illegal* to put in an employment contract. What you do on your own time with your own computer is "yours" unless it substantially overlaps the major business of your company -- then the company will probably win as they'll likely have more legal and monetary resources to carry on a lengthy legal battle. :-(

Re:What's the legality of contracts, exactly?

[Ziest (143204)]

The 9th circuit court (California, Oregon, Washington, etc.) has ruled these sort of agreements as void. They are deemed to be prior restraint and hence the agreement is unenforceable. Outside of the 9th? Unknown. Either way talk to a lawer. Most likely her/she will laugh at this agreement. However, what ever work you do on your own time, make sure you do not do it on company time or equipment.

 

Re:What's the legality of contracts, exactly?

[DustyShadow (691635)]

Seeing as how the 9th Circuit Court is federal, it was probably interpreting California law and California case law when it made that decision.

Re:What's the legality of contracts, exactly?

[Opportunist (166417)]

In Europe (at least in those parts that I know) it's fairly simple: Nothing you create outside of work can be claimed by your employer, unless he can somehow prove (or at least convince a judge) that you were using company resources to create it.

Re:

[DustyShadow (691635)]

"As for the 6 months bit, it's not like you can get a patent in under 3 years.. "

It says "invention" not "patent." Thus, it would apply to any patents granted later on said inventions even if it took 3 years to get that patent on the invention that you conceived within those 6 months.

Re:Sure

[lena_10326 (1100441)]

They're paying you to come up with cool, neat, innovative tech. If you come up with something really sweet, they don't want you to leave, start your own company and get rich.

That's one of the reasons I never offered my best ideas to my last employer. What's the point. Give them your idea and get nothing in return except for a lousy pat on the back. Meanwhile executive management profits heavily. I've seen it happen. You might as well just punch the clock and only work on your task list. Nothing more. Nothing less.

Never give up an idea unless you will own a percentage, otherwise keep them to yourself and try to implement them at home in secret, and then launch your website/product/business the minute your non-compete expires.

Re:

[DustyShadow (691635)]

"They're paying you to come up with cool, neat, innovative tech."

Ok I agree with you but these companies should have a royalty program in place for its inventors. Otherwise there is simply no incentive to disclose inventions to the employer. I think IBM has a program like that. Any company that doesn't though is just ripping off its employees. If this guy's contract has a royalty provision then it might not be that bad really cause the company would pay for the patent process and if they do end up making

Re:

[QuantumG (50515)]

royalty program? Ha! Best you'll get is a filing bonus.. and maybe when the patent is granted you'll get a jacket with your name on it and get invited to a boring ass party where they try to encourage you to think up more pointless shit for them to patent.