Author Topic: Noncompete agreements  (Read 8720 times)

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Noncompete agreements
« on: May 22, 2017, 01:30:21 PM »
How many people here are bound by a non-compete agreement?     I was reading a posting by Paul Krugman where he claims that as many as 30 million Americans are covered by non-compete agreements in their current job.

https://www.nytimes.com/2017/05/22/opinion/american-workers-noncompete-agreements.html?rref=collection%2Fcolumn%2Fpaul-krugman&action=click&contentCollection=opinion&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection

I work in technology in Canada and I've found non-compete agreements are common but not widespread.   The advice I've received around non-compete agreements is that they are difficult to enforce except for key positions.   People with wide customer relationships or deep product knowledge for example.   Two companies that do have non-compete agreements for their technical staff are QNX (now owned by BlackBerry) and Wind River Systems (now owned by Intel).    I was a little bemused to find that these companies would honour the other's non-compete agreements.   i.e. if you worked for QNX, no point in applying for a job at Wind River because they just won't hire you.

Krugman tries to give the impression that non-compete agreements are becoming widespread as a method of reducing employee leverage in negotiating compensation, or even in changing jobs.   Has anyone in the US had problems with this?    Or in Canada for that matter?

HipGnosis

  • Handlebar Stache
  • *****
  • Posts: 1825
Re: Noncompete agreements
« Reply #1 on: May 22, 2017, 02:05:22 PM »
No experience, but I've heard and read many times that non-competes are practically unenforceable.  There are workarounds and lawyers that specialize in defeating them.

Cranky

  • Magnum Stache
  • ******
  • Posts: 3852
Re: Noncompete agreements
« Reply #2 on: May 22, 2017, 02:22:52 PM »
Well, I've got one in my current contract, and I think it's ridiculous - I teach in a tiny private school, and it's not like I have some super secret patented info.

Capsu78

  • Pencil Stache
  • ****
  • Posts: 765
  • Location: Chicagoland
Re: Noncompete agreements
« Reply #3 on: May 22, 2017, 04:21:15 PM »
Marriages are created with rings of gold while pre-nups are to be used for the divorce!
Both myself and my wife have been under them at various times, often tied to the acceptance of RSU's and other incentives.  I have personally only seen 2 or 3 actually used to "modify behaviors" after the termination.   It does give the employer a place to start if the superstar sales rep suddenly appears at a direct competitor. 
Challenging NC's is more about the process being the punishment although we knew on "professional" lose his new position for not disclosing his non compete to his new hiring manager.  Turns out one of the executives from the new company was a good buddy with an exec from the old company. 

startingsmall

  • Pencil Stache
  • ****
  • Posts: 837
Re: Noncompete agreements
« Reply #4 on: May 22, 2017, 06:09:01 PM »
As a veterinarian, every job I've ever had has included a noncompete. I'm starting a new job next week and the noncompete is pretty typical:
- For two years after employment, cannot work as a veterinarian within 10 miles of the clinic.
- Cannot contact/solicit any clients for two years after employment.
- Cannot recruit any current employees for two years after employment.

The enforceability of non-competes varies by state, but my state is one in which they apparently are upheld if declared "reasonable."

Capt j-rod

  • Bristles
  • ***
  • Posts: 338
Re: Noncompete agreements
« Reply #5 on: May 22, 2017, 08:00:48 PM »
Corporate scare tactics to make you scared to leave. Most are a bluff and almost all are not enforceable. American employers love people who are broke, in debt up to they're ass, and are a slave to the money. Once they figure out you could care less they typically move on to a weaker team member. The wife just went through this. I'm still laughing from me telling them that I will see them in court and that I wouldn't settle. My mother in law is an attorney and I told them my legal fees were 0, so lets do this. Needless to say we never heard a peep.

semiretired31

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Noncompete agreements
« Reply #6 on: May 22, 2017, 08:20:20 PM »
I had a non compete at previous place of employment. I consulted an attorney about enforceability in PA. He told me they were slave labor and probably wouldn't exist in 15 years. However, he told me I was 50/50 to lose my case if it went to court. I assumed it was just a scare tactic and proceeded anyway. But, wasn't a lot of fun being served paperwork every 6 months. I'm no badass... I'll tell you it was stressful and impacted my life.

atrex

  • 5 O'Clock Shadow
  • *
  • Posts: 30
Re: Noncompete agreements
« Reply #7 on: May 23, 2017, 01:03:19 AM »
Non competes are illegal in California (or more precisely: have no legal power).  Thank jeebus.  Best state in the union.  Highly recommend other places go this way.

Mr. Green

  • Magnum Stache
  • ******
  • Posts: 4537
  • Age: 40
  • Location: Wilmington, NC
Re: Noncompete agreements
« Reply #8 on: May 23, 2017, 10:09:47 AM »
I had non-comptetes when I was younger before I understood what they were. I wouldn't even consider working for a company that out one in front of me now.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2136
  • Location: Cleveland
Re: Noncompete agreements
« Reply #9 on: May 23, 2017, 10:15:35 AM »
My wife had one at her last job ($35k, SEO and marketing, nothing behind the curtain to steal/disclose). It was absurd in the extreme. In hindsight, she never should've taken that job.

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: Noncompete agreements
« Reply #10 on: May 23, 2017, 03:30:57 PM »
I had non-comptetes when I was younger before I understood what they were. I wouldn't even consider working for a company that out one in front of me now.

I have one in my current job.   I figure if I have to leave and it becomes an issue, I'll just take an extended vacation until it expires.   I'm sure I can find a good open source project that competes with my current employer...

Raenia

  • Magnum Stache
  • ******
  • Posts: 2650
Re: Noncompete agreements
« Reply #11 on: May 24, 2017, 10:28:58 AM »
Every job I've had so far has had a non-compete in their standard contract.  They do seem to be mostly unenforced - the one time I was leaving a company for a direct competitor (at the direct request of the client - it was an odd situation) I asked about it and they were happy to give me a waiver.  The same company did, however, refuse to remove the clause from the contract when I first signed on and requested it.

BlueMR2

  • Handlebar Stache
  • *****
  • Posts: 2314
Re: Noncompete agreements
« Reply #12 on: May 24, 2017, 03:40:18 PM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2136
  • Location: Cleveland
Re: Noncompete agreements
« Reply #13 on: May 24, 2017, 04:20:19 PM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

Wouldn't the coercion make the contract unenforceable regardless of the terms?

BlueMR2

  • Handlebar Stache
  • *****
  • Posts: 2314
Re: Noncompete agreements
« Reply #14 on: May 25, 2017, 06:44:11 AM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

Wouldn't the coercion make the contract unenforceable regardless of the terms?

Legal or not, it's effective as it would be a court battle to fight it.  Easier to just move on...

Seadog

  • Bristles
  • ***
  • Posts: 268
  • Age: 40
  • Location: Halifax, NS
Re: Noncompete agreements
« Reply #15 on: May 25, 2017, 09:10:51 AM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

Wouldn't the coercion make the contract unenforceable regardless of the terms?

Legal or not, it's effective as it would be a court battle to fight it.  Easier to just move on...

Well then you're without a job, which for people who haven't FIREd yet could be an issue...  I have one in my current job, and quite honestly I don't really think about it. I would happily ignore it if it were in my best interest to do so. I fully subscribe to MMMs article about contracts being pointless.

Like others said they are largely unenforceable, unless you are fairly high up and could materially impact their business by competing. The other thing, is that if they were to sue you, they would have to show real damages. You can't just sue someone for a million dollars because they agreed not to wear puffy pants and then they did.

Laserjet3051

  • Pencil Stache
  • ****
  • Posts: 904
  • Age: 95
  • Location: Upper Peninsula (MI)
Re: Noncompete agreements
« Reply #16 on: May 25, 2017, 09:53:58 AM »
Capital will continue to exploit labor only so long as we let it go on. Do not fear the non-compete clause. However, you must look at the laws in your specific jurisdiction that guides the clause.

Let them go after you/me. I am sick of being shit on by these criminal enterprises who think they can get away with anything because of their size/deep pockets. I've had non-competes in every working relationship and I dont give it even one ioata of my attention.

semiretired31

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Noncompete agreements
« Reply #17 on: May 25, 2017, 02:00:00 PM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

Wouldn't the coercion make the contract unenforceable regardless of the terms?

My understanding is that if you are already in a job and they decide to add a non-compete to your employment agreement, they have to offer some form of compensation for it to be enforceable ($$, new title, etc.).  Otherwise, it would be coercion.  Personally... it's pretty shady to try and retroactively try to lock people into a job that they've already been doing for you.  How's that supposed to make someone feel?  I mean... F 'em.  But, that sure puts the pressure on you to stand up for yourself and look like you're not "on the bus".  Reason #9,999.

HPstache

  • Magnum Stache
  • ******
  • Posts: 2863
  • Age: 37
Re: Noncompete agreements
« Reply #18 on: May 25, 2017, 02:08:28 PM »
Yes, I had to sign a non-compete before starting work at my current employer.  I am an mechanical / design engineer.

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: Noncompete agreements
« Reply #19 on: May 25, 2017, 03:37:47 PM »
I left one of my employers when they suddenly chose to spring a non-compete on me.  The company argument was that I should sign it since they're practically unenforceable anyways.  My argument was why are we wasting so much money on lawyers drafting them then?

Ran it past my own lawyers and they said I'd be a fool to sign it as it was totally one sided and that I'd have a tough time if I ever left the job after signing.  I'd have the choice of trying to live by it (nearly impossible) or risk a lengthy and expensive court battle.  I lost a lot of respect for the people that signed and stayed on as apparently they are in fact fools.

Wouldn't the coercion make the contract unenforceable regardless of the terms?

Legal or not, it's effective as it would be a court battle to fight it.  Easier to just move on...

Well then you're without a job, which for people who haven't FIREd yet could be an issue...  I have one in my current job, and quite honestly I don't really think about it. I would happily ignore it if it were in my best interest to do so. I fully subscribe to MMMs article about contracts being pointless.

Like others said they are largely unenforceable, unless you are fairly high up and could materially impact their business by competing. The other thing, is that if they were to sue you, they would have to show real damages. You can't just sue someone for a million dollars because they agreed not to wear puffy pants and then they did.

I agree about these agreements being difficult to enforce.

What about the case where companies directly honour each other's non-compete agreements?    No court battle required, the new company just won't hire you.

There's a case to be made that companies don't need non-compete agreements to achieve this.   I think a number of silicon valley companies were effectively doing this - refusing to hire each other's employees in order to suppress wages.    And I remember when Nortel and Corning had an agreement not to hire employees from each other.    Nortel and BlackBerry as well, now that I think about it.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1934
Re: Noncompete agreements
« Reply #20 on: May 25, 2017, 03:39:57 PM »
Every job I've been in had a non-compete. Every job I moved to was a direct competitor.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2136
  • Location: Cleveland
Re: Noncompete agreements
« Reply #21 on: May 26, 2017, 07:02:01 AM »
What about the case where companies directly honour each other's non-compete agreements?    No court battle required, the new company just won't hire you.

There's a case to be made that companies don't need non-compete agreements to achieve this.   I think a number of silicon valley companies were effectively doing this - refusing to hire each other's employees in order to suppress wages.    And I remember when Nortel and Corning had an agreement not to hire employees from each other.    Nortel and BlackBerry as well, now that I think about it.

That isn't a noncompete in the same sense. It's usually a contractual arrangement between two companies working together closely. It's more to prevent one company poaching their partner's people when the project is done.

Honestly, that doesn't really bother me, as it isn't overbroad the way most employee-contract noncompetes are (i.e. you agree not to do your job for any other company within 3,000 nautical miles of your current work location).

nara

  • Stubble
  • **
  • Posts: 203
Re: Noncompete agreements
« Reply #22 on: May 28, 2017, 08:33:47 PM »
Someone I know locally in my field signed a non-compete. She was told by a lawyer that although she has a PhD in this particular field it doesn't limit her ability to work because she could always go work at McDonald's. I would never work for a company ever that requires one. You never know who wants to set an example out of you by enforcing it. But I do agree with non-solicitation contracts and I have my employees sign them as well.

cdttmm

  • Stubble
  • **
  • Posts: 249
Re: Noncompete agreements
« Reply #23 on: May 30, 2017, 06:05:08 PM »
I've been employed in two jobs where I was under a non-compete. The first one was deemed largely unenforceable by my lawyer so I wasn't concerned about it. The second was when I joined a start-up and I received other very favorable terms in exchange for the non-compete. Ultimately, it didn't matter as I wanted out of the industry all together when I left. I'd be hard pressed to sign one nowadays.

Zamboni

  • Magnum Stache
  • ******
  • Posts: 3886
Re: Noncompete agreements
« Reply #24 on: May 30, 2017, 08:50:07 PM »
One of my former employers rolled these out for all new hires and tried to get all existing employees to sign. We had all already signed NDA's, so it seemed silly to add this to me.

The quid pro quo for existing employees to sign the non-compete (that covered the entire world as the geographic region, hilariously) was that they would promise 2 additional weeks of severance if they sacked you and you had signed it. You also could never get a promotion again if you didn't sign it . . . even a ladder promotion was considered quid pro quo for signing the non-compete.

Many people (maybe a quarter of the technical staff?) refused to sign and the company started losing those people pretty much immediately. But then within a year or two a funnier thing happened: people who had signed it, usually as part of the condition of their ladder promotion, also began leaving but they simply refused to disclose where they were going to work next. Most of these people were scientists, engineers, and technicians who spent their days tucked away in labs and cubes, so not exactly sales and marketing people who could be tracked via trade shows. Some were staying nearby but remained resolutely tight lipped about what they would be doing next, while others were moving to another state and wouldn't even disclose which state. I thought it was hilarious. Managers were outraged. Least effective way to keep people EVER.

That company culture was psycho, though. Glad I escaped!

geek42

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Noncompete agreements
« Reply #25 on: May 31, 2017, 06:54:53 AM »
I lived by one at my first enterprise software job, it had a 1 year agreement. They had a couple interesting twists though, Item 1: All customers also signed an agreement that they wouldn't hire someone who had worked at the company. Item 2: Customers had an arranged kickback if they met certain standards from the software company involving upgrading the enterprise software and maintaining support EG 1 million dollars. While customers could ignore item 1 very easily the threat of losing item 2 if they chose to hire someone meant I had friends fired from California jobs after they realized the potential cost after a very pointed conversation with the CEO of the company.

I would not sign such an agreement at this point in my career but find them acceptable at your first job.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2136
  • Location: Cleveland
Re: Noncompete agreements
« Reply #26 on: June 02, 2017, 09:49:46 AM »
I would not sign such an agreement at this point in my career but find them acceptable at your first job.

This makes absolutely no sense. Entry level people aren't the ones holding the keys to a company's IP.

Slee_stack

  • Pencil Stache
  • ****
  • Posts: 876
Re: Noncompete agreements
« Reply #27 on: June 02, 2017, 11:06:20 AM »
First job out of school I had to sign a non-compete.  Left for a competitor.

Got sued.

Let me tell you what a fantastic time of my life that was!

First, I was forced to cease working at my new employer.  Bye bye income!  Next I hired a lawyer...with my paltry savings.

Awesome place for a newly minted Engineering grad with a few years of experience  and student loans to pay.  I was beyond pissed.

Non competes are indeed difficult (if near impossible to enforce).  However, that doesn't much matter because a young, (and/or penniless person) can easily be manipulated into leaving a job just by the threat of being dragged to court and the accompanying attorney fees.

Because I'm vindictive, I went all in though.  My former company's lawyer kept trying to get me to just quit and they would drop the suit ...etc.  Fuck em.

Had a few preliminary hearings, then showed up to court to actually have the lawyers begin arguing the case.  That's when my former company finally backed down because they knew it was impossible for them to win anything at that point.  We attacked and ended up getting most of my attorney fees and lost wages paid for by the old company.  I still ended up out of pocket, but it wasn't devastating.  I was also able to deduct my net attorney fees from my taxes (because they were employment related).  I also was 'gagged' to discuss the settlement for 10 years hence.

Sadly, two other coworkers also got sued when they left that company.  They gave in and quit their new jobs though w/o a fight.

Just an awful, bitter experience all around that molded me for the rest of my work career.  In retrospect, it did have the positive aspect that I could NEVER trust an employer for anything and I had to look out for myself always.  I've dodged signing and doing things that put me at a disadvantage ever since.



« Last Edit: June 02, 2017, 11:08:45 AM by Slee_stack »

BlueMR2

  • Handlebar Stache
  • *****
  • Posts: 2314
Re: Noncompete agreements
« Reply #28 on: June 02, 2017, 04:03:10 PM »
I would not sign such an agreement at this point in my career but find them acceptable at your first job.

This makes absolutely no sense. Entry level people aren't the ones holding the keys to a company's IP.

That makes no sense either.  There is plenty of legal coverage regarding absconding with an employer's IP.  If that's the reason we had non-compete's, then they're definitely a waste of money.  Since we have them, there's another reason.  I'm thinking it's control.  You can lock down people, forcing wages down by not letting them leave.

The hypocrisy is so amazing with the standard company lines.  "Free market", "Innovations through letting us be free", but, "oh, for you we'll need a non-compete because freedom isn't for *workers*"...

sol

  • Walrus Stache
  • *******
  • Posts: 8433
  • Age: 47
  • Location: Pacific Northwest
Re: Noncompete agreements
« Reply #29 on: June 02, 2017, 04:57:59 PM »
I'm currently under several, in my job for the federal government.

One is for fixed amount of time after departure, and is pretty easy to get around.  It comes from the ethics office and is really designed for people higher up the food chain, who tend to follow the revolving door between government and private corporations (e.g. all the Goldman Sachs folks in the Trump administration are currently in direct violation).

The second is more serious, and is related to controlled information.  Violate that one and they put you in jail right quick.  Like in the cell next to the Unibomber.

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: Noncompete agreements
« Reply #30 on: June 02, 2017, 05:19:31 PM »
The second is more serious, and is related to controlled information.  Violate that one and they put you in jail right quick.  Like in the cell next to the Unibomber.

That sounds more like the Official Secrets Act in Canada than a non-compete.   Does it really say they can put you in jail if you go to work for the wrong company?


sol

  • Walrus Stache
  • *******
  • Posts: 8433
  • Age: 47
  • Location: Pacific Northwest
Re: Noncompete agreements
« Reply #31 on: June 02, 2017, 07:12:57 PM »
The second is more serious, and is related to controlled information.  Violate that one and they put you in jail right quick.  Like in the cell next to the Unibomber.

That sounds more like the Official Secrets Act in Canada than a non-compete.   Does it really say they can put you in jail if you go to work for the wrong company?

Only if you go to work for the wrong government. 

Of course, the two are interchangeable in this case.  Uncle Sam is very serious about controlling how, where, and for whom their most knowledgeable employees go to work.  They take "proprietary information" very seriously.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2136
  • Location: Cleveland
Re: Noncompete agreements
« Reply #32 on: June 06, 2017, 08:40:52 AM »
I would not sign such an agreement at this point in my career but find them acceptable at your first job.

This makes absolutely no sense. Entry level people aren't the ones holding the keys to a company's IP.

That makes no sense either.  There is plenty of legal coverage regarding absconding with an employer's IP.  If that's the reason we had non-compete's, then they're definitely a waste of money.  Since we have them, there's another reason.  I'm thinking it's control.  You can lock down people, forcing wages down by not letting them leave.

The hypocrisy is so amazing with the standard company lines.  "Free market", "Innovations through letting us be free", but, "oh, for you we'll need a non-compete because freedom isn't for *workers*"...

Yes, I agree that holding down wages and mobility is the underlying goal, but that would never hold up out in the open. The IP argument is the one I see most often argued from a legal standpoint (see the current Google v. Uber debacle, which may actually involve real IP).