Non compete clause issues

[73rallye440magnum]

An acquaintance was recently presented a non compete clause by his employer in the state of Wisconsin. He was told if it was not signed within three days his employment would be terminated. Does he have any choice here? Seems to me like the employer is flexing some pretty big muscles. The employer is upset because some employees have left, and took some clients with them. The remaining employees at this small business are quiet disgruntled, arguing that they get paid much lower than the industry standard. What does everyone think of this? I'm sure most of us have experienced something similar.

[BananaDan]

Employment is always at-will.  He does have a choice, he can leave and work elsewhere.  The business has the right to protect themselves and their revenue stream.  If he likes it there and wants to stay, sign it.  Every company I have worked for has had similar contracts all new employees have to sign, including non-solicit contracts so you can't lure employees away for X years or months after termination of employment.  Most companies will also have their employees re-affirm their agreement to these policies every year in writing, a sort of an annual renewal of the vows. Welcome to corporate and litigious America.

[73rallye440magnum]

He mentioned that it states if he leaves or is released from his current employer he would need his current employers written permission to be employed elsewhere in the industry. Is that enforceable?

[BananaDan]

First let me say I live in NJ (used to live in NYC) and have only worked in NYC and NJ.  I am also not a lawyer, it wouldn't hurt for your friend to consult with one if he is really concerned.  That being said, I have seen things like that myself and asked my best friend who is a lawyer and he said that clauses like that are largely not enforceable for two reasons.  First, no one can prevent you from having a job and providing for yourself and your family, within reason.  The second surrounds the definition of compete.  Lawyers leave this shit vague on purpose, it's part of their game.  If you worked for a company selling widgets, and someone down the street also sold widgets, they are likely a competitor.  But if your friend is a mechanic, well most towns have many mechanic shops so him going to one of 12 shops in a 10 mile radius is not really going to directly impact their ability to survive as a business.  Distance plays a role too.  If he goes somewhere that is 25 miles away from his current place, a case can be made that due to distance they aren't direct competitors.  In the end, it's all really bullshit and you also have to think if the current employer will want to endure the time and cost involved in going after him legally.  If he isn't a revenue producer and won't directly impact their bottom line (i.e. is he a clerk, or an IT guy, or an accountant), then they probably won't care or bother.

[73rallye440magnum]

He works in the forestry field, and his work is billed directly to the client. The non compete clause explicitly states that any court costs incurred will be his responsibility.

[BananaDan]

Yeah, mine says that too, but I believe that is only if they win.  They can't charge you for court costs if they lose, otherwise companies could just screw people out of 1,000's of dollars every day to defend baseless suits.  Anyway, mine was very similar, I signed mine but I work in a field that allows me to work for any industry (IT).  Like I said, if he is really concerned, he should speak with a lawyer.  They can't drop a piece of paper on your desk and say you need to sign this in 3 days or you're out of a job.  If he informs them he is consulting with his attorney to review the contract, they have to allow him a reasonable amount of time to review it and sign it.  Otherwise, I imagine he would have a case for unjust termination.   All he should have to do is inform his manager or HR (if there is one) that he requires time to review the contract with his attorney and they should give him time.  

If he does consult, make sure the attorney is familiar with local and state labor laws.   

[RallyeMike]

Tell them that you need more time to consult an attorney, delay them as long a possible, and then go find a competing job and take your clients with you !!!

Non-competes have their place but they are being extended to too many regular people. My spouse was stuck in your same position - short time to sign or be fired. She chose to sign and then went and found another job. She is still in the same field, and the employer never pursued it.

[73rallye440magnum]

Thanks for your input so far. I have forwarded some suggestions.

Strangely enough, a non compete closure was handed out at my workplace about a month ago. I was not given one because I missed the meeting due to my part time status, but a coworker shared a copy with me and it really made my blood boil 

I don't think anyone signed it (10 employees)

I'm hesitant to sign or conform to any document or common practice presented to me by my employer.

[Troy]

Every job I've had since college has required a non-compete. It's standard practice in certain fields - generally ones where you have intimate knowledge of the business, customer/vendor relationships, or confidential material. HOWEVER, Ohio is a "right to work" state so, no matter what I signed, they can't legally keep me from taking a job if the alternative is unemployment. I understand that not all states are the same so check your local laws. I don't think I've ever worked a place that came to me after I was already employed to get me to sign one.

I understand the need for such protection. People working on sensitive business deals, new products, or unique business processes (assembly line techniques, etc.) shouldn't be free to just jump ship and go directly to a competitor to sell their knowledge for a higher price. It's equivalent to espionage. On the other hand, if you work in a highly specialized field there are only so many jobs available to you if you leave an employer (for any reason). It gets tricky there. I feel for any employer (especially in this market) where employees are taking clients with them when they leave. I have also seen situations where prospective employees were specifically recruited for their relationships with certain clients as well. In one case the employee had to sign an agreement that any clients he brought in belonged to the new company. They fired him soon after. Karma.

I have always wondered why people stay at a place they don't like. It makes your life miserable. If you aren't getting paid enough or are getting treated badly then go somewhere else! Staying is a choice and there's no one to blame but yourself. Unfortunately, it sounds easier than it is. Most people overvalue themselves and there's no guarantee a new employer will pay any more than the current one. Not to mention, most places who do pay more generally aren't hurting for good talent so you better be at the top to even have a chance. Sometimes places pay more because no one wants to work there so would anyone really want to switch jobs under those circumstances? I made a lot of money for a few years by taking on the junk that everyone else refused to work on (or failed miserably while trying). It was stressful but I also knew the contracts were short term.

Troy

[ChgrSteve67]

Generally non competition contracts mean you cannot start your own business and compeat against them. Did you see American Chopper when paul jr. got fired and or quit? The contract he had prevented him from starting up his own business and compeating against OCC for a period of 1 year. it did not stop him from going to work for someone else.

Probably most commonly used when someone sells a business they cannot start the same business up again and compete against the business they just sold.

I've signed non disclosure contracts were information and clients lists belong to the company and cannot be disclosed to anyone outside of the company including competitors or if you start your own business.

In IT its common to sign a no-hire contract which means companies that do business together cannot solicit or recruit away another company's employee. But if I choose to leave and work for that company there is nothing stopping me. Its a free country.

Lately I have seen arbitration contracts signing away your right to sue the company you work for publicly and must use a arbitrator of the companies choosing. This is very convenient for the company because any law suits between the company and its employees are are kept in private. So things like sexual harassment are never made public record.  

Like was said above, if he wants to keep his job sign the contract. If they try to go after him later the chances if it actually standing up in court are slim since his lively hood was threatened if he did not sign it.

Most companies start with asking people to sign it voluntarily then make it part of the employee hand book and make everyone sign it. Not signing the employee hand book and company policies are standard practice for termination and don't single out any one policy as means of termination.

If you friend is really woried about signing it then talk to a labor lawyer about that the language in the document really means.

[Silver R/T]

I hope your friend finds another job and won't let big corporation shaft him like that. I think people need to compete with big corporations who are greedy and step over boundaries of employees.

[68X426]

If you friend is really woried about signing it then talk to a labor lawyer about that the language in the document really means.

Steve nailed it on the observations. And sadly it takes a lawyer to fight a lawyer.

I hope your friend finds another job and won't let big corporation shaft him like that. I think people need to compete with big corporations who are greedy and step over boundaries of employees.

It's everyone, not just big corps, who ask/demand non-competes. Every small company, right down to a 2 person firm, can and do use non-competes to protect their legitimate interests. Every organization, as well as every one-person enterprise, have a need to protect themselves financially, and protect their intellectual property, and especially protect their secret sauce.

Charities do it, hospitals do it, churches do it, 2 person partnerships do it, sports teams do it. The very nature of an NFL contract is that you can't just leave and sign to play ball with another team. The player can sit out a year. The competing team can compensate the first team. But the player is restricted by the very nature of the non-compete contract. The non-compete is even backed by a monopoly endorsed by an act of Congress.

PS I'm not an attorney but I did sleep at a Holiday Inn Express last night. 

[Vainglory, Esq.]

I'd need to see the actual, real language to tell what's going on. Non-competes are a "yes and no" kind of deal. Without seeing the clause, there's no way to tell whether it's enforceable or not. And even then, there may be some gray areas.

[nh_mopar_fan]

In my experience, they're unenforcable.

The plain and simple is that you cannot prohibit anyone from making a living.

We used to have our people sign them but in the end they were mostly a tool to try to intimidate them from leaving and trying to steal your customers. But, if you do X for a living and you leave, they cannot stop you from continuing in your trade.

Our response when we found out someone was trying to take our customers after they left was to send them a standard letter from the lawyer telling them to cease and desist. That usually worked. We really had no intention of pursing it any further than that. We'd probably lose.

[471_Magnum]

You've got to be a pretty big fish before a company will actually try to enforce a non-compete. If you are at the executive level or in a sales position with some intimate knowledge that could benefit the competitor, they are much more likely to enforce them. For the smaller fish, it's just intimidation.

As an admittedly "small fish", ten years ago I jumped ship to work for a direct competitor. Basically, I agreed to help with my exit transition in exchange for my employer not trying to enforce the non-compete. I doubt they would have enforced it anyway, but I didn't want to burn the bridge. Ironically, seven years later, the two companies merged. I've since moved-on and had to sign another with my current company. I wouldn't take it too personally.

[GULFGLENY]

Non compete clause is a good thing in some cases it does need to be enforced, I have a small business with 5 employees and I think it would be a person with no morals to take my clients from me after ive fed their hand! Why is it people always think business owners are evil? Without us where would you work? Some even think the Government should run everything. Just think of the rules we would have then!

[BigBlackDodge]

Sounds very un-American to me!


BDB

[68blue]

Where I worked they had rather draconian non competes for the top technical people which also laid claim to anything you developed. The result of that adversarial attitude was a high degree of turnover, but of all the cases of people leaving to go to work for competitors I never heard of the company trying to enforce the contracts. They were publicly denounced by management at the next staff meeting, then forgotten.

[73rallye440magnum]

Non compete clause is a good thing in some cases it does need to be enforced, I have a small business with 5 employees and I think it would be a person with no morals to take my clients from me after ive fed their hand! Why is it people always think business owners are evil? Without us where would you work? Some even think the Government should run everything. Just think of the rules we would have then!

I agree, sometimes it does need to be enforced.

I'll stir the pot a little here. I understand and respect the importance of being loyal to your employer. Having said that, I think it's important to clearly recognize where the employee/employer relationship begins and ends. Employer finds work for employee, employee does the work, employer and employee get paid. The cycle repeats itself.

People think business owners are evil because of the shenanigans that take place between Wall Street and Washington DC. The media deliberately exploits these happenings. I applaud the media's efforts to bring the issue to public light, but am disappointed by the stereotype they have created. "All corporations and business owners are greedy money hungry tax evading scoundrels"

My suggestion? Simplify the tax code. If the temptation ceased to exist, it wouldn't be as common.

I especially respect the non-compete clause with respect to the global economy. I believe in American exceptionalism, and we need to stay in the lead. I know it's not the politically correct thing to say, but I don't feel like being inferior to other nations. I'm not trying to degrade other countries, their citizens, or their capabilities. I hope they feel the same way about their nation as I do mine.

New ideas, trade secrets, etc. do not remain "new" for very long. They need to hit the market fast, and you better be one step ahead of yourself by the time it hits. THIS IS WHAT DRIVES ECONOMIES.

[Cooter]

Still young Grasshoppa. When I worked for GoodYear bout 15 years ago, they had me sign a "Contract" about the composition of the tires and All I did was mount and balance them. I figured they had a right to keep their little BS trade secrets top themselves os what does it hurt.

[bill440rt]

I've been hearing a lot now about companies asking for your Facebook/Twitter/Myspace ID AND password!!
I've heard this as a fill-in directly in the job application. Don't fill it in, don't get the job. That is insane.

[BananaDan]

That doesn't sound legal. I'm sure someone will get sued over that one. Why not give them my email and ATM PIN too?

[resq302]

Yeh, I agree.  That is a bounds for invasion of privacy issue and what you do on your own free time they can not hold against you unless it is something that is of criminal nature.  The day my job starts asking me for that kind of info or telling me what car club I can belong to or do with my free time and money is the day that either I have a lawsuit against them or I start collecting unemployment!

[bill440rt]

I wholeheartedly agree as well. 
It's been the hot topic of many talk radio stations lately. Some well-known companies were mentioned... 

[73rallye440magnum]

Whether or not it will hold up in court, the expressed rhetoric in these clauses really makes my blood boil. People are not property. This is a free country, and employment is a two way street. If an employer didn't trust an employee to begin with, why hire them and expose them to sensitive material? The lawyers always have to chime in... I am disgusted by legal writing. It always manages to be "thoroughly vague".

Maybe I'm old fashioned? Leave me alone. Let me do my work while I'm here, keep the work coming. What I do outside of the business is nothing you can control. You'll never hear from me or about me.



My acquaintance signed his, by the way. He said he'll just sign it and move on with his life. I doubt it will ever amount to anything, but if he ever does feel like leaving it's one more carrot his employer can dangle in front of him.