×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Crazy Non-Compete Contracts?

Cliff posted more than 7 years ago | from the gotta-make-a-living-somehow dept.

Businesses 193

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?"

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered

193 comments

Pretty standard (1)

BlackMesaLabs (893043) | more than 7 years ago | (#18273134)

It's generally a pretty standard condition, most commonly when you are taking a redundancy package. I've never heard of it being used on internet related jobs before, but I don't think it's uncommon.

Re:Pretty standard (2, Informative)

WebCrapper (667046) | more than 7 years ago | (#18273392)

It is pretty standard.

I currently have one that states that I can't work for a competitor or start my own company OR even talk to other current employees about starting a company for 1 year.

Interesting thing is, we all sign it, then we all break it.

It's all about how far you bend the rules. If you piss off management on one side, they might zap you in the butt on the other side - I've seen it happen.

Re:Pretty standard (1)

rblancarte (213492) | more than 7 years ago | (#18273518)

Let me just agree with the above. These are pretty standard. It is pretty similar to the one I signed at my current job. And this is an industry where people change companies as often as their pants.

Just realize, the non-competes are not to keep you from working, they are to keep you from taking stuff from your current job to your new job. Your company has to enforce them, and in most cases they won't. But in a few cases they might.

RonB

Re:Pretty standard (2, Funny)

Anonymous Coward | more than 7 years ago | (#18273994)

And this is an industry where people change companies as often as their pants.

Monthly?

Re:Pretty standard (1)

Sobrique (543255) | more than 7 years ago | (#18274098)

It was 5 years before I last switched jobs. But that's ok, my pants still stand up on their own.

Re:Pretty standard (2, Interesting)

BrokenHalo (565198) | more than 7 years ago | (#18274490)

It might be pretty standard, but it's a stupid thing to sign.

My advice (and no, IANAL, but I have done this before) is simply to strike out the offending clause, put your initials against the deletion and leave it at that.

More likely than not, they won't argue, but be prepared to tough it out if they do. All it really needs is to be handled with confidence. If they argue that the clause isn't intended to be enforced to your disadvantage, all you have to do is ask "in that case, why is it there, and in that form?". If they really do insist on the clause being left there unamended, you probably don't want the job anyway.

In other words, if you behave like a doormat, don't be too surprised if someone walks all over you.

Re:Pretty standard (3, Insightful)

cyclop (780354) | more than 7 years ago | (#18275342)

In fact I can't understand how can US workers comply and go away with such a draconian practice like a "non compete" clause. What do they think you are supposed to do for a year? Washing cars?

I can understand not copying your previous employer IP property to paste it in your new workplace. But if, for example, I'm a software engineer that worked on PageRank at Google, I understand not re-implementing PageRank at my new workplace, but why should I stop working in search engine technology? Why should I restart from (almost) scratch, doing something I'm not expert in, having probably lesser opportunities and wages, etc.?

What I find more amazing is the "oh well it's pretty standard" attitude. Do you really think such clauses are fair clauses?

Re:Pretty standard (1)

Gr8Apes (679165) | more than 7 years ago | (#18275478)

They are standard. The state you're in makes a huge difference. Some states are work at will states and also have clauses that invalidate contractual clauses that would prevent you from earning a living.

While that means you can not take IP with you, they cannot prevent you from using your skills in your new job. They also, in my state, cannot prevent you from talking to your previous clients/customers/business contacts.

Re:Pretty standard (2, Interesting)

JPribe (946570) | more than 7 years ago | (#18275630)

Um, just to ask a (seemingly) dumb question:

Isn't *EVERY* company on the web a competitor??

Not to mention this applies to any internet based job. Seriously, this isn't a job locked down geographically...every design firm on the net is a competitor, or an I missing something here?

Re:Pretty standard (1)

Brew Bird (59050) | more than 7 years ago | (#18276058)

Noncompetes are just a way to keep you from using your talents against your former employer.

I would tell the company that if they want to keep you from working for a competitor for a year, you expect an appropriate severance package if you are terminated.

I would also clarify that if you choose to leave on your own, your non-compete ONLY applies to projects/customers you are currently working on, not future or potential projects. MAKE IT CLEAR that you retain the right to work for a competitor if you choose, but will not be working on any business you helped bring your former company.

If they will agree to those stipulations, you should be ok.

And of course, you can just not sign it, or agree to work for them on a contract basis.

Re:Pretty standard (1)

Ihlosi (895663) | more than 7 years ago | (#18276098)

Noncompetes are just a way to keep you from using your talents against your former employer. They're also just a way to deter you from changing to a job with better conditions (salary/vacation/benefits/stuff).

Standard? depnds on what "competing company" means (1)

Mateo_LeFou (859634) | more than 7 years ago | (#18275628)

I had a rejected /. story on this topic a couple weeks ago. Details here: http://btetc.blogspot.com/2007/02/have-you-sold-yo ur-brain.html [blogspot.com]

Basically, it's normal for the co. to protect themselves against you going in there, learning how they do everything, then duplicating their business/technology models for their competitors. Not unfair, as far as that goes.

But the contract I was looking at overreached by a *shocking degree, claiming "exclusive ownership" of any *idea "capable of being used in, or in connection with, the business... " for a period of 6 months.

I was able to get them to adjust these terms, and in fact to admit that any programmer who signed such a thing had to be insane. But YMMV.

Re:Pretty standard (2, Interesting)

Shads (4567) | more than 7 years ago | (#18275868)

Non-Compete agreements are fairly common, that being said, I was at a company in Ohio who tried to enforce one. It flushed, the judge ruled that you can't deny a person the right to make a living in their field of expertise. The non-compete in question was "you can't work for another isp in the state of ohio for 12 months." (we were all sys admins)

First hit on a google search (3, Informative)

nelsonal (549144) | more than 7 years ago | (#18273138)

I'm not a lawyer, but these guys [kkrlaw.com] are. Hope that gives you some useful tips about what's worth fighting over.

Re:First hit on a google search (1)

sumdumass (711423) | more than 7 years ago | (#18273470)

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.

Re:First hit on a google search (3, Interesting)

kefoo (254567) | more than 7 years ago | (#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:First hit on a google search (2, Interesting)

Bogtha (906264) | more than 7 years ago | (#18275024)

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 and never been seen by a solicitor. It was that poorly phrased that, although it looked like it was restricting you to not working for competitors for a year, it actually barred you from working for competitors forever. Although things like that would never stand up in court, it saves a lot of hassle to be attentive so that you don't need to go to court. In my case, I grumbled about the very thought of a non-compete as soon as I heard about it, and they "forgot" to present me with it to sign, even though it was company policy and all the other developers on my team hired before and since signed it.

Re:First hit on a google search (1)

kzanol (23904) | more than 7 years ago | (#18273478)

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 in web development for 6 months and would have effectively stopped me from founding my own business; the settlement I reached with my employer to get out of that non-compete clause involved cancelation of a severance package and was quite costly.

Negotiation of a better contract at time of employment (or at the time you're asked to sign the non-compete) is usualy much easier.

And yes, I do realize that the non compete probably wouldn't have held up in court in my case; however if you're just getting started with your own business it's you have neither the time nor the money for a drawn-out legal fight; besides it doesn't help to inspire trust in your new customers.. So getting this settled out of courts was much to be preferred.

Re:First hit on a google search (4, Informative)

stephanruby (542433) | more than 7 years ago | (#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.

Re:First hit on a google search (1)

Sobrique (543255) | more than 7 years ago | (#18276282)

Depends on the exact wording of the clause, but sometime 'no compete' is intended to stop you e.g. working on Rolls Royce jet engines, then moving to General Electric and doing the same thing. E.g. They hire 'your trade secrets'.

However I'd consider it entirely reasonable to move from developing websites for one customer, to developing websites for another - it's not like you're using the 'professional knowledge' acquired at one, to work for another.

But as is correctly pointed out, contract amendments are entirely fine to place before your boss/HR. I did this with 'software development' - I work in systems admin, I asked my boss about whether I'd be ok to release utilities I developed whilst I was there, and he was fine with it. (The 'IPR' restriction in that case would have been very pertinent if I'd been working on software development, but he was quite positive and helpful about the fact that releaseing stuff I'd hacked together onto the web wasn't a big deal)

yes... don't sign it depending on which state (3, Informative)

Anonymous Coward | more than 7 years ago | (#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.

Re:yes... don't sign it depending on which state (1)

Phreakiture (547094) | more than 7 years ago | (#18274646)

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 period, and that their failure to pay you for any reason in a manner that is not timely will constitute a breech of the agreement and render it null and void.

This doesn't have to be a one-sided game. If they want to prevent you from working, they'll have to compensate you for that.

Of course, the usual caveat: I am not a lawyer.

IANAL but... (1)

ESarge (140214) | more than 7 years ago | (#18273148)

I assume this is a US city? I don't know US law but under legal systems that follow UK common law that wording is almost certainly unenforceable. The leading case is about a blind piano tuner of all things.

Yes, it is important to be able to actually work and the law generally recognises that.

My suggestion is to consult a lawyer as to the exact legality. I would suggest negotiating with your employer to knock that down an aweful lot.

Re:IANAL but... (1, Funny)

Anonymous Coward | more than 7 years ago | (#18273202)

I had to sign one of these for Doubleclick. They told me it was basically unenforceable and that a number of employees were working there in violation of their previous non-compete agreements.

It's worthless garbage, but I said I would only sign it if they gave me $5000 extra, which they did. So not totally useless, and you can bet I'm not going to tell them where I'm leaving to if I leave.

Re:IANAL but... (1)

artifex2004 (766107) | more than 7 years ago | (#18273358)

I had to sign one of these for Doubleclick. They told me it was basically unenforceable and that a number of employees were working there in violation of their previous non-compete agreements.


Which begs the question: why have you sign it? Good thing you held out for more money, at least.

Re:IANAL but... (1)

rtb61 (674572) | more than 7 years ago | (#18274420)

The only way a non-compete clause is enforceable is if they actually pay you a retainer during the non-compete period, either a large lump sum at the beginning of the period, or regular payments during the non-compete period.

The only time this really occurs is when a business is bought out and the owners are payed a stipend to not compete in the same business, idiot lawyers just dragged that across into employment contracts not because they though it would work but because they knew it would fail and create legal disputes hence providing them the opportunity of generating more income.

Ignore 'em (3, Interesting)

Utoxin (26011) | more than 7 years ago | (#18273152)

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:Ignore 'em (2, Interesting)

TubeSteak (669689) | more than 7 years ago | (#18273544)

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 (1)

lundqvist (1070102) | more than 7 years ago | (#18273832)

I think thats the key phrase, flagrant violation. Most of the outsourcing companies use non-compete clauses and its sometimes hard to find work other than with another outsourcing company. If I started my own outsourcing company or poached the previous companies customers then I'd definitely be in flagrant violation, simply working for another outsourcing company, while in literal contravention of the contract isnt outside the spirit of the agreement.

Re:Ignore 'em (3, Interesting)

Splab (574204) | more than 7 years ago | (#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:Ignore 'em (1)

Rob the Bold (788862) | more than 7 years ago | (#18275528)

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.

Re:Ignore 'em (1)

Detritus (11846) | more than 7 years ago | (#18275898)

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".

it depends. (4, Insightful)

User 956 (568564) | more than 7 years ago | (#18273158)

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.

Re:it depends. (1)

eric76 (679787) | more than 7 years ago | (#18275608)

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, the confidential information may now be provided a reasonable time after the signing of the agreement.

Employers still require employees to sign the agreements. I really think that the purpose is to discourage them from leaving to work for a competitor by a clear threat to file suit if they do.

Too common (2, Insightful)

Johnny Mnemonic (176043) | more than 7 years ago | (#18273172)

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.

I'm on such a job currently... (3, Interesting)

RuBLed (995686) | more than 7 years ago | (#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.

Re:I'm on such a job currently... (1)

chriso11 (254041) | more than 7 years ago | (#18273272)

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 ignore it later. Lawyers have ways of making you adhere to contracts.

Re:I'm on such a job currently... (1)

TubeSteak (669689) | more than 7 years ago | (#18273572)

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.

Re:I'm on such a job currently... (1)

Sique (173459) | more than 7 years ago | (#18273702)

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 of your workplace, so the issue doesn't arise.

Re:I'm on such a job currently... (1)

alragh (907360) | more than 7 years ago | (#18274632)

The non-compete clauses in the case of a company with wide ranging business will be written to cover all work an employee might do, but should only cover work that an employee was actually involved with.
That is what the 1 in my contract says.

Strange for SW, not for others (4, Insightful)

Meostro (788797) | more than 7 years ago | (#18273198)

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?

Re:Strange for SW, not for others (1)

D.A. Zollinger (549301) | more than 7 years ago | (#18273678)

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 fired the both of them. The show had a huge following, and another local station picked them up within a few days, and the whole story made the local news on all of the television stations. However, because they had both signed a non-compete contract, they couldn't work for their new station for six months, or face fines. This actually worked for the benefit of the new station who did similar programming, as they got to spout to the entire market how they have the lovebirds that everyone likes to listen to, and how bad their previous station was for firing them, and prohibiting them from working. Not a week went by that they weren't encouraging listeners to call in or write the former radio station to complain about their treatment of the two DJs. Not only were they able to keep the audience, but they were able to garner serious ill will for the competing station that fired the two DJs.

That wouldn't stand up in court here in Oregon (1)

chriscappuccio (80696) | more than 7 years ago | (#18273206)

Our state law nullifies these sorts of contracts, even if you've signed them.

Re:That wouldn't stand up in court here in Oregon (1)

Fallen Kell (165468) | more than 7 years ago | (#18274628)

Something to keep in the back of your mind. Just move to Oregon and work there if you are stuck with one of these contracts, since the state law where you currently are employed will the be the applying law.

Re:That wouldn't stand up in court here in Oregon (0)

Anonymous Coward | more than 7 years ago | (#18275642)

Posting AC because I can not remember my username.

I find this interesting as The jobs I ahve taken in Oregon have all required that I sign non-compete clauses. While thet may not be vald, employers will not hire you if you have signed one with another employer (a form of blackballing). I had to sign one with both IKON and Imagistics, these were fot trade jobs as a copier technician (no, going to college really didn't get me a better job).

Re:That wouldn't stand up in court here in Oregon (1)

Rydia (556444) | more than 7 years ago | (#18275672)

Not all of them. Just certain (what the legislature considers overly-broad) examples. The only state that outright bars them is California.

I'm not a lawyer but .. (1)

terrymr (316118) | more than 7 years ago | (#18273360)

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 also be interpreted differently depending on circumstances, it should be harder to justify enforcing a non-compete where you are terminated without cause for example.

I'd say the real question is whether a legitimate interest of your employer is being protected or whether they just want to screw people.

I'm not a lawyer, and this is not legal advice.

Contracting clauses (2, Informative)

simm1701 (835424) | more than 7 years ago | (#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.

Mine didn't even have a time limit (1, Interesting)

Anonymous Coward | more than 7 years ago | (#18273438)

My non-compete didn't even have a time limit. I was forced to sign it after my company was acquired; previously I had no non-compete. I have a family to support and would have been terminated if I didn't sign, so I did.

Fortunately, non-competes are generally unenforceable in California, and after I was later laid off, I went to work at a direct competitor.

Who had me sign that draconian non-compete? A big software company that is not terribly popular on Slashdot.

Re:Mine didn't even have a time limit (1)

anagama (611277) | more than 7 years ago | (#18273704)

Another defense you may have had if you had needed it, was that you were coerced into signing the contract. For example, if someone points a gun at your head and tells you sign over the deed for your house or you'll die, the contract wouldn't be enforced even if you signed it. Your situation could have been coercive enough to make the contract invalid.

Re:Mine didn't even have a time limit (1)

Rydia (556444) | more than 7 years ago | (#18275730)

This is annoying, but not coercive. The main point is that they are free to set the terms of your employment, and you are free to reject them. Importantly, you have a right to be able to work in the industry of your choice (invalidating overbroad DNC agreements), but not at the specific employer of your choice. Secondly, depending upon the contract, even if it does contain a period of employment, he is still likely an at-will employee (as most are), and therefore firing him for not agreeing to part of a contract modification is grounds for dismissal unless there was some sort of Title VII violation.

Good thought, but it wouldn't hold up.

Re:Mine didn't even have a time limit (0)

Anonymous Coward | more than 7 years ago | (#18273944)

SCO? No, wait, you said big. Does it rhyme with Snadobe? Spike Row Soft? Rim ant heck?

Oh, this reminds me of the ol' Freedom Debate.. (1)

hyfe (641811) | more than 7 years ago | (#18273472)

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 to be screwed over by companies. You have the freedom to sign away your liberties to everybody but the government. Now, is that really freedom, or just really advanced serfdom?

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

Husgaard (858362) | more than 7 years ago | (#18273656)

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 compensate the former employee by paying half his former wage for the duration of the non-compete clause.

If you understand danish, a Google search for "konkurrenceklausul" will give you more information.

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

hyfe (641811) | more than 7 years ago | (#18274726)

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.

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

SharpFang (651121) | more than 7 years ago | (#18273908)

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.

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

aadvancedGIR (959466) | more than 7 years ago | (#18274188)

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.

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

Facegarden (967477) | more than 7 years ago | (#18274612)

I like the way that works, with the employer having to pay you; otherwise, it's really easy for an employer to ask everyone not to compete, and since the employee has an immediate interest to do whatever their current employer asks, they may agree even though it's not in their best interest. Making the employer have to pay makes sure that they really need to have that clause, and being paid helps to make sure the employee isn't screwed. -Taylor

Re:Oh, this reminds me of the ol' Freedom Debate.. (1)

AlXtreme (223728) | more than 7 years ago | (#18274542)

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.

Illegal in Australia (2, Informative)

Timbotronic (717458) | more than 7 years ago | (#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 (1)

cerberusss (660701) | more than 7 years ago | (#18273522)

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 other work.

My employeer tried that (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18273526)

My employeer wanted me to sign that, I refused. They told me that 'Never would use that against me'. I told them 'Then why is it in the papers I have to sign?'. I still refused to sign it. So long time ago, dont realy remeber what happened. I think they change it anyhow. Not long down the road I switched to an other company cause I was sick off things like that. Respect your workforce and you will gain respet from your workforce, and the other way around... By the way, this was a webcompany.

Re:My employeer tried that (0)

Anonymous Coward | more than 7 years ago | (#18275722)

They want us to sign them too, at my review I was given a copy to review. I haven't signed it yet and don't plan to, I'm not planning on leaving but I'm not signing myself into slavery either.

It's only enforced when they want to (1, Informative)

Centurix (249778) | more than 7 years ago | (#18273574)

I've had to make employees sign such things. They are there so that if we get an employee who is valuable to us in terms of their knowledge who leaves on unpleasant terms then we pull it out as an ace. If you leave the company doing the right thing, plenty of notice, nice and amicable then they aren't going to do anything unless the company is desperate enough for money.

The other thing to remember is that business owners tend to be very aware of each other in the local marketplace. They attend the same functions, give to the same charity balls and attend the same cigar club so they can burn $100 notes. It's the adage of keeping your friends close and your enemies closer. If your boss finds out that his mens club 'friend' has hired you, he'll take it personally and then use the clause.

Re:It's only enforced when they want to (0)

Anonymous Coward | more than 7 years ago | (#18273740)

ahh, socialite faggots.

Illegal in Europe (0)

Anonymous Coward | more than 7 years ago | (#18273674)

Such clauses are illegal in Europe (where law basicly states that one can not sign away chances on future employement), in the USA, they could probably add a clause where the CEO gets to keep you as a pet when you leave if they wanted to.

Not in California (1)

kbob88 (951258) | more than 7 years ago | (#18273716)

I'm currently negotiating with my client here in California to take full-time employment with them. They wanted a 12-month non-compete. My attorney told them to suck eggs, because it is unenforceable here in Cali -- you have the right to work. So they took it out of the contract. They still want an anti-poaching clause though (can't poach their employees after you leave to work elsewhere).

If you're concerned, spend $350 to have a labor lawyer (who specializes in employee agreements) review it. As someone's who's been screwed in the past by not having an attorney review a contract, it's worth it.

Re:Not in California (1)

pla (258480) | more than 7 years ago | (#18274252)

My attorney told them to suck eggs, because it is unenforceable here in Cali -- you have the right to work. So they took it out of the contract. They still want an anti-poaching clause though (can't poach their employees after you leave to work elsewhere).

IANAL, but I can spot a bum deal. Your attourney advised you poorly.

Anticompete agreements, whether enforceable or not (usually not), amount to a two-way exchange of services - You get a job, and they get your signature.

Now, if enforceable, you might want to seriously consider that exchange, and negotiate them down... The "signature" part of the exchange has quite a lot of value, possibly a year's unemployment for you when you leave the company in question; you damned well better get something worth it for their part of the deal. It sounds like your lawyer chose this path even though deeming it unenforceable.

If unenforceable, though... Negotiate them UP. Get as much as you can for that worthless signature, and laugh, laugh, laugh as you sign it. "Yup, even my descendants to the seventh generation can't work for the competition, in exchange for which I get two extra weeks of vacation". Congrats, you got two extra weeks of vacation for literally the cost of your time to sign a worthless document.



By pointing out their error, you've given them the opportunity to try to bind you to a lesser obligation instead, one that might actually hold up in court. How has that advice benefitted you???

Re:Not in California (1)

Rydia (556444) | more than 7 years ago | (#18275834)

You can't just say "Haha, that's unenforcable!" and then win. They'll take you to court. They'll try to bind you to the agreement. They'll lose, since it's California and these clauses are per se unconstitutional, but they'll still force you to get a lawyer and likely spend as much as you'd gain through bargaining, with a lot of extra hassle.

Secondly, depending upon how the contract is structured, they could probably withhold the extra money anyway. If I were the employer I would make the full contract, then make it subject to any riders agreed to, THEN bring in the noncompete and force the employee to negotiate for the extra money as part of that. The rider would be invalid, and the employee would not even be able to get reliance, because he negotiated it in bad faith. Money goes poof, except this time after MORE court and MORE lawyer.

Even if it were part of the main contract, they could likely get that particular clause (and the extra money) invalidated for the same reasons. Hope you didn't take that extra two weeks of vacation, because if you did you would owe them two weeks' worth of pay.

Re:Not in California (1)

Rydia (556444) | more than 7 years ago | (#18275880)

"per se invalid," not "per se unconstitutional." It's too early for right me to think.

Not worth the paper they're written on (3, Informative)

8-bitDesigner (980672) | more than 7 years ago | (#18273720)

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).

Re:Not worth the paper they're written on (1)

Pig Hogger (10379) | more than 7 years ago | (#18275778)

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.

This is stupid. Suing their customers works very well for the RIAA, so why shouldn't it work for them too????

Ask them to pay for it (5, Insightful)

khchung (462899) | more than 7 years ago | (#18273826)

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.

Simple: Don't Sign any agreement you do not like (2, Interesting)

l0ungeb0y (442022) | more than 7 years ago | (#18274036)

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 knowledge acquired.
Of course the aggregate work as a whole is strictly theirs, but I'm only interested in the basic internals. A very fair trade, and this language has been accepted as a suitable alternative many times now.

So there you have it. What it comes down to is reading the documents, identifying areas that may hurt you and requiring the removal of those items if you are to engage. Just signing it with your fingers crossed and hoping for the best is not the smart or professional way to go.

Re:Simple: Don't Sign any agreement you do not lik (1)

Black Parrot (19622) | more than 7 years ago | (#18274710)

It amazes me how often business owners/managers have the arrogance to think they can stick something in an employee's face and order them to sign it.

Your future employer should know (0)

Anonymous Coward | more than 7 years ago | (#18274652)

Even if you don't care about the clause, your future employer must be told. If they go up against your former employer (FE) and the FE finds out you are working there, they might just invoke your clause and punish the new firm. All sorts of nasty things can happen, like not being able to use code you've produced. You most certainly WILL be fired then and most likely black-balled in that city.

I'm not a lawyer, but this is what I was told by the freindly HR staff at my former employer. Like everything here, take it with a grain of salt.

Contracts (1)

Weird_Hock (571445) | more than 7 years ago | (#18274674)

Do not sign ANY contract without having your lawyer look it over. Understand what you are agreeing to. I'm self employed and have been offered contracts that could have put me out of business at the end of the contract had I signed it. That's makes the lawyer a good deal. Don't know where to look for a lawyer, check my sig.

My non-compete is for 2 years (1)

NTT (92764) | more than 7 years ago | (#18274718)

But the terms are that I can't work for direct competitors in the industry. That is a list of only a handful of companies. They aren't precluding me from plying my trade as a developer overall, just as a developer for specifically what I'm doing now.

I'd read the non-compete again. It would be overly broad if it didn't specify a particular section of the workforce you couldn't work for.

Give and take (2, Insightful)

deblau (68023) | more than 7 years ago | (#18274826)

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.

Just go to work for a California company (2, Insightful)

dr2chase (653338) | more than 7 years ago | (#18274968)

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.

Don't sign it or any other unreasonable contracts (1)

TheLink (130905) | more than 7 years ago | (#18274974)

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 unreasonable clauses - e.g. unreasonable IP clauses[1] ) be struck out.

[1] Just because I work for a company doesn't mean it should own everything I think about. Do NOT sign up to be a slave. Sure the company should have rights to most stuff they tell me to create/make for them. BUT if a carpenter makes tools using his own materials and time to better build his employer's stuff, then the carpenter should own those tools. His employer should of course own what he made for them.

I've seen IP contracts where ALL ideas of yours past, present, future end up being property of the company whether or not they have any relation to the work you were hired to do, that's ridiculous.

Very Common in USA (0)

Anonymous Coward | more than 7 years ago | (#18275002)

Every position that I've had the last 15 years required a non-compete agreement as well as a confidentiality agreement. The good news is that because I don't know what I do, they can't prove I've ever violated it.

OTOH, if you are a mid-level or lower web developer, they won't bother coming after you because these agreements are really just corporate bullying. The company knows these are enforceable unless you and only you know about a specific method or technique. We all like to think we know something the other guys don't, but get real. Do you have a patent for any work? Could you? If not, forget the non-compete, unenforceable bunk dreamed up by lawyers to make good people afraid.
These agreements have been struck down over and over when anyone bothers to bring a suite. Use google, not slashdot. But don't be stupid. If you mainly work on a medical information web site, don't make your next job for the same type of site, rather work on a pet medication web site or a porn site or lumber yard site.
Asking Slashdot for any **real** legal advice is crazy, all you get are opinions, like mine.

In every recent job, I've required all agreements required for the position to be provided prior to accepting the job, when my ability to negotiate is strongest. There's nothing worst than showing up the first day at a new company and being handed a stack of "standard forms" to sign. Normal people don't get up and walk out, they have a mortgage, wife, kids to feed. Oh, get in writing that no new agreements will be required for at least 1 year and have an officer of the company sign it. That usually isn't the hiring manager, he has no power to enter agreements on behalf of the company. I haven't gotten many offers recently, as you might guess.

Experienced Advise (0)

Anonymous Coward | more than 7 years ago | (#18275168)

I went through this too (different field).

If your friends are already employed and are just now being approached with this document (after stable employment) then they are fully entitled to 'compensation' if they decide to sign this. For example I was offered 25000 more stock options as a 'bonus' when an employer tried this on me. Thanks god I was smart enough to know the game that was going on, and I called them out - which instead led to the stock and a 15% pay increase.

The other thing about non-competes is (and it sounds like this is the case here) if they try to enforce that you can't work with co-workers in the after period as well. This one is easily crossed by having a recruiter place you into the firm (where your friends work) and you want to go. Nice loop hole there.

Lastly, if you do not want to sign it (and I recommend you find an amicable way not to) and the employer gets real aggressive or fires you - they are in all sorts of legal trouble for these actions. Then you have to decide if the company you would sue is big enough to regain the legal fees of if your pockets are big enough to support them. Or just walk...

One more thing - another way to work this out is to be an independent consultant to the firm in question. Consultants cannot be asked to sign these things. (well they can be asked, but by no means should they ever). At most a consultant should sign a NDA.

This is just from my experience, your milage may vary.

Specifics. (1)

Aladrin (926209) | more than 7 years ago | (#18275270)

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 competitor, and I wouldn't want to work for anyone else that was forbidden by the contract.

The short answer is: If you think it will actually prevent you from finding any work after you quit, then you should not accept that contract. If it only takes a small chunk of the market away from you, it is probably an okay contract.

Of course, if you're the type to only stay at a job for 6 months, then you'll definitely want to keep all your options open.

I call BS. (1)

Ihlosi (895663) | more than 7 years ago | (#18275832)

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.


Re:I call BS. (1)

Rydia (556444) | more than 7 years ago | (#18276184)

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.

Current non-compete lawsuit (5, Informative)

The Bastard (25271) | more than 7 years ago | (#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]

Bad even if unenforceable (1)

GlobalEcho (26240) | more than 7 years ago | (#18275384)

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.

Table Turning (1)

AlHunt (982887) | more than 7 years ago | (#18275466)

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.

Usually it's more specific (1)

Dekortage (697532) | more than 7 years ago | (#18275636)

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 ignore it! (1)

stry_cat (558859) | more than 7 years ago | (#18275692)

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 to tens of thousands. Plus your new employer might decide to drop you when they find out about your legal problems.

Demand that it be taken out or accept the fact your employment opportunities after this job will be limited. If you can get it modified that might be ok as well although I don't see how it could really be modified to be acceptable.

As for the actual question about what to do when your current employer decides to make you sign one...Well the job market isn't too bad right now. If they insist, you can probably quit and get another job pretty quickly. Of course you have to be willing to quit and risk being unemployed for some time.

Broad NDAs = life-long non-competes? (1)

vubevab (1073242) | more than 7 years ago | (#18275772)

I've seen NDAs that comprise algorithmic/mathematical insights gained on the job/task. While I can understand value of trade secrets, this is problematic because it's impossible to get algorithms/mathematics out of one's head later, and most NDAs default to eternal (which is perfectly understandable for say customer medical data but difficult for algorithms). Am interested in precedents (either law/case law or codes of conducts in professional associations in any legislation of this world) how to find a fair dividing line (maybe by disentangling the privacy and the business secret protection aspects mixed into an NDA and giving fair limits to the latter).

Clarification (1)

vubevab (1073242) | more than 7 years ago | (#18276252)

To clarify the intention of the (not purely theoretical) question: Being able to a quote from a publicly available and quotable (model) contract that company xyz does with their employees, legislation abc suggests etc would be useful when negotiating with customers/employers. "(Respected) company xyz, legislation abc does it that way too."

The Important Thing (5, Informative)

Rydia (556444) | more than 7 years ago | (#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.
Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account

Loading...