Author Topic: Legal advice needed: non-compete clauses  (Read 4064 times)

Stache In Training

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Legal advice needed: non-compete clauses
« on: December 09, 2014, 11:33:17 AM »
Hello,

I currently work for a business that when I started I signed a non-compete agreement for 18 months after end of employment.  However, I then quit for six weeks.  They then hired me back in a different position.  Upon re-hire, I did not sign the non-compete again.  In fact, they said I'd have to re-sign the handbook and everything (which includes the non-compete form), but then bookkeeping never got it to me.  So I haven't signed any of that stuff at the second hire, just the first time.

So my question is, am I allowed to leave (Which currently I have no intentions of doing, just curious.) and go to a competitor after 18 months from when I first quit? Or does my first signature carry over, even though I quit for 6 weeks?

gimp

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Re: Legal advice needed: non-compete clauses
« Reply #1 on: December 09, 2014, 01:32:40 PM »
Depends on the state and your job. Generally non-competes are not enforceable unless they pay you for your time not competing. Are you going to steal their clients? Share their insider data? No? Then you pretty much have nothing to worry about. This is especially true in states like California but still fairly true elsewhere.

TN_Steve

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Re: Legal advice needed: non-compete clauses
« Reply #2 on: December 09, 2014, 02:13:58 PM »
Depends on the state and your job.  Widely varying results are possible.

seattlecyclone

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Re: Legal advice needed: non-compete clauses
« Reply #3 on: December 09, 2014, 02:29:26 PM »
My gut feeling says the original agreement likely only applies to the original term of employment, but you should consult an employment lawyer in your state for a real answer.

Rube

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Re: Legal advice needed: non-compete clauses
« Reply #4 on: December 09, 2014, 04:07:29 PM »
Generally it's probably enforceable. They notified you of the requirement as a condition of employment before you started and in consideration for the non-compete they're giving you a paycheck. The clerical error doesn't make a difference. They will probably ask you to sign it. 

If you were already employed without a non-compete and then they started asking employees to sign them, you might expect some sort of compensation or severance as consideration.

A prospective employer isn't likely to want to challenge this knowing that your company has these agreements.

Then again I'm sure there are some states where this can vary. I'm not an attorney but my industry has always had them especially for some highly valued, highly compensated contract players. BTW, the latest ones are stacked for the employers in my industry.

mozar

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Re: Legal advice needed: non-compete clauses
« Reply #5 on: December 09, 2014, 07:05:04 PM »
If you were leaving for a competitor, I would ask the competitor to pay the legal fees in the unlikely event that your previous employer sues you (unlikely unless you are important or are stealing data).
 If the previous employer did sue you, they would likely not win or they would try to settle. If they did win in court (unlikely) they would get a year or less of your salary (paid by you or new employer).
Sometimes a competitor will offer your employer to pay a penalty for taking you.

Stache In Training

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Re: Legal advice needed: non-compete clauses
« Reply #6 on: December 10, 2014, 08:26:50 PM »
hmm interesting stuff.  I'd give you my state to try and clear things up, but I'm going to try to stay as anonymous as possible, just in case.

Looks like if I do want to leave, I'll have to contact an lawyer first to see. 

Thanks!

Sid Hoffman

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Re: Legal advice needed: non-compete clauses
« Reply #7 on: December 11, 2014, 07:22:36 AM »
Generally non-competes are not enforceable unless they pay you for your time not competing.

This is exactly what I was going to say.  My mom recently retired after 23 years at a major corporation where the upper managers had to sign non-compete contracts.  She was friends with the head of HR who often mentioned that she hated making people sign those contracts when she knew full well they had literally never sued anyone in company history because they knew it would be a nightmare to try to win.  Meanwhile because lawsuits are public, it has a chilling effect on the remaining employees to see their own company going after former employees, further diminishing morale and causing more people to want to leave the company.

Cromacster

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Re: Legal advice needed: non-compete clauses
« Reply #8 on: December 11, 2014, 08:00:17 AM »
This is exactly what I was going to say.  My mom recently retired after 23 years at a major corporation where the upper managers had to sign non-compete contracts.  She was friends with the head of HR who often mentioned that she hated making people sign those contracts when she knew full well they had literally never sued anyone in company history because they knew it would be a nightmare to try to win.  Meanwhile because lawsuits are public, it has a chilling effect on the remaining employees to see their own company going after former employees, further diminishing morale and causing more people to want to leave the company.

I think the issue arises when the employee leaving has knowledge of trade secret technologies.  In those cases companies have and will enforce non-compete clauses.

Generally non-competes are not enforceable unless they pay you for your time not competing.

While this is true, usually it falls on the former employee to prove they cannot get a job elsewhere other than at a competitor.


Rube

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Re: Legal advice needed: non-compete clauses
« Reply #9 on: December 11, 2014, 09:29:53 PM »
It's worth noting that the OP asked a more specific question than just whether it was enforceable.

To review, in US and Canada, noncompete agreements are generally enforceable, except in California where they are void as a matter of public policy (except in cases where you sold your business and a noncompete clause was a condition of sale).

Let's assume that the agreement that the OP signed was enforceable.

The OP then asks whether the 18 months is reset by starting with the company again.

The answer will depend entirely on the wording of the agreement you signed. It might be worded such that the 18 months runs from when you last quit working for them, in which case that would be the operative regime. Or it might not say that. We don't know since we haven't seen the form of agreement that you executed. However, it wouldn't magically renew if the agreement doesn't provide for that.

However, depending on your position, you may be restricted under common law from joining a competitor anyway, regardless of the agreement. For instance, as a manager, you are probably restricted from joining a competitor if you bring any of your subordinates with you, because it would violate the duty of loyalty to your employer. However, if that's not your situation, it's going to be governed by the specific agreement you signed, assuming it's enforceable (which it probably is unless you are working in California).

Aside from working in California, other cases where a noncompete agreement could be unenforceable would be the usual contract law defences, including unconscionably. For example, a contract that prevented you from ever earning income again would likely not be enforceable.

I realized that after I typed my response but really the previous tenure at the company is irrelevant. Contracts simply need an offer, acceptance and consideration. We have that here. I will say again that consideration can be your paycheck.