Non compete agreements

[Brian Runau]

I never signed one. Probably kept me from going higher in organizations, but I've never sold myself out. I only had experience in one career field and refused to exclude myself from employment going forward if it didn't work out, as some jobs don't. These didn't exist for mid level or lower level folks until 1990's? Lawyer friend of mine told me years ago if I am concerned about language in a document sign it, but under my signature write in "With reservation of rights."

Last company I worked for was sold and the new owner sent paperwork to the customer service people to sign that included a non compete clause and controlled what people could say if they left the company. They tried to trick them into signing it saying it was their employment letter confirming details of salary, vacation, sick leave etc...

Now I read fast food workers are being pressured to sign these, even read a doctor working for a hospital in a special pediatrics field had to sign one. They cut staff and quadrupled his work load and he left to go to a competing hospital and they sued him.

Non competes are fine for intellectual property, but they are now a weapon employers use to keep people's salaries and benefits lower.

Thanks for letting me vent.

Brian

[Jim Becker]

I believe I read not long ago that there is some legal attention being paid to non-competes because of them proliferating in the way they have to areas that there is nothing unique about a particular worker. That makes for a very unfair employment situation for people in too broad of a group. I don't recall the source, however.

[Steve Demuth]

The law varies from state to state. California has long prohibited non-compete employment terms, and expanded enforcement of them this year. Nebraska also dissallows them. (Kinda hard to think of anything else California and Nebraska agree on, no?). Most other states allow them, though there are few with various degrees of restrictions, and New Mexico, IIRC, bans them for doctors.

They ought to be illegal in Federal employment law, in my opinion, except perhaps for a few very few, key top-level positions. I didn't, e.g., object to signing one as part of a deal that also gave me 3 years of (in aggregate) triple compensation as a retention agreement.

[Ken Fitzgerald]

The first corporation I worked for had us sign one. 18 months later when a bunch of employees quit and started competing companies, the privately-owned corporation sued and lost in several courts.

[William Lessenberry]

When I sold a business I owned in 1976 I signed one. Didn't matter as there was no way in hell that I was going to return to that line of business ever again. :p
BillL

[Allan Dozier]

They are probably overused in many businesses but make sense in some others. For instance, a mechanic wants to sell his auto repair shop. It has a solid reputation and loyal customer base. A new young mechanic wants to buy the business. After accounting for the value of the equipment he will also typically pay for "Good Will" which is the value of the customer base that has been built up over the years and likely will continue to come in for service. He will be much further along over opening a new shop cold turkey. However, if the selling mechanic opens a new shop a block away he won't be getting what he paid for. Or if the seller goes to work for a competing shop down the street and his long time customers follow him. If I were the buyer I would of course insist on a non-compete.

[roger wiegand]

I've been on both sides of non-competes, as employee or as one of the founders in a startup. They can be a useful, and sometimes necessary, tool for protecting intellectual property, and I've signed several. The scope of the non-compete field is always carefully negotiated, as is the term of the agreement. In most tech fields 12-18 months is the maximum I would consider-- if you're not moving faster than that you have bigger problems than non-competes. They have never created an issue that I know of when the field is described appropriately, eg use of a specified technology in a specific application. That's usually sufficient to protect a company's interests while allowing an employee to work in their area of expertise. I'd never sign one without having my lawyer go over it in detail. Typically the people who you'd ask to sign a non-compete are sufficiently valuable to your company that they have a fair amount of negotiating power.

Application of them to generic jobs where people don't have highly specialized skills/knowledge to restrict their freedom of movement among jobs is flat out evil and manipulative and should be banned. IIRC, MA law specifies that such agreements cannot be written to prevent you from working in your area of expertise.

[Alan Lightstone]

I was forced to sign a non-compete clause in a contract when moving to Florida 27 years ago. It turned out afterwards that the doctor who owned the practice was a real dirtball and was committing billing fraud. I quickly got out of the practice, but had to work 30 miles from home, which was no small feat when having to drive in quickly for emergencies due to the distance required by the non-compete clause.

When I moved back to this county taking a job much closer to home, he sued me for the non-compete clause. 12 months after I left. $50K in legal expenses, he dropped the suit, but kept $30K in back pay. How that clause helped the local population here, keeping a Harvard trained specialist physician working in a competing hospital instead of being able to care for sick patients is beyond me.

Fortunately, a couple of years later I heard that he and the hospital CEO were escorted out of the building by security, and canned. Way too late for me.

Needless to say, non-compete clauses are routine in medicine down here (every practice I know of down here), and they screw doctors and hurt patients. And since corporate medicine is now everywhere, and these clauses are routine and mandatory, the present situation is truly sad. And in my field, anesthesiology, they are absurd because no one chooses a hospital based on their anesthesiologist. We're a captive audience. Patients choose hospitals and/or surgeons based on their reputation. We're the hidden ones behind the scenes keeping patients alive and save.

I could rant about this for years and years having been harmed by them...

[Dave Fritz]

That's part of the reason corporations don't like unions. They wouldn't get away with it because the union would have their own lawyers and negotiators.

[Jack Frederick]

In my business one of my biggest lines went with new management and it was the top guys chance to hang his star in the heavens. Non-comms were required of all the employees and they are aggressively enforced. Field service techs & clerical staff couldn’t go to another company. It was incredibly mean spirited, ruined the moral at a good outfit and the whole place has turned over in 5 yrs. That type attitude was of course projected out to the customer base and it has lost many of them too.

[Dan Friedrichs]

FTC is actively working to ban them: https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition

This is something that everyone should be in favor of.

[Jim Koepke]

Can't remember the book it was in, but one author on job hunting suggested signing such documents with, "I Will Sueyou." Apparently, if you just nod and sign not much attention will be paid and you will just be given the next piece of paper to sign.

Before going out on job hunts I would practice signing that quickly and making it look like a signature.

jtk

[Brian Elfert]

Non-competes make sense in a few positions where the employee is likely to take a lot of the businesses' customers with them if they leave and get a job nearby, but those are very rare use cases. I have never had to sign a non-compete myself. A lot of employers abuse them. I assume they do it to make employees stay with the employer. An employee is less likely to leave if they have to move, or have a long commute to work in the same industry.

I wonder how they work in the age of remote working? If based on distance can they stop you from working remotely for an employer that is not local?

[George Yetka]

I believe Non competes are fair if you are selling a business. If you were to sell your established business then move down the road and open a new one and take your clients back it would be unethical and the non compete would be fair. If you are hired and need to sign a noncompete for a job and get laid off a non compete is BS. What are you going to do with your skillset?

As far as taking clients from a business you formerly worked at, that is a little greyer. In contracting its usually based on estimates so all's fair.

[Dave Zellers]

I have a friend whose son was just let go from a fairly high up job. He is subject to a non-compete for a year but they are paying him for that year. In the interviews he is having now for new work, the new company knows he can't start until that time is up.

That seems to be a reasonable way to handle the situation.

[Mark Wedel]

While being paid for a year makes that non compete not as painful financially, it does mean that his career is not advancing in the next year, which could have long term consequences for compensation (not getting a raise/promotion this year is lost income for future years).

But a lot of people would jump at the opportunity for a 1 year paid sabbatical, even if it puts one career on hold.

[Dave Zellers]

But a lot of people would jump at the opportunity for a 1 year paid sabbatical, even if it puts one career on hold.

On this level the interview process for new employment is measured in months. You go up through the levels of the company if the previous level approved you. A different world from what most of us are accustomed to.

As described earlier, selling a business would be an important place for a non-compete but it seems for lower level workers it's abusive.

[Maurice Mcmurry]

My Scoutmaster got run out of town with a 20 year no compete for check kiting. 20 years later he was back in town and up to the same behavior.

https://www.justice.gov/usao-wdmo/pr/two-university-missouri-physicians-plead-guilty-health-care-fraud

[Bill Dufour]

When teachers or school administrators retire they can not be rehired, by their original district, full time unless they get a special dispensation from the state due to a shortage of their speciality. They can go back and work part time or as a substitute. Once they make more then 20,000 as a sub they lose retirement money equal to the amount over.
Bill D

[Jim Becker]

When teachers or school administrators retire they can not be rehired, by their original district, full time unless they get a special dispensation from the state due to a shortage of their speciality. They can go back and work part time or as a substitute. Once they make more then 20,000 as a sub they lose retirement money equal to the amount over.
Bill D
"Location, location, location", Bill...

[Jim Koepke]

When teachers or school administrators retire they can not be rehired, by their original district, full time unless they get a special dispensation from the state due to a shortage of their speciality. They can go back and work part time or as a substitute. Once they make more then 20,000 as a sub they lose retirement money equal to the amount over.
Bill D

This is a similar situation with many beneficiaries of CalPERS (California Public Employee Retirement System). A similar rule applies to me. My last employer was a public transit agency. My situation is different from a lot of other CalPERS retirees. Many people like teachers, law enforcement, fire fighters and others work their whole career in a public agency. Mine was about half public, half private sector. My contributions to my retirement funding during my public agency career were enough to disqualify me from receiving any Social Security benefits. It is fine with me that other retirees are benefiting from my contribution.

During my private sector work one business I serviced was a maker of industrial hot melt glue equipment near Monterey, CA. These units had large sprayers that were fed from 55 gallon drums. The units held two drums to allow replacing the drums without having to stop. My contact person there told me one of their applications was for gluing in the floor mats on automotive assembly lines. One of their employees left and took some workers with him to compete. The two big makers in the business were within a mile of each other.

This was likely before they thought of noncompete clauses in hiring paperwork.

jtk