How common are non competes?

Started by
7 comments, last by frob 5 years, 7 months ago

Hello, 

I know non competes are usually used for for ensuring a person doesn't compete after a job, but what about during?

A few of my team members say they can't help because someone at their company said, or had them sign something to say they aren't allowed to work on any other projects while they are part of the company. 

This worries me, because if I ever get an official job in the industry, they might ask me to drop my current project. (We are mainly hobbyists.)

 I'd consider it,  but I'd prefer not to be put in that situation to begin with. 

So how common is this?

I understand the point of making sure people aren't working on other projects on company time and resources, but what about if your working on a side project at home? 

 

 

 

Our company homepage:

https://honorgames.co/

My New Book!:

https://booklocker.com/books/13011.html

Advertisement

It's very common. Employment agreements often include that kind of language.

If you want to work on your own stuff, you should notify your employer of existing projects that are yours, so they don't later claim it as theirs. You do that the day they present you with a contract to sign. 

-- Tom Sloper -- sloperama.com

Is notifying them enough?

Or do we need to get some sort of exception in writing?

Most companies want people to have portfolios to get in the door, but they expect you to drop it if your hired, even on short term contracts. It seems a little counter intuitive.

I amuse they can disqualify your application if you refuse to sign?

 

Our company homepage:

https://honorgames.co/

My New Book!:

https://booklocker.com/books/13011.html

Yes, you should get it in writing. Yes, if you don't sign the employment agreement, you don't get the job.

-- Tom Sloper -- sloperama.com

Also keep in mind that some non-competes can have terms which extend out months after you leave the job. These are designed to prevent you from taking your knowledge and immediately getting hired on with a competitor to build a competing product. Companies will want to put in a term which makes it so you cannot work in the industry for a set amount of time! This means, you are legally blocked from employment in your industry after you leave the company! Financially, you are making no money, so you would need to be double sure that you are being appropriately compensated so that you can live without wages for that amount of time. In other words, if there is a non-compete clause in your employment contract, you had better be getting paid more than just the base market rate for your skills.

1 hour ago, slayemin said:

Also keep in mind that some non-competes can have terms which extend out months after you leave the job.

In most jurisdictions these have repeatedly been thrown out by the courts based on the notion that you have a right to earn a living with your skills and knowledge (note: this is not the "right to work" popular in some places).  Of course if you sign such a promise, they'd have to take you to court to enforce the contract and you'd end up paying out of pocket even if you'd inevitably win.  On the other hand, companies with deep enough pockets to sue tend to know the case law and not bother with such an unenforceable clause in a contract.

What's easier to enforce is the idea that you can't take your work with you.  That means client lists (for salepeople) or skunkworks/hobby projects developed while an employee (if you're a developer).  There are plenty of precedents where an engineer left to hit the ground running with a startup and their former employer claimed ownership and won in court.  Declarations of interests in existing intellectual property protect everyone, not just the employer.

Stephen M. Webb
Professional Free Software Developer

They've got a scale of how enforceable they are.  Certain aspects are easily enforced, other aspects are difficult.

They can't block you from working in your chosen field, those get thrown out immediately in the courts.  But depending on the details --- and those details are critically important --- they can preclude you from specific jobs or from specific activities. They are more heavily enforced when the person is of some prominence, or when they are highly associated with the brands or the company.  They are more heavily enforced when the competition is highly visible, or when the competition rivalry is widely known (e.g. leaving Coke to work at Pepsi, leaving ABC to work at NBC), or when the competition is specifically named in the contract (although that can also backfire in enforcement when a company is using it in an abusive way). They need to have a limited duration, usually under 6 months maximum. They need to have a limited geographical scope that makes sense for the job.  Usually they also require compensation for the time they're in effect; if they prevent you from working for 3 months they generally need to compensate you for those three months.

A leading news anchor on a city's major news show moving over to be the star news anchor on their direct competitor in the same city would be a problem, but moving to a news station in a distant city would probably pass legal scrutiny. Often when newscasters change companies there is a time when they are off the air, such as six months, to help with non-compete. 

Within this industry the most common time they are enforced is when a group of people leave a company to start a new startup studio and they have a game that directly competes with one they were working on. Less commonly (but still occasionally) they are enforced when a studio lead is headhunted away to another company in the same geographic region. 

Note that non-competes also tend to cover other facets like trade secrets, contact lists, and some specialized knowledge. When changing jobs be VERY careful before using any of that specialized knowledge. Check with HR and/or legal before saying "I've been working with this other group up until recently, I'll text them and get the new company hooked up!" The more time passes the better the situation is.  Enforcement of agreements looks at how likely it is that you are abusing your past relationship, including contacts and goodwill established at the past job.

 

There is a second type of agreement similar to a non-compete. Non-solicitation agreements are a similar agreements generally between companies that they won't hire other workers, or between people if you're in a role working with business contacts. These also have a sliding scale. The most enforceable agreements protect trade secrets. People can still leave the job and change companies, but not for purposes of stealing specific key individuals, specific contacts, or specific knowledge.  For example, contractors and subcontractor companies tend to have non-solicitation agreements with the hiring company, so someone working as a contractor for one company being offered a job by the company they were being contracted for can be a problem. Another example, getting a new job at a competing company and then actively hiring a former co-worker can be a problem or be fine, depending on the details.  If they post on facebook to say "Hey everybody, I was just given a huge pile of cash to work here, twice as much as I was making before, come work here too!" that's fine because they aren't soliciting specific people or specific information or secrets. But "Hey Bob, you've been cooking for them for six years and know every recipe, come help us in our kitchen to formulate something 'new'.I'm sure the food will look very familiar ?", that one is going to have a hard time passing legal tests.  These also have time limits, geographic limits, etc.

 

All that said, it costs time and money for a company to attempt to invoke a non-compete agreement or non-solicitation in the courts.  Even if they are angry or upset about somebody leaving they need to determine how angry they are. If they're angry but not $50K+ angry, they won't enforce it. They may say or do things that make life a little more difficult down the road, and even little comments to former co-workers (like "he quit right when we needed him most") but not actually sue.  But if an entire team was lured away, or if major clients suddenly vanished and followed former employers, the company won't hesitate to pay the legal fees.

(Note about the facebook post example, that's also a borderline case, too.  The more specific it is, the worse it is for the agreement.  Posting on a facebook page of his former job members would be a no-no. Posting on a facebook page of his school alumni would be a little better. Not posting at all is the safest bet of all.)

This topic is closed to new replies.

Advertisement