non-compete clause

Let me preface this by stating that most non-compete clauses apply mostly to workers in white collar jobs and especially those engaged in the high tech industry. For those of you who work in such blue collar jobs as construction and factory workers, I don’t think it applies.

So, you’ve finally landed that dream job you’ve been searching for! Congratulations! Years of toiling through the ranks and looking to climb the corporate ladder have finally paid off and you’re finally sitting pretty atop the heap. You’ve got a secretary, a corner office with a view and while the rest of the staff works in the vast pit of the cube farm, you’ve actually got a door to your office that closes and affords you some semblance of privacy. All is right with the world…

But then, a funny thing starts to happen. Maybe you’re passed over for that next promotion and you notice that you’re not getting invited to as many meetings as you’re used to. You seem to be eating lunch more and more by yourself and your e-mail which once flowed so freely has dwindled down to a trickle. You start to feel unappreciated and a general malaise greets you each day when you come through the office doors.

Being a person of action, you start surfing the Internet for jobs in your field. You polish up your resume and send it out to the various headhunters about town and start making some preliminary phone calls to various associates about town and hinting that you're looking to make a career change.

All of your diligence pays off and soon you’re offered a job in a competing industry just down the block. You heave a sigh of relief and vow to make a fresh start and a good impression at your new place of employ. Once again, all seems right with the world.

Not so fast mon ami, you just might be shit out of luck.

In these days of ever increasing corporate competition for high priced talent, many employers have their employee’s sign what’s known as a non-compete clause when they initially get hired. Effectively the clause stipulates that should the employee terminate their services, they won’t accept employment with a competing firm in the area that is engaged in the same field. The clause usually lasts for at least one year.

Originally these clauses were designed to protect so called “trade secrets” and to keep the departing employee from pilfering both the secrets and customers and bringing them over to the competing firm. That was all well and good but with the advent of high tech jobs, the ability to work from home and this thing called the Internet, some employees found that they were being blackballed from the entire industries.

Naturally when faced with that situation, we do what we do best. We file a lawsuit and threaten to sue the former employer because of “loss of livlihood” and let the judge decide.

Many courts are deciding in favor of the big guys, the corporations. I don’t know if that’s because they come to court with a phalanx of high priced corporate attorneys to back them up or if the judges own stock in one of the companies. To me, it’s just a case of the little guy getting screwed. (More on that later)

Just sign on the dotted line

If you’re in the high tech biz, chances are that when you’re initially hired you’re going to be asked to sign a non-compete clause. Basically it states that any information you obtained while working for the corporation will stay with them should you choose to leave. It’ll probably also stipulate that you’ll refrain from joining a competing firm for a period of at least one year.

You must sign zee papers old man!

For whatever reason, let’s say that you’re a bit hesitant to sign along the dotted line and refuse to do so. Guess what happens?

In most instances, you’ll be out of there before your ass has a chance to hit the chair. “Thanks for coming and playing our game but sorry about your luck! Please take our home version with you because you’re going to be spending an awful lot of time there.”

The only thing I can think of that will make a company hire you even though you refuse to sign is that they’re really desperate for talent or that your skills or so good you’re gonna revolutionize the way they do business.

Whoa, this can’t be legal.

Wanna bet? In most states it’s perfectly legal to refuse employment for individuals who refuse to sign. Some states however, most notably California, cannot restrict the livelihood of their current and former employees. I’d advise you to check with the powers that be in your state of residence for any clarifications and terms you need before making your decision to accept that once in a lifetime opportunity.

Screw them, I’m leaving anyway

You best think twice about that. If the company you’re leaving hasn’t done anything wrong to make you leave, they’re within their legal rights to deny you employment at a competing firm for the terms of the contract.

Again, that depends on the value you bring to your new place of employment and the threat that your departing company feels to their bottom line as a result of your departure. Some companies feel that if there’s a low risk that you’ve made off with their secrets and you won’t go about contacting their customers, they’ll probably let you slide.

Other companies however might see this is as setting a bad precedent and use it to serve notice to their other employees right where they are.

Personal experience

Years ago I worked for a tiny little company that goes by the name of Fidelity Investments. Maybe you’ve heard of them? Anyway, I had signed a non-compete clause with them but after they tried their hand at getting into the field of banking and installing Trust accounting systems I got an offer from one of their customers to go independent and to be hired on as a consultant.

The money was better, the travel was less and I decided to take it. About a month later I got a letter from Fidelity’s attorneys stating that I was in violation of the non-compete clause and I should terminate my employment immediately less further action be taken.

I wrote them a letter back stating that I, simple borgo running a one man operation surely could pose no threat to a nine billion dollar corporation and went about my business as usual.

I never heard from them again.

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