Non Compete?

[Corban_White]

So, after almost 2 years of employment, yesterday my boss asks if I ever signed the non compete agreement when I was hired. I hadn't so he gives it to me to sign. The reason for the sudden interest is because several of the clients I have worked for have expressed an interest in hiring me. So far I have turned them all down because I am treated fairly well here but I am wondering about the future. What kind of legal footing does a non compete have? The paragraph that I am most concerned with says:

"During the term of Employee's employment and for a period of one year thereafter, Employee will not:

(a) induce or attempt to induce any customer, client or supplier of the Company to reduce the level of business with or to cease or refrain from doing business with the Company, or in any way materially interfere with a relationship between the Company and any such customer or supplier. A "customer" is defined as a business entity that the company is currently engaged in work with or have previously been engaged in work within the last 3 years as of the termination date of the employee.

(b) work or offer services as an employee or independent contractor for any person or entity that is a customer of the Company.


Understand that I am not handing out my resume or applications or anything like that. I am fairly happy where I am at and have no desire to screw my employer. That being said, I have had some fairly good offers-completely unsolicited by me. If, in the future, a better opportunity than my current one presents itself, I would be inclined to accept it. In such a situation, what kind of legal ground does the non compete hold? (assuming I actually sign it) None of the positions I have been offered were a position that would replace the work we were doing as a contractor, they were simply a current position in the company that had been vacated for one reason or another. Thanks for the insight.

 

[I Lean]

The way I read it, neither of those paragraphs limit you from working for anyone, you just can't do anything to reduce the amount of business they give your current employer.

As for the second paragraph, that's just saying "don't do side work for customers".

 

[Rusted]

The company that I work for has pursued two non-competes that I know of and blocked that person from taking the new job they ageed to.

From the companies side I can see they try to protect their customers and clients. I see no indication that you can't work for a competitor.

I am no lawyer, but if you are worried you may want to ask someone who does know.

But the way I read (a) it seems pretty weak. They don't want you to "reduce the level of business". My guess is that it would be VERY difficult for the business to defend that to a judge. Business levels go up and down naturally, they would have to prove that your actions caused a down that was outside of normal somehow. What if your actions made their business increase because you made their client stronger??

(b) seems like more of a problem since they are blocking you from working for a customer. Notice that it is only customers that you are blocked from, you still have the option to work for clients or suppliers or partners. So (b) seems pretty loose as well.


Is there any recourse if you don't sign it? Will they allow you to edit it before you sign?

 

[Rusted]

I hate you I Lean!!!!

While I typed for 20 minutes in deep thought you rattled off two sentances that says exactly what I was trying to say.


No wonder you get more stuff done during the day than I do.

I hate you I Lean!!!!

 

[Caleb]

The way I've always understood non-competes in Utah is because Utah is a right to work state, they can't prevent you from making a living doing what you know how to do. Reading those paragraphs though, it sounds, like Carl pointed out, you just can't do anything to reduce the amount of work they are currently giving your current company. The one thing that's concerning about this though is the line preceding the paragraphs, "During the term of Employee's employment and for a period of one year thereafter, Employee will not:" with the combination of your second paragraph "(b) work or offer services as an employee or independent contractor for any person or entity that is a customer of the Company." It sounds like they are trying to prevent you from working for a competitor or customer for one year after your employment with them. But as I stated earlier, because Utah is a right to work state, they can't prevent you from earning a living I'd consult an attorney though to be sure.

 

[Spork]

So they want to change the terms of your employment? Seems to me like compensation is needed for changed terms. :greg:

 

[solidfrontaxle]

What are the repercussions of not signing it?

 

[SAMI]

What are the repercussions of not signing it?

That would be my first question.

When I worked at ClearBra years ago I witnessed this situation play out. When I was hired on they had me sign a non-compete form. At that time they realized their veteran installer had never signed one. They pushed him to sign it, and he left to go do the same type of work at a different company for better pay.

Not to be a jackass to your employer, but if it's not worth it to them to give you compensation for signing then i'd probably explore looking into some of those other offers that you've recieved. I'd talk that over from a purely business standpoint with no emotions or 'reactive' attitude as though you are entitled to some compensation.

If they're worried you might leave to work for a current vendor, customer, or competitor, they must like you and your work. So, in theory, they should be willing to work something out as far as benefitial/compensation..

 

[JL Rockies]

Non competes are serious business but only as strong as the company's will to enforce it. It is enforceable no matter where you live. Some industries are so competitive that these are common place.

 

[Stephen]

The way I've always understood non-competes in Utah is because Utah is a right to work state, they can't prevent you from making a living doing what you know how to do.

This is how I always understood it. I just lost my job yesterday due to some funny situations and I had signed a non-compete that was similar. I'm still going to apply with anywhere and anyone I can think of because in my opinion no judge would uphold a silly non-compete in this economy unless I was actively working for a direct competitor and providing trade secrets.

 

[TRNDRVR]

I am fairly happy where I am at and have no desire to screw my employer.

Yeah but......what's up their sleeve?

 

[EB101]

It seems that a lot of corporate lawyers are trying to justify their jobs right now and it makes going after non-competes look like easy prey. I have seen companies take on the burdan of defending against non-compete suits. Usually it boils down to: Just stay out of accounts you worked in under the old employer.

By the way.. I am not a lawyer but work for a company that has a full staff of them and have seen them go after ex-employees. And yes, I had to sign one as well. The good news is that if they let you go then a serverance package is about the only way they can enforce it.

Sign the non-Compete if you think you have a future there, otherwise maybe a little kick like this will get you started on bigger and better things.

The bad news is that you are probably in a situation that also has a compensation plan that says something like "This is what we will pay you unless we don't feel like it. Sign here.."

Good luck out there.

 

[Herzog]

The more I think about non-competes the more angry I get. If a company thinks you are worth the work they are paying you for, they should make sure you are happy and taken care of so you don't run off with a different company. Free market.

A non-compete is just their weasel way of not paying you what you are worth by keeping you scared.

 

[SAMI]

Agreed Shane

 

[rollover]

If I were you I'd get professional advice. The cost of them looking it over in todays job market is a good idea.

Someone shows interest in you and now your employer is scared of what you may do. If you sign does your company give you something like an extended contract? After all you've been there 2 years + now without one signed. They should not of allowed you to work if it wasn't signed before you started if thats their company policy.

I'd ask a pro. Your giving up some of your rights to find employment if they terminate you (now or later) or you leave for a better job on your own.

JM2C

 

[ichi-san]

I found this here: http://www.journalofaccountancy.com/Issues/2004/Feb/ToCompeteOrNoncompete.htm

Who has to prove the reasonableness or unreasonableness of a noncompete agreement? In most states the employer has to show its noncompete agreement is reasonable. However, Arkansas, Colorado, the District of Columbia, Minnesota and Utah place the burden of proof on the employee who challenges the validity of a contract. Maryland and Texas place the burden of proof on both employer and employee: The firm must prove a violation of the contract likely will cause irreparable injury to the firm. The employee must show the employment contract is unreasonable. Consult an attorney about guidelines in your state.

I have also read that new employers can be sued for damages as well as you.

Based on being an established and valued employee I would think you have some bargaiing power in this situation...

 

[Corban_White]

Thanks for all the responses guys! The repercussion of not signing it-if anyone notices-is technically termination (as it states in the agreement that my employment is contingent on signing). However, the truth of the matter is that I can likely "forget" to do it and it will likely be forgotten. The company is small (13 employees or so) and the boss/owner is rather forgetful. We have no company lawyer but we use the services of one when needed (like drafting non compete agreements ). In all likelihood I will "forget" to do it while consulting with a lawyer to find out how hard I should fight it should they press the issue.

 

[Rusted]

I did just that for as long as I could. I forgot to turn mine in for years I had a friend forget to sign his before it was turned in, and it went un-noticed. When he left for a competitor they opened his file and discovered that it was not signed

 

[SAMI]

^that's funny

 

[jdub]

I'm currently in violation of mine but my current boss is a Lawyer and will do what it takes... so I have my own non-compete working for me. "Don't even try!" My previous employer never valued his employee$ $o he has everyone training on his time and walking into a better work environment and to my knowledge it isn't worth the hassle to pursue it.

Bottom line, Get caught doing it while under employment--you get fired.