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Crazy Non-Compete Contracts? 193

Posted by Cliff
from the gotta-make-a-living-somehow dept.
JL-b8 asks: "I've just encountered a (from what I know) strange occurrence. A group of friends who work for a small web design firm are being forced to sign a non-compete agreement with a clause that prohibits the employee from working with a competing company for 12 months, after the date of their leaving. The owners claim it's a standardly practiced clause, but I don't see how the hell a web developer/designer is supposed to find work in a city for a year, without moving to a completely different city. I'd like more input as to how this weighs in to the rest of the companies out there. Is this a common thing? If you've signed something like this, and had to switch jobs, how did it affect you?"
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Crazy Non-Compete Contracts?

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  • by nelsonal (549144) on Thursday March 08, 2007 @03:00AM (#18273138) Journal
    I'm not a lawyer, but these guys [kkrlaw.com] are. Hope that gives you some useful tips about what's worth fighting over.
    • by sumdumass (711423)
      I have heard of some non-competes being tossed out because the basicly left the person without employment opertunities in their profesional market. So it does happen.

      The last non compete I had to deal with said I wouldn't go after their current clients or people they have interviewed as clients for two years after my termination. This seems reasonable compared to nothing anywhere close to were you live. And their goal of me not taking their customers with me was satisfied pretty good.
      • by kefoo (254567) on Thursday March 08, 2007 @08:23AM (#18274724)
        I have heard of some non-competes being tossed out because the basicly left the person without employment opertunities in their profesional market.

        Here in Ohio we have a law called The Blue Pencil Rule. If a person can show that a non-compete clause is preventing them from finding employment a judge can rewrite the clause as he sees fit. There's probably something similar in many states.

        Most of the non-competes I've been asked to sign have a term of about one year. They usually specify that they only apply to working for a competitor, although on one occasion I had to get the contract amended to specify what the comapny's area of business was because the clause was so sloppily (or possibly intentionally) written that taking almost any other job could run afoul of it.
        • Re: (Score:3, Interesting)

          by Bogtha (906264)

          Most of the non-competes I've been asked to sign have a term of about one year. They usually specify that they only apply to working for a competitor, although on one occasion I had to get the contract amended to specify what the comapny's area of business was because the clause was so sloppily (or possibly intentionally) written that taking almost any other job could run afoul of it.

          True. One place I worked had a badly-worded non-compete that I can only assume had been written by the company owner

    • by kzanol (23904)

      useful tips about what's worth fighting over.

      One thing I'd definitely encourage you to fight over: cause of termination of current job.
      It may be reasonable to have to honor a non-compete statement in case you quit a job or are fired with cause - it's NOT reasonable to have a non compete if you're layed off because of downsizing or similar motives.

      I've personaly been in the position where the company I was employed with decided to close down a branch office and lay off all employees. The non-compete in my contract would have kept me from working i

      • by afidel (530433)
        I will never again sign a non-compete. Even after getting one reworded by my own lawyer it was used against me where it shouldn't have been. I will gladly sign a non-solicitation agreement as I believe that it is fair to expect me not to poach former clients for a period of time, but I will not limit my ability to provide for my family.
    • by stephanruby (542433) on Thursday March 08, 2007 @06:41AM (#18274260)
      "I don't see how the hell a web developer/designer is supposed to find work in a city for a year..."

      He's not, that's why you ask for full time income for one year (in addition to the standard severance package) to compensate for the time he won't be employable. You can tell your friend this is the "standard" response for this "standard" clause. Either that, or you can tell your friend to strike out the clause, initial it, and ask the employer to initial it as well. Crossing out clauses, or modifying clauses to make them more reasonable, is another very "standard" practice.

      Whatever happens, tell your friend to not let this clause slip by untouched (even if he does live in a State where it's not really enforced). If his boss is going to be uncompromising, your friend needs to find this out now *before* he accepts a job from him. For some good reading on this topic, I recommend he takes a look at http://asktheheadhunter.com [asktheheadhunter.com]. I would also suggest "When I Say No, I Feel Guilty" by Manuel J. Smith -- which is the best book I've read on assertiveness.
  • by Anonymous Coward on Thursday March 08, 2007 @03:00AM (#18273140)
    non-compete clauses are very common and yes, some companies will use them against you. Some states prohibit non-compete clauses, like CA. If you live in CA, you can sign a non-compete clause but it is unenforceable. Other states, like WA, TX and I think FL allow non-compete clauses, so I would be careful about what you sign.

    You sound young and inexperienced... welcome to the real world. Don't sign it unless you are completely desperado for money.
    • You sound young and inexperienced... welcome to the real world. Don't sign it unless you are completely desperado for money.

      Alternative: Negotiate the price of your signature. Advise them that you will sign it if, and only if, they agree, in writing, as part of the non-compete agreement, that upon your departure from the company for any reason (to include dismissal and layoff), that you will be paid your salary at the time of your departure plus 5%/year for inflation for the duration of the non-compete

      • by mypalmike (454265)
        Negotiate the price of your signature.

        On the contracts I've seen that have these sort of non-compete clauses, it is sometimes mentioned that the CEO has to sign off on any changes to the contract. So, depending on the size of the company, you're often trying to negotiate with someone who has absolutely no authority to negotiate. Further, the hiring manager is unlikely to want to become the "exception" by requesting such an unusual request of the CEO.

        For my current job, I paid a few hundred bucks to talk t
    • This is correct (at least, the CA part).

      Sadly, a lot of legal paperwork is actually invalid and done to intimidate or make people think that's the law...
  • Ignore 'em (Score:4, Interesting)

    by Utoxin (26011) <utoxin@gmail.com> on Thursday March 08, 2007 @03:02AM (#18273152) Homepage Journal
    I'm a PHP/MySQL developer, and I get asked to sign those on a regular basis. I sign them, and then forget about them.

    To be a bit more thorough in my answer, I have never flagrantly violated such an agreement. It's usually not that hard to find work for another company that isn't a direct competitor. Plus, (IANAL) I've heard that those sorts of contracts are mostly unenforceable. I could be wrong about that though, which is why I try to avoid flagrant disregard for the non-compete.
    • Re: (Score:3, Interesting)

      by TubeSteak (669689)

      Plus, (IANAL) I've heard that those sorts of contracts are mostly unenforceable.

      The key phrases you'd want to Google are:
      "violates reasonable expectations" or
      "is unconscionable" or
      "overly broad"

      The definition differs from state to state, which is why lawyers get paid.

      Anyways, assuming you get sued (you may not be important enough to bother suing), the Judge will most likely strike any clauses that would prevent you from making a living in your industry.

    • Re:Ignore 'em (Score:4, Interesting)

      by Splab (574204) on Thursday March 08, 2007 @09:32AM (#18275212)
      Back when I did PHP programming we had a non compete regarding costumers, if they chose to enforce it they had to produce a list of companies that I wasn't allowed to work for no later than my last day of work. Also if they chose to enforce it they had to pay me compensation for the duration of the non compete.

      They never did choose to enforce it.
      • Re: (Score:3, Funny)

        by sconeu (64226)
        we had a non compete regarding costumers

        Yeah, those people who wear costumes can be a real bitch to work with.
    • I'm a PHP/MySQL developer, and I get asked to sign those on a regular basis. I sign them, and then forget about them.

      It is now standard practice in the US to claim Constitutional authority to disregard any law, regulation or agreement that you disagree with. It works at the highest levels, don't see why all citizens wouldn't claim to have decided that authority for themselves on the same basis.

      • by Detritus (11846)
        You're assuming that these non-competes are the result of negotiation between employee and employer. Often, they are not. They are presented to the employee with a demand that the employee sign or walk.

        Many contract terms and agreements are dictated to the party who is not in a position of power. The unfairness and abuse that this can lead to is a reason why there are many laws, regulations and judicial rules that limit the so-called "freedom to contract".

    • by Dausha (546002)
      "Plus, (IANAL) I've heard that those sorts of contracts are mostly unenforceable."

      I am a recent law school graduate who did not go to law school to be a lawyer. However, I did pay attention in Employment law when non-compete clauses were discussed. Basically, the enforceability of a non-compete is based on how well it is written and whether the state's employment law thinks the terms of the non-compete are reasonable. For example, in Arkansas a non-compete can say that you cannot work for a competitor for s
      • by rah1420 (234198)
        The contract in question stated that ten percent of the employee's salary had to be refunded to the employer if he violated the non-compete or if the non-compete were declared unenforceable in a court of law.

        But...

        If the contract were declared unenforceable, how did the employer have a legal right to enforce the "ten percent" rule?
        • by Dausha (546002)
          "If the contract were declared unenforceable, how did the employer have a legal right to enforce the "ten percent" rule?"

          The contract would not be unenforceable, only the non-compete provisions. The provision enforcing the ten-percent rule is a separate contract provision that is only triggered if the non-compete provision fails. The rational is that the ten-percent salary is paid to the employee based on the enforceability of the non-compete provision; sort of like insurance. In the event the non-compete i
  • it depends. (Score:5, Insightful)

    by User 956 (568564) on Thursday March 08, 2007 @03:03AM (#18273158) Homepage
    I'd like more input as to how this weighs in to the rest of the companies out there. Is this a common thing?

    It's probably pretty much bullshit, as non-competes are usually targeted at specific knowledge jobs (CTO, CEO, etc), not skill jobs (web designer/developer). Basically, it comes down to compensation for that commitment. If the firm's paying six and a half figures, go for it. If they're paying market rate, tell them to knob off: There are plenty of other firms that don't require a non-compete for a regular web developer/designer position.
    • by eric76 (679787)
      I don't know about all states, but around here, Texas, I understand that non-competes are pretty much enforceable if the employee has not received information that is clearly of a confidential and propietary nature after signing the non-compete.

      The rule for years was that you had to be given the confidential information at the time you signed the non-compete for it to be enforceable. A waiting period of even a few hours made them unenforceable.

      A recent court decision has changed that. As I understand it,
  • Too common (Score:3, Insightful)

    by Johnny Mnemonic (176043) <mdinsmore AT gmail DOT com> on Thursday March 08, 2007 @03:07AM (#18273172) Homepage Journal
    I have found such non-competes very common, and I've signed a few of them myself. The scope of the agreement is generally proscribed by the state in which it's signed: length of time after employment that other employment is barred, definition of the region, how close the work can be. etc. A 12 month period is a pretty common period. It's never stopped me from looking for work, though, as the burden on them is to prove that I've broken it, and if I don't return their calls, what will they do? Get employment records from my now-current employer? For real advice, consult a lawyer.
  • by RuBLed (995686) on Thursday March 08, 2007 @03:09AM (#18273184)
    In my case, it's 6 months but it's a little forgiving since a specific industry was clearly stated. (my case: bpo) Although that still limits my options since our competitors are also one of the better places to go in case I would like to find another job.

    I know people who work in an "all purpose IT Company" that offers services ranging from outsourcing programs to supplying servers. They got a 2 yrs non competing period, the funny thing (because it's not me) is that my friend can't find an IT job anywhere since it would violate the agreement. He "had" to work in a non-IT related field, I just bid him good luck.

    And yes, such things are crazy.
    • by chriso11 (254041)
      State that you want to continue to receive your pay for 6 months after you leave if they decide to enforce the contract. A contract is an agreement - don't simply sign away something of value (6 months of work) without something in return. You may need to ease up a bit (60% of your pay for the duration of the non-compete clause), but I would at least try to get a nice chunk. Of course, that depends on how stable your job is and how ease it is to find another. DON'T just sign it and expect that you can ignor
    • by TubeSteak (669689)

      They got a 2 yrs non competing period, the funny thing (because it's not me) is that my friend can't find an IT job anywhere since it would violate the agreement. He "had" to work in a non-IT related field

      2 years is excessively long & the job blackout (all of IT) is overly broad.

      No Judge would allow the terms of that non-compete to be enforced.
      Have your friend read the non-compete wikipedia entry [wikipedia.org]
      Then tell him to find a labor law lawyer.

    • by Sique (173459)
      I am pretty wary about those clauses anyway from a judical point of view. Does the company sign a non-compete clause too? Do they get barred from taking your knowledge and train your replacement? You are also in a competition against all other potential employees that could do your job.

      I wonder what happens in a job interview if you ask to put an according non-compete clause for your employer in the contract. In the EU most non-compete clauses are nullified anyway, because you have the right of free choice
  • by Meostro (788797) on Thursday March 08, 2007 @03:12AM (#18273198) Homepage Journal
    I've seen non-competes like this in things like news media, but not often in software development. If someone is a news anchor at station A, when they switch over to station B they generally get a 6-month to 1-year paid "vacation" so the marketing that station A did to promote this person to their viewers would not give an advantage to station B.

    Non-competes should only be accepted for this sort of reason, where some person working within the same industry for another company would have either proprietary knowledge or influence not due to their skill, but only to their association with a company. If I'm working as a cashier for -insert megalomaniacal chain store here- then there isn't really any possibility of having such knowledge or influence. If instead I'm working in their procurement department and negotiating deals with (and cultivating relationships with) outside vendors, it makes sense for the company to have a non-compete clause. If I weren't working for them, I wouldn't have had the contact with those vendors, it is only due to my work with the company that I would be as successful at another company.

    Whether or not you accept the clause, however, is up to you. Do the benefits of working for this company outweigh the problems that a non-compete may cause you?
    • It is interesting that you mentioned news media. It is very common for Broadcast talent, because specific talent tends to draw a specific audience. I have a story about an incident that happened in the Indianapolis radio market several years ago and is a story about how a non-compete clause backfired.

      A local radio station had a male and female DJ pair doing a show for several years. One day one of the DJs proposed marriage to the other DJ over the air, and she accepted. The radio station promptly fir
  • Speaking very generally here, my legal education was in English law, but googling for US cases reveals similar outcomes.

    The clauses are presumed to be invalid unless they are reasonable in terms of the scope of work covered, geographical area and length of time. The burden will be on the employer to prove these three in any litigation. There may be specific state statutes limiting these, otherwise look for cases in your state to get an idea of what courts are finding to be reasonable. These tests may al
  • Contracting clauses (Score:3, Informative)

    by simm1701 (835424) on Thursday March 08, 2007 @03:44AM (#18273380)
    There are a few similar cluases in my contract - most are completely unenforcable under EU and Dutch law - to follow them to the letter would force all my future work to go through the same agency, and not be able to work elsewhere without their permission - obviously nonsense.

    About the only things they can enforce is that it would be very very difficult for me to switch to a different agency but still work in the same job at the same company (and its probably 50-50 in switching agency to do a different job at the same company) and it would probably be equally difficult to switch to a permanant rather than contracting role while doing the same job here.

    Since as agencies go mine isn't too bad I can live with those limitations - and if they happen to be offering the next job I want then I would have no issue with signing with them again - but it certainly won't stop me signing with other agencies/companies if they have a better offer and I highly doubt they would even attempt to enforce it in court let alone have a snow flakes chance in hell of them winning.
  • Sorry for going on a way too short rant (given the subject), but I've had this discussion with plenty of Americans. Apparently Americans are supposed to be for freedom, while Europeans are for security (*sic*).

    I always said we're both for freedom, the big question is just 'freedom from whom?'.. and this question illustrates it perfectly. In Europe, this is a non-issue. I could sign all the non-compete contracts I'd want to, but they don't hold up in court. We have a 'right to work'.

    You have the freedom

    • by Husgaard (858362)

      In Europe, this is a non-issue. I could sign all the non-compete contracts I'd want to, but they don't hold up in court.

      I think you are arong that non-compete contracts do not hold in court in Europe. I am under such a non-compete contract, and before signing it I did a bit of legal research.

      In Denmark where I live, the law specifically mentions non-compete clauses in employment contracts. They are legal in some circumstances, but there is also a requirement that if used the former employer has to c

      • by hyfe (641811)
        Yeah, you're right. I could have phrased myself more carefully, but I didn't want to bother with all the disclaimers and qualifiers.

        What I meant was general one-sided 'you're totally screwed now' non-compete clauses weren't allowed.. and as seen by your and the other replies here, that does hold.

    • by SharpFang (651121)
      I'm under such a contract, but here the situation is more clear - it's not "don't work in a competing field", but "don't work for any company listed below [list of 30 or so names follows]. They are big and serious and can mean danger - especially if you leak company secrets to them, but my employer doesn't give a shit if you leave for a tiny start-up, start your own business or such.
    • In France, we have such thing and they can be enforced, but not only the clause has to be very restrictive, your former employer has to pay you to enforce it.
    • by AlXtreme (223728)
      Couldn't agree with you more.

      In Europe, you work to live. In the USA, you live to work.

      Also, 'security' is ambiguous. In Europe, 'security' means that I'll be able to feed my family in case I lose my job. In the USA, 'security' means the ability to apply draconian privacy laws, or side-step them all-together.

    • Re: (Score:2, Insightful)

      by Meccanica (980734)

      Now, is that really freedom, or just really advanced serfdom?


      Any sufficiently advanced serfdom is indistinguishable from freedom.



      -1 Stupid Meme

  • Illegal in Australia (Score:3, Informative)

    by Timbotronic (717458) on Thursday March 08, 2007 @04:06AM (#18273498)
    Here we (still) have quite strong "restraint of trade" laws which prevent the vast majority of non-compete clauses. I have had legal advice on it. Hasn't stopped a good number of companies asking me to agree to them though.

    Sounds to me like they're just trying it on. Almost every contract I've received has had something really unreasonable in it. Every one is different too, but they're all "just the standard contract". If you do contracting for any amount of time you'll hear those weasel words a *lot*.

    My advice is strike it, explain that it's unreasonable and they'll very likely back down. Good luck.

  • Oracle's Technical Consulting branch does this too, sort of: you can't go and work at any clients you've been to at the past year. I was green back then, signed it and wasn't happy at all, but when I left, it didn't affect me.

    I suggest your friends just sign, but strike out the clauses that don't suit them. Put a signature left of the striked-out clauses for good measure, put them in the in-tray and you're done. If they complain, say you've done all you can. If they keep complaining, quietly look for oth
  • by 8-bitDesigner (980672) on Thursday March 08, 2007 @04:57AM (#18273720) Homepage

    I'm a web designer/developer in a mostly print design shop, and we actually ran into a situation where one of our designers quit to work in-house with one of our clients. The effect being that she left, and having no more need of us, the client did too.

    So what happens? Nothing really. We chose not to pursue the legal route because the client wasn't worth what we would've had to pay in legal fees, and secondly because no legal ruling would repair the situation. Sure, maybe we could bilk a little extra cash out of the client on the way out, but we couldn't seek an injunction against our designer working for them.

    Ultimately, after asking a couple of HR people I know, I found out that these things are pretty much only valid if you're getting something in return. ie: If I ask this of a designer, then right there, in the contract there has to be spelled out some level of compensation for the direct act of denying them this revenue source should they leave. Otherwise you'd get laughed out of court for trying to enforce this, at least to my understanding (and ovbiously, IANAL).

    • by Pig Hogger (10379)

      I'm a web designer/developer in a mostly print design shop, and we actually ran into a situation where one of our designers quit to work in-house with one of our clients. The effect being that she left, and having no more need of us, the client did too.

      So what happens? Nothing really. We chose not to pursue the legal route because the client wasn't worth what we would've had to pay in legal fees, and secondly because no legal ruling would repair the situation. Sure, maybe we could bilk a little extra ca

  • by khchung (462899) on Thursday March 08, 2007 @05:16AM (#18273826) Journal
    Add a clause in the agreement that said the company will pay your full salary for the duration of the non-compete agreement, or until you landed another job, whichever is earlier. Tell them that is also "a standard clause for non-compete agreements".

    If what you know is so important that the company will suffer if you work for a competitor, it makes sense for the company to pay you for it. That's fair.
  • It might help if the questioner told us where. IANAL, but I'm told that laws do vary from place to place.
  • by l0ungeb0y (442022) on Thursday March 08, 2007 @06:03AM (#18274036) Homepage Journal
    Having 10 years experience providing development and architecture services to startups, I've seen plenty of conntracts, so I might have a couple useful tips for you.

    As far as non-competes go, you have to first look at what the laws of your State are.
    If you are in a Right to Work State such as California, you can safely sign an agreement that says you may not compete or work for a competitor who competes.
    This is because Right to work means just that, the State recognizes that you have the right to earn a living by your trade and that no entity save the State itself may revoke that right nor confine or restrict that right in anyway. So even if you do sign that document and you do go to work for or against the client later, there is nothing they can do about it.

    Now, if you don't live in a right to work state such as Washington, the State will allow a contracts terms to restrict you from plying your trade.
    In essence, they see you as the clients little bitch for signing such an agreement and your ability to be employed is now bound by those terms.
    Here, you will need to negotiate through those terms. Simply inform the client that while you would like to assist them, you are unable to sign the contract as it is currently written because it would effectively prohibit you from practicing your trade as a means of livelyhood and cause you significant harm.

    What do you do if they refuse? Then walk away. Personally, I've never had a client refuse to revise the contract to my liking.
    I've sometimes had a few days of ping pong and negotiations, but in the end I've always gotten exactly what I ask for.

    But there are other things to look out for as well.
    Ownership and Assignment are the first things I look out for, and the areas I read most closely.

    Look out for crap like this:
    "Subject to the terms of this Agreement, Consultant hereby assigns and transfer to the Client its entire right, title and interest, including without limitation all copyrights, patents, inventions, trade secrets, trademarks, trade names, service marks, trade dress, and all other intellectual property rights, in and to the Deliverables. To the extent that such assignment and transfer may not, by operation of law or otherwise, fully convey to the Client the foregoing rights, Consultant hereby grants to the Client a worldwide, irrevocable, exclusive, fully transferable, unrestricted right and license to use, execute, display, reproduce, distribute, modify, publicly perform, publicly display, sell, lease, license, sublicense, and otherwise transfer, and to authorize one or more third Parties to do some or all of the foregoing, with respect to the Deliverables in any form or medium, whether now known or later developed."

    Just a little one sided don't ya think?
    What the bolded bit means is that any pre-existing code I may allow to enter the code that comprises the deliverable is now theirs as if they had written it themselves. Additionally, anything I may generate while working on that project, I would never be able to again utilize. Now, enforcing that is a different matter... but I prefer to sign all of my contracts in good faith.

    So here is the language I provide as my alternative language if they are to engage my services:
    "Subject to the terms of this Agreement, Consultant hereby grants to the Client a worldwide, irrevocable, exclusive, fully transferable, unrestricted right and license to use, execute, display, reproduce, distribute, modify, publicly perform, publicly display, sell, lease, license, sublicense, and otherwise transfer, and to authorize one or more third Parties to do some or all of the foregoing, with respect to the Deliverables in any form or medium, whether now known or later developed."

    Essentially, it's theirs to use and abuse with my own interests and entitlements maintained.
    Not at all as strong as the GPL, but that's the point, they get the unfettered usage they want, but I maintain my ownersip of my existing code and any new knowl
  • Give and take (Score:3, Insightful)

    by deblau (68023) <slashdot.25.flickboy@spamgourmet.com> on Thursday March 08, 2007 @08:45AM (#18274826) Journal
    If the company wants them to do something (i.e., use their knowledge and time), they have to pay for it. Likewise, if the company wants them not to do something (i.e., work for someone else), they should have to pay for it. I'd say, if you don't want me to work for someone else, give me a severance package that covers the exclusion period. For instance, ask for 6 months severance for a 12 month exclusion (half pay). Or argue that the non-compete is unreasonable. Or work for someone else.
  • by dr2chase (653338) on Thursday March 08, 2007 @09:05AM (#18274968) Homepage
    Even if you don't live in CA, work for a CA company, they are less likely to bother you with this crap since it is apparently (IANAL) unenforceable in CA. California also serves as a useful example of the economic uselessness of such agreements; if they were so necessary, their lack would stifle investment and industry.

    I've turned down a job because we could not reach agreement over a non-compete clause; it was very broad, and unreasonable-looking, and they insisted on the annoying language. I took this as a sign that they might make trouble if I ever did want to leave (and if I have to hire a lawyer to assert my rights, that's trouble, even if I eventually win). I've signed others that were not so insane, but I generally hate them, and wish that other states would follow California's lead.

  • So what if it's unenforceable _now_. Who's to say it won't be enforceable later?

    Even if they say it's "nothing" or not enforceable, it's still stupid to have it in.

    Or do they prefer to select employees whose signatures/words are worth _nothing_, while eliminating potential employees who actually are diligent (to read fine print in contracts) AND have integrity?

    It can't be acceptable practice, otherwise what do you expect a baker to do if he leaves a bakery? Do web design?

    Request that the clause (and other u
  • As others have already said, it comes down to the specifics. The clause is there to prevent you from bringing their trade secrets to a competitor.

    The contract I signed is a little overly broad, but it doesn't stop me from working in IT altogether. Just a very small subsection. When I read that portion of the contract, I thought, 'Would I consider working for someone this might affect?' The answer was 'No.' Besides the legal obligation, I would not feel right taking their methods and practices to a comp
    • The clause is there to prevent you from bringing their trade secrets to a competitor.



      That's what NDAs are for. You could spill trade secrets all you want without ever violating a noncompete agreement, since you don't have to work for a competitor in order to reveal the information to them.


      • by Rydia (556444)
        Slightly different. If you were under an NDA, you could use the knowledge of the trade secret as part of your work at the other corporation, just not tell them the entirety of your former project.

        The two often work in tandem, so employers have all angles covered.
  • by The Bastard (25271) on Thursday March 08, 2007 @09:40AM (#18275290)
    Actually, there are companies which do enforce non-competes through legal action. Even if the defendants win, how much money will they have spent on lawyers to defend themselves? Often, lawsuits aren't for the purpose of winning; rather for the purposes of setting an example of "you can fight, but it will cost you every penny you've ever earned, and ever will earn"...

    Ex-Iowa workers are sued to shield ethanol secrets
    They worked in Jewell and learned confidential methods before switching jobs, the lawsuit says.

    By JEFF MARTIN
    SIOUX FALLS (S.D.) ARGUS LEADER

    March 7, 2007


    In a case that underscores how competitive the ethanol industry has become, an ethanol maker is suing two former Iowa employees to protect its trade secrets and keep them from a rival.

    Broin and Associates claims it has developed technology that make its ethanol plants some of the most profitable in the industry.

    In a federal lawsuit, Broin says two employees of a Broin-affiliated ethanol plant in Jewell, north of Ames, learned confidential information and trade secrets about Broin's ethanol production methods.

    Then, the Iowa employees left to work with Colorado's first ethanol plant - a direct competitor of Broin, the lawsuit alleges.

    In going to Colorado, the employees broke agreements not to compete with Broin, according to the lawsuit.

    Broin has designed, engineered and built more than 25 ethanol plants across the United States, and is building one of the first plants to produce ethanol from corn cobs, in addition to the grain.

    Defendants in the lawsuit are Gary T. Hanson, former operations manager at the Horizon Ethanol plant, which began operations about one year ago.

    Also named as a defendant is Robert A. Akers, a former maintenance technician at Horizon.

    "Broin and Associates licensed to Horizon Ethanol proprietary technology, design information, and operational information," the lawsuit states. "The licensed technology included trade secrets, formulas, research data, processes, know-how, and specifications related to Broin and Associates' design and construction of the ethanol facility."

    Hanson resigned from the Iowa plant Dec. 18 and became affiliated with Sterling Ethanol LLC in northeast Colorado, according to the lawsuit. Akers resigned Jan. 22 and also went to Sterling, Broin maintains.

    Those job moves violated agreements that they not compete with Broin-affiliated plants, the lawsuit states.

    Akers' lawyer, Stu Cochrane of Des Moines, said the lawsuit misrepresents the situation.

    For one thing, Cochrane said, Akers was not involved in producing ethanol. Rather, he was a maintenance worker who made $13 an hour, and he went to Colorado to try to make a better life for his family, Cochrane said.

    "He wouldn't know a trade secret if he saw one," Cochrane said. "He had nothing to do with anything that was remotely confidential for that plant. He essentially fixed broken equipment."

    Akers had no contact with customers, wasn't involved in marketing efforts, and "the suggestion that he's now harming them is ridiculous." Cochrane added that Akers "is no threat in any way, and he never has been."

    Hanson could not be reached Tuesday for comment.

    Sioux Falls lawyer Tim Shattuck, who is representing Broin and Horizon, said it's their policy not to comment on pending lawsuits.

    Among other things, Broin's lawsuit seeks injunctions preventing the two men from working with Sterling, and stopping them from sharing confidential information.

    Sterling Ethanol has 30 employees and operates 24 hours a day.

    Its owners are building another plant 40 miles south of it. They have plans for three more facilities, the Rocky Mountain News newspaper of Denver reported in January.


    http://www.desmoinesregister.com/apps/pbcs.dll/art icle?AID=/20070307/BUSINESS01/703070352/1029/BUSIN ESS [desmoinesregister.com]
  • It can be a bad idea to sign even an unenforceable noncompete. In any industry where noncompetes are common (as in my case, finance), prospective employers always ask if you are subject to one. If you say "yes", they don't want to get involved, whether or not the noncompete is enforceable.
  • I once aborted a non-compete by agreeing to sign it if the company would agree to pay me for the non-compete period if I was terminated for anything other than performance related issues. Sort of a half-assed golden parachute. I got the job without the non-compete.

  • I have signed non-compete clauses, but they were specific. For example, when working at an online shopping portal, my non-compete clause prevented me from working at another online shopping portal for a year. Not really a problem.

    A non-compete clause for "web design" is too broad. What aspect of web design -- conceptual design? layout? integration? sales? Is there a specific industry or set of industries your clients come from -- financial, medical, etc.?

  • Don't follow the advice of the people who are saying sign it and forget about it that it won't or can't be enforce. While it is unlikely that it will be enforced and a good case can be made that a judge will strike the clause if it ever comes to trial, what happens when your boss/company is a jerk and tries to enforce the clause? Do you really want a legal cloud over you? It can take years to fight it. Do you have the money to pay a lawyer for that long? Heck even a speedy trial can run you thousands t
  • The Important Thing (Score:5, Informative)

    by Rydia (556444) on Thursday March 08, 2007 @10:56AM (#18276126)
    Remember, I am not your lawyer.

    Read the contract. Take it to a lawyer. If you are in california, tell them straight up it's unenforceable and tell them you want it out of the contract because it could be damaging to the rest of the agreement should legal actions arise. Elsewhere, if you absolutely cannot find a lawyer, agree to the non-compete if you can get one of the following:

    1) Specific mention of area of effect of the clause. Overly large areas are unenforceable. Look around your area and see if there are other places you could go to more than X miles from the employer.

    2) Specific mention of specific competitors in the contract that you could not work for. If the contract has a completeness clause ("this agreement is the complete and final agreement between the parties," if I remember the wording close enough, which bars extrinsic evidence, such as a list), make sure it is in the contract itself, and not just an oral agreement or a typed-up list. Remember that what is said during negotiations likely will not have any effect upon how the contract is interpreted by any court at some (unfortunate) later date. The contract must be ambiguous for that, and non-specific does not mean ambiguous.

    The larger the area/more employers, the more money you can ask for in severance during your noncompetitive period. If they try to get you to sign away longer than a year and a half or a couple counties of area, tell them up front that you can't agree to that and it is likely unenforceable. If they disagree, grab a lawyer for an hour and have him call them to tell them that it probably is. Generally, however, these clauses are allowed, and you have to be careful what you sign. Do not agree to a bad covenant not to compete in exchange for a lengthy period of "gauranteed" employment, because the gaurantee is... well... not a gaurantee. Even with a contract, unless it is worded extremely carefully, you are still an employee at will (to forestall questions: contractors are different, as they are not employees).

    DO NOT, EVER, just cross out parts of a contract. That will not modify the contract unless the other party specifically agrees to the modification. The physical appearance of the paper is meaningless, as the contract itself is metaphysical. At best, you don't have a contract. At worst, you have a counteroffer that was not accepted by the employer, which may revert to the employer's version. Feel free to cross things out, add things, or whatever on your copy, but you ABSOLUTELY MUST go and specifically bring your concerns to the person you are negotiating with, draft a NEW copy of the contract for you to both review and sign. That is the only right way to do it.
    • by mph (7675)

      Elsewhere, if you absolutely cannot find a lawyer
      Can you tell me more about this "Elsewhere" you speak of? It sounds nice.
  • by Sloppy (14984)
    You are not being treated with respect. Do you still want to work there? Maybe now is a good time to go work for their competitors.
  • For a year after you leave? Typically in my experience these types of agreements are reserved for higher ranking management, not for typical engineers and developers.
    • by PFI_Optix (936301)
      Microcenter has (or once had) one that says you can't work for any competing company in the county you were employed or any surround counties for eighteen months. Where I was applying, that meant I'd have had to move 100 miles to find work.
  • http://www.lawteacher.net/Contract/Agreement/Agre e mentLecture.html [lawteacher.net]

    My preference with these is to modify the contract AND put a condition on the acceptance. I've never been challenged on either, and I've handed in 5 such modified contracts and never been challenged about it (either about the modifications/acceptance, or after changing jobs), in spite of otherwise violating the language of the base contract.

    "1. COUNTER OFFERS

    If in his reply to an offer, the offeree introduces a new term or varies the terms
  • As a software / web developer, many of our potential employers are NOT in competition with each other. Who are the competators? For example, I've signed similar non-compete clauses where there were only 4-5 "competators". Likewise, if the company is selling trinkets, the non-compete clause may not consider a company selling widgets to be a competator.

    Thus, it's a good idea for your friends to understand who the competators really are. My guess is that the competators are a very narrow range of companie

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