Comments on: Noncompete clauses can keep tech in check

IBM's lawsuit against former executive Mark Papermaster, who is trying to join Apple, underscores how companies can enforce restrictions on their employees.

[Lerianis]

There shouldn't be any such thing as non-compete clauses in the modern workplace, period and done with. When someone gets fired (for good or not-good reasons), it keeps them from finding another job easily.
That's the main reason why I would NEVER sign one of those agreements, or I would insist on a codicil that says if I get fired/laid off, the non-compete clause does not come into effect.

[Pishkado]

The trouble with a non-complete going out the window if you get fired is that anyone with half a brain and another job offer can easily make sure that he/she gets fired. In any case, Papermaster wasn't, so this wouldn't have helped him.

[Renegade Knight]

Contracts require consideration. If IBM want's to pay me my salary while I sit on my but (reglardless of how I came to be unemployed) and look for work starting the day after the agreement expires, then maybe it would be worth signing.

Non competes are really for the sale of busiensses. That way the old owner can't go across the street and open up the same business they just sold you and steal all the busienss that you just thought you bought into.

[bluemist9999]

I believe companies that use non-compete agreements are afraid they don't treat their employees well. If a company treats its people well, and uses an NDA for real, critical, trade secrets, there's nothing to worry about.

[Remo_Williams]

NDAs should be the only tool necessary in today's business. Non-competes were never a good idea, less so today where fluidity in the tech industry is the norm.

-R

[Penguinisto]

Rule #1: Never sign a non-compete. At any level, you always have the right to refuse one. Any employer that refuses to budge on one really isn't worth working for. If you stupidly sign one anyway, that's your bucket of problems.

A Non-Disclosure Agreement (which is perfectly rational) should be sufficient (and they're usually standard fare for programmers and sysadmin types).

A non-compete is a product of the 1980's, and should've died back then.

If I'm an employer that doesn't want you to compete against me later, and you're a competent, solid employee, I'd simply do my best to retain you. Conversely, if you're an incompetent employee, I'd want you to work for a competitor... ;)

[Vegaman_Dan]

Penguinisto wrote:

"Rule #1: Never sign a non-compete. "

I'll add to that:

Rule #2: Never work in the IT industry where non-compete clauses are commonplace and required by most companies. If you DO want to work in the IT industry, then you'll probably need to sign one of these necessary evils.

They shouldn't be an issue in this day and age, but they are here so you deal with them. While Penguinisto's comments are very high and mighty, they are also unrealistic in the real IT world. I wish it wasn't so, but that's simply the way it is. Hopefully times will change.

[Penguinisto]

Sorry kid, but I've managed to avoid them for 15 years+ now. I realize that down at the help desk you're pretty much stuck with whatever they give you, but at the higher levels you can very easily avoid them.

Yes, I've turned down job offers (one specifically because of a non-compete) because of a refusal to negotiate from the employer.

It sucks, it's not easy to do, but consider this: If they're inflexible on something as stupid as a non-compete covenant (and think they require one because there's no other way to keep you than to entrap you), then why in the hell would you want to work for them? Do you think that every other aspect of working for them will become a magical dreamworld? If they're so eager to show you up-front that they want to limit your options, then why would you willingly do so? If it were a matter of acceptance or starvation, sure, I can grok that - but unless that's the situation, you won't get anywhere in your career without negotiation or standing up for yourself.

Also, consider this: You claim that they are common and required "by most companies". I haven't seen one since 1996, and hadn't signed one since (IIRC) 1993. NDA's OTOH I've seen plenty of, and have signed one almost with every new job - maybe you;re confused about the terminology?

[UITD]

Are you effin kidding me? I refuse to sign anything that comes close to a non-compete. NEVER sign one of those things. An NDA, sure. I believe in protecting my client's trade secrets and business processes. I am only interested in working and getting paid. That is IT. I am not interested in destroying your business. Then I cant work and get paid. And, did I tell you that I want to get paid? Non Compete Clauses are the most absurd things in business today. Aside from most middle-managers out there. :-)

Dont EVER sign one. Walk away. Better yet - RUN. Tell them where to shove their NCA and tell them to tell their stinkin attorney to shove it tightly up there too.

[Vegaman_Dan]

Somehow this is Microsoft's fault, you know. It's a story about Apple, therefore it must be Microsoft's fault. :)

[ssalava]

lol

[Penguinisto]

Given that you work with/for MSFT, tell us - did they make you sign a non-compete?

[ssalava]

Has anyone been able to pull up the PDF file? http://i/ne/pg/fd_2008/noncompete_agreement.pdf is a bad link.

[Tom Krazit]

Sorry, that was my fault, had an extra backslash in the URL. Should be fixed now.

[J. Blow]

Non-competes, except at the very highest exec level are almost copmletely unenforceable, especially in CA.

However, non-solicit agreements are VERY enforcable, i.e. companys poaching employees.

[johnqh]

The IBM is not trying to stop Papermaster from working for Apple. It is using this case to tell other employees to think twice before jumping ship.

The problem is, it is a double edged sword. It is also telling IBM job applicants to think twice before joining.

[Penguinisto]

Yep. IBM has a way of getting a message out without saying a word.

That said, Papermaster did sign it (and thus may be --depending on jurisdiction-- be bound by it).

[stigmattaman]

Great story Tom. I agree with what most are saying here about how outdated non-competes are. With that said, Papermaster - which has to be one of the coolest names ever - did sign it and should abide by it. It's only a year, Jobs can keep it afloat until then.

[InklingBooks]

IBM is foolish making such a big deal about what one of their more talented execs does after he leaves. That may discourage other talented people from leaving in the short term, but it'll also discourage others from signing up with IBM in the future. Potential hires will think, "If IBM thinks servers and iPods are in competition, do I really want to work for them?"

[groupeone]

On the matter of non-compete clauses, details matter.

Is the language of the non-compete even enforceable? In many cases, they're not worth the paper upon which they are written. Non-compete clauses often are created to intimidate an employee more than anything else.

What is the legal climate of the state in which the lawsuit is filed? As noted, in California, a non-compete clause is worthless. But some states still provide a safe haven for employers that want to brandish a non-compete as an intimidation weapon. I was party to one such lawsuit in the state of Minnesota, in which the former employer used its largesse to try to intimidate two ex-employees leaving the company to jump to a start-up. Their new employer had its ducks in a row, and eventually, both sides settled out of court in a decision that proved to be inconsequential. But it left the two ex-employees scarred and bitter.

I would believe a judge would place considerable burden on IBM to show why its lawsuit has merit. My hunch is that this will settle pretty quickly and quietly (but for the press that make noise about pretty much anything these days).

Of interest to some of you is the fact that you might have signed a non-compete and never had a clue that you did. Here's an example: At one company, employees received a congratulatory email thanking them for their hard work, and providing them with a bonus in the form of additional shares of company stock. To accept the bonus, the employee only had to click on a link in the email. What they did not likely do is also click on fine print nearby, that was a shrink-wrap agreement related to the awarding of stock that was SUBJECT TO ACCEPTANCE OF A NON-COMPETE AGREEMENT. In short, the frigtards buried the non-compete in the fine print of the acceptance of the bonus stock award.

Yes, this sort of thing happens. An attorney who reviewed the agreement was blown away at how insidious it was, and thought he could successfully sue to have it overturned were it not that he had to recuse himself because his firm was of counsel to - get ready - the company that used the shrink-wrap non-compete agreement disguised in the bonus stock offering.

And kudos to Tom Krazit for a well-researched article. That's pretty rare these days.

[Penguinisto]

@groupeone:

Indeed - some folks can be pretty sneaky about such things (your lawyer friend was right though - it would die very quickly in court - precicely due to its blatantly deceptive nature and lack of a complete copy of said agreement for you to sign, among a lot of other reasons).

[t424unow]

Non-compete enforceability: Given that IBM is in New York and Papermaster is (was) in Texas, there shouldn't be a problem with enforceability.

See: http://www.peoplefinders.com (or
http://www.peoplefinders.com/summary.asp?fn=Mark&mn=&ln=Papermaster&city=Austin&state=TX&age=&dobmm=&dobdd=&doby=&vw=people&Input=name)

http://www.traviscad.org/tcad_search.php?mode=name&kind=real (or
http://www.traviscad.org/travisdetail.php?theKey=156545)

[Dr_Zinj]

Real simple.

A non-compete is only valid for as long as the company is continuing to pay me as much as I would make working elsewhere.

Anything else is a form of legalistic slavery.

Here's my recommendation.

Draft an addendum contract that stipulates that the company must continue to pay you your salary and benefits that you were making at the time of your layoff or termination for the entire period of their non-compete contract. Add a paragraph in there that renders their non-compete null and void in the event that you do not received any pay or benefits from them. Then run it by a lawyer for proper language.

If they hand you an non-compete, you hand them that copy and tell them that it's non-negotiable if they want to push the competition claus in your contract.