Why I Don't Sign Non-Competes(penguindreams.org)
penguindreams.org
Why I Don't Sign Non-Competes
https://penguindreams.org/blog/why-i-dont-sign-non-competes/
294 comments
That's fine. If someone is willing to pay you, then they are allowed to tell you what to do. Whether that's "Do this job", or "sit at home watching TV, but don't work for this company"
I've had non-compete agreements provided to me to sign in the past, usually as part of a packet of things to sign. In each case I just pocketed them without signing them. I've never had a company come back later and demand that I sign the thing. If they don't do their diligence, I don't see why I should do it for them.
In other words, just because someone puts something in front of you to sign doesn't mean you have to sign it, or even comment or push back on it. You can just ignore it.
In other words, just because someone puts something in front of you to sign doesn't mean you have to sign it, or even comment or push back on it. You can just ignore it.
(IANAL)
Not signing the contract is one thing. Misrepresenting your position is something else. If you gave the impression that you agreed to the terms provided, then it's possible you could be held to those terms.
A contract isn't defined by a signature. A contract is defined by a "meeting of the minds." The signature is commonly-accepted evidence that such a thing occurred, but it's not essential.
By pocketing the contract rather than pointing it out to them, you've arguably violated the "meeting of the minds." The company was under the impression that was part of the agreement. You can dither about "due diligence" and say it was there responsibility to check, but in some cases that can be seen as an intentional misrepresentation on your part, for which there are consequences.
I will concede that this is unlikely to come back to bite you in practice. But others should be aware that it is technically playing with fire. And personally, I consider it unethical.
Not signing the contract is one thing. Misrepresenting your position is something else. If you gave the impression that you agreed to the terms provided, then it's possible you could be held to those terms.
A contract isn't defined by a signature. A contract is defined by a "meeting of the minds." The signature is commonly-accepted evidence that such a thing occurred, but it's not essential.
By pocketing the contract rather than pointing it out to them, you've arguably violated the "meeting of the minds." The company was under the impression that was part of the agreement. You can dither about "due diligence" and say it was there responsibility to check, but in some cases that can be seen as an intentional misrepresentation on your part, for which there are consequences.
I will concede that this is unlikely to come back to bite you in practice. But others should be aware that it is technically playing with fire. And personally, I consider it unethical.
If the employer wants the NDA to be part of the agreement, they should include it in the conditions of the employment contract.
If they offer me a separate contract to sign for their non-disclosure terms and I agree neither verbally nor in ink, I think it's a stretch to call it a misrepresentation of my position. Given that this type of contract usually offers absolutely nothing in exchange, it would be more reasonable to assume that I don't agree, if I don't sign it or express agreement otherwise.
Also IANAL, but at the very least I don't think that this is unethical.
If they offer me a separate contract to sign for their non-disclosure terms and I agree neither verbally nor in ink, I think it's a stretch to call it a misrepresentation of my position. Given that this type of contract usually offers absolutely nothing in exchange, it would be more reasonable to assume that I don't agree, if I don't sign it or express agreement otherwise.
Also IANAL, but at the very least I don't think that this is unethical.
In every case I've heard of where someone was pressed for misrepresentation, it was for actively misleading the other party.
Verbally agreeing to the NDA then not signing might count. Signing a fake name would obviously count. Editing a digital contract before signing might count, and not highlighting the edits in a "track changes" negotiation would probably count. If you returned the papers and said "these are all set" or something, I guess you might be at risk.
But just... not signing a thing? If someone puts it in front of you without negotiating or asking for consent, then accepts it back unsigned? I've never heard of a lawsuit arguing anything even close to "I handed him a paper, so he should have spoken up to tell me he wasn't signing it", and I can't imagine it'd go anywhere.
(On which note, every NDA I've seen has been explicitly brought up to ensure that I was ok with it. But I guess that's not universal?)
Verbally agreeing to the NDA then not signing might count. Signing a fake name would obviously count. Editing a digital contract before signing might count, and not highlighting the edits in a "track changes" negotiation would probably count. If you returned the papers and said "these are all set" or something, I guess you might be at risk.
But just... not signing a thing? If someone puts it in front of you without negotiating or asking for consent, then accepts it back unsigned? I've never heard of a lawsuit arguing anything even close to "I handed him a paper, so he should have spoken up to tell me he wasn't signing it", and I can't imagine it'd go anywhere.
(On which note, every NDA I've seen has been explicitly brought up to ensure that I was ok with it. But I guess that's not universal?)
Oh no this is not true - if they can't find the signed paper work it is Absolutely on them. I've been square in this situation before - the company's legal "person" is absolutely in charge and responsible for collecting whatever signatures they want and which ones are optional and required. I absolutely disagree with this post.
I would also generally agree with this.
I had a client once who worked for a company for a few years, then did not for a few years, and then did again for three decades. The company terminated this person. The company found out this person had had a side business for more than a decade in the same industry. My client had signed an IP assignment during the first tenure, which lapsed at termination, and then never signed a new one.
The company tried to take all of my client's IP. They failed for lack of execution.
(I did not represent this client on the IP/non-compete/employment stuff; I did NDAs/licensing for the side business. But I have first-hand knowledge of this.)
I had a client once who worked for a company for a few years, then did not for a few years, and then did again for three decades. The company terminated this person. The company found out this person had had a side business for more than a decade in the same industry. My client had signed an IP assignment during the first tenure, which lapsed at termination, and then never signed a new one.
The company tried to take all of my client's IP. They failed for lack of execution.
(I did not represent this client on the IP/non-compete/employment stuff; I did NDAs/licensing for the side business. But I have first-hand knowledge of this.)
(IAAL)
Just for clarity's sake:
Some kinds of contracts definitely do require signatures to be executed and others don't. If it's important to you, then make sure you know which kind of execution yours requires.
I have read cases where employment agreements are void for lack of signatures. But, I am not an employment lawyer, and every jurisdiction is potentially different.
Just for clarity's sake:
Some kinds of contracts definitely do require signatures to be executed and others don't. If it's important to you, then make sure you know which kind of execution yours requires.
I have read cases where employment agreements are void for lack of signatures. But, I am not an employment lawyer, and every jurisdiction is potentially different.
Could you be more specific? I am curious. Did not realize contracts could be implicitly signed.
Implicitly signed? Like verbal assent? Yes, some kinds of contracts do only require verbal assent of the parties in order to be executed.
More specific about what? I can try.
More specific about what? I can try.
Like what scenarios would a signature not be required, it is my understanding verbal contracts are enforceable. But can you give verbal assent to a written contract?
In absolute numbers, there are probably more contracts executed every day that must be in writing, but there are probably more types of contracts that simply do not require writing.
In any of these types of contracts that do not require writing, you can write your terms down on paper (or memorialize them in any way you agree upon; email, napkins, etc) and still verbally execute the agreement. The writing will then become evidence of the verbal agreement.
For any specific type of contract, you will want to consult a lawyer in your jurisdiction. There is just too much variability to account for.
If your question is, "If someone gives me this written contract, and I don't sign it, but I say, 'yes, I'll do this' -- can this contract be enforced against me even if I didn't mean it and didn't sign it?"
The answer to that could very well be: Yes, you're on the hook. So don't say yes unless you mean it.
Don't ever say yes just to get out of a situation. Say, "I need to think about this for a couple of days." And if they push you, then say you're really sorry but you can't agree without thinking about it.
In any of these types of contracts that do not require writing, you can write your terms down on paper (or memorialize them in any way you agree upon; email, napkins, etc) and still verbally execute the agreement. The writing will then become evidence of the verbal agreement.
For any specific type of contract, you will want to consult a lawyer in your jurisdiction. There is just too much variability to account for.
If your question is, "If someone gives me this written contract, and I don't sign it, but I say, 'yes, I'll do this' -- can this contract be enforced against me even if I didn't mean it and didn't sign it?"
The answer to that could very well be: Yes, you're on the hook. So don't say yes unless you mean it.
Don't ever say yes just to get out of a situation. Say, "I need to think about this for a couple of days." And if they push you, then say you're really sorry but you can't agree without thinking about it.
When you get a job offer and do not have a current job you are automatically signing everything under duress. You don't get to eat unless you sign that, therefore you signed it.
Such arguments tend to hold weight in court.
Such arguments tend to hold weight in court.
I'd love to see just one case where someone flew that line past a judge.
> (IANAL)
That reminds me, I am going to add some of these points to "questions for my employment attorney" for next time I change jobs. It's not very expensive to purchase an hour of an attorney's time and they can answer a bunch of questions like these.
That reminds me, I am going to add some of these points to "questions for my employment attorney" for next time I change jobs. It's not very expensive to purchase an hour of an attorney's time and they can answer a bunch of questions like these.
Unethical?
It seems ethically equal to a company using their bargaining position to advantage themselves and disadvantage their prospective employees.
It seems ethically equal to a company using their bargaining position to advantage themselves and disadvantage their prospective employees.
I agree that many companies behave unethically during negotiations with their employees.
I disagree that excuses unethical behavior on the part of the employees.
I disagree that excuses unethical behavior on the part of the employees.
So you feel it's just for employees to hold themselves to higher ethical standards than their employer? To their own financial detriment?
I'm being pointed here, but I feel that's a fair representation of what we're talking about.
Specifically for all but the most specific competitor-worded non-competes, the company knows exactly what it's doing: retaining employees through a cheaper method than compensation.
I'm being pointed here, but I feel that's a fair representation of what we're talking about.
Specifically for all but the most specific competitor-worded non-competes, the company knows exactly what it's doing: retaining employees through a cheaper method than compensation.
First, I think the ethical standards one holds oneself to should be independent of who you're interacting with. Lying to a saint is the same as lying to a sinner. (I think lying is justifiable in many cases, but "lying to a bad person" is not a blanket justification.) If for no other reason, it creates a race-to-the-bottom for acceptable behavior.
Second, in this particular situation there is an above-board alternative, which is to reject the terms in a clearly-communicated fashion. Were there literally only two alternatives which were "lie by omission" and "starve" then this conversation would be different. But I think in the real world, there are more alternatives available. If there are ways of achieving the same ends without deceit, then the use of deceit is unjustified.
Second, in this particular situation there is an above-board alternative, which is to reject the terms in a clearly-communicated fashion. Were there literally only two alternatives which were "lie by omission" and "starve" then this conversation would be different. But I think in the real world, there are more alternatives available. If there are ways of achieving the same ends without deceit, then the use of deceit is unjustified.
I used to think more in the mode of your "First" perspective. Yet the more of the world I see, the more I come to believe that in a majority of important life situations (in the US at least) acting in an unethical manner is a strictly winning strategy (from a game theory perspective, in that it trumps all possible other strategies).
Not that I'm using that as an argument to be an unethical person.
But I am saying I feel it's a justification to act in a more Rooseveltian realpolitik manner: treat someone ethically until they demonstrate a lack of ethics. And even then, strive to conduct oneself to a higher standard, but firstly protect yourself and your aims at all times.
Most unethical behavior seems advantageously predicated on others' ignoring / accepting it. To the contrary, confront it! And win!
To your second point, granted with a caveat. The "freedom to turn down a job" is a freedom many aren't afforded (and I daresay most don't have the benefit of affording at least once in their lives).
Saying "Yes, but we have better, more ethical alternatives" feels elitist and... inapplicable to the average working person.
So yes, while most people commenting here may have that option, there are a huge number that don't. (Hence why non-competes should be ruled unconstitutional)
Not that I'm using that as an argument to be an unethical person.
But I am saying I feel it's a justification to act in a more Rooseveltian realpolitik manner: treat someone ethically until they demonstrate a lack of ethics. And even then, strive to conduct oneself to a higher standard, but firstly protect yourself and your aims at all times.
Most unethical behavior seems advantageously predicated on others' ignoring / accepting it. To the contrary, confront it! And win!
To your second point, granted with a caveat. The "freedom to turn down a job" is a freedom many aren't afforded (and I daresay most don't have the benefit of affording at least once in their lives).
Saying "Yes, but we have better, more ethical alternatives" feels elitist and... inapplicable to the average working person.
So yes, while most people commenting here may have that option, there are a huge number that don't. (Hence why non-competes should be ruled unconstitutional)
Specifically, what do you find unethical about it?
I fail to see why not signing an agreement you disagree with is unethical.
Disagreeing with terms is not unethical. It's the "pocketing." An explicit rejection of terms is perfectly reasonable. But I think it's deceit to try and hide from the other party that you did not agree to all the terms that were offered.
> It seems ethically equal to a company using their bargaining position to advantage themselves and disadvantage their prospective employees.
You must be unfamiliar with the software development market. In which way do employers have massive market power which renders prospective employees vulnerable?
If anything, it seems like developers have the upper hand (perhaps with the exclusion of game developers).
You must be unfamiliar with the software development market. In which way do employers have massive market power which renders prospective employees vulnerable?
If anything, it seems like developers have the upper hand (perhaps with the exclusion of game developers).
Please don't make assumptions.
Whatever the current market conditions are is irrelevant. They were different 10 years ago, they'll be different in another 10 years.
I was responding to the parent's claim that social engineering around signing non-compete clauses is unethical.
I consider trying to pressure an employee to sign such a clause unethical.
Maybe you feel differently.
Whatever the current market conditions are is irrelevant. They were different 10 years ago, they'll be different in another 10 years.
I was responding to the parent's claim that social engineering around signing non-compete clauses is unethical.
I consider trying to pressure an employee to sign such a clause unethical.
Maybe you feel differently.
I am very familiar with the software development market wherein both of my job changes thus far have been multi-year searches. Please do not assume that because it is easy to walk out the door into another job in a select few markets an with a select few skill sets that it is this easy for everyone writing software for a living.
Yes, employers getting people to sign away everything they do after their employment is definitely a sign of them getting the shorter end of the stick...
Without a job, you don't eat. That alone is massive market power.
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Is there no baseline burden of due diligence that would come into play here? What if you didn't sign any of the packet and just showed up and started working. Surely you can't be held liable for the employer doing absolutely no follow-through?
but it's not essential
https://en.wikipedia.org/wiki/Statute_of_frauds
I've had an HR person tell me I needed to sign an NDA on the day I quit because it was missing (they forgot to hand me mine the day everyone got theirs). It included minimum damages of one year's salary for ANY breach. I had a lawyer friend write a much nicer and more reasonable version and told them that was the most I would sign. The only reason I even signed anything was to preserve the connections I had made there.
It’s pretty typical to be asked to sign an NDA or other restrictive agreements at termination time if you’re getting a severance payment or other benefits that you wouldn’t otherwise get if you were voluntarily leaving the company.
What were the circumstances in which they asked you to sign?
What were the circumstances in which they asked you to sign?
This happened to my dad. He was with a company for 25 years, since its founding. He knew everything there is to know about the particular product they made, not only from being there for so long, but from holding a variety of positions while there including fifteen years as operations manager. He never signed an NDA or noncompete or anything like that. The company was bought by an "investment group" which did it's typical cost-cutting stranglehold to cash in on the name before driving the company into the dirt. I tried to convince him he could start his own company, on his own terms, creating those products with the highest quality craftsmanship. He thought about it, but on his last day when the inevitable came, they coupled his severance pay to signing a shitload of these typically overbearing, draconian clauses.
I was just getting standard severance mandated by law (here in Brazil), but I was going to a sort-of competitor: both company were incubators.
That was very generous. I'd have laughed in their face in a similar situation.
No point burning bridges if you don't have to, you never know when a connection could come in handy.
That's why you say no in a professional way. But I would still say no. If professionally saying no to such an unreasonable request burns a bridge, then it isn't just a bridge you shouldn't miss, it is a bridge that is better burned.
They're also kind of burning bridges. "Hey, remember our company? When you left we demanded you sign something that threatened you with damages!"
Burning bridges with who? The HR Drone?
Be very careful with this.
I have run into trouble because of exactly this. There was a conflict in payment, I left. Their lawyer argued that even though the agreement was not signed, I had acted as if it had been (by not objecting and continuing the employment), so it was still valid.
I ended up settling, so losing money.
I have run into trouble because of exactly this. There was a conflict in payment, I left. Their lawyer argued that even though the agreement was not signed, I had acted as if it had been (by not objecting and continuing the employment), so it was still valid.
I ended up settling, so losing money.
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I mean, I get that approach, but tbh I would rather hash that out with a company before I get hired rather than 4 months down the road when some HR person notices the paperwork is incomplete.
By that point, the paperwork is complete. The hiring completes the transaction as being satisfactory to both sides.
That's not generally how it works. Modifying a contract without being clear that you are making a counter offer isn't going to hold up in court. They are going to see the company's offer, your acceptance, and then hold you to the original company offer.
Fwiw, I'd say at least half of the clauses I've been asked to sign were not included at contract time, but rather at post-contract "do HR paperwork" time.
So I don't see how that could be construed to be 'part of the original offer'.
Especially if you asked (in writing) if such a clause existed and received a negative / no response before signing the contract.
So I don't see how that could be construed to be 'part of the original offer'.
Especially if you asked (in writing) if such a clause existed and received a negative / no response before signing the contract.
Depends. There could be a reference in the main contract listing execution of the non-compete as a condition of the validity of the contract.
I'd still prefer to have issues resolved before I start employment somewhere, rather than having to deal with it when you're already at work and walking away is a bigger step.
For the vast majority of workers the company has the right at any time to introduce a new contract and require you to sign it as a condition of continued employment.
Kind of an interesting approach to it, I guess. I wonder how far you could take such a thing.
* Could you initial every page but remove any pages you didn't like from a single contract?
* Could you insert your own subtly edited version of their non-compete that you signed?
Sounds like this [1] case where a man received a credit card offer in the mail, re-wrote some terms and sent it back, and the bank accepted it without reading it. He did win the initial lawsuit from the bank.
[1] https://www.telegraph.co.uk/finance/personalfinance/borrowin...
[1] https://www.telegraph.co.uk/finance/personalfinance/borrowin...
I really respect that guy. From the linked article:
"They signed the documents without looking. They said what usually their borrowers say in court: 'We have not read it',” said Mr Mikhalevich.
Oleg Tinkov, founder of the bank, tweeted: "Our lawyers think he is going to get not 24m, but really 4 years in prison for fraud. Now it's a matter of principle for @tcsbanktwitter."
He technically won a consolation prize (30% cash back debit card) on his counter suit after both parties withdrew their suits[1].
[1]https://themoscowtimes.com/articles/man-who-outwitted-bank-e...
[1]https://themoscowtimes.com/articles/man-who-outwitted-bank-e...
Lately more companies are using digital hiring packets which employees e-sign, making this strategy essentially moot. You're unlikely to sneak under the radar when each field is required.
I've done this with a client in the past. They badly needed my help but tried to get me to sign some ridiculous paperwork (basically a noncompete / NDA plus more simply for being on the premises). They handed me the paperwork to fill out, I smiled and nodded, end of story. They asked about it again a few weeks later and I just said I didn't get around to it. Never came up again.
In a similar light, there are many places that ask you fill out your social security number among other items on paperwork. 9/10 times they will never ask you to fill in the blanks you left out...
If you leave off your social security number, your employer is presumably going to have difficulty paying taxes / social security / etc to you.
Depending on work relationship (e.g. contract), they may not be doing this anyway. But there are some things they need it for.
Depending on work relationship (e.g. contract), they may not be doing this anyway. But there are some things they need it for.
With all the stupid and unjustified uses of SSN, it's sort of funny to see this as the one people are objecting to. Working out Social Security contributions for your paycheck is pretty much the most reasonable use for that number I can think of.
I was speaking generally, not specifically employers. I was asked for my SSN to get a mailbox once...
That's bullshit. There are appropriate tax forms for that information.
You can amend any contract given to you before signing and dating. Simply cross out the sections you do not approve of and initialize the amended sections. I have done this several times with both contract clients and employers and not yet been met with any opposition, but it always went a bit different each time. Every time I advised the employer or client of the contract amendment, sometimes with no detail, sometimes with reasons why. Only once did the customer sign and give me a copy of the amended contract, while in his presence at the office, no questions. All other times the employer or client never sent me a co-signed copy of the contract, but things went forward and I was paid.
As others here have already suggested, I would agree that not signing the given contract and just going forward is not the right approach if you truly want to avoid the non-compete trap. Instead, amend the contract (or have a new contract drafted, as also mentioned earlier) and return it signed; it shows both your commitment to the work, and your attention to detail. The ball is then in their court. YOU now possess an amended, signed and dated copy of THEIR contract, returned to them along with an advisory of amendment.
As others here have already suggested, I would agree that not signing the given contract and just going forward is not the right approach if you truly want to avoid the non-compete trap. Instead, amend the contract (or have a new contract drafted, as also mentioned earlier) and return it signed; it shows both your commitment to the work, and your attention to detail. The ball is then in their court. YOU now possess an amended, signed and dated copy of THEIR contract, returned to them along with an advisory of amendment.
Now if only I could do that with software-enforced EULAs.
You know, the things that nobody reads but generally sign away all your rights.
You know, the things that nobody reads but generally sign away all your rights.
In theory you can (but unfortunately nobody does).
Send a letter via snail mail that clearly states that you disagree with their EULA but were unfortunately only made aware of the EULA after your purchase. Include a printed, revised EULA with your proposals for changes. Be reasonable in the changes you propose.
If they reply to you that they disagree with the changes, they can prohibit you from using the software or service, but then you're also entitled to a full refund, of course.
If they forget to reply, their EULA will not be enforceable.
Send a letter via snail mail that clearly states that you disagree with their EULA but were unfortunately only made aware of the EULA after your purchase. Include a printed, revised EULA with your proposals for changes. Be reasonable in the changes you propose.
If they reply to you that they disagree with the changes, they can prohibit you from using the software or service, but then you're also entitled to a full refund, of course.
If they forget to reply, their EULA will not be enforceable.
I don't know, this sounds a little bit like that sovereign citizen "wrong flag in the courtroom" stuff.
Even if they haven't replied, the original contract is still sitting there clearly stating that a certain set of assumptions are in place if you use the software. I don't see any way to argue that a non-reply implies consent to new terms or abandonment of any terms.
Even if they haven't replied, the original contract is still sitting there clearly stating that a certain set of assumptions are in place if you use the software. I don't see any way to argue that a non-reply implies consent to new terms or abandonment of any terms.
A contract is only valid if both parties agree. If one of them explicitly disagrees, the contract is definitely not valid.
[deleted]
gasp
Are... are you... this is the internet and are you... you are serious? Can I believe this? I want to believe this.
Are... are you... this is the internet and are you... you are serious? Can I believe this? I want to believe this.
EULAs in most European countries have zero value.
They are only valid if you are able to accept them before paying for the product.
They are only valid if you are able to accept them before paying for the product.
I've had two agreements that were separate pages, but all the recent ones were part of the actual job offer or employment contract. I feel like that's becoming more the standard/boilerplate.
Is that even legal ? I think in Europe they can't be part of the employment contract but as additional papers ( i may be wrong )
So recently I came across an Invention Disclosure agreement that a company wanted me to sign. The phrasing of this kind of threw me off:
"I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intellectual property which I may disclose to anyone within one (1) year after the termination of my employment shall be presumed to have been made during my period of employment hereunder and shall become the sole property of the Company."
At first glance it looks like a typical "I assign everything I invent while employed" deal, but the 1 year post-employment clause sure looks like a non-complete to me.
What do you think?
"I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intellectual property which I may disclose to anyone within one (1) year after the termination of my employment shall be presumed to have been made during my period of employment hereunder and shall become the sole property of the Company."
At first glance it looks like a typical "I assign everything I invent while employed" deal, but the 1 year post-employment clause sure looks like a non-complete to me.
What do you think?
Holy shit. That is way, WAY crazier than a non-compete. That is saying you can't work at all for a year after your employment terminates, because anything you produce during that time is presumed to have actually been created during your previous employment, and so belongs to your ex-employer. Even if you go and work for a non-competing company in a completely different field, and invent something totally unrelated to your ex-employer's business, then it supposedly belongs to your ex-employer. Since no new employer could accept that situation, it essentially prevents you from working.
I'm sure that can't be enforceable at all, but it's still completely sickening that a company would put something like that in its terms.
I'm sure that can't be enforceable at all, but it's still completely sickening that a company would put something like that in its terms.
In Germany that clause would mean they'd have to pay you your full salary for as long as they prevented you from working for someone else. So it'd be a one-year vacation whenever your employment ended, but probably not much use for your career.
Same in Switzerland. If they don't want you working for someone else, they have to keep paying you.
The only "non-compete" clauses that are even theoretically binding apply to stealing clients andn customers and the like so generally only apply to sales people.
This doesn't stop companies trying to include ridiculous non-compete clauses in employment contracts. It's sort of a silly pretence - both sides know it's not binding so the employer makes it sound as harsh as possible but the employee signs anyway.
At the end of your employment (whether fired or you walk), if they really want you to not complete, they have to offer you money - generally fully salary for the desired period of time regardless of what your contract states.
The only "non-compete" clauses that are even theoretically binding apply to stealing clients andn customers and the like so generally only apply to sales people.
This doesn't stop companies trying to include ridiculous non-compete clauses in employment contracts. It's sort of a silly pretence - both sides know it's not binding so the employer makes it sound as harsh as possible but the employee signs anyway.
At the end of your employment (whether fired or you walk), if they really want you to not complete, they have to offer you money - generally fully salary for the desired period of time regardless of what your contract states.
That's a year I could spend doing SICP exercises and learning to program in brainfuck. Of course, I would happily turn these projects over to the company and do so with an air of personal superiority regarding my work. And also pick up my paycheck.
That sounds very reasonable. And to take it a step further, if they want possession of ideas you have in your spare time, then they should pay for your spare time too! :)
That's pretty interesting.
Do you think someone in Germany under such an agreement could work for another company that had no presence in Germany or, perhaps, the EU?
Do you think someone in Germany under such an agreement could work for another company that had no presence in Germany or, perhaps, the EU?
That would be fine because that someone would not be a competitor of the company. Although you have to consider that if you earn money while being paid through such an agreement your earnings are partly deducted from them. So if you find a job which pays the same as before, your old company will only need to pay until your income reaches 110%(125% if you moved for your new job) of your old income. You are also not allowed to "maliciously refrain" from working in that time. (But that is interpreted quite lax for the employee)
Spend the year taking classes, learning new programming languages and tools. There are ways to make it work for you.
I would just return this back to them and ask, "why?"
Regretfully the negotiations didn't get far enough to get to this point, although I told them I would have to discuss things with a lawyer if they wanted it signed. Then we would have at least had a "why" to go with it.
Thankfully the deal fell apart for other reasons, although I shouldn't have been surprised by any of it.
Thankfully the deal fell apart for other reasons, although I shouldn't have been surprised by any of it.
In some states, it's not enforceable unless there's a monetary compensation that goes along with it.
In Europe a lot of these non competes are unenforceable. I work for a U.S startup in the U.K. (British citizen) some of the clauses in our contract are just flat out illegal. It’s also 26 pages long, which is almost unheard of in the U.K. I asked about it and it turns out it was written at a U.S law firm.
To me at least, it doesn't matter if it's enforceable or not. I don't want to go through the hassle of fighting it in court, dealing with lawyers, when I could avoid it by going elsewhere. Obviously I'm lucky to be able to do that, and if I was under pressure for a new job it would be a different story.
I would expect 26 pages is unheard of even in the USA.
26 pages? That's just ridiculous.
Wouldn't your salary during the employment term be that consideration?
Consideration need not be during the same period. I can pay you $X today for something that covers the next N years.
Consideration need not be during the same period. I can pay you $X today for something that covers the next N years.
As I understand the state laws - not if it's not stated as such. They don't allow it to be implicit in "you get salary X each year and operate under noncompete Y". A restriction on future work like that would require explicit compensation.
(And as for why people don't just add "compensated via your salary" to the boilerplate - that's an open-ended transaction, not a defined amount of compensation for the year of noncompete restriction.)
(And as for why people don't just add "compensated via your salary" to the boilerplate - that's an open-ended transaction, not a defined amount of compensation for the year of noncompete restriction.)
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Which states?
>That is saying you can't work at all for a year after your employment terminates, because anything you produce during that time is presumed to have actually been created during your previous employment, and so belongs to your ex-employer.
But it's not. Inventions != copyright or code produced. If I author a book after employment they don't own the rights to my book. If I write code after employment they don't necessarily own my code or rights to it.
Yes. This is WAY CRAZY because enforceable or not it abuses the information and resource availability asymmetry between company and employee.
But it's not. Inventions != copyright or code produced. If I author a book after employment they don't own the rights to my book. If I write code after employment they don't necessarily own my code or rights to it.
Yes. This is WAY CRAZY because enforceable or not it abuses the information and resource availability asymmetry between company and employee.
It's not just inventions, though. The phrase is:
Seems way unenforceable to me, but IANAL.
invention, discovery or item of intellectual property
Seems way unenforceable to me, but IANAL.
>The "item of intellectual property" would cover copyrighted material, right?
Very much possible, but as someone else alluded to, this clause is incomplete without the rest of the agreement. Somewhere in the agreement "intellectual property" may be defined [better] and it may include copyright, and it might include terms that narrow down what copyright falls within their definition of "intellectual property" (i.e. copyright-able works which pertain to the business of the company). They don't want to own everything... what if I write software for a personal pet project and it causes damages... they would open up themselves to potential liability (unless they cover that, again, somewhere else in the agreement). The entire agreement text is needed for clarity and to make conclusions.
Very much possible, but as someone else alluded to, this clause is incomplete without the rest of the agreement. Somewhere in the agreement "intellectual property" may be defined [better] and it may include copyright, and it might include terms that narrow down what copyright falls within their definition of "intellectual property" (i.e. copyright-able works which pertain to the business of the company). They don't want to own everything... what if I write software for a personal pet project and it causes damages... they would open up themselves to potential liability (unless they cover that, again, somewhere else in the agreement). The entire agreement text is needed for clarity and to make conclusions.
The agreement explicitly says "or item of intellectual property". It's absurd.
I wonder if you could create a toxic legal liability by assigning an IP right to the company. E.g. create a trademark about bestiality or pornography, and assign it to the company. Or file a toxic patent (it doesn't need a lawyer). Obvious difficulty to find something you can publish while avoiding legal liability yourself...
*The CLAUSE explicitly says "or item of intellectual property".
We can't conclude what the agreement means by "intellectual property". See comment to sister reply. We need the entire agreement text to make conclusions.
We can't conclude what the agreement means by "intellectual property". See comment to sister reply. We need the entire agreement text to make conclusions.
I can see why they've done it -- stop you from inventing something at work, knowing you can't sell it immediately, so leaving and selling it after you've left.
But the presumption clause is absolutely insane. Even if you can prove something was done after you left the company, they're still considered the owner.
Imagine someone quit that job today, 6 months later room temperature superconductors were invented, and 2 months after that the ex-employee invented a great new use for them. It's literally impossible that the invention was made at the job, but the contract still appears to claim it.
Imagine someone quit that job today, 6 months later room temperature superconductors were invented, and 2 months after that the ex-employee invented a great new use for them. It's literally impossible that the invention was made at the job, but the contract still appears to claim it.
I didn't say I agreed it (I don't), just suggesting why the firm things their clause may be reasonable.
Run away. No client/employer is worth that kind of baggage.
It's even worse than a non-compete: instead of you simply being prohibited from competing with them, they automatically own your creations.
It's even worse than a non-compete: instead of you simply being prohibited from competing with them, they automatically own your creations.
Although I agree with you - no client/employer is worth that kind of baggage - I was sort of surprised, after four months of unemployment when my last company shut down abruptly (no warning, no severance), just how many things seem negotiable when you're starting to worry about unemployment running out.
Fortunately when that is your only offer and you don't have a job you can tell the court you signed that under duress. Which is to say courts will not look favorably on the whole thing.
Courts tend look unfavorably on any agreement that doens't allow you to earn a living doing what you know how to do. As such non-competes as bad as they are are very hard to actually enforce in court. The threat of going to court though can be scary.
Remember if you need legal advice ask a lawyer not some random idiot on a forum.
Courts tend look unfavorably on any agreement that doens't allow you to earn a living doing what you know how to do. As such non-competes as bad as they are are very hard to actually enforce in court. The threat of going to court though can be scary.
Remember if you need legal advice ask a lawyer not some random idiot on a forum.
The problem with noncompetes isn't that you'll get dragged into court over them, it's that old employer makes a call to new employer and you get shown the door.
Now you have to sue somebody to get your rights upheld.
Now you have to sue somebody to get your rights upheld.
The upside is that in at least some cases, you can warn the new company and they'll agree to fight the thing - or even preemptively tell the previous company off.
Obviously that's mostly going to work for people with major leverage in the job market, but there have been some notable success stories lately of people not getting sacked.
Obviously that's mostly going to work for people with major leverage in the job market, but there have been some notable success stories lately of people not getting sacked.
Pretty much every employer I’ve ever worked for has laid claim to all IP I produce, even on my own time using my own equipment at home. This is a very common clause in any tech company’s employment agreement. If you’re going to run away from these, your employment options are severely limited.
The “within 1 year” thing, however is one I haven’t seen before. Ugly!
The “within 1 year” thing, however is one I haven’t seen before. Ugly!
I've always pushed back against "all IP even on my own time with my own equipment." You're right that it's common in tech employment, but it's never been a deal-breaker for me.
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edited to elobrate You can almost always reach a compromise if you aren't a jerk about it and can show you understand the company's concerns. Typically I have it modified so that if I'm using their resources at all (office, computer, pen they bought me, etc.) it's theirs. Or if it's directly related to their core business it's theirs. Note that this is separate from a non-compete.
The key thing is to find some clear dividing criteria that is 1. generous to the company and 2. within my control (like choosing to use my own machine). Same idea behind the "one person cuts, the other chooses" method of dividing a cake.
I'm never going to give a company all of my output carte blanche. I want to contribute to open source. I want to make little (unrelated) fun things on my own and not worry about being sued if it ends up becoming popular. The company has a reasonable fear of people competing against them while on their payroll. Both sides can reasonably expect some protection.
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edited to elobrate You can almost always reach a compromise if you aren't a jerk about it and can show you understand the company's concerns. Typically I have it modified so that if I'm using their resources at all (office, computer, pen they bought me, etc.) it's theirs. Or if it's directly related to their core business it's theirs. Note that this is separate from a non-compete.
The key thing is to find some clear dividing criteria that is 1. generous to the company and 2. within my control (like choosing to use my own machine). Same idea behind the "one person cuts, the other chooses" method of dividing a cake.
I'm never going to give a company all of my output carte blanche. I want to contribute to open source. I want to make little (unrelated) fun things on my own and not worry about being sued if it ends up becoming popular. The company has a reasonable fear of people competing against them while on their payroll. Both sides can reasonably expect some protection.
In the past, when I’ve tried to politely push back against these, the response has always been a firm “sign the agreement unmodified or GTFO.” When your employer has 500 lawyers, you do what they say or get back to the job hunt.
Yeah, if they're not going to let me have any say in matters that directly affect my ability to put food on the table for my family then I'm glad to walk. If your prospective manager isn't willing/able to go to bat for you on things like this it's a good bet they're not going to be willing/able to go to bat on lots of other things that matter while you are there. Not worth it.
Or, if they really are your only option at the moment, you can also sign with the intention of claiming you did so under duress if sued, but I'm not sure I'd be comfortable with that.
Or, if they really are your only option at the moment, you can also sign with the intention of claiming you did so under duress if sued, but I'm not sure I'd be comfortable with that.
It's all about bargaining power
These "IP agreements", in my experience, include an "Invention Disclosure" section where you can submit a list of "inventions" that you developed before you took the position. It's supposed to be the blacklist of stuff explicitly excluded by the IP ownership agreement (i.e., you still own it since you "invented" it before you joined the org). Usually they give you a few lines to write these in. My approach has been to provide this as an attachment with an exhaustive list ranging from things I've actually developed all the way to mere ideas that could be realized in some form. Of course, every new time you have to sign one of these, the list should be longer. Each item should be broadly written; they can't be asburdly broad, like "Software to perform transformations on data", but you can undoubtedly find ways to make the item more specific to certain domains, and write in that annoying "cover your bases multiple times" form of legalese, e.g. "Tools, methods, and approaches in distributed and monolithic data aggregation, satisfying static and dynamic reliability constraints".
I reliably hear from HR or contracts that I'm the only one they've seen fill that section out, and certainly to the length I typically provide, but they duly accept it and execute the agreement. I've never seen them send to an IP lawyer or anyone else to screen the list for legitimacy.
Considering how challenging litigating technical IP claims is, I think this should have some amount of reasonable deterrent effect regarding threats or actual wanton IP theft litigation after leaving the org's employ.
I reliably hear from HR or contracts that I'm the only one they've seen fill that section out, and certainly to the length I typically provide, but they duly accept it and execute the agreement. I've never seen them send to an IP lawyer or anyone else to screen the list for legitimacy.
Considering how challenging litigating technical IP claims is, I think this should have some amount of reasonable deterrent effect regarding threats or actual wanton IP theft litigation after leaving the org's employ.
In California, it is flat out illegal for an employer to claim stuff you've created using your own equipment on your own time. As it should be.
Many believe this is one of the reasons Silicon Valley became what it is.
Many believe this is one of the reasons Silicon Valley became what it is.
...illegal, but with a loophole you can drive a truck through: if the employer thinks your project is close enough to what they do (or might one day do) it’s theirs. Beware!
But they have to prove this to a judge. The onus is now on them to prove that the thing is related enough to keep you from feeding your family.
That's crazy, copyright also counts as intellectual property, so technically you'd have to promptly communicate to the company almost everything that you write (I'm pretty sure all of your HN posts would qualify), every stick figure you draw, every song you hum (you have copyright on your performance). That contract forbids you from doing any creative work for a year after you quit (or are fired). I don't suppose that contract included a year's wages as severence pay?
I'm having fun imagining the malicious compliance that you could do.
Come to think of it, every email you write to them notifying them of new copyrighted work can itself be new copyrighted work...
Come to think of it, every email you write to them notifying them of new copyrighted work can itself be new copyrighted work...
It's not just a non-compete, it's a non-work. (Or more realistically, non-enforceable.) It's basically saying that everything you make in the first year at your new job after leaving belongs to the company. Uh... no.
That's so broad and so ridiculous I'm sure it's unenforceable. They basically want to own every idea, every bit of copyrightable IP produced by you during employment but for a year afterwards too! What dirtbag company did this?
I once got the the offer stage with IBM, and they wanted me to assign all rights to any invention or IP produced by me during employment, including on my own time. It's quite common apparently. I have side-projects I work on, and I specifically asked for an exclusion for them. They refused, and I told them where to stick their contract - even although I was borrowing money to pay the rent at the time. But I like to tell this story about IBM to everyone who will listen so other engineers don't waste their time applying. I hope I've personally cost IBM more sharing this story than they cost me in wasted time.
I once got the the offer stage with IBM, and they wanted me to assign all rights to any invention or IP produced by me during employment, including on my own time. It's quite common apparently. I have side-projects I work on, and I specifically asked for an exclusion for them. They refused, and I told them where to stick their contract - even although I was borrowing money to pay the rent at the time. But I like to tell this story about IBM to everyone who will listen so other engineers don't waste their time applying. I hope I've personally cost IBM more sharing this story than they cost me in wasted time.
>and I agree that any such invention, discovery or item of intellectual property which I may disclose to anyone within one (1) year after the termination of my employment shall be presumed to have been made during my period of employment hereunder and shall become the sole property of the Company."
IANAL, but I read it differently from most other people, the accent is IMHO on the "disclose to anyone within one (1) year after the termination", even if you conceived the invention during the time you were employed, as long as you don't communicate it to anyone for 1 year after termination, you are fine.
Still - as I see it - the point of debate is more generally about the implied 24/7, there is a difference IMHO between something you invented (and developed) during working hours (and possibly utilizing the hardware/tools/resources of the company) and what one can invent (and develop) after hours, during weekends and holidays, etc., unless your pay is so high that it can be assumed to compensate for all your time.
Even then it seems more similar to slavery than anything else.
IANAL, but I read it differently from most other people, the accent is IMHO on the "disclose to anyone within one (1) year after the termination", even if you conceived the invention during the time you were employed, as long as you don't communicate it to anyone for 1 year after termination, you are fine.
Still - as I see it - the point of debate is more generally about the implied 24/7, there is a difference IMHO between something you invented (and developed) during working hours (and possibly utilizing the hardware/tools/resources of the company) and what one can invent (and develop) after hours, during weekends and holidays, etc., unless your pay is so high that it can be assumed to compensate for all your time.
Even then it seems more similar to slavery than anything else.
I've signed one once that had a clause where everything I made for a year after the job ended I had to approach them with it and give them a chance to offer me money for it (right of first refusal), but never anything where they automatically own it post employment.
They did have a 'we own pretty much every thought you have while you work here' clause, though, because it was a game studio and the owner's reasoning was you could have inspiration for game ideas for what you're working on pretty much anytime, anywhere...which he's right about, and he was a cool guy and I don't think he'd enforce the clause to actually steal other people's outside projects, but that clause still made me uneasy and I didn't really pursue my personal projects while I worked there much as a result.
But what you received is much, much worse.
They did have a 'we own pretty much every thought you have while you work here' clause, though, because it was a game studio and the owner's reasoning was you could have inspiration for game ideas for what you're working on pretty much anytime, anywhere...which he's right about, and he was a cool guy and I don't think he'd enforce the clause to actually steal other people's outside projects, but that clause still made me uneasy and I didn't really pursue my personal projects while I worked there much as a result.
But what you received is much, much worse.
I never believe excuses like that. They can just as easily write "we own any game ideas you come up with while you work here" instead of "every thought".
There's no reason to ask for what you don't need and never intend to enforce. Unless you intend to selectively enforce it, in which case I'll assume you'll select me to do so one day.
There's no reason to ask for what you don't need and never intend to enforce. Unless you intend to selectively enforce it, in which case I'll assume you'll select me to do so one day.
I'm not sure they said every thought specifically, but it included outside of work, and it wasn't limited to games. It was media and web, I think, since they did whatever clients asked them to do, make websites, mobile apps, booths at events, videos, etc.
Considering everything I work on personally was somehow web or media related, it felt very draconian to me at the time. But I still worked there and don't regret my time there overall.
Considering everything I work on personally was somehow web or media related, it felt very draconian to me at the time. But I still worked there and don't regret my time there overall.
> he was a cool guy and I don't think he'd enforce the clause
The problem with that kind of trust is that sometimes the person who makes the decision isn't the cool guy. It can be the company's lawyers who decide to make your life hard after termination for whatever reason (reduces your negotiating leverage at least), or someone else entirely if the company is acquired (for example).
The problem with that kind of trust is that sometimes the person who makes the decision isn't the cool guy. It can be the company's lawyers who decide to make your life hard after termination for whatever reason (reduces your negotiating leverage at least), or someone else entirely if the company is acquired (for example).
It was a small business and he was very much the one who made decisions, in this particular circumstance. There were other employees who moonlighted a bit while working there and I don't think he ever pursued them.
But as I said, despite my comment about him being pretty cool about things, it was enough to make me uncomfortable, and I didn't work on my stuff much, and definitely didn't release anything while working there.
But as I said, despite my comment about him being pretty cool about things, it was enough to make me uncomfortable, and I didn't work on my stuff much, and definitely didn't release anything while working there.
"I don't think he'd enforce the clause to actually steal other people's outside projects"
There is zero reason for him to have that clause unless he wanted to do just that.
There is zero reason for him to have that clause unless he wanted to do just that.
It's silly and annoying, but I saw them crop up twice while looking for work two years ago. Both times it was non-negotiable - the justification being "we'd only use it to get back any work you took with you after leaving".
It seems like one of those "Oracle's doing this, so why don't we do it as well?"
It seems like one of those "Oracle's doing this, so why don't we do it as well?"
Legally they probably can't get anything more than work they can show you took with you. Courts don't like the idea of telling somebody they are no longer allowed to hold a job doing what they know how to do.
Of course they probably don't need any signed document to get the above, odds are your local state laws are already strong enough to cover them.
Of course they probably don't need any signed document to get the above, odds are your local state laws are already strong enough to cover them.
That's my impression too. There are lots of existing laws and court precedence around regaining stolen company secrets; more than enough to fill the need.
I would totally DDOS legal with a deluge of stupid inventions.
Toilet which makes farting sounds when you flush it.
Spoon with a hole in it so you spill on yourself.
Mug without an opening (solid cylinder with handle)
Computer monitor that only displays the color pink.
Headphones with integrated q-tips
iPhone but its a triangle
Strap for swinging a chainsaw over your head like a helicopter
Toilet which makes farting sounds when you flush it.
Spoon with a hole in it so you spill on yourself.
Mug without an opening (solid cylinder with handle)
Computer monitor that only displays the color pink.
Headphones with integrated q-tips
iPhone but its a triangle
Strap for swinging a chainsaw over your head like a helicopter
Porn. Lot of porn.
And stuff related to country the US are not too friendly with, like Pakistan.
That would make their investors / bankers absolutely freak out.
That would make their investors / bankers absolutely freak out.
"What is the 'Shariah Sexbot IP' and why is it on our balance sheet?"
I think I'd go a step farther and create web pages for them -- making sure to mention "the company" created them -- and possibly even send out press releases about them to local media.
This does not even pass the Sex Tape Litmus Test [1]. No sane person should sign this.
[1] http://www.laverick.org/sex-tape-litmus-test/
[1] http://www.laverick.org/sex-tape-litmus-test/
Strike it out and keep going. If it can't be striked out (such as online) just don't sign it. Probably start sending out your resume just in case they force the point, but I would not sign such an clause at all.
I managed to get a clause like this stricken once and I still regret taking the job. It turns out unreasonable contracts means unreasonable people and you want to stay away from unreasonable people.
Better to just tell them to take a hike and (ideally) name and shame the company publicly.
Better to just tell them to take a hike and (ideally) name and shame the company publicly.
This was in a documentation package presented to me as part of a job offer, so it was easy to walk away from.
My wife had to deal with one of those, and it was abstractly written to the point of us paying a lawyer to read over it.
The lawyer had her fill out quite an additional bit of disclosure about it and did not like that clause. At the time my wife really wanted the position, but I doubt she would bother going forward with such a contract.
The lawyer had her fill out quite an additional bit of disclosure about it and did not like that clause. At the time my wife really wanted the position, but I doubt she would bother going forward with such a contract.
"or item of intellectual property made or conceived by me"
By this agreement if you wrote a hit pop song 11 months after your employment they'd own it. That's utterly ridiculous.
By this agreement if you wrote a hit pop song 11 months after your employment they'd own it. That's utterly ridiculous.
The "I assign everything I do" aspect is complete bullshit anyways. The post 1 year makes it greedy. Personally I would unprofessionally laugh at the contact person and then specifically call them out for that sort of crap. Swearing might/would be justified.
Is laughing that unprofessional? From where I am it seems like the clause is unprofessional and laughter might be the appropriate response!
It's not enforceable. However, in that post year if you "invent" something and they can tie it back to their business "somehow", they will come after you (maybe).
And that's really the big problem in my eyes (ignoring how ridiculous it is in and of itself.) I'd be opening myself up to a potential lawsuit. Even if it's deemed unenforceable I still have the hassle and legal costs to deal with.
That was exactly my problem.
I'm doing work in IoT, and I fully expected to retain that knowledge for the jobs afterward (for the record it was a job offer, not a current employer).
So this company could have really made my life a hassle if I quit them and went to work in a different field but was still doing IoT work. They could shut things down just to make life hard.
I'm doing work in IoT, and I fully expected to retain that knowledge for the jobs afterward (for the record it was a job offer, not a current employer).
So this company could have really made my life a hassle if I quit them and went to work in a different field but was still doing IoT work. They could shut things down just to make life hard.
Yup. I work in medical devices, and a pretty niche area at that. When I left my previous company I joined a company doing essentially the same stuff, but at a much earlier stage. How could I possibly have done my job and also conformed to an agreement such as this? There's no way; I would have had to change industries.
Tell them that you will agree to it on the perfectly reasonable condition that they will be paying you a years full salary plus fifteen percent on top to cover the administrative costs of self management, in order for you to provide them this service following the termination of your employment.
The first part is stock boiler plate, one year after you leave? That is interesting.
Most companies simply don’t care, save for inventions directly in their field. I would think this would typically result in a contract dispute with your new employer, not with you so much. The new employer is going to claim your inventions, file various patents and such, then the old one tries to wave your employment contract around and lay claim to them? It’s interesting, I don’t see it being withheld in many courts though. They’d be on the back foot, at best, if the new company already filed invention paperwork. Was there a signing bonus or something to pay for these future inventions? Or gauanteed future pay when you file them? Maybe I’m wrong, most of these documents arent terribly enforcable as it is.
Most companies simply don’t care, save for inventions directly in their field. I would think this would typically result in a contract dispute with your new employer, not with you so much. The new employer is going to claim your inventions, file various patents and such, then the old one tries to wave your employment contract around and lay claim to them? It’s interesting, I don’t see it being withheld in many courts though. They’d be on the back foot, at best, if the new company already filed invention paperwork. Was there a signing bonus or something to pay for these future inventions? Or gauanteed future pay when you file them? Maybe I’m wrong, most of these documents arent terribly enforcable as it is.
The one-year is for the disclosure of the idea/discovery.
So what this says is that they have IP on inventions you made while employed, even if you only disclose that invention after having left.
It does not say anything about inventions made after you left.
So what this says is that they have IP on inventions you made while employed, even if you only disclose that invention after having left.
It does not say anything about inventions made after you left.
It says if you disclose an invention after you left it is presumed to be made before you left. So if you leave, make something, then disclose it, they will presume you made it, left, then disclosed it.
The thing that is "presumed to have been made during my period of employment" is "any _such_ invention, discovery or item of intellectual property", and the "such" here refers to "each and every invention, discovery, (...) made (...) during my period of employment".
It's pretty redundant and there could be a fight regarding when the invention was made vs disclosed, but the wording limits it to the period of employment.
It's pretty redundant and there could be a fight regarding when the invention was made vs disclosed, but the wording limits it to the period of employment.
Which state is this in?
There's a lot of stuff in contracts that are more scary / intimidating / best-effort-squeeze-of-the-big-over-the-small that isn't enforceable in many states. I'm no lawyer, here, though.
I can't see how it's enforceable that once you cease working there, everything you do for one year is presumed to be related and subject to the same work you did for the previous employer/Client. Also, that might imply that they'd owe you money, right? I can picture a judge turning to the counsel of this company and asking that question.
There's a lot of stuff in contracts that are more scary / intimidating / best-effort-squeeze-of-the-big-over-the-small that isn't enforceable in many states. I'm no lawyer, here, though.
I can't see how it's enforceable that once you cease working there, everything you do for one year is presumed to be related and subject to the same work you did for the previous employer/Client. Also, that might imply that they'd owe you money, right? I can picture a judge turning to the counsel of this company and asking that question.
This language is very common in IP assignment agreements (often bundled together with restrictive covenants where enforceable). I don't love noncompetes, but assuming you plan to work in the tech industry with proprietary software or hard tech, you will have to get comfortable agreeing to provisions such as this. The purpose of the clause is risk allocation. If the employer has a dispute with you after termination, involving your alleged infringement of their copyrights or patents in violation of this contract, then this lowers the burden for them to show that you have breached your contract as they do not need to show factually that each element of copyright or invention was created or conceived exactly prior to termination. This obviously is unfavorable to employees, and if you can negotiate it then by all means do. But as a lawyer who has dealt with hundreds of similar agreements, I feel like a lot of the commenters may be overreacting.
Again, I don't like competitive restrictions -- I don't even like proprietary software business models! -- but if you are in that game, then this kind of risk allocating language is reasonable in that context. Refusing to sign a contract because of this clause means you are perhaps a closeted free software advocate (and good for you!) or do not really desire a long-term career in this (arguably exploitative) industry.
Again, I don't like competitive restrictions -- I don't even like proprietary software business models! -- but if you are in that game, then this kind of risk allocating language is reasonable in that context. Refusing to sign a contract because of this clause means you are perhaps a closeted free software advocate (and good for you!) or do not really desire a long-term career in this (arguably exploitative) industry.
Refusing to sign a contract because of this clause means you are perhaps a closeted free software advocate (and good for you!) or do not really desire a long-term career in this (arguably exploitative) industry.
I have to disagree. I've had a long career in software development and I've never seen a clause this broad. If the clause was restricted to the term of employment, that would be one thing, but insisting that they own your brain beyond the time that they're even paying you is too overreaching to even consider.
I have to disagree. I've had a long career in software development and I've never seen a clause this broad. If the clause was restricted to the term of employment, that would be one thing, but insisting that they own your brain beyond the time that they're even paying you is too overreaching to even consider.
That's not what the language says. The employer claims ownership of inventions conceived during your employment and requires you to disclose them for a period of time after your employment. For example, if there's an invention -- say you worked on LIDAR for self-driving cars -- and you were part of a team during your employment. Your employment ends, then you 6 months later file your own patent for a part of that technology. This language makes it so that the employer has a contract claim even though the patent application wasn't until after your employment ended. Conversely, it also protects the former employer from infringement claims arising from your post-employment patent that is allegedly based on their stolen secrets.
As an appeal to authority, take the Confidentiality and IP Assignment Agreement generated by Goodwin Procter's Founders Workbench. It contains a much more exhaustive (and better) definition of assigned rights, and the obligation to disclose them survives indefinitely. It also is rather more nuanced, so it might not be readily apparent that it in fact is a much stronger assignment clause than the one criticized by the OC.
As an appeal to authority, take the Confidentiality and IP Assignment Agreement generated by Goodwin Procter's Founders Workbench. It contains a much more exhaustive (and better) definition of assigned rights, and the obligation to disclose them survives indefinitely. It also is rather more nuanced, so it might not be readily apparent that it in fact is a much stronger assignment clause than the one criticized by the OC.
Doesn't that make part of the agreement a tautology, though?
"I will promptly communicate to the Company ... during my period of employment, and I agree that any such invention ... shall be presumed to have been made during my period of employment..."
Wouldn't a simple assignment clause during the employment term be both clearer and provide the same rights?
"I will promptly communicate to the Company ... during my period of employment, and I agree that any such invention ... shall be presumed to have been made during my period of employment..."
Wouldn't a simple assignment clause during the employment term be both clearer and provide the same rights?
Belt and suspenders. There should be an assignment clause -- if not, the agreement is totally defective! The assignment clause is of course the key part. But there are also further assurances, that make it easier for the company to "protect its rights" as it were. It's about risk shifting. If there's a dispute, how hard does the company vs the employee have to work to make out a claim and prove damages. The rationale for company-favorable clauses is that the company has more to protect, and has the same relationship with every employee -- thus an accumulation of risks. I personally have decided I no longer view proprietary software as an ethical business model, and I would never agree to assign my rights to such a company under most circumstances. But that is a personal decision that also makes me unemployable, ahah.
That is disheartening to hear. I've been doing software for over 20 years and I have yet run across such a provision in my employment contracts. I do not hold a strong ideological position on free software but if a potential employer asked me to sign something like that I'd just walk away. I do work on my own side projects, and the most I would ever agree to is that my side projects won't be in the same area or in any way compete with any of the products my company offers (easy for me because I don't work for a place like Google...).
The notion that a company owns you is just silly IMO. They make a big point of informing me once a year that I am employed at will and can be terminated at any time for any reason or no reason. So I am clear with them that outside of my work week, everything I do is mine. This is business.
The notion that a company owns you is just silly IMO. They make a big point of informing me once a year that I am employed at will and can be terminated at any time for any reason or no reason. So I am clear with them that outside of my work week, everything I do is mine. This is business.
I absolutely agree with you in principle. The language in question does not capture inventions you create on your own time with your own equipment, etc, as a matter of law. Copyright may be somewhat different but would need to view the entire contract -- a good one would include a carve-out for inventions, copyrighted works, etc., outside the scope of employment. This is typically where an employee should focus negotiating efforts -- not on the standard risk-allocating language, but on the carve-out. Personally I would never sign a noncompete, and I would never sign an invention assignment agreement except in a limited circumstance such as pledging a bit of software to a foundation to better enforce the licensing terms, that kind of thing. But then I am not ever going to be employed by a large tech company and have the luxury of my personal rules.
Your comment reads a little strange, if this kind of agreement is unfavorable for employees, makes it easier for a former employer to prove breach of contract, and contributes to an exploitative industry, why recommend signing it ? If we collectively as employees argue and refuse to sign such a clause, it will create pressure to make it go away. On the contrary if we sign it without a fight, the clause will spread throughout the industry, making it hard to negociate. I've been pursuing a career in that industry for several years, and I've successfully negociated that clause away when I came across one that I deemed exaggerated, and I encourage everyone to do the same.
I don't really see the link with free software either, preserving the right to use one's mind, the single most important thing a developer has, seems very important no matter what.
I don't really see the link with free software either, preserving the right to use one's mind, the single most important thing a developer has, seems very important no matter what.
This thing seems stupid to me. Am I required to disclose such a restriction from a previous employer? I say no, since it's common in the industry and a prospective employer would be expected to either ask for disclosure or know it may exist. So now my inventions (assigned to my new employer by a similar boilerplate clause) are in violation of the previous agreement and if a legal dispute arises, they will now sue my current employer, who knowingly employed me despite this IP assignment and is in willful violation of the "previous employer's IP."
I've never once been asked if a previous IP assignment agreement of this sort is in force when taking a new position.
I've never once been asked if a previous IP assignment agreement of this sort is in force when taking a new position.
The disclosure of prior agreements is to YOUR benefit as the employee / contractor. A lot of employers treat this as sort of a nod nod, wink wink situation, where they know you have prior conflicting agreements and would rather not hear about them -- b/c proving knowledge of the prior restriction is an element of tortious interference, by which a former employer can go after the next one for the employee's violation of the old restrictive covenants. As the employee, by disclosing the prior restrictions, you may insulate yourself to some extent against claims by your new employer if there's a 3-way dispute. Yes, restrictive covenants are heavily abused and I wish we didn't use them so widely. But if you're asked to sign one, there are normal areas to negotiate -- but refusing to sign at all will prevent you from advancing very far in the proprietary software industry.
I have never been asked about IP assignment (and haven't really been in a situation where it would come up). But I've actually been asked about non-competes. (By a small firm which would have absolutely walked away if I had one.)
I don't think this clause is crazy. It feels poorly drafted but this is just a single section of the contract. Who knows if other parts influence the interpretation of this section. With that said:
The first segment of this clause is prompt communication to the company of works created. This is so that they'll know whether or not you're seeking IP protections over work-related projects which is reasonable. Nothing here states that disclosure to the company triggers any assignment of IP to them.
The second segment follows the "and I agree". It indicates that if you disclose work to another individual within a year of having worked at the company, they will assume you made it on their time. They are trying to put some teeth on the clause in the case that you hid the invention during your time at the company.
The issue here is that none of the terms are defined; does putting together a presentation count as the creation of intellectual property which is then disclosed, triggering the presumption? That would be absurd. Can the presumption that creation was done during employment be rebutted with evidence that it clearly is not exfiltrated company material? Etc.
Would help to see the entire document. Also I'm not your lawyer.
The first segment of this clause is prompt communication to the company of works created. This is so that they'll know whether or not you're seeking IP protections over work-related projects which is reasonable. Nothing here states that disclosure to the company triggers any assignment of IP to them.
The second segment follows the "and I agree". It indicates that if you disclose work to another individual within a year of having worked at the company, they will assume you made it on their time. They are trying to put some teeth on the clause in the case that you hid the invention during your time at the company.
The issue here is that none of the terms are defined; does putting together a presentation count as the creation of intellectual property which is then disclosed, triggering the presumption? That would be absurd. Can the presumption that creation was done during employment be rebutted with evidence that it clearly is not exfiltrated company material? Etc.
Would help to see the entire document. Also I'm not your lawyer.
Be happy to forward it to you but the issue is moot now, the deal fell through. But I don't recall any other text that influenced this clause, it was just a paranoid expression of their IP as far as I could see.
So that second part: you say "if you disclose work to another individual"...which work would that be? Work that I performed for another employer after termination from the first? Or is that overthinking, and it means work performed for the employer but disclosed after the fact?
I had an ambiguous read about this, which is what threw up the red flags.
So that second part: you say "if you disclose work to another individual"...which work would that be? Work that I performed for another employer after termination from the first? Or is that overthinking, and it means work performed for the employer but disclosed after the fact?
I had an ambiguous read about this, which is what threw up the red flags.
> What do you think?
When my last company got bought, they tried to throw that in for existing employees, but it was a 3 year time period. I refused. They said my job depended on signing. I know I could pursue a number of legal arguments as to why that wasn't valid, but I went with my own standard advice to not work with bullies, and I quit.
When my last company got bought, they tried to throw that in for existing employees, but it was a 3 year time period. I refused. They said my job depended on signing. I know I could pursue a number of legal arguments as to why that wasn't valid, but I went with my own standard advice to not work with bullies, and I quit.
That would be constructive dismissal, and (certainly in many parts of the world) you could take them to an employment tribunal over it.
I worked at a company once that was bought and tried the same thing. I told them I needed a large compensation component to sign, and I never heard anything else about it. This was big company buying big company though, so it was probably boiler plate stuff.
I've seen similar clauses. I understood what the company was going for (they didn't want you to quit, patent the idea you had been working on, and then hold the company for ransom [I know, unlikely]) and suggested alternate wording but in the end we just struck the clause completely.
That was the spirit of the document as I understood it. Fortunately the deal fell apart before I got to this part, but I certainly would have crossed out the clause, or at least wrote in "inventions related to the business of the employer" to satisfy their paranoia.
Non-compete agreements like that aren't enforceable in every state. Check the laws of your state.
You have got to be fucking kidding me. That’s insane. I’d never sign such a statement. That’s far worse to me than a non-compete, especially as someone who is always working/playing on my own time with various ideas. There are no boundaries for work time vs personal time, and it even tries to take ownership of other people’s work. Fuck that. I would absolutely laugh in the face of anyone who asked me to sign such a statement.
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I'd have to be pretty desperate to sign such a thing.
Or maybe if they pay me 3 times the market rate. And that's without the "1 year after termination" craziness. For that, I'd ask continued pay (3 times the market rate, remember?) for the duration of the clause.
If this means walking away from a dream job, so be it. Can't be a dream job with such a clause.
Or maybe if they pay me 3 times the market rate. And that's without the "1 year after termination" craziness. For that, I'd ask continued pay (3 times the market rate, remember?) for the duration of the clause.
If this means walking away from a dream job, so be it. Can't be a dream job with such a clause.
Nope the fuck away. There is no justification for that. If they're going to push, make them pay an extreme amount for it.
Sounds crazy to me. I believe in California non compete clauses are unenforceable in court.
Always check with a lawyer, but I wouldn't sign it.
Ghost them.
This is the flip-side benefit to living in Right-to-Work states. On the one hand, it's nearly impossible to unionize, but working as a contractor in Virginia, I had an agency try exercise the non-compete against me when I tried to take a job directly with their client. That client happened to be the Society for Human Resource Management. Their management laughed at the attempt and had a lawyer send the agency a letter explaining that Virginia was a Right-to-Work state and the non-compete was unenforceable.
In North Carolina, another Right-to-Work state, my government contractor tried to exercise the non-compete I had with them to prevent other companies from competing for the contract. My co-worker had us all sign up with his lawyer, who defended us breaking the non-compete as unenforceable in NC. The contractor didn't bother taking the case to court and was only using the non-compete to bully employees who didn't know better.
I've been hearing about lobbyists working to make non-competes enforceable in Right-to-Work states, and I'm not surprised. The point of the laws was to defend corporations against unions. I imagine the fact that it protects individuals against companies is undesirable to the powers that be.
In North Carolina, another Right-to-Work state, my government contractor tried to exercise the non-compete I had with them to prevent other companies from competing for the contract. My co-worker had us all sign up with his lawyer, who defended us breaking the non-compete as unenforceable in NC. The contractor didn't bother taking the case to court and was only using the non-compete to bully employees who didn't know better.
I've been hearing about lobbyists working to make non-competes enforceable in Right-to-Work states, and I'm not surprised. The point of the laws was to defend corporations against unions. I imagine the fact that it protects individuals against companies is undesirable to the powers that be.
These things aren't related. For example, California is not a right-to-work state but it has banned noncompete agreements since the late 1800s, except in a small number of very specific situations.
Right-to-work is strictly anti-union BS and has nothing to do with non-compete agreements. A quick search suggests that non-competes are enforceable in both VA and NC if they meet certain criteria.
From the tail end of the OP:
> I’m a Computer Scientist. We don’t have unions and we don’t collectively bargain. Basic workers rights are our responsibility
I've always been bothered by this question. Why _don't_ we have unions? What is it about the tech industry that makes it so resistant (especially in the US) to labor organization? I work in the EU for a US company, and my American colleagues universally seem to find the idea of collective bargaining _preposterous_. Often, they even seem offended by the idea!
Is this a particularly American trait, or something endemic to tech?
> I’m a Computer Scientist. We don’t have unions and we don’t collectively bargain. Basic workers rights are our responsibility
I've always been bothered by this question. Why _don't_ we have unions? What is it about the tech industry that makes it so resistant (especially in the US) to labor organization? I work in the EU for a US company, and my American colleagues universally seem to find the idea of collective bargaining _preposterous_. Often, they even seem offended by the idea!
Is this a particularly American trait, or something endemic to tech?
When we are young hubris and arrogance are quite up there. We are worshipped with $100K+ salaries and it goes to our head. We do not think about age-ism or time needed to spend with a spouse, a child, or a parent. There is a lot of stuff that comes down the road, but right now, all we know is that we are gods. No need for a CBA - even though other high paying professionals use it. No use of agents who can bargain better on our behalf.
We know we can do it all. And we do. Life slowly comes into play. Family, health, house... the dynamics change. Your control diminishes. You look behind and a new generation is at the employment door. You keep your skills up with what time you have available but not sure if you have chosen the right skills to upgrade. Too many variables. A good portion of your retirment is likely at the mercy of the stock market.
Having an entity representing the interests of an employee is not in the interest of an employer. It makes them more expensive. So change is going to be difficult. It is hard for a union to grow if the drivers are older. It requires the early and middle part of the employee age distribution participating to be effective as they are not easily replaced.
We know we can do it all. And we do. Life slowly comes into play. Family, health, house... the dynamics change. Your control diminishes. You look behind and a new generation is at the employment door. You keep your skills up with what time you have available but not sure if you have chosen the right skills to upgrade. Too many variables. A good portion of your retirment is likely at the mercy of the stock market.
Having an entity representing the interests of an employee is not in the interest of an employer. It makes them more expensive. So change is going to be difficult. It is hard for a union to grow if the drivers are older. It requires the early and middle part of the employee age distribution participating to be effective as they are not easily replaced.
I think it's a bit of both.
American society indoctrinates people with the negative aspects of labor unions. They're run by radicals or the Mafia, they have rules which limit innovation, hold back talented individuals, sanction goldbricking, and on and on. The pro-union side of things is not often promoted in the mainstream.
When the pro-union side of the story is promoted, it's usually in a context where a company was doing something extremely bad to extremely vulnerable people. It's a tough sell to convince an engineer that they're in the same position as an early 20th century lumberjack or coal miner.
I've known people in tech who think of themselves as self-made people and so they further don't like the idea of collective bargaining on a philosophical level.
American society indoctrinates people with the negative aspects of labor unions. They're run by radicals or the Mafia, they have rules which limit innovation, hold back talented individuals, sanction goldbricking, and on and on. The pro-union side of things is not often promoted in the mainstream.
When the pro-union side of the story is promoted, it's usually in a context where a company was doing something extremely bad to extremely vulnerable people. It's a tough sell to convince an engineer that they're in the same position as an early 20th century lumberjack or coal miner.
I've known people in tech who think of themselves as self-made people and so they further don't like the idea of collective bargaining on a philosophical level.
As a born and raised American, I associate union pay with tenure (how long you have worked for one company) or flat pay. This sounds okay when productivity does not vary much by employee like factory workers.
However, knowledge workers like software developers can very in productivity by orders of magnitude. Companies can therefore pay far more for more productive employees if they can differentiate employee productivity. As someone who has worked with people whom I consider a net negative on our output, A union based pay that brings my income down to the lowest common denominator is the last place I would want to join.
However, knowledge workers like software developers can very in productivity by orders of magnitude. Companies can therefore pay far more for more productive employees if they can differentiate employee productivity. As someone who has worked with people whom I consider a net negative on our output, A union based pay that brings my income down to the lowest common denominator is the last place I would want to join.
Unions often lead to better terms but lower pay. Europeans are, in general, OK with that.
Americans, in general, value their salary more than anything else, which is optimized by individual bargaining, rather than collective bargaining.
Indeed, if you compare US programmer salaries to (e.g.) UK programmer salaries, the difference is apparent: Outside of specialized industries like finance, the pay in the US is much higher, and the gap grows much more with seniority[0]
I am not aware of any CS union in the UK, but in many senses every European country runs a lot of collective enterprises (healthcare, education), and has strong unions for many other industries, unlike the US; I believe the difference in [0] is, at least in part, due to the "collective" vs. "individual" mindset.
[0] https://www.daxx.com/article/it-salaries-software-developer-...
Americans, in general, value their salary more than anything else, which is optimized by individual bargaining, rather than collective bargaining.
Indeed, if you compare US programmer salaries to (e.g.) UK programmer salaries, the difference is apparent: Outside of specialized industries like finance, the pay in the US is much higher, and the gap grows much more with seniority[0]
I am not aware of any CS union in the UK, but in many senses every European country runs a lot of collective enterprises (healthcare, education), and has strong unions for many other industries, unlike the US; I believe the difference in [0] is, at least in part, due to the "collective" vs. "individual" mindset.
[0] https://www.daxx.com/article/it-salaries-software-developer-...
This is just one of those things which looks evil from 'Employee' perspective but important enough from 'Employer' Perspective. You have to also look at the how these clauses found their way into these contracts.
Certain professions; Legal/Software/IT Services/Accounting; make it very easy for one or group of employees, to just take a company's current clients, offer them a low price, and start a new firm thereby causing losses for the original service company. Business which got burnt by their employees starting competitive business thereby started adding these clauses into their agreements.
Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
It's much easier for a Company to let a potential employee go then position themselves to a losing client situation.
Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
Again, your blog content would be different if you stopped being a Computer Scientist and started your own Company.
Certain professions; Legal/Software/IT Services/Accounting; make it very easy for one or group of employees, to just take a company's current clients, offer them a low price, and start a new firm thereby causing losses for the original service company. Business which got burnt by their employees starting competitive business thereby started adding these clauses into their agreements.
Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
It's much easier for a Company to let a potential employee go then position themselves to a losing client situation.
Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
Again, your blog content would be different if you stopped being a Computer Scientist and started your own Company.
Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
Great way to get sued. That's going to be logged. Isn't this what got Levandowski in trouble when leaving Google?
I definitely do not do this. In fact, once you stop paying me, I don't care about your code in anymore. It goes in the trash. It's not my problem after that.
Great way to get sued. That's going to be logged. Isn't this what got Levandowski in trouble when leaving Google?
I definitely do not do this. In fact, once you stop paying me, I don't care about your code in anymore. It goes in the trash. It's not my problem after that.
It can be used to prosecute you if they so desire
https://en.wikipedia.org/wiki/Sergey_Aleynikov
https://en.wikipedia.org/wiki/Sergey_Aleynikov
I've never even heard of someone doing this. I know people sometimes want samples of their code from past jobs to show future employers, but even that I would explicitly ask about when leaving, and I certainly wouldn't ask for the entire codebase on anything large or meaningful.
Hell... I don't think I'd even want a copy in most cases, it seems like it'd open me up to legal and privacy risks without any actual benefit.
Hell... I don't think I'd even want a copy in most cases, it seems like it'd open me up to legal and privacy risks without any actual benefit.
> Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on.
Is that really common practice? I don't doubt some people do this but it seems very foolish to me so I'm surprised that you think most engineers do this.
Is that really common practice? I don't doubt some people do this but it seems very foolish to me so I'm surprised that you think most engineers do this.
I agree. Doing this would be stupid as hell, since it just opens you up to a lawsuit over stealing company secrets. Having knowledge in your head is one thing. Having actual code is another entirely.
I'm not sure I'd even take most corporate code if it was offered to me. It'd potentially drag me into any future breaches or noncompete violations, and have no upside I can think of. I'm honestly struggling to imagine why devs would bother taking most code when they leave a job.
I have seen people bring in Portable Hard disks and copy the code.
Lets say you have developed a utility messenger bot which alerts you every time SLA of your support ticket is about to be crossed. A developer would like to keep this 'completed+working' code with them to reuse in next projects.
One of my employees left the company and he took all the Unity assets (assetstore.unity3d.com) I had purchased. I realized this when I saw those assets being used in "his" newly released game on Appstore.
One of my employees left the company and he took all the Unity assets (assetstore.unity3d.com) I had purchased. I realized this when I saw those assets being used in "his" newly released game on Appstore.
> I had purchased
These strike me as the likely cases, yeah. Taking company-specific software seems like it's either useless (why would I even want some random inventory management system?) or spectacularly illegal, like taking a stock trading algorithm.
But I can imagine someone wanting random quality-of-life tools, though honestly just asking for those would probably suffice. And people certainly take expensive proprietary assets and programs that employers buy, though I'm not sure that really fits with the top-level fear of "our programmers stealing our data".
These strike me as the likely cases, yeah. Taking company-specific software seems like it's either useless (why would I even want some random inventory management system?) or spectacularly illegal, like taking a stock trading algorithm.
But I can imagine someone wanting random quality-of-life tools, though honestly just asking for those would probably suffice. And people certainly take expensive proprietary assets and programs that employers buy, though I'm not sure that really fits with the top-level fear of "our programmers stealing our data".
That's not employer code.
Most companies I've worked at recently have some sort of mechanism in place to prevent this. Portable drives disabled, email attachments monitored, etc.
I've known enough people that have done this, as to believe it to be pretty common
> make it very easy for one or group of employees, to just take a company's current clients, offer them a low price, and start a new firm thereby causing losses for the original service company. Business which got burnt by their employees starting competitive business thereby started adding these clauses into their agreements.
Sure, but this isn't a fair way to solve that problem. You don't need a non-compete to do this. A simple client list clause protects this legally for the employer, without removing employees right to work.
> Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
This is a feature, not a bug. If the company had paid their employees decent wages, they wouldn't be so easily swayed by offers from competitors. Companies don't get to under-pay employees and demand they never get raises from any other company. Companies don't get to own people working in "field X" just because they have a product or service in that field.
Sure, but this isn't a fair way to solve that problem. You don't need a non-compete to do this. A simple client list clause protects this legally for the employer, without removing employees right to work.
> Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
This is a feature, not a bug. If the company had paid their employees decent wages, they wouldn't be so easily swayed by offers from competitors. Companies don't get to under-pay employees and demand they never get raises from any other company. Companies don't get to own people working in "field X" just because they have a product or service in that field.
This is true in theory but not in practice. I know of a few (somewhat disreputable) big law firms and prop/hedge funds that primarily hire from competitors. They can offer better partnership terms or pay because they don’t spend on research, training, or developing their own talent. Let the competitors do that, and we can skim off the cream talent-wise. It’s good for wages, but is that really fair play? Does it have a chilling effect on R&D investment?
They’ll say they just want quality employees, but interview with them and they’ll care little about your skills. They always want to know how much business your clients brought you, seek traders with a good "track record", ask how much profit you made, with the implied understanding that you will bring them that business.
IMO it’s fair to strike a balance, so companies can earn some returns on R&D, and employees can get fairly paid. Your employer shouldn’t lock you out of working forever, nor should competitors be able to hire away instantly by paying $x+1.
They’ll say they just want quality employees, but interview with them and they’ll care little about your skills. They always want to know how much business your clients brought you, seek traders with a good "track record", ask how much profit you made, with the implied understanding that you will bring them that business.
IMO it’s fair to strike a balance, so companies can earn some returns on R&D, and employees can get fairly paid. Your employer shouldn’t lock you out of working forever, nor should competitors be able to hire away instantly by paying $x+1.
It seems like this problem is well-solved, though not with simple client-list rules. (I've definitely seen those thoroughly violated in ways no one can really enforce.)
Financial firms, for example, give strict noncompetes but back them with actually-valuable payouts. Employees can't be hired away for inside knowledge or clients, because those connections will decay for 6/12/24 months before they start. But their loyalty is actually incentivized, rather than just compelled with "if you quit you're not employable".
Financial firms, for example, give strict noncompetes but back them with actually-valuable payouts. Employees can't be hired away for inside knowledge or clients, because those connections will decay for 6/12/24 months before they start. But their loyalty is actually incentivized, rather than just compelled with "if you quit you're not employable".
Totally agree. Better to use the carrot than the stick, but it never hurts to have the stick as a backup plan.
Typical problem in finance is you have consistent top performers who are compensated very well and would never leave, you don't really need a non-compete for them, deferred bonus is more than enough, but also bring on junior team members who need to learn a lot of confidential information by necessity.
Hopefully all of the juniors become top performers too, but sometimes they don't. It's the middling guys where you worry about them taking all your secrets to another shop. They aren't very valuable to you, so you won't pay them a big bonus, but also not bad enough to fire, and their knowledge is more valuable elsewhere.
Typical problem in finance is you have consistent top performers who are compensated very well and would never leave, you don't really need a non-compete for them, deferred bonus is more than enough, but also bring on junior team members who need to learn a lot of confidential information by necessity.
Hopefully all of the juniors become top performers too, but sometimes they don't. It's the middling guys where you worry about them taking all your secrets to another shop. They aren't very valuable to you, so you won't pay them a big bonus, but also not bad enough to fire, and their knowledge is more valuable elsewhere.
> Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
You have a source for this? I would strongly disagree that this happens by "most" software engineers. This is theft and it's completely unethical. I would never do this.
You have a source for this? I would strongly disagree that this happens by "most" software engineers. This is theft and it's completely unethical. I would never do this.
>Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
You mean like Anthony Levandowski? I think we all know how that turned out.
I never make copies and no one should. These days companies know when you put in a thumb drive, copy things on, etc. if you do anything like stealing code, they will know for sure. Why risk it?
You mean like Anthony Levandowski? I think we all know how that turned out.
I never make copies and no one should. These days companies know when you put in a thumb drive, copy things on, etc. if you do anything like stealing code, they will know for sure. Why risk it?
Agree completely. This is one of the worst things you can do, even if the code isn't particularly confidential. It is such an easy case to win. Worse yet, you expose your new employer to enormous liability and can taint their entire code base if left undiscovered for a long time. If I saw tons of source code of unknown provenance committed by some new guy, I'd be scared shitless.
If you're lucky, it might only cost you millions of dollars:
https://www.houstonchronicle.com/business/article/Decadelong...
Or you could end up in jail:
https://en.wikipedia.org/wiki/Sergey_Aleynikov
https://en.wikipedia.org/wiki/United_States_v._Agrawal
If you're lucky, it might only cost you millions of dollars:
https://www.houstonchronicle.com/business/article/Decadelong...
Or you could end up in jail:
https://en.wikipedia.org/wiki/Sergey_Aleynikov
https://en.wikipedia.org/wiki/United_States_v._Agrawal
>Certain professions; Legal/Software/IT Services/Accounting
Yeah, without getting too specific, I'm aware of one particular category of IT consulting firm that has a few big players in the market. One or two of them do indeed have one-year non-compete clauses that basically say that you can't go to another firm in the same space. And anecdotally they aggressively enforce. I've known people wanting to switch firms who basically just took a year off (unpaid).
You can still go to a client (as I've also known people to do) but not a competitor.
Yeah, without getting too specific, I'm aware of one particular category of IT consulting firm that has a few big players in the market. One or two of them do indeed have one-year non-compete clauses that basically say that you can't go to another firm in the same space. And anecdotally they aggressively enforce. I've known people wanting to switch firms who basically just took a year off (unpaid).
You can still go to a client (as I've also known people to do) but not a competitor.
Most software engineers when they leave the company take backup of ... the entire code for the project
[0] https://www.northeastern.edu/securenu/toy-story-2-almost-los...
Nope, not me. When I leave a company I purge all code, all documents, all access to any services etc.
"This is just one of those things which looks evil from 'Employee' perspective"
Because it is.
"but important enough from 'Employer' Perspective."
Because they want to limit my ability to better my position. They want me staying where I am, with the company.
"You have to also look at the how these clauses found their way into these contracts."
Overzealous lawyers?
Because it is.
"but important enough from 'Employer' Perspective."
Because they want to limit my ability to better my position. They want me staying where I am, with the company.
"You have to also look at the how these clauses found their way into these contracts."
Overzealous lawyers?
Accept a job, NCA/NDA had a clause that gave them rights to any intellectual property I had developed in the PREVIOUS 20 years. I refused to sign. I was looking for work again after that pay period.
Sidenote: The company I now work for does business with the first company, I ended up inheriting the first companies code base written for my current company. It looks like they can't hire much beyond script kiddies.
Sidenote: The company I now work for does business with the first company, I ended up inheriting the first companies code base written for my current company. It looks like they can't hire much beyond script kiddies.
The problem I have with non-competes, is that I've always been given them as I'm filling out paperwork. So my options are: Say no to the job that I've just quit my last job and moved two states away for, or sign it.
I've asked companies for copies of all paperwork that I'll be expected to sign before starting. I just frame it casually before I accept the offer, like "hey, I'm very excited about this opportunity! I should have a final decision in a few days, but I just want to run everything by a lawyer friend of mine. Would you mind sending me any documents that I'll be expected to sign before I start working?".
I've never had any resistance to this. If a company doesn't want to show you legal contracts until you show up to the office, there's something shady going on.
I've never had any resistance to this. If a company doesn't want to show you legal contracts until you show up to the office, there's something shady going on.
yeah, which technically makes the non-compete invalid. They can't change the terms of your contract after you've already accepted the position.
What they're hoping for, is that you'll just bow down and take it, rather than pursue any other option, because you actually do want the job.
The next problem you run into, is if you do sign it, and then don't immediately start looking for another position, then they could argue back that you accepted the new terms of the agreement. In order to push the case that the non-compete is invalid, you have to immediately begin taking action in accordance with the idea that the non-compete is a deal-breaking change of your employment contract for you. If you continue working at the job for another 2 years, for example, you likely won't be able to convincingly make that case.
If you do leave the position, you likely have a case on your hands. In the event that they try to use the non-compete against you, you could claim the offer was invalid, because of the misrepresentation of your employment conditions, something you attempted to fix immediately upon starting the job (by attempting to leave again). This has been successfully argued in court before.
You may even be able to argue for damages, particularly if you moved across country, like you imply. It is grossly illegal for an employer to, for example, change your pay rate right after starting a new job, so you might be able to argue the same for an unexpected non-compete.
But obviously, I am not a lawyer. Everything I just said could be wrong, and you'd be crazy not to talk everything above through with one during the entire process.
But that's the general gist of how these things work.
Any company that does this is a very scummy company. Or they're just unorganized, and didn't think to send you all the paperwork before you started. I like chadash's suggestions above a lot.
What they're hoping for, is that you'll just bow down and take it, rather than pursue any other option, because you actually do want the job.
The next problem you run into, is if you do sign it, and then don't immediately start looking for another position, then they could argue back that you accepted the new terms of the agreement. In order to push the case that the non-compete is invalid, you have to immediately begin taking action in accordance with the idea that the non-compete is a deal-breaking change of your employment contract for you. If you continue working at the job for another 2 years, for example, you likely won't be able to convincingly make that case.
If you do leave the position, you likely have a case on your hands. In the event that they try to use the non-compete against you, you could claim the offer was invalid, because of the misrepresentation of your employment conditions, something you attempted to fix immediately upon starting the job (by attempting to leave again). This has been successfully argued in court before.
You may even be able to argue for damages, particularly if you moved across country, like you imply. It is grossly illegal for an employer to, for example, change your pay rate right after starting a new job, so you might be able to argue the same for an unexpected non-compete.
But obviously, I am not a lawyer. Everything I just said could be wrong, and you'd be crazy not to talk everything above through with one during the entire process.
But that's the general gist of how these things work.
Any company that does this is a very scummy company. Or they're just unorganized, and didn't think to send you all the paperwork before you started. I like chadash's suggestions above a lot.
yeah really, you should have to sign that as part of the job offer and you can decide about the job then and there instead of potentially uprooting your life / moving states or even countries / and then getting there and having some not-insignificant monkeywrench thrown in.
What this author misses is that California also has a law[1] that makes unenforceable contracts that claim ownership of anything employees do on their own time with their own equipment. Passed in 1979 (amended 1991). I think other places hoping to create "Silicon $X" need to put anti-non-compete and this law in place to even have a possibility to create a similar culture to the Valley.
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.
[1]https://leginfo.legislature.ca.gov/faces/codes_displaySectio....
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.
[1]https://leginfo.legislature.ca.gov/faces/codes_displaySectio....
> Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated rese
You can fit the entire planet through that loophole. Most employers can easily show that your side project “relates” to something they do or might one day do.
You can fit the entire planet through that loophole. Most employers can easily show that your side project “relates” to something they do or might one day do.
I would be careful trying too hard to fit anything at all through that loophole though, as I'm pretty sure in California, companies that push employees to sign non-compete agreements that are deemed unenforceable (which is objectively most non-competes in California), may be subject to statutory damages and may wind up getting summarily owned in the countersuit.
I have no source for this and I am not a lawyer (but nobody knows you're a dog on the internet...) – if anyone knows more about this than I do, I'll happily read and be glad to learn something, but this is a subject I've read a bit about.
OK, actually, it wasn't that hard to find a citation:
http://levinebakerlaw.com/publications/post-employment-non-c... see the phrase "independent wrong"
You still have strong protections as an employer against "unfair competition" but you are better off not trying to pass any non-compete agreement to your employees, as you may be on the hook for damages if it's determined that your NCA is unenforceable, so you misled the employee(s) who have signed it.
California law is (and has always been) very favorable to employees, compared to other states.
I have no source for this and I am not a lawyer (but nobody knows you're a dog on the internet...) – if anyone knows more about this than I do, I'll happily read and be glad to learn something, but this is a subject I've read a bit about.
OK, actually, it wasn't that hard to find a citation:
http://levinebakerlaw.com/publications/post-employment-non-c... see the phrase "independent wrong"
You still have strong protections as an employer against "unfair competition" but you are better off not trying to pass any non-compete agreement to your employees, as you may be on the hook for damages if it's determined that your NCA is unenforceable, so you misled the employee(s) who have signed it.
California law is (and has always been) very favorable to employees, compared to other states.
The company you work for might try, but the fact that the law states that you are allowed to do your own thing sure helps support a culture of side projects and startups.
Like I've said before, learn how contracts work people! First, never sign willy nilly. second, you always have a right to mark out and modify parts and present them back for acceptance. Third, each thing is a separate contract, don't assume because you accepted the employment agreement that also means you have to sign (an unmodified) anything else like an nda or non-compete.
I just got out from under a biotech non-compete of two years recently, but after talking with friends in the legal friend they just laughed and said they love getting non-compete tossed because they are mostly unenforceable.
As a senior sysadmin I always saw it as a sort of test. I'm going to be entering the company into contracts (with the isp for example) so I better be able to actually read them and know how to modify and negotiate them. It's one of the things I tell my teams too... stop signing anything anyone puts in front of you, and that includes HR!
These are the sort of issues on the tech side that a MBA in a role like CTO/CIO should be catching and correcting. As for employment agreements, there is a lot of stuff that HR does that ought to be consulted with counsel but isn't, and is therefor is questionably legal or enforceable.
I just got out from under a biotech non-compete of two years recently, but after talking with friends in the legal friend they just laughed and said they love getting non-compete tossed because they are mostly unenforceable.
As a senior sysadmin I always saw it as a sort of test. I'm going to be entering the company into contracts (with the isp for example) so I better be able to actually read them and know how to modify and negotiate them. It's one of the things I tell my teams too... stop signing anything anyone puts in front of you, and that includes HR!
These are the sort of issues on the tech side that a MBA in a role like CTO/CIO should be catching and correcting. As for employment agreements, there is a lot of stuff that HR does that ought to be consulted with counsel but isn't, and is therefor is questionably legal or enforceable.
One of the NDAs someone wanted me to sign had a phrase like "I will not share or use anything that I learned working on this project". Not limited to the client's project or anything.
Whenever I work on something, I learn something. Be it a minor thing. How would I ever met that contract on my side? I can't forget what I just learned.
My policy is that I charge about 33% extra if they don't trust me not disclosing sensitive information. In fact, if the project requires such, my obligation is to use more work and resources to make sure that this will never leak, including encrypting project files separately, make sure I don't write down notes in my usual 'survival notebook', etc. But the NDA has to be sane.
My policy is that I charge about 33% extra if they don't trust me not disclosing sensitive information. In fact, if the project requires such, my obligation is to use more work and resources to make sure that this will never leak, including encrypting project files separately, make sure I don't write down notes in my usual 'survival notebook', etc. But the NDA has to be sane.
> I charge about 33% extra
Has that ever come up for you in real life, with the client paying you the 33% extra and you accepting such a wide-ranging NDA/noncompete?
It seems to me that you'd be taking on a risk much greater than 33% of your earnings on the project, though I suppose the risk of actual "enforcement" of the letter of the agreement is not very high.
Has that ever come up for you in real life, with the client paying you the 33% extra and you accepting such a wide-ranging NDA/noncompete?
It seems to me that you'd be taking on a risk much greater than 33% of your earnings on the project, though I suppose the risk of actual "enforcement" of the letter of the agreement is not very high.
Once I was asked and I stated my conditions, but we ended up not having mutual trust in each other. The communication was weird and seemed very suspicious on their side.
I slept over it and my gut feeling said not to do it.
No one has ever sued me before but with my personal business as company structure, I am legally liable with up to all my private assets. I am not an anonymous entity, I get jobs mostly by recommendation, getting letters from lawyers messes me up mentally easily and I can't mess with my client's sensitive data in the first place.
My extra charge is giving me extra time and compensation for adding extra security measures and most importantly (encrypted) documentation for myself if in any unlikely case they'd enforce their part.
In essence: I value mutual trust a lot, if I feel lack of trust on their side, I need to be extra careful. The more mutual trust I form with a client, the easier it is to get a mutual understanding and less likely that they'll escalate it to lawyers and courts.
No one has ever sued me before but with my personal business as company structure, I am legally liable with up to all my private assets. I am not an anonymous entity, I get jobs mostly by recommendation, getting letters from lawyers messes me up mentally easily and I can't mess with my client's sensitive data in the first place.
My extra charge is giving me extra time and compensation for adding extra security measures and most importantly (encrypted) documentation for myself if in any unlikely case they'd enforce their part.
In essence: I value mutual trust a lot, if I feel lack of trust on their side, I need to be extra careful. The more mutual trust I form with a client, the easier it is to get a mutual understanding and less likely that they'll escalate it to lawyers and courts.
My division got laid off... my company is paying my full salary + bonus through my enforced non-compete duration of a year, which I think is the right thing to do if they're going to enforce such. (and knowing what I know, and what I worked on, it's in their best interests)
Non-competes are fine so long as:
-You are in a role with high search/discovery costs but low replication costs: A quant developing predictive signals, a salesperson or attorney building a client base, a researcher improving Google's machine learning techniques, a chemical engineer at a petroleum company improving their processes, a pharmaceutical researcher, a chef trying new dishes hoping to find a hot new idea.
-Your work can't easily be protected by a patent. If you're developing brake pads or some other consumer product, the company should protect itself with a patent instead since competitors will just buy the product in the open market and reverse engineer it. However, even for these cases, knowledge of ideas that failed is a valuable roadmap for a competitor.
-The non-compete is specific and targeted to direct competitive behavior. For example a law partner should be blocked from taking his book of business to another big law firm for a period, but working as a judge or government official should be permitted.
-If unpaid, the period should be short. For a year or more, there should be significant compensation to enforce. The primary purpose should be protecting the company, not trapping employees or lowering compensation. For retention, bonuses and deferred compensation should be used instead.
If used fairly, non-competes are good for both the employer and employee. Businesses that share ideas openly, with mutual trust among employees, tend to perform better. People in R&D all work very hard, and eventually each should generate results, but some people are just lucky and discover great ideas sooner. If all your lucky guys/gals walk out the door immediately, the company can't invest as much in R&D.
And NDA/confidentiality contracts can only do so much. In obvious cases like a salesperson downloading his client list and profit numbers, or an engineer putting the source tree or product designs on a USB stick, it's a slam dunk case. But you can't vacuum someone's head. Someone who created a system at one company will likely create a similar system elsewhere. It's hard to make the case that a different system with some similar ideas, thought processes, or architecture is a direct copy.
-You are in a role with high search/discovery costs but low replication costs: A quant developing predictive signals, a salesperson or attorney building a client base, a researcher improving Google's machine learning techniques, a chemical engineer at a petroleum company improving their processes, a pharmaceutical researcher, a chef trying new dishes hoping to find a hot new idea.
-Your work can't easily be protected by a patent. If you're developing brake pads or some other consumer product, the company should protect itself with a patent instead since competitors will just buy the product in the open market and reverse engineer it. However, even for these cases, knowledge of ideas that failed is a valuable roadmap for a competitor.
-The non-compete is specific and targeted to direct competitive behavior. For example a law partner should be blocked from taking his book of business to another big law firm for a period, but working as a judge or government official should be permitted.
-If unpaid, the period should be short. For a year or more, there should be significant compensation to enforce. The primary purpose should be protecting the company, not trapping employees or lowering compensation. For retention, bonuses and deferred compensation should be used instead.
If used fairly, non-competes are good for both the employer and employee. Businesses that share ideas openly, with mutual trust among employees, tend to perform better. People in R&D all work very hard, and eventually each should generate results, but some people are just lucky and discover great ideas sooner. If all your lucky guys/gals walk out the door immediately, the company can't invest as much in R&D.
And NDA/confidentiality contracts can only do so much. In obvious cases like a salesperson downloading his client list and profit numbers, or an engineer putting the source tree or product designs on a USB stick, it's a slam dunk case. But you can't vacuum someone's head. Someone who created a system at one company will likely create a similar system elsewhere. It's hard to make the case that a different system with some similar ideas, thought processes, or architecture is a direct copy.
I'm not a lawyer, but in Belgium these type of agreements are subject to extra constraints. For example a non-compete can only be triggered if they payed you enough. The reasoning is that if you did not earn enough you were not important enough for the company to have such a clause. They also need to compensate the fact they are invoking it (at least 6 months of wages iirc). Anyway, check with your legal representative how valid/legal the clause is, and if it isn't you can sign.
What are your thoughts about a non-compete which is tied to a bonus, restricted stock, or some other reward?
I worked for my employer for several years without a non-compete before I received my first chunk of restricted stock. In accepting the stock grant, I had to accept a non-compete for a period of 1 year, which included both competitors and customers of my employer. It was a significant sum, but not a year's salary. I feared that if I turned it down, I would be seen as disloyal, and it could cause my employer to pass me up for promotions or include me in the next reduction-in-force.
Since then, I've received almost yearly bonuses and stock grants which carry the same non-compete, so I am probably closer to having received a year's salary worth of additional consideration by now, but I still feel wary about the non-compete.
(edit) Note: I'm not in California
I worked for my employer for several years without a non-compete before I received my first chunk of restricted stock. In accepting the stock grant, I had to accept a non-compete for a period of 1 year, which included both competitors and customers of my employer. It was a significant sum, but not a year's salary. I feared that if I turned it down, I would be seen as disloyal, and it could cause my employer to pass me up for promotions or include me in the next reduction-in-force.
Since then, I've received almost yearly bonuses and stock grants which carry the same non-compete, so I am probably closer to having received a year's salary worth of additional consideration by now, but I still feel wary about the non-compete.
(edit) Note: I'm not in California
It depends on your jurisdiction, mostly.
In some jurisdictions, enforceable non compete requires extra-ordinary compensation, which has to be comparable to a base salary.
If the industry (and especially the company) gives almost everyone a bonus, then it is ordinary and thus not enough to make the non-compete agreement valid.
It was customary for employers to negotiate a reasonable salary, say $96K, and write it down in the employment contract that "you get a base salary of $48K/year, and an additional $48K/year is compensation for your 2-year non compete". Courts struck this down many times, since this wouldn't be extraordinary in the first place; and also, because if employee quit after 1 month, they would get $4K in compensation for a 2-year non compete, which is not remotely of the same order of magnitude as the income lost due to that non-compete.
In some jurisdictions, enforceable non compete requires extra-ordinary compensation, which has to be comparable to a base salary.
If the industry (and especially the company) gives almost everyone a bonus, then it is ordinary and thus not enough to make the non-compete agreement valid.
It was customary for employers to negotiate a reasonable salary, say $96K, and write it down in the employment contract that "you get a base salary of $48K/year, and an additional $48K/year is compensation for your 2-year non compete". Courts struck this down many times, since this wouldn't be extraordinary in the first place; and also, because if employee quit after 1 month, they would get $4K in compensation for a 2-year non compete, which is not remotely of the same order of magnitude as the income lost due to that non-compete.
I've signed some crazy NCA's in my time, it the full knowledge that the only way to enforce them (here in the Netherlands that is), is through a judge that will asses the if it is reasonable and will force the employer to continue paying you in full until said NCA expires and it prevents you from performing your profession.
I'll sign that 'you will not work in IT for 2 years' and take 2 years paid vacation if you insist on enforcing it, thank you ;)
I'll sign that 'you will not work in IT for 2 years' and take 2 years paid vacation if you insist on enforcing it, thank you ;)
There's a 3rd alternative. I recently signed a non-compete, but hired a lawyer to write an exception to the non-compete for my own nights & weekends startup. As part of that process, the company hiring me and asking for the non-compete agreement had to agree that my startup was not currently competing.
It was some of the best money I ever spent, and it allowed me peace of mind, and also allowed me to sign the company's contract, so there was some peace of mind for them as well. The language of my non-compete (and most non-competes I've seen) is so vague that just writing any kind of software for someone else could be seen to violate the agreement.
It was some of the best money I ever spent, and it allowed me peace of mind, and also allowed me to sign the company's contract, so there was some peace of mind for them as well. The language of my non-compete (and most non-competes I've seen) is so vague that just writing any kind of software for someone else could be seen to violate the agreement.
I agree with the general gist out there, but there are sane non competes. To take the one example I'm intimately familiar with, here in the Netherlands it's common for agencies to "rent out" some or all of their employees to work directly at customers (formally called secondment but I'm not sure that's a common term anywhere). This is because Dutch employment laws make firing someone hard, but terminating a secondment contract is easy. So it brings flexibility, plus the agencies are typically good at recruitment. Many tech companies's engineers have a huge chunk of their engineering teams be seconded via agencies.
Those agencies typically have a non-compete which, if it's the Good Kind Of Non-Compete, disallows employees who quit to take a job at the company they were last seconded to. This means that you can't, on paper, quit the agency to work directly for the company you were already working at via the agency.
In practice this works out fine, because the agency adds two values: flexibility and recruitment. What happens in practice is that if a company wants to take you over (a bit like buying a top sports player maybe), then the customer has to negotiate with the agency for some sort of buy-off fee. They tend to come to a sensible agreement fast, because the job market is great and if Joe Employee just was told he can't get his dream job because his current employer pulled a legal trick, he's not gonna want to keep working for the screwover employer long. So there's an incentive for the agency to make the deal.
There's also plenty evil non-competes here btw. Like "you can't ever work in our industry anymore" or "you can't ever work for any of our customers (and oh by the way all tech companies in the area are a customer haha lol)", etc.
Those agencies typically have a non-compete which, if it's the Good Kind Of Non-Compete, disallows employees who quit to take a job at the company they were last seconded to. This means that you can't, on paper, quit the agency to work directly for the company you were already working at via the agency.
In practice this works out fine, because the agency adds two values: flexibility and recruitment. What happens in practice is that if a company wants to take you over (a bit like buying a top sports player maybe), then the customer has to negotiate with the agency for some sort of buy-off fee. They tend to come to a sensible agreement fast, because the job market is great and if Joe Employee just was told he can't get his dream job because his current employer pulled a legal trick, he's not gonna want to keep working for the screwover employer long. So there's an incentive for the agency to make the deal.
There's also plenty evil non-competes here btw. Like "you can't ever work in our industry anymore" or "you can't ever work for any of our customers (and oh by the way all tech companies in the area are a customer haha lol)", etc.
Good article, except for the strange conflation of non-compete with debt. Debt implies an asset of value was received by the debtor at some point. No such thing takes place with a non-compete. Employment itself is a contract, not an asset. That's the reasoning behind CA's ban of these clauses.
Depends on jurisdiction.
Turns out that in Israel, for example, where non-compete agreements require material specific pay, a non-compete lasting 3 years or more, is generally considered an asset sale and is taxed as a capital gain transaction (25% instead of the ordinary income which has brackets that go as high as 55%).
Turns out that in Israel, for example, where non-compete agreements require material specific pay, a non-compete lasting 3 years or more, is generally considered an asset sale and is taxed as a capital gain transaction (25% instead of the ordinary income which has brackets that go as high as 55%).
where non-compete agreements require material specific pay
That's materially different. Anywhere in the United States, AFAIK, non-compete is not part of a "golden parachute" with continued post-severance pay except for C-suite people - sometimes. Employment is at-will on both sides in the United States in the vast majority of private labor.
That's materially different. Anywhere in the United States, AFAIK, non-compete is not part of a "golden parachute" with continued post-severance pay except for C-suite people - sometimes. Employment is at-will on both sides in the United States in the vast majority of private labor.
Employment in Israel is (if there's no union involved) mostly at-will as well, even if not quite as at-will as the US.
However, it is my understanding that e.g. California is similar. It's not that asking someone to sign a non-compete clause is illegal; what is illegal is not properly compensating them for it. That is, a clause like "in the event of lawful termination of employment by either side, for a period of up to (at the employer's discretion) 12 months, you will continue to receive your salary and will not be allowed to compete with employer".
Such a clause is legal in Israel, and indeed it is how binding non-competes are implemented. I haven't had employees in California in almost 20 years now, but AFAIK it is similar there. It is probably worded differently because of how the non-compete laws on the books are written, but I've heard of cases where something to that effect was deemed legal and enforceable.
However, it is my understanding that e.g. California is similar. It's not that asking someone to sign a non-compete clause is illegal; what is illegal is not properly compensating them for it. That is, a clause like "in the event of lawful termination of employment by either side, for a period of up to (at the employer's discretion) 12 months, you will continue to receive your salary and will not be allowed to compete with employer".
Such a clause is legal in Israel, and indeed it is how binding non-competes are implemented. I haven't had employees in California in almost 20 years now, but AFAIK it is similar there. It is probably worded differently because of how the non-compete laws on the books are written, but I've heard of cases where something to that effect was deemed legal and enforceable.
I thought it was an interesting way to look at it, and while I see your point I still think there's value in the company store comparison.
How can I politely say "no way" while still getting the job?
"Hi, would it be possible to remove clause X?" usually works for me. I've occasionally had to use the slightly stronger, "I'm sorry, but I actually can't sign this until clause X is removed."
Don't go into reasons, or get into a philosophical debate about it. The only time I've given an explanation was for a volunteer gig where I refused to sign an NDA at all, and had to explain to the coordinator "We can either be employee and employer where you pay me a lot more money then you have, or we can be two buddies working on a thing for free. We can't be two buddies where one guy has a contract against everyone else."
Don't go into reasons, or get into a philosophical debate about it. The only time I've given an explanation was for a volunteer gig where I refused to sign an NDA at all, and had to explain to the coordinator "We can either be employee and employer where you pay me a lot more money then you have, or we can be two buddies working on a thing for free. We can't be two buddies where one guy has a contract against everyone else."
>"I'm sorry, but I actually can't sign this until clause X is removed."
I said that once to someone about a liability clause that would possibly have cost more than I'd make there.
He started accusing me of attempting to sabotage his business and was very angry.
I just left. So glad I found that particular bombshell before I signed anything.
I said that once to someone about a liability clause that would possibly have cost more than I'd make there.
He started accusing me of attempting to sabotage his business and was very angry.
I just left. So glad I found that particular bombshell before I signed anything.
"Don't go into reasons, "
Agree with that. Never explain your reasoning without being asked. It makes you look weak.
Agree with that. Never explain your reasoning without being asked. It makes you look weak.
By simply stating you don't sign non-compete clauses because they're 1) illegal (in some states) 2) unenforceable (mostly) and 3) immoral. Work is a voluntary arrangement between both parties, at will, and you'll stay (and hopefully the employer will keep you) so long as it's good for both sides of the desk.
Or tell the HR person you'd like to have some time for your lawyer to review it. Come back with a refusal or just strike out the lock-out terms, or change the duration to something you can accept (1 year -> 30 days), etc.
Say this pleasantly and most HR types will accept it. I've had to walk away from a few offers, but most (maybe 4/5) firms accept my concerns with some version of "I understand."
It's my experience that large corporations are more likely to be rigid and insist you sign it, which is your first warning that it's probably not a pleasant place to (literally) spend your life.
Or tell the HR person you'd like to have some time for your lawyer to review it. Come back with a refusal or just strike out the lock-out terms, or change the duration to something you can accept (1 year -> 30 days), etc.
Say this pleasantly and most HR types will accept it. I've had to walk away from a few offers, but most (maybe 4/5) firms accept my concerns with some version of "I understand."
It's my experience that large corporations are more likely to be rigid and insist you sign it, which is your first warning that it's probably not a pleasant place to (literally) spend your life.
In my experience the problem is that these clauses are traditionally presented to you by a non-technical employee typically from HR, and (in my anecdotal experience) these employees usually try to dismiss your concerns with a "oh it's just a formality" or "all companies make you sign this sort of thing!"... so if you're not important enough to talk to someone higher up, you might just get your offer revoked if you try to fight it because your HR contact isn't important enough/doesn't care enough to fight against it for you, and the legal department only has so much time for custom agreements.
-Agreed that the clauses are most often presented by someone not authorized to waive them.
However, I've found on the couple of occasions where (non-reasonable) NCAs were presented to me that simply claiming that the terms as stated are not acceptable and that a revised NCA must be prepared if I am to sign it results in a shrug and a 'Whatever. We'll just skip it, then.'
Now, if they'd stood their ground, I'd have had to look elsewhere. (I am not a big fish - just a lowly engineer who do some management on the side - so they didn't waive the NCA for REALLY wanting me to come aboard; more from reluctance to go through all the hassles of either doing another hiring process OR amending the NCA.)
(At a former employer, the NCA basically stated that anything I ever thought of, be it at work or after work, in my field of expertise or in whatever unrelated field, belonged to them. Oh, and this obligation extended past the termination of employment for a period of time decided at their discretion. Not enforceable in the least, but still...)
However, I've found on the couple of occasions where (non-reasonable) NCAs were presented to me that simply claiming that the terms as stated are not acceptable and that a revised NCA must be prepared if I am to sign it results in a shrug and a 'Whatever. We'll just skip it, then.'
Now, if they'd stood their ground, I'd have had to look elsewhere. (I am not a big fish - just a lowly engineer who do some management on the side - so they didn't waive the NCA for REALLY wanting me to come aboard; more from reluctance to go through all the hassles of either doing another hiring process OR amending the NCA.)
(At a former employer, the NCA basically stated that anything I ever thought of, be it at work or after work, in my field of expertise or in whatever unrelated field, belonged to them. Oh, and this obligation extended past the termination of employment for a period of time decided at their discretion. Not enforceable in the least, but still...)
Those are all tricks. They put pressure on the candidate to sign ASAP.
If the candidate accepts the contract as it is the company wins.
If the bargains around clauses it's still OK and having many clauses to drop makes it look like the company is being flexible.
Always push back!
If the candidate accepts the contract as it is the company wins.
If the bargains around clauses it's still OK and having many clauses to drop makes it look like the company is being flexible.
Always push back!
Oh I do. I'm just saying that most folks aren't as stubborn as me, and it's unfortunate that you have to play games over something like that. All it does is screw over people who don't have many options, and widen the delta between the haves and have-nots in our field (the haves have the luxury of rejecting these clauses, while the have-nots might not be willing to "roll a hard 6" on their only job offer).
You have just been hired as their new rockstar developer. If HR lose you over this HR will be taking some flak.
Just speak to your future line manager and explain that you have returned a modified version of the contract and that you hope that they will agree to it soon because you are really excited to start working.
Just speak to your future line manager and explain that you have returned a modified version of the contract and that you hope that they will agree to it soon because you are really excited to start working.
If someone doesn't have the power to change the contract, then they don't have the power to negotiate with me. And if they don't have the power to negotiate with me, then what business do they have offering me a contract to sign?
This is why the solution to this kind of problem is industry-by-industry collective action. Once 10 people in a row tell the HR person that they're not signing that garbage, even the densest bureaucrat will take notice.
At that point HR wasn't the one making the decision to hire you, simply because HR isn't qualified to evaluate an engineer after initial screening. At least companies that actively try to find good engineers for their roles, HR is in no position to withdraw an already given offer by themselves.
I think by politley saying "no way" :). When I did contracting I saw excessive non competes and usually when I told them calmly that I wouldn't sign this they would back off without problems. Only some companies made a fuzz.
The answer is that you don't want to take the job if saying "no way" would be a problem. It's a coal-mine canary whose death indicates that more severe problems will occur after you have committed yourself.
The presence of the clause that requires rejection is itself a lesser warning, but not necessarily cause for immediate alarm.
The presence of the clause that requires rejection is itself a lesser warning, but not necessarily cause for immediate alarm.
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Yes, I've done exactly that several times. Couple of times they explicitly added provisions for hobby projects that I do in my spare time.
The whole premise behind the outrage is alien to me: any contract that you're presented with is just the first step of negotiation. Of course it favors the author. Present them with an alternative, and then, step by step, you come to a compromise.
The whole premise behind the outrage is alien to me: any contract that you're presented with is just the first step of negotiation. Of course it favors the author. Present them with an alternative, and then, step by step, you come to a compromise.
This should be "why non-compete agreements should be legally curtailed," not "why I, personally, do not sign them."
I work in California, specifically in Silicon Valley.
What is the "Non-compete Clause" of which you speak? The only time I have heard of is a snippet of conversation that "Judges just laugh at them."
In practice, there a plethora of laws that provide legitimate protection to employers. Taking a copy of the software, copying the customer list, purloining the secret to creating nooks and crannies in muffins are all protected theft. You even have restrictions on your research if you are paid for research in one company and try to do the exact same thing for another company.
It works.
What is the "Non-compete Clause" of which you speak? The only time I have heard of is a snippet of conversation that "Judges just laugh at them."
In practice, there a plethora of laws that provide legitimate protection to employers. Taking a copy of the software, copying the customer list, purloining the secret to creating nooks and crannies in muffins are all protected theft. You even have restrictions on your research if you are paid for research in one company and try to do the exact same thing for another company.
It works.
In California, judges do laugh at them, because the vast majority of US non-compete agreements would be unenforceable in California. Employees can be prohibited from using trade secrets from the job after their employment is ended as you say, but the "non-compete" itself as generally described can only be enforced in the case of a business owner who sells his business, and "its good-will" (edit: and the good will is revokable and must be spelled out and compensated.)
The assumption underlying the exception being, last I heard at least, that if a business owner sells their business to you, there is an expectation that they are doing it in good faith, and they will not intentionally undermine the success of the business that you bought. It would be "in bad faith" or faithless for that former business owner to go out and round up all of the customers of your business, and start marketing at them new contracts with a new competing company that does just what the company you purchased does.
This is, to my knowledge, only really the law in California (non-competes are mostly enforceable in other states), but my understanding is that if a person from another state has some other kind of non-compete agreement that they wish to escape, they can also do it safely by moving to California and going to work for a CA employer.
My ailing memory tells me there was a third different condition in which non-competes were able to be enforced in CA, but that it was also very narrow and unlikely to cover a regular former employee, or ever prevent them from working for a competitor... if anyone knows the law better than I do, feel free to chime in with whatever I'm missing.
I think I remember that the "good-will" clause needs to be spelled out explicitly, in terms of a period of time and a specific compensation that it is tied with... that might be what I had forgotten.
The good-will is revokable and the penalty for revoking it can be no more than the specific compensation associated. I seem to remember actually, that the good-will compensation must be structured as a series of payments, because the penalty for revoking your good-will is actually just the discontinuation of those payments, not a statutory damage or requirement of returning any of that money that was already paid.
IOW California judges will usually just laugh at non-competes. I think I also remember that there is a statutory damage amount that employers must pay, if they write and attempt to pass any overly broad or non-enforceable non-competes as a condition of employment.
IANAL though, of course ask your lawyer if you really needed to know...
The assumption underlying the exception being, last I heard at least, that if a business owner sells their business to you, there is an expectation that they are doing it in good faith, and they will not intentionally undermine the success of the business that you bought. It would be "in bad faith" or faithless for that former business owner to go out and round up all of the customers of your business, and start marketing at them new contracts with a new competing company that does just what the company you purchased does.
This is, to my knowledge, only really the law in California (non-competes are mostly enforceable in other states), but my understanding is that if a person from another state has some other kind of non-compete agreement that they wish to escape, they can also do it safely by moving to California and going to work for a CA employer.
My ailing memory tells me there was a third different condition in which non-competes were able to be enforced in CA, but that it was also very narrow and unlikely to cover a regular former employee, or ever prevent them from working for a competitor... if anyone knows the law better than I do, feel free to chime in with whatever I'm missing.
I think I remember that the "good-will" clause needs to be spelled out explicitly, in terms of a period of time and a specific compensation that it is tied with... that might be what I had forgotten.
The good-will is revokable and the penalty for revoking it can be no more than the specific compensation associated. I seem to remember actually, that the good-will compensation must be structured as a series of payments, because the penalty for revoking your good-will is actually just the discontinuation of those payments, not a statutory damage or requirement of returning any of that money that was already paid.
IOW California judges will usually just laugh at non-competes. I think I also remember that there is a statutory damage amount that employers must pay, if they write and attempt to pass any overly broad or non-enforceable non-competes as a condition of employment.
IANAL though, of course ask your lawyer if you really needed to know...
Is it legal to publicly share a job contract/agreement ?
It could be nice to have a website that list all the companies and link all the known contracts for these companies.
We could even have a summary of the weird clauses.
Or some checkmarks. IE:
It could be nice to have a website that list all the companies and link all the known contracts for these companies.
We could even have a summary of the weird clauses.
Or some checkmarks. IE:
[X] You own your IP after work hours produced on your own computer
I remember reading about these clauses in contracts as the "fear and loathing" clause
https://books.google.com/books?id=nWWAGnBDzJEC&lpg=PA164&ots...
Glad I read that. Thank you. I probably be taking a look at the rest of that book.
Is it worth the full read?
Is it worth the full read?
It definitely opened my eyes to the realities of this contract world that's strongly established by now. I'd recommend reading it, its a pretty fun read too being an ethnographic study and all. Covers the historical evolution and causes for it and basically the interests of the three parties that form the triangle of vying interests: employer, staffer, contractor.
Not the OP. I have read that book and highly recommend it.
I think the only non compete i've had was for one of my 4-month co-op jobs. I think it lasted only a few months, and it was not to work at a software company in the same field. Which was fine, as I would be at school during that time anyways.
I have signed agreements where anything I do on the company laptop is considered theres. So I just made sure to only use it for work, and put nothing else on it.
I have signed agreements where anything I do on the company laptop is considered theres. So I just made sure to only use it for work, and put nothing else on it.
> I have signed agreements where anything I do on the company laptop is considered theres. So I just made sure to only use it for work, and put nothing else on it.
That is (or should be) pretty standard both on the company's part and on yours. As someone who spends chunks of his days as an IT admin for clients, work systems should be used for work, personal devices should be personal devices and in addition should not be allowed connection to company/internal wifi.
I'm sure that "you" are the most brilliant and secure flower in the field, but if we don't have and enforce policies against personal use then it gets harder to crack down on Boris in the mailroom who wants to check his personal email on Yandex and download every elf bowling attachment that gets sent his way.
That is (or should be) pretty standard both on the company's part and on yours. As someone who spends chunks of his days as an IT admin for clients, work systems should be used for work, personal devices should be personal devices and in addition should not be allowed connection to company/internal wifi.
I'm sure that "you" are the most brilliant and secure flower in the field, but if we don't have and enforce policies against personal use then it gets harder to crack down on Boris in the mailroom who wants to check his personal email on Yandex and download every elf bowling attachment that gets sent his way.
Does anyone know an excellent attorney in NYC who could examine a non-compete an engineer signed so they could actually accept another job offer?
+1. I know people who will probably need this.
For my current consulting job I signed a contract with a non-compete clause for 1.5 years (and a similar relation clause - which forbids me to work with any relation of my employer for 1.5 years). I did discuss this with both my employer and friends in the industry. In the end my employer convinced me that it's non-negotiable and standard in consulting (which, I think, is true).
This is kind of bitter, as I plan to leave this company after half a year (work is not challenging, I feel lonely since the rest of my team is offshore, not happy with the pay, 3 hour commute every day, many unpaid hours).
I don't assume my employer will start a fuzz, since it's a nice company in general (just not for me). However, I can imagine that this could be a major problem if I left the company on bad terms (since they are basically a vanilla IT company, and most companies could be a client or relationship).
This is kind of bitter, as I plan to leave this company after half a year (work is not challenging, I feel lonely since the rest of my team is offshore, not happy with the pay, 3 hour commute every day, many unpaid hours).
I don't assume my employer will start a fuzz, since it's a nice company in general (just not for me). However, I can imagine that this could be a major problem if I left the company on bad terms (since they are basically a vanilla IT company, and most companies could be a client or relationship).
Thought experiment: it may be interesting for a corporation to insert a fairly crazy NCA rule just to see how the applicant reacts.
Every now and then there are some crazy stuff happening in big organizations, and you probably want someone who is able to call those out, politely but firmly, rather than pushing them under the rug.
Every now and then there are some crazy stuff happening in big organizations, and you probably want someone who is able to call those out, politely but firmly, rather than pushing them under the rug.
I don't think the lawyers would allow that kind of trickery.
>Non-competes are agreements that challenge that basic freedom.
They limit the freedom, it's a little dramatic to say they "challenge" it. A non-compete is just a contract, one that you enter (or don't enter) willingly. THIS is capitalism, that you can decide what you want to do without the government intervening. California's law is actually limiting capitalism by making rules that companies need to follow. (I am not judging either way, just trying to point out an inconsistency in the argument)
I agree, don't sign non-competes if you can avoid it, because that's what's best for you. But this person is a little out there on their reasoning.
They limit the freedom, it's a little dramatic to say they "challenge" it. A non-compete is just a contract, one that you enter (or don't enter) willingly. THIS is capitalism, that you can decide what you want to do without the government intervening. California's law is actually limiting capitalism by making rules that companies need to follow. (I am not judging either way, just trying to point out an inconsistency in the argument)
I agree, don't sign non-competes if you can avoid it, because that's what's best for you. But this person is a little out there on their reasoning.
There's a relevant discussion that happened recently here:
https://news.ycombinator.com/item?id=16575920
Wondering if we (as a group of people who will face many non-competes) could generate a standard response to these kinds of clauses in employment contracts, which could be more effective then everyone rolling their own.
I made a (pretty bare for now) repo for it if anyone is interested - https://github.com/DBCerigo/non-compete-standard-response/bl...
I made a (pretty bare for now) repo for it if anyone is interested - https://github.com/DBCerigo/non-compete-standard-response/bl...
I see a lot of stories/comments about not signing non-compete agreements on HN, so I want to throw in my own 2 cents.
Many times, companies have standard paperwork that they want you to sign and they don't want to deal with the hassle of hiring someone who won't sign the forms that their lawyers already drafted. Making modifications means that they have to call up their lawyer (who charges $300+/hour), have a conversation where the lawyer tries to convince them why they should keep the clause in, and then pay said lawyer to modify the contract. It's a hassle at the very least and it makes you look like a difficult person to deal with. So think carefully about negotiating on this, because it means less room to negotiate in other areas.
There are people out there who have a strong moral conviction against non-competes and who refuse to sign them. Power to those people. I don't care much for these agreements myself. But if you are thinking in practical rather than principled terms, I think it makes sense for many people to just sign the paper and move on.
What it comes down to is this: How likely are you to ever want to work for a direct competitor of this company?
If you are a chemical engineer working for a drug company, you are likely to find your next employment offer from another drug company and they very likely compete with your current employer. So be careful. But if you are a software engineer joining, for example, Dropbox, a non-compete might prohibit you from taking your next job at Box, Backblaze or any other online storage company, but it's very likely that you won't want your next job to be at a cloud storage company anyway, so think about that when deciding about whether to sign a non-compete.
In general, the more specialized your skillset is, the more you should care about non-competes. But as my lawyer once told me before I signed a pretty lengthy non-compete contract, "sometimes it's best to just sign the thing and not worry about it. You're almost certainly never going to work for a direct competitor anyway".
edit: Added emphasis above on the word "many", in response to rgbreneer's comment below. It's not that I don't think you should blindly sign non-compete agreements. It's that, like it or not, many employers don't like dealing with the hassle of someone who won't sign their standard paperwork. Maybe they don't care but their investors don't like it. Maybe it's a big company and the hiring manager doesn't want to deal with the bureaucracy of the legal department. Maybe they just really really don't want you working for a competitor. In any case, sometimes it's not worth fighting over. I once interned as a software engineer for a wristwatch manufacturer who made me sign a non-compete. The chances of me starting a wristwatch company or working for a direct competitor were close to zero. If that's the case for you, then weigh the risks involved, but you might decide that it's worth it to sign anyway.
Many times, companies have standard paperwork that they want you to sign and they don't want to deal with the hassle of hiring someone who won't sign the forms that their lawyers already drafted. Making modifications means that they have to call up their lawyer (who charges $300+/hour), have a conversation where the lawyer tries to convince them why they should keep the clause in, and then pay said lawyer to modify the contract. It's a hassle at the very least and it makes you look like a difficult person to deal with. So think carefully about negotiating on this, because it means less room to negotiate in other areas.
There are people out there who have a strong moral conviction against non-competes and who refuse to sign them. Power to those people. I don't care much for these agreements myself. But if you are thinking in practical rather than principled terms, I think it makes sense for many people to just sign the paper and move on.
What it comes down to is this: How likely are you to ever want to work for a direct competitor of this company?
If you are a chemical engineer working for a drug company, you are likely to find your next employment offer from another drug company and they very likely compete with your current employer. So be careful. But if you are a software engineer joining, for example, Dropbox, a non-compete might prohibit you from taking your next job at Box, Backblaze or any other online storage company, but it's very likely that you won't want your next job to be at a cloud storage company anyway, so think about that when deciding about whether to sign a non-compete.
In general, the more specialized your skillset is, the more you should care about non-competes. But as my lawyer once told me before I signed a pretty lengthy non-compete contract, "sometimes it's best to just sign the thing and not worry about it. You're almost certainly never going to work for a direct competitor anyway".
edit: Added emphasis above on the word "many", in response to rgbreneer's comment below. It's not that I don't think you should blindly sign non-compete agreements. It's that, like it or not, many employers don't like dealing with the hassle of someone who won't sign their standard paperwork. Maybe they don't care but their investors don't like it. Maybe it's a big company and the hiring manager doesn't want to deal with the bureaucracy of the legal department. Maybe they just really really don't want you working for a competitor. In any case, sometimes it's not worth fighting over. I once interned as a software engineer for a wristwatch manufacturer who made me sign a non-compete. The chances of me starting a wristwatch company or working for a direct competitor were close to zero. If that's the case for you, then weigh the risks involved, but you might decide that it's worth it to sign anyway.
This is terrible advice. I'm happy to hear you've never been sued or had a contract used against you... I have had a contract I've signed used against me (although it wasn't an NCA)... and on that day, you're going to have a terrible time.
People who say they ask for the moon and never plan to collect are liars. They paid someone to draft that contract with that language. That cost real money. Why would they do that, and then cause friction in their dealings with others by asking them to sign it, if they never plan to use it?
People who say they ask for the moon and never plan to collect are liars. They paid someone to draft that contract with that language. That cost real money. Why would they do that, and then cause friction in their dealings with others by asking them to sign it, if they never plan to use it?
A) A lot of companies go to their lawyers and say, "hey, can you give me some standard forms to have employees fill out". Non-compete clauses (for better or worse, and I think for worse) have become a part of that standard contract. Generally, the more standardized your paperwork is, the less you pay lawyers.
B) I fully agree with you that you should never trust someone who says that they don't plan to collect on a contract. Peoples' intentions often change once money is involved. But for a typical software engineer (pretty common on this forum), your skills typically transfer to many non-competitors anyway. If you work for Spotify[1] and have a non-compete, sure, you should fully assume that the non-compete will be enforced if you jump ship for Pandora. But I'd venture to guess that most Spotify employees don't move on to direct competitors anyway, but rather to software engineering roles at companies that do unrelated things.
C) Like anything else, it's a calculated risk. When I talked to my lawyer, he said that many people just ignore non-competes and don't have any issues, but that some people have painful legal battles over them. So before signing one, ponder the following: Are you likely to want to leave to a competitor of the company that wants you to sign a non-compete? Do you think you will want to start your own company that competes? Are you going to be employable among non-competitors? For many people this is a non-issue.
[1] I'm just using Spotify as an example. I have no idea what their employment paperwork looks like.
B) I fully agree with you that you should never trust someone who says that they don't plan to collect on a contract. Peoples' intentions often change once money is involved. But for a typical software engineer (pretty common on this forum), your skills typically transfer to many non-competitors anyway. If you work for Spotify[1] and have a non-compete, sure, you should fully assume that the non-compete will be enforced if you jump ship for Pandora. But I'd venture to guess that most Spotify employees don't move on to direct competitors anyway, but rather to software engineering roles at companies that do unrelated things.
C) Like anything else, it's a calculated risk. When I talked to my lawyer, he said that many people just ignore non-competes and don't have any issues, but that some people have painful legal battles over them. So before signing one, ponder the following: Are you likely to want to leave to a competitor of the company that wants you to sign a non-compete? Do you think you will want to start your own company that competes? Are you going to be employable among non-competitors? For many people this is a non-issue.
[1] I'm just using Spotify as an example. I have no idea what their employment paperwork looks like.
I get this perspective in principle, but you have to be careful - I've seen cases where the wording of what construes a competing company / product / service in a non-compete is so broad that it could block me from doing any work in my profession at all. And I've also seen companies where contracts with questionable language were agreed and signed in good faith, but were later weaponised when things turned sour. These days I'll always ask for the contracts as soon as I receive an offer, read the clauses carefully and push back ASAP where needed with my own redlined version. Most times it works out fine, and once I received a bad reaction that led me to walk away. (A bullet dodged, IMHO.)
This perspective makes a lot of sense to me. My point is that some people are militantly against them and sometimes it's just not a big deal. A lot of companies have very narrow niches that you are unlikely to compete with anyway. If you work for a startup that makes AI powered baby monitors, it's unlikely that your non-compete is going to prevent you from working anywhere outside of the baby product industry (and you'll probably be fine in most areas within that overall industry as well).
Of course, there are people who are going to try to enforce crazy non-compete clauses. Many times, these clauses aren't enforceable if they are too broad. I'm not a lawyer, but when I spoke to one about this, he said that courts will generally not enforce non-competes unless it's pretty clear that the company you move to is an actual competitor (again, IANAL, so don't take this at face value). Still, it's a huge hassle and a big expense to hire a lawyer to defend you, even for a frivolous lawsuit. But this isn't only for non-competes. Companies can also sue for non-disclosure agreement breaches and the like which are nearly universal in employment contracts. Might be hard for them to win those lawsuits, but I'm sure it's a pain to fight them.
When I'm considering a new company, if I google them and see a history of litigation against past employees, I take that into strong consideration in my decision.
Of course, there are people who are going to try to enforce crazy non-compete clauses. Many times, these clauses aren't enforceable if they are too broad. I'm not a lawyer, but when I spoke to one about this, he said that courts will generally not enforce non-competes unless it's pretty clear that the company you move to is an actual competitor (again, IANAL, so don't take this at face value). Still, it's a huge hassle and a big expense to hire a lawyer to defend you, even for a frivolous lawsuit. But this isn't only for non-competes. Companies can also sue for non-disclosure agreement breaches and the like which are nearly universal in employment contracts. Might be hard for them to win those lawsuits, but I'm sure it's a pain to fight them.
When I'm considering a new company, if I google them and see a history of litigation against past employees, I take that into strong consideration in my decision.
I worked for a company in field A. They were bought by a PE firm and we were all given three days or out to sign an NDA. I signed. FF a short period of time and I'm negotiating employment at a firm that did work in field B. They had a subsidiary someplace else that happened to do similar work in field A. New company had to have their lawyers draft a letter saying I was not going to work with the subsidiary for the remainder of my NDA before I was officially hired.
New company could easily have just walked away from the deal costing us all a good deal of time. Luckily they really wanted to hire me and didn't.
NDAs are toxic. Don't encourage anyone to sign one.
New company could easily have just walked away from the deal costing us all a good deal of time. Luckily they really wanted to hire me and didn't.
NDAs are toxic. Don't encourage anyone to sign one.
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Either remove the page (less obvious) or strike out the clause. Or if sneaky, reprint it without the clause.
Take the agreement "to your lawyer" first, modify it, sign and return.
If a clause is widely regarded as unethical, it seems appropriate to respond unethically.
Take the agreement "to your lawyer" first, modify it, sign and return.
If a clause is widely regarded as unethical, it seems appropriate to respond unethically.
Last time I signed one it was very weakly worded. I laughed and said "I'll only sign this because it's completely unenforceable here". It was a bit awkward.
We can have non compete provisions in contacts in France but this goes both ways: the company must pay you during the non compete time, when you are unemployed.
In much of trading-related finance, non-competes or garden leaves are ubiquitous, with periods lasting between 6 months and 2 years. However, they are usually paid, and in many cases paid well (more than your annual base salary). In my view, this makes sense: you may have learned a trading strategy that is highly valuable to the firm you are leaving and it is expected to decay over time. You are being compensated not to share this with competition.
In that context, I eagerly sign non-competes with the expectation of having 6-18 months paid vacation at some point in the future. Some non-compete periods can be _glorious_. A guy in Chicago sued his former employer to have his non-compete enforced (and thus collect a massive pay cheque): https://www.natlawreview.com/article/employer-s-waiver-non-c...