Signing Confidentiality, Non-Solicitation, Non-Competition, & Inventions Agreements

[donlapalma]

I just received a job offer that I'm seriously considering. As part of the offer letter, there is an Employee Confidentiality, Non-Solicitation, Non-Competition, & Inventions Agreement. I've never had to sign one of these before. For the attorneys out there, what should I be on the lookout for?

I've read my fair share of these for work so, to my accounting mind, it sounds pretty boiler-plate. However, since this now impacts me personally I thought I would see what you all had to say.

And yes, I will not construe any posters comments as "legal advice." ;)

[KUSA]

In regards to the no compete, I would never sign one of them. If the company is so concerned about you leaving, is it a place you really want to work? A good company will have the confidence that you will want to stay.

I’ve seen people in my industry that signed them, left the company to work for a competitor, and get sued. They lose and have to fork over cash.

Ask them why they feel they need a no compete.

[JoshNC]

In regards to the no compete, I would never sign one of them. If the company is so concerned about you leaving, is it a place you really want to work? A good company will have the confidence that you will want to stay.

I’ve seen people in my industry that signed them, left the company to work for a competitor, and get sued. They lose and have to fork over cash.

Ask them why they feel they need a no compete.

That is industry dependent. Very common in some. OP, I recommend you hire a good employment attorney and ask these questions. Coming to an Internet forum asking for job/legal advice is worth what you pay for it.

[donlapalma]

That is industry dependent. Very common in some. OP, I recommend you hire a good employment attorney and ask these questions. Coming to an Internet forum asking for job/legal advice is worth what you pay for it.

Yes. I'm acutely aware that forum discussions are not the equivalent of paid legal advice and I acknowledge as much in my OP. I'm asking personal friends and colleagues the same question I posed here - because I tend to think there are some smart and experienced folks here. If after my INFORMAL inquiries, I believe the engagement of an attorney is warranted, I will certainly go down that route.

[THCDDM4]

I’d personally not sign such an agreement that pushes me into a corner. Unless the juice was worth the squeeze and I had thoroughly vetted the company and my plan was to stay for the term of the contract.

Some non-competes come with an extension beyond the contracted term- that’s a big no no for me.

[MegademiC]

Not an attorney.
I’ve signed one for a prior position as an engineer.

Very situational, business, and career dependant.
If I ran the company, I would want people to sign as well, depending on the job.

I would expect it to be common for people involved with R&D.

[FromMyColdDeadHand]

It is state dependent on what is enforceable too. Had a buddy bitten hard by one, others aren't worth the paper that they are written on.

[Renegade]

I just received a job offer that I'm seriously considering. As part of the offer letter, there is an Employee Confidentiality, Non-Solicitation, Non-Competition, & Inventions Agreement. I've never had to sign one of these before. For the attorneys out there, what should I be on the lookout for?

I've read my fair share of these for work so, to my accounting mind, it sounds pretty boiler-plate. However, since this now impacts me personally I thought I would see what you all had to say.

And yes, I will not construe any posters comments as "legal advice." ;)

Only saw one.

Dell wanted me to sign:

a) 2 year no compete.
b) if I fail to complete 4 weeks, my salary reverts to minimum wage I must pay them back.

This for a short term contract position, 6 months tops. They acted surprised I turned them down.

[26 Inf]

Regarding the non-compete agreement, a friend of mine recently had an experience worth mentioning.

My friend went to work for a doctor-owned clinic. He contracted in for a period (I believe two-years) with the provision that after two years he would become a partner/owner (I don't know the details of how that was going to occur).

Things were going along great until a year or so into the contract. At that point the doctor-owners sold out to another entity and became employees of that entity. They continued operations under the same name, with the senior of the old owner's group being made director.

Since my friend was not yet an owner, he didn't, as he put it, 'get a million bucks plus a job' he just got offered a chance at continued employment, with no chance of partnership/owner's stake.

My friend had been in private practice before coming to the group and had joined the group, bringing most of his former patients, for the benefit of becoming a partner in a much larger practice.

He wasn't interested in continuing as an employee and made the decision to go back into private practice. When informed of this, the new owners, tried to invoke the non-compete clause. This was eventually ironed out, but cost my friend some time, money, and goodwill.

If such a circumstance would even be remotely possible in your new job, you might want to consider wording to address the problem.

[Artos]

I've signed them before as a sales rep before but never had any problems...One employer let me go for no reason after taking the company from a 500k biz to 6mm over 5 years, but agreed to pay me commissions I brought in for a year if I wouldn't go to work for the competition. After the one year I did just that & they closed shop not too long after simply due to stupidity & not understanding the importance of sales / relationships.

This was all in manufacturing in Mexico in the maquilas several years ago & when the issues over there got ugly to uglier, I decided to leave & change my direction to keep me out of the country...one of my superiors who was a complete idiot threatened to take me to court over a rumor I jumped ship to the competition & the agreement I signed. I played the game, told him I was going take all the biz with me & I had the 'right to work' bs being in TX on my side & he came unglued. Our main boss who I stayed very good friends with let him work himself up for months which made for some great long distant phone conversations & laughs.

Anyway, depending on your industry I think it would be wise to do just what you are considering & look at the options with trusted attny who understands your situation & mostly has experience with the issue. Good luck.

[Artos]

I've signed them before as a sales rep before but never had any problems...One employer let me go for no reason after taking the company from a 500k biz to 6mm over 5 years, but agreed to pay me commissions I brought in for a year if I wouldn't go to work for the competition. After the one year I did just that & they closed shop not too long after simply due to stupidity & not understanding the importance of sales / relationships.

This was all in manufacturing in Mexico in the maquilas several years ago & when the issues over there got ugly to uglier, I decided to leave & change my direction to keep me out of the country...one of my superiors who was a complete idiot threatened to take me to court over a rumor I jumped ship to the competition & the agreement I signed. I played the game, told him I was going take all the biz with me & I had the 'right to work' bs being in TX on my side & he came unglued. Our main boss who I stayed very good friends with let him work himself up for months which made for some great long distant phone conversations & laughs.

Anyway, depending on your industry I think it would be wise to do just what you are considering & look at the options with trusted attny who understands your situation & mostly has experience with the issue. Good luck.

[HMM]

Main thing to look into is how long you can't work for a competitor after you leave the company. We hired a guy and had to put him in another position for a year until his noncompete clause ended.

[arptsprt]

Non-compete clauses are very common in the Architectural and Engineering (A&E) world mainly for senior level positions and/or an individuals bringing a unique or highly sought after network or skill set to the table.

I signed two non-competes when I was in the A&E consulting world and both were a year if I left on my own accord.

I didn’t want to sign them but really had no choice if I wanted to follow my career path. It all worked out in the end for me but they are getting more common in this highly competitive work environment where finding and keeping good talent is challenging.


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[SomeOtherGuy]

Lawyer here. Of course, as you know, I am not YOUR lawyer. Enforceability varies a lot by state, your type of job, and the terms of the noncompete. Personally I think they are legitimate for (1) sale of a business, where the selling owner agrees not to compete, and (2) those rare situations where a business invest heavily in a person's training and wants to make sure they don't just finance their competitor. Other than that I think poorly of them, and you've seen some horror stories above.

If you do decide to sign - like if you have no real choice in your industry - make sure that the terms don't prevent from working any skilled field during the post-termination non-competition period. It's one thing if you can't do hyperspecialty X in metro area A, but another if you can't do, say, any computer programming in north America. (The latter probably wouldn't be enforceable, but you might have to spend $10k or more on attorney fees to get that decided in court.)

[1168]

Its not that unusual. I’m under one now as a consultant for a dod contracting organization. Mine’s easy to live with. I can work anywhere I want, doing whatever, when I’m not on the clock with them, as long as its not for a direct competitor.

Read the fine print.

[Hmac]

Non-competes are routine in Medicine. Usually 30-50 mile geographic exclusion for 2 years around here. They appears to be pretty enforceable in this state. The 12-surgeon group that I own/work for has such a non-compete, and we contract with a hospital for exclusive surgical services (so...two non-competes...one for the group and one for the hospital). Conversely however, the hospital has a non-compete with us...we have right of first refusal for any other surgeon that the hospital wants to hire...the hospital can only hire them if we don't want them. Just had that happen with a podiatrist. We elected to keep our professional corporation all physicians, and hospital hired him.

[donlapalma]

Thanks a lot for the comments guys. Very helpful as I think through this.

[Averageman]

Have you ever looked at something at work and said " I know I can do that better?" now imagine taking the time to cobble all of that up better and getting nothing for it.
The next time you see it the .gov.mil owns it and you kind of wonder wtf?

[Don Robison]

In my experience they aren't enforceable except in very limited/narrow cases like HMac outlined above. I used an attorney to address the one I had with a previous contract and as it was stated to me by the attorney. It's like hiring a plumber and telling him he can't fix any of your neighbor's toilets after he fixes yours. There isn't a judge out there who is going to tell you that you can't work in your career field. Most companies use them as a threat and threaten to enforce it in court thinking you won't push back.

[militarymoron]

It's like hiring a plumber and telling him he can't fix any of your neighbor's toilets after he fixes yours.

Well I think that it depends on who is bringing what to the table. If you're an expert in your field already, and the company is hiring you for your knowledge/skills, a non-compete doesn't sound like a lot of sense. Confidentiality would, though, depending on the kind of work. Anything developed using company resources on company time usually belongs to the company.

But, if they're the ones with the expertise and they're going to invest a lot in you, then I can see the company's point of view.

It's like a plumbing company hiring a trainee who's relatively new to the field, teaching him all the skills of the trade, and then he leaves after a while with all his new-found knowledge to start his own plumbing business. If I were the plumbing company, I'd want some sort of contract to say that were he to start his own business, it wouldn't be in an area where he competes directly with me. I wouldn't expect him to not work in the same field; just not in my area of coverage.

[SomeOtherGuy]

Non-competes are routine in Medicine. Usually 30-50 mile geographic exclusion for 2 years around here. They appears to be pretty enforceable in this state.


In my experience they aren't enforceable except in very limited/narrow cases like HMac outlined above. I used an attorney to address the one I had with a previous contract and as it was stated to me by the attorney. It's like hiring a plumber and telling him he can't fix any of your neighbor's toilets after he fixes yours. There isn't a judge out there who is going to tell you that you can't work in your career field. Most companies use them as a threat and threaten to enforce it in court thinking you won't push back.

Like I said earlier...


Enforceability varies a lot by state, your type of job, and the terms of the noncompete.

There is a wide range of state law on these, and some states will laugh at them while other states will enforce most of them to the letter. You need to look up the law for the state that's going to govern the noncompete - that's usually where the job will be physically located, but it can vary from that. You should get a copy of their proposal and review it before agreeing to anything (with or without a lawyer advising you). And don't be too surprised if what they ask you to sign after "signing on" doesn't perfectly match what they allowed you to review - that would be a sleazy trick, but in some industries it would not surprise me. (Probably not an issue in medicine, FWIW - people have long memories and many doctors will actually have a lawyer review stuff before signing.)

Even if the state involved looks unlikely to enforce, keep in mind that the former employer will likely threaten, sue, and seek a preliminary injunction preventing you from working at the new job you switched to. If the law is on your side you can make that all go away quickly, but with $$$ in lawyer fees. If the law is not clearly on your side it can drag on for months or more. It's also possible that state law could change after you sign, either by legislation or court decision, or you might be asked to sign a new non-compete mandating some other state's law during your employment. If you can negotiate it away or avoid signing, it's in your interest. But I realize in some fields they are used by all employers and close to impossible to avoid.