Very sad.
I recently gave my 3 page (really 2.5 pages) client services contract to a client and they came back with their own 9 page "standard contract" for contractors. (I'm a developer.)
I couldn't believe how overreaching their contract was. The most egregious paragraph stated that if I introduced a bug I would be liable for not just what they paid me - I would be liable for their estimated loss of profits !!!
I quoted that part of the contract and wrote back:
"Nice try but yeah, no."
I had my lawyer go over it and take out all the stupid stuff and we came to an agreement.
Lesson: Read the contract. If you find that the contract is unduly unfair, ask if you can cross out the parts you don't like. If they say yes, turn it over to your lawyer.
Lesson: There is no "standard contract".
Lesson: If they say "It's a formality that we'll never enforce." Cross it out. ("Then you won't mind if I cross it out.")
Lesson for contracts [my lawyer taught me this]: If you put something egregiously one sided in your contracts you will break trust with the other party. In my case it triggered a "Whoa, where else are they trying to screw me?" response which triggers the "this is job for my lawyer" response.
If the contract is for your enemies, do whatever you want. If it is designed for parties that you want to work with, it's sending the message that you can't be trusted is not a good way to start the relationship.
My dad was part owner of the business which he got out of 10 years ago. The company went bust a couple years ago and the debt collectors started trying to get what they could.
One of those was a laundry service that would wash uniforms of the employees. My dad had signed the contract for it 25+ years ago to start the account going. On the contract it stated my dad was personally liable for owed fees. But when he originally signed it, he crossed out those 2 words (personally liable) and turned it over signed.
He pointed this out to the debt collectors when they came knocking and they stopped bothering him.
I did a year of law school, then left because I was miserable and it was too much money to be miserable for. I did, however, take contracts, and I cannot stress this enough. Read the contract. Read it again. Anything that looks off, ask about. It might be innocent, standard, or something you don't need to worry about, but it might be important. As you mention, it's also a great signal about the intentions of the other party. Finally, anytime someone tells you something is "standard" in a contract, it's bullshit. "Standard" lease agreements (the ones you can get by Googling) regularly contain unenforceable language. The only standard elements a contract needs are: an offer, an acceptance, mutual assent to be legally bound by the terms, and consideration (the promise of an exchange of value for something else of value). Anything else in the contract doesn't have to be there.
This depends on where you are. Quebec, for example, has a single standard residential apartment lease. It's written by the Régie du logement so everything in it is, by definition, enforceable.
Many state "Association of Realtors" have "standard" contracts they recommend. They might be a bit biased toward the landlord, but have been refined over time to be generally acceptable by all parties and take into account state and local law.
I have renegotiated terms of almost all my freelance contracts. Usually, a non-compete was the main culprit. Generally, the non-competes don't come from the client, but from a mediator that wants to prevent me from bypassing them and working directly for the client, which is fair. But sometimes they're still ridiculously broad. For example: I'd already worked for a major bank, quit that project because of a new baby, and when I looked for a new project, found one at the same bank through a different recruitment agency. They wanted a non-compete on all my work for that bank. That was obviously not fair, so I got it reduced to only the department where I would be working. I'd be free to work for any other department.
It's a state law, but I would be shocked if there were any state where that term was legally enforceable. I live in Massachusetts, and I would LOVE it if, after a 9 day vacation, my landlord started selling my belongings. The lawsuit would, not only be lucrative, but fantastically entertaining.
Do you (or anyone else) have advice for people who are employees? What do I do if Large Company X wants to hire me and they hand me their standard contract -- with me being a mid-level engineer of no note (and thus no real leverage).
The first thing -- and this is critical -- is understand that you could be held to each and every clause of the agreement you sign. So don't sign anything that you don't want to do, unless you're down to I need a job or I can't eat levels of desperation.
Your leverage is you can decline the offer.
I had, btw, a former google manager who got funded by a16z slip a clause into an offer agreement that said if I conducted any business on my personal media device (ie phone), they had the unlimited right to search it on demand. Obviously there was no way I'd agree to that, so putting work gmail on my phone was right out. But what if texting me on the weekend meant conducting business? They'd also left in language backdating the employment agreement (presumably because it was an update for existing employees), so as written it would have extended to before our phone screen... which I took on my cell phone. I don't work for them because the ceo said his lawyer insisted on it, I responded that the lawyer works for the ceo (not the other way around), he said blah blah blah, I told him he was a liar. The clause was on him and if he wouldn't forgo it he should at least have had the integrity to stand up and say I want this. And that was that.
I've also lost a job in nyc at the written offer stage because new company's counsel determined it would have violated my noncompete with old employer. These aren't empty words you're signing. CA mostly bans them and it's really important to employees, because right or wrong, you really don't want to get caught in the middle of a pissing match with people who have company-funded lawyers.
If I were in that position I'd markup the contract sections that I was concerned with and send it to my HR contact. Some will be happy to accept changes, some will negotiate the terms, and some will say "standard contract or no contract". I can't imagine any HR person ending the relationship just because you ask.
At that point, it's really up to you to weigh the specifics of the offer and the drawbacks of any contract terms they won't budge on.
Hiring is fairly expensive, and if you've gotten to the point where you've got an offer along with a contract you're fairly far into the process. You don't have a ton of leverage, but you definitely have more than 0 leverage.
You can try to make whatever changes to the contract are important to you but ultimately you have to evaluate your desire for the job vs. how restrictive the non-compete is likely to be on the day you want to move on.
In spite of the various folks on here saying you "should never sign a non-compete" that's bench advice that isn't necessarily especially helpful. In my case, quite a few years ago my company was acquired by another (MA company that is very pro non-competes; you can probably guess who if you follow the space). We were given non-competes to sign (that, in my case at the time wasn't really very restrictive).
We had a choice of signing in the sense of we could sign or we could walk out the door. Perhaps I could have walked out the door for abstract principle but, frankly, that wouldn't have been very sensible.
They might have said you would walk out the door, but the reality is that they would have been firing you and that would have been a whole can of worms for them.
Except not really. It would have been "So, sue us." It's not even clear that you would have a case; you're just having to sign an agreement that already applies to all current employees. In any case, is it really worth spending 10s of K$ to fight them?
I interpreted CyberDildonics' comment differently. It may be structured as "sign or walk out the door", but that sounds like "sign this or quit." But in truth, it's "sign this or we fire you".
Depending on local laws, this may make you more (or less - I am not a lawyer and have no experience in this field!) likely to get unemployment benefits.
You may well be eligible for unemployment under the circumstances but that's probably a fairly minimal percentage of what you were making as a mid-level engineer or marketing person.
The point is, the company wants you to quit and quitting is different than being fired. Unemployment benefits, severance, insurance, visas etc are all things that may be different if the company fires you. When they say 'there is the door' they are misdirecting people from the fact that the real alternative choice will cost the company a lot more money.
Good luck. I've tried crossing out undesirable terms in the past at several Large Company Xs. The response is always "WTF is this? Sign the contract unmodified, or there's the door!" Of course, I was not looking forward to another 6 month job search, so I signed it.
> Good luck. I've tried crossing out undesirable terms in the past at several Large Company Xs. The response is always "WTF is this? Sign the contract unmodified, or there's the door!"
On the other hand, I had the experience as a junior employee of crossing out and initialing objectionable portions of a hiring agreement in NY and several years later having the corporation issue a new employee handbook and agreement with the passages in it. I again crossed them out and initialed it and returned the forms. I never heard a word.
You need to view the terms of the contract as part of the pay / benefits / conditions package that you consider before you take a job.
Very few people would accept a job before they found out what salary was on offer, and so you shouldn't accept a job before you've read the contract. It's all part of the same thing: "We will give you this much money, in return for you doing these things ..."
If you've been looking for work for a while and you've only received 1 offer then you'll probably accept it even if it pays less than you were hoping for, or if the contract has clauses you don't like. You take the best that you can get.
But if you've got a number of offers (or reasonably expect to have a number of offers) then you are probably willing to turn down a job (or negotiate) over salary, and you should do the same over contractual clauses.
If someone verbally offers you a job with a salary you're happy to take, it's perfectly reasonable to say "That all sounds fine, and I'll be happy to respond formally once I've had a chance to read a copy of the contract", but don't accept the job until you've received and read the contract, because that is the thing that you're actually agreeing to.
I worked for IBM for a short while, in California. All of the agreements that I signed with them acknowledged that California law gave me special rights, and nothing in the contract could take away those rights. That's the kind of "Large Company X" that you want to work with.
This is the general problem when you have two parties with an asymmetry of power enter into an agreement with each other.
The more powerful entity will spend time iterating over the process and identify every possible way they can be threatened. They will write contractual language that errs on the side of protecting the company.
The less powerful entity will not argue any of this language for fear of no longer being allowed to engage the more powerful one. They don't know what to look out for anyway because they are inexperienced at entering in to these kinds of contracts.
This is a problem for more than just employment contracts. We expect individuals to have to negotiate against highly-paid professional negotiators for even the most essential activities in our lives.
My solution for this nonsense would be to make things such that a noncompete is only enforceable as long as the employee is being paid their highest wage in the previous two years during the entire time of the non-compete and they were limited to a maximum of 2 years (both limits are required to avoid certain gamesmanship). If you make this salary only (not stock), it has the bonus of screwing over bogus $1 CEO tax-dodge salaries too.
If it's actually that important that they be kept off the market, they should have to pay the salary during that time. If it's not important enough to pay them for, then it shouldn't be had.
The good news is that most employers don't actually try to enforce non-competes unless the violation is egregious (like poaching clients).
This particular case might be a cynical and calculated action to, as the article says, "send a message" to other young employees looking to move on. It could be the aggressor here has been suffering from a brain drain and this is how they've decided to deal with it.
I don't know that this is good news. Limited enforcement is why they can get away with such clauses in the first place. A remarkable number of people will be placated by this when they really shouldn't.
Yeah, I realize that many non-competes don't get enforced, but the fact is that those companies will continue to demand them because the non-compete protects them in a small percentage of cases (regardless of its impact on their employees). The companies have zero downside from the NC but it can significantly affect workers who may feel they have no choice but to sign it if they want a job. Hell, many of the non-competes are likely unenforceable, but so few people ever push back on them their legality is never tested.
Exactly, and most employees are never going to be in a position to push back, especially in a field like journalism, where people are happy just to have a job
The way things are right now, employees will simply use their judgement to determine whether or not it is "safe" to violate "the letter" of a non-compete clause in their contract.
That usually works out just fine, until it doesn't :-(
Hopefully the public shame of more stories like this will encourage more employers to think twice about draconian non-compete clauses.
Actually, many clients will request this. The practice of winning a bid from another company and then just going and hiring the team that works on that project away from your competitor is far too common, and this helps stop it from happening.
I think it's more that if they replace a vendor, they are replacing them for a reason and don't want the same idiots to bring the same bad habits back with them.
“We are confident that our employment practices comply with all applicable laws, and we remain committed to maintaining the highest standards in our ethical, journalistic and employment practices.”
Oh, please. The overly broad non-compete demonstrates a complete lack of ethical standards in your employment process. You're really just trying to say you are just as scummy, but no more scummy, than the prevailing standard for employment practices in the U.S. Which is a standard largely devoid of any ethical considerations whatsoever.
Agreed - these kind of boilerplate statements are so common that they virtually carry no weight anymore. It's almost just a standard "checkbox platitude" that any large size company will be expected to mention as a default response. (These statements are probably just there to provide some level of deniability when an employee does something bad, to say that it's not part of the company culture - which may or may not be true)
As an example, Enron: "We are dedicated to conducting business according to all applicable local and international laws and regulations, including, but not limited to, the US Foreign Corrupt Practices Act, and with the highest professional and ethical standards" [0]
"We are dedicated to conducting business according to all applicable local
and international laws and regulations, including, but not limited to, the US
Foreign Corrupt Practices Act, and with the highest professional and ethical
standards." - Enron Code of Ethics
When somebody states so strongly that they are following the law, you should be really suspicious that something is up. Like how if a hotel strongly advertises "our rooms are really, really clean," run away.
One important thing to note is that often, when you leave a company, they will offer you a severance package in return for signing an agreement. This may happen if you are fired, or also if you leave on your own accord.
IANAL, but I've dealt with this situation and my key takeaways are as follows:
1. Pay a lawyer to read the document for you and provide advice.
2. There are major differences in state law, and jurisdiction is important. For example, if you worked for Google in NY[0], and your contract was a NY-based contract, and there was a harsh noncompete in it[1], and you subsequently took a job in California that violated the terms of the non-compete, it doesn't matter that your new job is in California and Google's HQ is in California and Alphabet is domiciled in Delaware. You signed, and are potentially in violation of, a contract whose potential violation would be adjudicated in New York.
3. Upon receiving advice from your lawyer, and bearing in mind the importance of state jurisdiction, ask your former employer to make changes to the agreement as you see fit, especially if there is an aggressively worded non-compete.
4. Don't believe them when they say "this is just a formality". Read the fine print and understand what it means.
[0]: Has already been mentioned a couple times in this thread, but California is a much more employee-friendly state than NY. Non-competes are essentially unenforceable, as are non-poach agreements. It's my understanding that disparagement clauses are also a lot harder to enforce in CA, but IANAL.
[1]: To be clear, I am not sure whether this would be the case at Google specifically, just using a well-known California-based company as an example.
The "just a formality" line really bugs me. I once contracted for a place that asked me to indemnify them against all fines or taxes due against them in relation to my contract with them. So, I asked them to amend it to include language that excluded cases where they are informed that they are breaking the law, where they agree to a settlement with a third party, where they refuse to defend an action, where they fail to notify me immediately after an accusation is made, etc. They refused, saying it's just a formality.
I can understand why their lawyers were keen on having people sign it, as they were so clearly abusing their relationships with contractors, but I don't understand why so many of my colleagues did.
I was told a clause was unenforceable, and used the reasoning "So we can remove it from the contract?" and they wanted me to work with them so they took it out.
My usual approach with NCs is to reign in the scope of them. I've had some that could be interpreted I couldn't write any software for anyone else for up to a year.
Companies have a way of shitting their pants, and walking away from the employment offer if you question even a line or two of the "formalities" they expect you to unblinkingly sign.
True but it grinds the gears nonetheless (especially when considerable time has been invested, and you were actually kind of interested in what they were doing).
Worth noting that in the UK it is pretty standard for your employer to pay for your lawyer (not their lawyer) to review your "compromise agreement" - there is a standard fee of £500 or so for this which a decent employment lawyer will be able to get a decent amount of work done even if their hourly rate is much higher.
I left my previous employer a couple of years ago and it ended up with a fair bit of negotiation and it was all covered under the standard fee. The particularly nice thing is that they bill your employer, not you!
I remember a place that asked me to sign a "exit agreement" with all sorts of ridiculous things on it, but did not offer a severance or any other kind of incentive for me to sign it. Had a good chuckle at that one. They insisted I couldn't leave until I signed it, and looked kind of confused when I said how about I just not come in the next day, or the day after, etc. They asked that they get some time to figure out how they were going to deal with that scenario...
I've worked for several startups (US and UK) where the contracts contained very broad restrictions like this non-compete. Fortunately my wife is a lawyer and has helped me to read and red-line them, and then push back and get these sections rewritten. This is something I would NEVER have thought to do by myself, and I don't know many other tech people who do this either. I don't know the legality of these clauses, but my impression is that the companies don't really care - it's easy to put overly restrictive language into their contracts because they have little to lose out of it, as an employee is unlikely to undergo expensive future litigation to sue over it.
Bottom line - there needs to be (a) some low cost support mechanism for people to be able to check whether their contracts contain anything overly broad that could hurt them later, and (b) some way of educating potential employees that they should read contracts in detail, and that they can challenge contracts and push for changes before signing them, and not to treat them as a binary sign as-is/no-sign decision.
> some way of educating potential employees that they should read contracts in detail
I don't mean to sound overly dismissive, but isn't this just part of being an adult? Meaning, don't sign legally binding contracts that you haven't read. Don't lock yourself into a potential course of action, or waive rights to certain things (e.g. arbitration agreements), without understanding the ramifications should something go pear-shaped in the future.
Some of these are sign as is or don't sign, unfortunately. My wife and I were about to buy a car maybe three months ago, and throughout the process we're signing paper documents for everything. Most of it printed off a dot matrix printer, if you can believe that.
Then we get to the arbitration agreement. Handed an iPad with the agreement on it, no ability to change anything, and a signature pad to sign. I put up a fuss and said that we weren't going to sign the agreement, but eventually we had to walk away from the deal because they would not proceed without it and would not provide a paper copy we could red line at the desk.
>Meaning, don't sign legally binding contracts that you haven't read.
If we required this to be an adult that the world would be full of children. Granted, I personally want this. I would like to make 'I didn't read/understand the contract' valid reason to break a contract unless the other party could prove with clear and convincing evidence you read and understood the contract... but I realize this would bring our society to a halt and would require a significant rework to fix. We live in a society that abuses consent and to swap to one that doesn't will not be an easy task.
... Your signature is exactly supposed to be the "clear and convincing evidence" that you read and agreed to the contract. Now understood it, that's a different matter entirely and is generally governed by contractual capacity, which adults by default have. I'm not even sure how you would prove contractual capacity, short of proving that they can read and understand the words on the page... Which is basically just the opposite of proving that someone is not capable due to mental illness or impairment. Considering that it's much more likely that someone is capable than not, it seems like assuming capability and proving the lack thereof is a reasonable stance.
If "contractual capacity" means that you have a legally robust understanding of the meaning of all of the clauses in a contract, then I'd posit that maybe 1% of the population have that, even for common consumer contracts such as with Telcos.
I'd guess that only a small minority of the population have a sound idea of what arbitration or indemnification are for example.
"Contractual capacity" means you have the capacity to enter legally-binding contracts. It is generally understood that if you willingly enter into a contract that you agreed to the terms. Not willingly entering the contract is signing under duress and would result in a voided contract. Not understanding the terms is not a valid defense, unless you were not capable of understanding them, in which case you would be ruled contractually incapable and any contracts voided. If you were capable of understanding the terms and simply chose not to before signing, that is on you.
>Your signature is exactly supposed to be the "clear and convincing evidence" that you read and agreed to the contract.
And if a signature can be substituted for informed consent, well I have this crayon signature from a child promising me a billion dollars if I let them play one of my video games. The signature clearly outlines that they understood and consented to the agreement.
Except minors don't have contractual capacity, for exactly the very reason that they can't understand what they are signing. Any contract signed by a minor can be either honored or voided by the minor at will.
>Except minors don't have contractual capacity, for exactly the very reason that they can't understand what they are signing.
They can understand the simple contract far better than an adult can understand the average legal heavy contract. Any reasoning to not give contractual capacity to a minor (especially one who is able to read/write) applies just as well to the average individual.
No, a child does not understand that owing a billion dollars means several lifetimes of debt that they will never pay. If no reasonable adult would agree to the terms but a child would, that immediately indicates that the child is not functioning as an adult and is therefore not contractually capable. Because this can pretty much be generalized to all minors, it's simply laid out in law that they are not contractually capable.
>No, a child does not understand that owing a billion dollars means several lifetimes of debt that they will never pay.
They do. They only agree because they realize it would never be enforced. Maybe a really young child wouldn't, but a preteen would know similar amounts as an 18 year old. That said, most 18 year olds don't really comprehend how much it will take to pay back their college loans and many, once they figure it out, say they wouldn't have agreed. There are also many who take out pay day loans not realizing how bad a deal it would be who would not have taken them had they understood the true costs.
>Because this can pretty much be generalized to all minors
There is nothing you can generalize between a 2 year old and a 16 year old that couldn't also be generalized to someone 18+.
So I'm not really sure what your standing point is anymore. You yourself admit [0] that children and adults don't have the same contractual capability. Your example relies on a ridiculous presumption which exactly proves why minors are not considered capable. And now you're on to people regretting financial decisions, to which my response is, who doesn't?
The information is there, if they do the math. Failure to crunch the numbers is, in my opinion and in the law's, not an excuse to void a contract. Changes like credit card statements showing the results of paying only the minimum payment only do the math for you, not relay novel information. They are only valuable in the sense that people can no longer not do the math and remain ignorant, because it is already done for them.
Mathematically prove? Yes, that would be impossible. I'm talking legally prove.
>prove with clear and convincing evidence
Clear and convincing evidence is a set of evidence required to reach the point. It is in-between preponderance of the evidence and beyond a reasonable doubt.
Mathematically speaking, no matter how much evidence you have, you can never reach a full proof that someone did some action. You might get one hundred 9's, but you will never get one 100. But legally, you don't need to. Even the highest standard of evidence does not require a 100% certainty. But I'm not even saying we go with the highest, I'm saying go with clear and convincing.
(Clear and convincing is, from what I've seen, the standard needed to award punitive damages resulting from fraud in a civil case. Preponderance is needed for more exact damages. Beyond a reasonable doubt is needed for criminal prosecution for fraud.)
It is part of being an adult, but many adults are deficient in adult-like things. And really, if nobody ever tells new adults stuff like this, how are they supposed to know?
Which is why the very notion of consenting to contracts completely suspect when one side is a larger corporation and the other side is someone with an average IQ and education. You should no more honor their contract than you would a contract between the average child and the average adult.
So what's the solution then? Are corporations are supposed to hire an "average" person to write an employment contract for them, so that the playing field is level? Or is the employee supposed to hire a lawyer to inform them, which is something they can already do? Does the mom-and-pop down the street that hires teenagers with a contract from LegalZoom qualify? At what level of sophistication is this line drawn?
The only real position I see here is something like arethuza discussed [0] where the employer reimburses the employee for legal fees related to reviewing and negotiating the contract. Though questions of "when does this apply" are still unsolved.
Banning unreasonable clauses is a good step. It's not a complete solution, but those are rarely possible anyway.
Better education would be another good step. WTF Are Contracts 101 should be a required course at every high school, along with WTF Are Credit Cards, WTF is Voting, and How TF Do Taxes Work.
Agreed on all counts, though it's mostly unrelated to Lawtonfogle's exact suggestion that I was replying to. I've held for a long time that every high school needs to have a mandatory personal finance class, which would cover things like budgets, credit, and taxes. I could see a kind of "personal legality" class being useful also.
I don't mean to sound overly dismissive, but isn't this just part of being an adult
You would think so -- but many companies apparently expect that none of their candidates will really read (let alone think about the consequences of) the employment terms they're expecting them to sign.
It is, but in practice I don't think it's as straightforward as that, because:
1. There can be a presumption that the contract will be fairly written. Some of my recruiting employers have behaved as though they have your best interests at heart, which could lull you into a false sense of security. [A]
2. As you mention, it can seem that the decision is strictly yes/no. Corporate EULAs fall into this category - you either agree to abide to the terms of huge piles of legalese, or you don't use the software. I admit that I just agree to all of these. Even if I did read them and find a clause that I wanted to negotiate, I don't know how I'd even begin to broach the subject with an Apple, Microsoft, Adobe etc. And a similar situation exists in employment contracts, where someone who is desperate to accept a job offer (e.g. at a big uni or company), and they may not know that the terms are negotiable.
3. People just may not be aware that there are really long term consequences, such as the non-compete clause in the OP. I certainly didn't know about these sorts of issues before I worked in the Bay Area.
4. Some of the more restrictive legal clauses may be quite innocuously or confusingly written, and therefore require a lawyer with relevant experience to spot. So even if a layperson is being diligent, they may still fall afoul of something dodgy.
========
[A] Quick aside. One startup CEO gave me such a contract, and when I verbally raised some issues, he just laughed them off and said they were typical boiler-plate legal language, and said that none of this would ever affect me. I was on friendly terms with the CEO and was therefore ready to accept those assurances, but my wife wouldn't have any of it, and she urged me to make some modifications.
I just looked up the email thread where my wife and I discussed one particular startup employment contract. It featured a section on intellectual property rights, where if you didn't complete an additional "Exhibit A", you were at risk of giving the company free licensing rights to anything you'd worked on in the past.
Wife: "It should be okay to sign, but not without completing Exhibit A."
Me: "I think it'll be fine, they're nice people, I'll just go ahead and sign it."
Wife: "Wrong answer."
I spent hours working on the Exhibit A, and took it to the CEO the next day. When he read it, he saw red and stormed off out of the office to talk to his legal counsel. The legal counsel came back and said yeah, my wife was right, and agreed to do the changes.
When I joined the company, it turned out I was the only technical person who had filled out that Exhibit. Would this have affected any of them? Who knows, but there was certainly a quantifiable risk involved. I'm certainly glad that I had my back covered by it when the shit hit the fan. The others were smart people who just didn't understand the legal consequences of not filling in that Exhibit.
I had a very similar experience to you. In an employment contract, I asked for--and got--an amendment to an IP provision to remove wording suggesting that I was performing an IP transfer to any personal work prior to employment not listed in Exhibit A. The employer even told me that the wording I suggested might be better wording to use in their standard contract.
"I don't mean to sound overly dismissive, but isn't this just part of being an adult?"
Reading and understanding what you read doesn't make any difference.
In the U.S., employers have a lot of power. Workers have none. When every company has a non-compete (or whatever other egregious terms), eventually you have to sign somewhere so you can feed yourself.
The non-compete agreement and employment contract at my last job was provided and signed electronically over the web. There was no opportunity to red-line any of it, although I could have printed and shown it to a lawyer. I suspect many people will be subject to these non-modifiable, digitally-signed contracts in the future.
They're largely not enforceable in the US either - non-competes are thrown out in court all the time.
Enforceability is only one (small) dimension of the problem - arguably the chilling effect it has on future employers (who simply don't want the show up in court, even if they will win) is larger.
The threat of litigation is often stronger than the litigation itself, especially against smaller entities. Overly broad non-competes are more a bullying tactic than they are an actual contract.
In 45+ states some form of non-compete is legal. Other than CA, most big states allow it. Most non-compete clauses in practice are probably unenforceable (because they are too long, cover too large an area, covers too big of a market, etc). But I'd be pretty worried about one if I wasn't in California, and I'd never except it.
Where I worked years ago, I told my employer flat out that I wouldn't sign the non-compete that he handed me. He asked me again two weeks later to sign it. I refused, explaining how it would essentially give me no bargaining power and could keep me from getting future work. That was the last I heard about it.
I continued working with some awesome people (my employer included) for another two years.
As someone who worked at West Publishing and then Thompson West and its current iteration Thompson Reuters, I have some insight into why this happened.
Many of Reuters businesses are starting to face more serious competition. There was a time when Reuters owned the media business. Now smaller, more nimble companies are coming in and giving them a LOT of competition.
Legal reporting is one of these areas, and Law360 has been eating into their market share in several regions. As such, Thompson goes out of its way to try and hire their help. It gives them more of an insight into what the company is doing. For years, Thompson West used to hire Lexis sales people just to find out what they were doing. Reuters still does the same thing. None of the information is confidential, but it gives Reuters a lot of information into how they train their people, the areas of law they focus on, how many reporters are on a certain beat, etc. Any kind of information they can get, they do. Of course this isn't done in a formal way, it's more off the cuff stuff you hear around the lunch table, or during an training session.
Law360 probably realized this and called in their ace card - the NDA. Tie it up in court, or just hamper the reporter in trying to get a new gig and their problem is solved. This is why Law360 sent out the letter about having "critical and sensitive confidential and proprietary information".
Simply out, this is a resource war, Reuters is getting beat and uses employees from other companies to gain a competitive advantage. She just got caught in the middle is all.
Something I don't understand -- a non compete is between an individual and their (previous) employer. The new company hiring the employee has NO contractual or legal obligations to the former employer -- so why the tendency towards firing? And if the former employer contacted the new one, making legal threats in order to get a person fired, isn't that itself illegal? (Wrongful interference with Employment Relationship).
> Something I don't understand -- a non compete is between an individual and their (previous) employer. The new company hiring the employee has NO contractual or legal obligations to the former employer
Well, this part is wrong. Once they become aware of the contract, they risk the potential of liability for tortious interference. [0]
> And if the former employer contacted the new one, making legal threats in order to get a person fired, isn't that itself illegal?
So long as there was no misrepresentation involved, I don't see how it would be illegal. What law do you think would be broken?
I am not a lawyer but I believe this is because there is a tort for inducing someone to break their contract with a third party. Therefore as the new employer they'd be on the hook.
Even when the new employer has not been sued, there are cases where they have paid the previous employer to settle the non-compete, as was the case with a CEO Nortel hired from Motorola:
"The two companies were involved in a brief legal dispute last year after Nortel announced it had chosen Motorola's former chief operating officer, Mike Zafirovski, as its next CEO. Citing non-compete agreements, Motorola sued Zafirovski in October. The dispute was settled a few days later when Nortel agreed to pay $11.5 million to end the matter.
Under the terms of that October settlement, Zafirovski and Nortel agreed not to recruit Motorola employees."
(Not trying to say this case is anything like that of a much lower-level journalist as described in the article. That seems unfair and harsh)
I guess in this particular case, journalism, the reporter cannot work on any article or subject anymore. Almost all old cases and even related cases are probably covered by the old employer's magazines etc.
If you're a programmer, it means that you cannot work for a certain client, or even in a certain branch, but this case is so much broader.
I suspect there's a problem with them getting "information" from an employee "illegally". That's very vague, but that may not be a helpful thing if a competitor is trying to root through your data to confirm or deny whether you've profited from trade secrets of theirs...
I can see non-competes as valuable for people who know business details that would be considered trade secrets (and only for a limited period of time). But for people further down the ladder, this seems like an extremely high burden.
The UK's approach is generally to have "gardening leave" - if you want to be able to ensure I can't work for a competitor for 6 months after leaving you agree to pay me my full salary for 6 months after I leave in return for me not working anywhere else. It's fairly common in the client facing world of finance for instance to stop someone walking off with all of their clients to a new firm.
For me at least it seems a fairly sensible compromise - 6 months in that example is really at the top end of the spectrum, usually it is 1-3 months. That's plenty of time to have a holiday, learn some new skills and arrive at your new job refreshed and ready to go.
The length and scope of UK non-competes is fairly heavily restricted by the courts and the onus is on the employer to justify the business need. An example like in the article would be unthinkable.
Non competes in Canada are also enforced very selectively. The standard legal advice is to structure the agreement such as it still stands (severability) even if specific parts of it are struck down because of how likely that is.
For non compete to work, the affected person has to have specific knowledge to protect (usually client accounts) and the restriction needs to be narrow to specific industry ("software" is not good enough, "Point of Sales software for Bars and Restaurants" probably is), duration needs to be only as short as it needs to be and geographically bounded.
The only time broad non-compete really hold up is for things like sales of a business where the founders are barred from immediately competing with the company they just sold.
It should be noted that in the U.S., there are really 50 individual jurisdictions. Contract law is a state matter. Some states may be better or worse at upholding non-competes. California in particular is known for disregarding non-competes.
Also, many non-competes go totally unenforced. It's rare that a suit over a non-compete is actually filed for low-level employees. In the linked article, the writer wasn't fired because her old company sued her for competing, she was fired simply because the new company found out she had signed a non-compete and presumably wanted to avoid any potential lawsuit-related shenanigans. It's also possible that the company is trying to establish a precedent for voluntary, pro-active enforcement of competitors' non-competes within the industry specifically because they know the courts are unlikely to uphold them. If all the employers just agree not to hire someone who worked at a competitor within the last 2 years, then they don't need to worry about what the court thinks (though they may have to face the DOJ in a wage-fixing scandal, like the computer animation industry has).
In the linked article, the writer wasn't fired because her old company sued her for competing, she was fired simply because the new company found out she had signed a non-compete and presumably wanted to avoid any potential lawsuit-related shenanigans.
Unfortunately, this isn't quite accurate, as shown by the Q&A at the end of the article. Although her previous employer didn't directly sue her, it essentially threatened to sue her. Moreover, the way her new employer found out about her previous non-compete agreement was because her old employer specifically notified them and indicated that she had confidential information. Her new company basically had no choice but to fire her.
How does your statement differ from the parent statement? And yes her new company had a choice, they could have kept her and dealt with the court issue if it came up.
I didn't say the quoted section was false, I just said it was inaccurate because it gives an inaccurate impression of what was happening in the original article. Without reading the article, you might think that she was fired due to the 'chilling effects' of non-competes. However, in this case, the threat was more tangible. Her new company didn't just find out about the non-compete 'through the grape vine', they found out because the previous company forcefully notified them. This gives a much greater indication of intent to sue then if the prior company had kept quiet about it, as they apparently did for most other employees. Remember, it was apparently a well-known fact that employees from her firm occasionally moved to 'competing' firms. This was why she wasn't initially worried about the non-compete in the first place, because she didn't think they would enforce it. Reuters probably got rattled once they saw that Law360 was serious about the non-compete.
Technically, Reuters could have gone to court on her behalf but why bother unless she was some highly sought-after journalist? Intimidating letters are meant to make you weigh your choices carefully. Also, while Law360 didn't literally sue her, it gave every indication that it intended to if she continued at Reuters.
Even the UK probably differs between England and Scotland, and the EU is 27 further jurisdictions. It's different everywhere.
But common sense applies everywhere; if you don't understand it don't sign it, if you don't want to be held by it then don't sign it, if you promise never to enforce it then just take it out of the contract.
I've seen a couple cases of non-competes being enforced by small companies as retaliation for an employee leaving. I've never seen it holding up in court but frankly neither instance was very rational. They were someone taking someone else quitting very personally.
Based on personal experience with this in Canada -- there's significant expense and stress involved when you're on the receiving end of a lawsuit from a former employer who had deep pockets and an ax to grind. This is even more true if you've got a mortgage and family.
Even when you're in the right, you're more likely to take the least expensive route to make the suit go away than to fight to the finish.
> The standard legal advice is to structure the agreement such as it still stands (severability) even if specific parts of it are struck down because of how likely that is.
I don't know about Canada but in the US this is standard for any contract of any type. The vast majority of contracts I've signed have specific clauses to that effect as well.
In Denmark if the company you're leaving wants to uphold the non compete, they're obliged to pay half of your salary for the duration of the clause.
FWIW I've been under non compete, and a couple of other clauses in all of my previous jobs, but they were never enforced. The legal power of non compete in Denmark is from my observations very weak. So much so, that an employer of mine vaived all clauses after a while since it was a bigger hindrance when hiring people than benefit when people left.
Trade secrets are already specifically protected, even without non-compete clauses (https://www.law.cornell.edu/wex/trade_secret). A former employee that divulges trade secrets will get into trouble for violating that.
Thanks for sharing that. If any lawyers are reading this, I would be curious as to why non-competes exist if the above is true. I suppose I knew that implicitly, i.e. joining a competitor and divulging your previous employers secrets feels illegal, regardless of law.
In theory, if trade secrets are already protected, then either the non-compete's are setup as a double protection, or they are only being used to restrict movement. (neither of which seems fair in the economic sense)
A salesperson's or financial adviser's Rolodex is not a trade secret in most circumstances and a public list of a firm's past/current clients never is (by definition), but all can be very valuable for a warm-introduction/client-poaching scenario.
Clients often follow their old account executive they like when that person leaves. Nothing illegal in that...
Sometimes someone figures out a better solution to a problem than their current employer and they sucessfully go out and implement it. That's not a trade secret... The solution is wholly different.
A good example of the later case can be seen in the healthcare field. The same person architected the Cloverleaf interface engine (which uses TCL as glue language) and then went on to implement the highly popular Corepoint interface engine (which generally tries to avoid the use of programming/scripting language).
Corepoint is eating cloverleaf's lunch in the marketplace, the main similarity between them is what they do, how they do it is very different.
I was unaware of the UK laws around this. That would take care of this pretty quickly even at the senior levels. If the company really believes that you have valuable knowledge, then the burden is on them (in terms of financial burden) to compensate you for not taking the other job.
Obviously, they would only do this in the cases where they are worried that it really could harm their competitive advantage. It would also save companies money in the long run given the number of instances that two companies go to court over things like this.
> After you sign something, it's not important if it's reasonable or not: you have to uphold it.
It very much is important, and you don't necessarily have to uphold it. In the vast majority of jurisdictions unreasonable[0] contractual clauses are unenforceable and may even be sanctionable.
[0] what is or is not unreasonable being the primary variable. CNC clauses are generally unreasonable in california (reasonable CNC are related to goodwill and shared businesses) for instance, and in mainland europe they are limited and often must be compensated for their whole duration e.g. in Germany the leaving employee must be paid at least half their gross salary for the whole CNC term (no more than two years) and unreasonable clauses can be invalidated, lest the whole CNC be invalidated.
> After you sign something, it's not important if it's reasonable or not: you have to uphold it.
This is simply not true. Trivial examples include a contract without consideration, or an apartment lease with clauses that attempt to restrict rights granted by local law (very common in NYC). Most non-competes in the state of California are not enforceable as well, even if you agree to it.
> After you sign something, it's not important if it's reasonable or not: you have to uphold it.
That's frankly a ridiculous idea that clearly leads to injustice. Contracts are often between people who are not equals, where one party has less ability to negotiate or walk away. If the weaker party does not have extra protections outside of the contracting process, the stronger party could use its power to abuse them.
This idea is not upheld in any part of American jurisprudence. Plenty of contractual conditions are straight-up not enforceable; this is why so many have severability clauses.
I see a lot of advice here to never sign a non-compete form. Sounds reasonable, but I have another possibly simpler suggestion.
I've been asked to sign 3 non-compete agreements in the course of my career, in spite of working the entirety of it in California, where they're useless. When I got the first one, I consulted a lawyer who told me as much and suggested I sign it with all of the non-compete language redlined out.
I've done that with all 3 of them, and have never once gotten so much as a comment about it from my employers. The hiring manager is happy to get al his paperwork, HR is apparently happy to have a bunch of stuff to file away, and I'm pretty sure legal either knew I was in the right or they never even looked at it.
When I was a freelancer working on my own, a few companies would include a non compete clause. I challenged them on this always and they were all very happy to alter the wording. It's about the wording mostly, and about definition of competition. For example if I am working for a web agency shop that does e-commerce websites for sports and I am just working on a site for a surf shop, I would alter the clause to read "in the realm of surf shops" rather than competition in general. They were happy to change it because it kept the spirit of the agreement, what they actually meant there. Yeah, I was fine not making directly competing in a specific domain, but I wasn't going to be limited by contract in competing in a general sense. It was also clear that reducing from 12 months to 6 months is usually acceptable also.
Now. The worst clause in a permanent contract is the other works / open source projects etc. They sometimes want to own all your code even the things you do in your spare time. They will ask for a list of all projects you contribute to before working, and if you want to contribute to something new in your spare time you will need approval from management. Now, I think this is very unreasonable, and I've pushed back on this so much that I've rejected job offers because of it. What I do in my own time is my business.
Blanket non-competes undermine the creative destruction process in modern economies. They will end up hurting the companies using them by making it harder for successful firms to expand quickly and keeping less successful firms afloat longer. The problem is individual companies lose little in the short run by putting them on their own employees.
The answer is to make non-competes unenforceable across the US in the way they are in California, which makes them generally unforceable but adds reasonable exceptions for situations like selling a company to an acquirer.
I have been asked to sign non-compete agreements by a couple of employers.
One of them was just a legally worded agreement to not poach customers or go to work for a customer within 18 months of ending employment. That made sense to me and I agreed to it.
I wouldn't sign a non-compete that forbade me from going to work for a competitor.
Same here. Unfortunately most people either don't take the time to think through the consequences or do not have a choice about work that allows them to push back.
I have similar feelings about binding arbitration, another area where corporate lawyers have gone crazy in recent years.
In one case, I needed the job and a non compete was a condition of employment.
Instead of signing, I wrote in cursive "Won't Agree" on the signature line.
It may not hold up in court but it was enough to satisfy my personal ethics. If I decided to do something that was contrary to the agreement, I wouldn't be violating my own code of honor.
> 1942, age 30. [Alan] Turing joined the Home Guard so he could learn to shoot. “[Turing] had to complete a form, and one of the questions on this form was: ‘Do you understand that by enrolling in the Home Guard you place yourself liable to military law?’ Well, Turing, absolutely characteristically, said: There can be no conceivable advantage in answering this question ‘Yes’ and therefore he answered it ‘No.’ … And … he was duly enrolled, because people only look to see that these things are signed at the bottom.” He learned to shoot, but he refused to attend parades, and the apoplectic chief officer confronted him, and Turing said, “You know, I rather thought this sort of situation could arise…If you look at my form you will see that I protected myself against this situation.” He’d decided on the “optimal strategy if you had to complete a form of this kind. So much like the man all the way through.”
How is a non-compete legal anyway? You're basically saying that a person can't get a job with a competitor in the same industry, how is anyone with any decent skillset supposed to get a new job without somewhat violating a noncompete?
Most non-competes aren't enforcable and employers know this. They exist to bully people into submission – in the case of the article, Law360 bullied the journalist, but also Reuters Thompson. They know they'd probably win if they challenged Law360 in court, but it's just not worth the cost to take the fight, when it's easier and cheaper to just fire what is essentially a low-level employee.
I know a similar story. A person I know took a job with a tier one financial institution, knowing full well that the company they were previously employed with would cause a stir. Sure enough, upon starting the new job, the person in question received letters threatening legal action. This person is not easily scared, so simply ignored the letters. The new employer however received similar letters, and just as with the story in the article, they fired the employee simply because it wasn't worth taking the fight – there's always someone else they can employ.
It's unethical, and I'm glad the AG looks into it.
It's a cost/benefit situation. The cost of keeping the employee is very high in this case, even if they win the legal battle, and the benefit is probably unclear. The employee might be really great for the company, but it's difficult to quantify, and the moral cost to just let them go is low. It'll mean you and I will have a conversation like this about how crappy they are, but unless that conversation happens on the front page of WaPo or NYT it's just not worth caring about it. Haters gonna hate, and all that.
Most employers would see it this way, I'm absolutely sure of it. Even if fighting for the employee means they'll sleep better at night, it still would've cost an arm and a leg with little to show for it other than a feel-good sensation.
That's why it's so important for the AG to look into, and hopefully strike down on this shitty practice.
Disregarding their use in tech or journalism, there are uses for them.
My wife and I own a gym (in addition to our full-time jobs) that has several salaried trainers on staff. They sign a non-compete that for 1 year from the date of termination, they cannot take a trainer job at any gym within a 5 mile radius from our location, and they cannot own more than 20% of any gym located within a 10 mile radius.
This prevents them from opening up shop across the street and taking half the clients with them. It prevents them from doing the same with a nearby competitor.
It is limited by time, has a specific geographic area, and is only for a specific job. They can do whatever they want beyond a 10 mile radius on day 1, or they can open up a gym on day 366 anywhere in the world.
We've never had to litigate it because it's never come up, and if someone wasn't happy and really wanted to get a job at a Gold's two miles down the road, we would probably let them provided they didn't spend their last week giving our clients their new business cards or something.
I think there is a big difference here between non-compete and no-poaching agreements. At least yours is tailored to a radius, but I don't know that your narrow definition of non-compete is really the same.
In principle, I agree with you. However, in practice, a lot of what drives non-competes is concerns about poaching. I don't know if non-competes are particularly prevalent in service industries but I'm probably most aware of examples from consulting. I'm not going to defend non-competes but I suspect one of the reasons that they exist is that poaching clients and use of inside knowledge from a former employer are difficult to prove if they're not blatant whereas working for a competitor is pretty straightforward.
"Silly contract games" are still important to protecting the business. And it's not only about our bottom line. We have three full-time trainers and few part-timers. If one took a big chunk of our clientele, we're suddenly laying people off with no notice just to keep the lights on.
As a consultant/freelancer/employee you have the luxury of just worrying about what's best for you and that's it. As an employer, it's in my best interest to protect the business, otherwise people could be out on the street. If we mess something up with a contract or fail or do some "silly" thing correct it can literally ruin someone else's life through no fault of their own.
That one seems far more fair to me though, just because you're limiting it to a certain distance around your particular shop (and I know gyms are super competitive so the protection measures make sense).
It's not like you're saying you can't get a job or own a gym anywhere on the planet for one year after your resignation or something to that effect.
It completely removes your negotiating powers in regards to raises and promotions, as well. What incentive does an employer have to pay their employees fairly when they know that said employee is legally prohibited from working anywhere else?
It seems the surest way to hamstring your own career is to sign a non-compete.
That sort of depends. My last non-compete contained the provision that if the employer needs to continue paying the full wage during the time of the non-compete. That doesn't fully remove the lock-in but it makes it a costly option, leveling the playing field somewhat.
To be an enforceable contract, there has to be an exchange of value.
If the value to be exchanged is "this allows you to be employed by us" then you should easily be able to rescind your consent and return the value offered by the counterparty. If I am no longer employed by a company, the right to work for them is worthless to me, so I can return it to get back my right to work for other companies.
In order to be enforceable, the non-compete has to pay you just compensation for every week that you honor it. And in order to discourage people from simply rescinding when they quit, it needs to provide tangible value at signing, value that would have to be returned in order to rescind.
For instance: If you sign this, we will give you $2000 now, and your full salary for each of the first 52 weeks after you leave us, provided you do not go to work for one of our competitors (list of specific competitor companies incorporated by reference) during that time. We can rescind at any time, and any ongoing payments will stop after two weeks. You can rescind by returning the $2000, and any ongoing payments will stop immediately.
That's a non-compete with teeth, because it recognizes that the ability to work for other companies has value, and gives other value in exchange for that value.
If BS non-competes are to become more common, notices of rescission might become more common with the resignation letter. Had the subject of the article offered such a rescission notice, she would have been able to sue her former employer for defaming her to her new employer. Now, she would first have to sue for declaratory judgment that the non-compete did not constitute an enforceable contract from the beginning, and then also prove that the old employer should have known that it was unenforceable when they contacted her new employer. That's a lot more difficult than "they told a lie and it got me fired."
In a lot of professions, you can relatively easy move to another industry. Software engineer who had developed very valuable medical algorithms may sign a non-compete and then get a next job in game development, for example.
Also, a lot of non-compete agreements are more specific than an "industry" as a whole and target specific product type, niche or something like that.
I've had to negotiate scope of NCs at all but one job. I've had to change enforcement period length and industry scopes. So many times the scope has been interpretable as all software ever, and I've seen terms of 2 years. Generally I'll accept NCs for the same industry and for up to 6 months after termination.
Most non-competes aren't enforced because they can't be (due to the reason you mentioned). BUT it still adds a level of risk to people looking to jump ship.
And many firms just don't want to deal with the potential hassle/exposure of hiring someone who has a non-compete that could potentially come into play.
In a former role, one or two of the larger firms in the space were known for having non-competes they were known for trying to enforce that basically said that if someone left--even if they were laid off--they couldn't do the same type of job for a year. Someone I know who left one of those firms just took a year off before going out on their own. The firm I was at wouldn't even think of touching someone to whom those non-competes applied.
How do you sign something first and then complain when it gets enforced? Even if she wouldn't get fired from her next job, her getting another job in a field covered by non-compete already shows that she didn't pay attention to her obligations and easily violated them.
I have been in this situation myself: a company that wanted to hire me presented me with a non-compete agreement. I naively think that I should expect contracts and obligations that I sign to actually be upheld by all involved parties, including myself. If I signed it, nobody would fire me from another position — because I don't violate contracts that I sign, and I wouldn't apply for another position in the same field.
Instead, I declined to sign it in the current form, explained my problems with it to an HR, and one day later got an edited agreement that had a non-compete with a reduced scope (only companies making similar products).
The problem happens when you accept a job offer, quit your previous job, then during new hire orientation you are given a stack of "standard HR forms" to sign. You are never told "Take these home and have your lawyer look them over" (how many of us even have a lawyer?), and are given the impression that everything is boilerplate.
People really need to learn that there's no such thing as a boilerplate contract, everything is up for negotiation, and when somebody tells you to sign something and not worry about it because "we never enforce that anyway" then they're either bullshitting you or they're complete idiots.
This sort of thing ought to be taught in high school, along with other basic adult concepts like how to get a bank account, how credit cards work, how to vote, and how to pay taxes.
It's bizarre how such important things are left to each person to learn on their own on an ad hoc basis.
I don't think I really gained a good understanding of contracts until my first employer out of university sent me on a 3 day course on contracts.
The fact that a contract is very much a legally binding document that you can't easily walk away from is not given nearly enough emphasis in the UK school system.
That's usually part of the employment contract, so it's not something you'll be shown after having gotten hired, and if it was, it would have even less standing than if the clause was included in the employment contract.
When I got hired by Microsoft, I was specifically told to get a lawyer to review the contract before I sign it. I did and my lawyer promptly told me the same at the person here, which is that the two non-compete clauses were so broad as to be unenforceable.
When a "partner company" to my MSFT division kept hiring our staff, Microsoft didn't try to enforce the non-competes, but instead threatened to sue the partner if they kept at it.
> That's usually part of the employment contract, so it's not something you'll be shown after having gotten hired, and if it was, it would have even less standing than if the clause was included in the employment contract.
It would, if we weren't living in a world where courts had consistently held that things like this changing the employment contract after it begins are just as valid, because continued employment is sufficient consideration for them to be valid (the exception would be if the original employment contract had, e.g., a set term, but that's unusual.)
> How do you sign something first and then complain when it gets enforced?
Reminds me of the plot from "The Merchant of Venice".
Suppose you are in a desperate situation where you absolutely needs work: would you start to complaining about imoral demands on the contract or shut up and take the job?
That is why non-compete agreements for employees are not enforceable in most jurisdictions - Shylock can't take his pound of flesh.
What if the contract is illegal and unenforceable? Then they aren't really obligations are they?
I've certainly done this. Signed a contract, with provisions that I knew were 100% illegal, and then months later, after I left and they tried to enforce the contract, I told them to fuck off, because the contract was unenforceable and they knew it.
A court has to decide that. The employer likely has more resources than you and can tie you up wasting time and money in proceedings. That is the real issue behind this article. This company decided it was in their best interests to make an example of this person, and now she's unemployed.
What's a company going to do? Sue me? Chances are they won't even know if I'm working at another company, as I can just choose to not update my LinkedIn.
Companies can do stuff like this to a few, limited , number of people. But anybody can get under the radar extremely easily, if they so choose.
The problem is non-competes have become an almost universal part of the employment process, and if they were ever enforced at scale, would bring the U.S. economy to a screeching halt. And it is becoming increasingly difficult for employees to negotiate these agreements and remain employed.
The only thing keeping it from becoming a crisis already is selective enforcement. If every corporation suddenly decided to enforce all of their non-competes, the job market would collapse.
I agree with you; people need to take this stuff seriously!
Just after I started university in Ontario I turned down an internship in a R&D department of a company in Lichtenstein. I was so excited when I got the offer and then so disheartened by the non-compete and non-disclosure agreements.
There was definitely a little bit of meaning lost in translation and essentially was scoped to cover the industry material and didn't specify a termination date.
While I didn't think they'd be enforceable I knew they didn't need to be to become burdensome. What's interesting to me is clearly it took their employer time to find out about the prior agreements. Either this was something missed during the hiring process or something the candidate chose not to reveal.
Either way I fully understand why they were let go. If you're a business you don't want to invest in someone that a competitor can apply leverage on and has the legal grounds to do so, which would likely result in them quitting.
The way the non-compete is written could bar a Law360 employee from working at any news outlet that covers legal news, in any capacity. Getting a job in another field means switching careers.
I was faced with a non compete clause that would have barred me from working in the same industry for 2 years. I said I wasn't ok with. They said 'it isn't usually enforced'. I said 'then it shouldn't be in there'. I was told 'they don't usually allow any changes' (and this was a big company).
The result was that they did change it and send me a new contract.
Companies make a huge play for legal rights with contracts. Usually you have wasted a lot of time to get to that point since they haven't sent you a template in the first place. Suddenly there is an unreasonable amount that you are giving up for the privilege of working for someone. Selective enforcement is bullshit. Anything in the contract can be used as leverage against you if the company doesn't like the position they are in at any particular moment.
I find that even corporate lawyers are frequently ignorant of the laws applicable to post-employment restrictions. In NY these covenants are enforceable only to the extent that they protect the "legitimate business interests" of the employer, under BDO Seidman v Hirshberg. Those interests do not include preventing employees from practicing their trade, though some sleazier employers seem to think that is part of the game. In this case, it sounds like the employer is threatening some sort of trade secrets misappropriation claim, which would not be surprising as this usually accompanies any noncompete claim. However, it's hard to imagine what protectable trade secrets a "content" author would learn. I mean, how to write content is not a trade secret, it's a skill of the trade.
Typical of products and services marketed toward lawyers, law360 requires a silly subscription to read content that is largely already public info. Maybe the trade secrets that the Reuters journalist stole have something to do with the secret of convincing people to cross the paywall of this obnoxious publication! Anyway, here's a Google Scholar link to the opinion, which is self-explanatory:
I am curious, given the length of time she was employed at her new employer and her statement saying her editors were aware of this, whether this was just the HR compliant reason she was let go.
There's some confusing language in the article that might make you think that she worked at Reuters (the new employer) for a long time. In fact she was only there for a few weeks:
... who Thomson Reuters fired within weeks after hiring her in September
The bit that confuses it is this:
I also later found out that every editor in my section at Reuters had been well aware of the non-compete for years
What I think she's saying is that the editors at her new employer were well aware (and had been "for years") that Law360 (her old employer) used these non-competes, and (by implication) that she'd be subject to one.
It gives the impression that she worked there for years, but that seems to just be an unintended consequence of the phrasing.
The editors in the legal news department knew; that doesn't mean the corporate side knew or cared until Law360 sent its letter. I was let go because of the non-disclosure of the non-compete - I can assure you there was no other reason. In fact, HR didn't even need a reason to fire me, but they still gave me one.
Perks of a right-to-work state: broad non-competes are unenforceable for exactly this reason. You have to have specific and reasonably defined scope in order for it to be viable.
The internet has completely changed contracting for me. The contract is the email thread up to the point at which we have an agreement. If the counter-party suggests that we sign another document than that, he is a liar and a cheater, and I will not do business with him.
In those circumstances, non-compete clauses will have been discussed during the mail thread. If we discussed and we agreed to them, they are valid. Otherwise, they are not.
I do not understand that anybody would still agree to sign a contract document drafted solely by someone else. If it was not drafted together, it is bound to be abusive, and it is always the party who did not participate in its drafting who will be abused.
I have always imposed my will or else walked out of bad deals, regardless of whether the counter-party is an individual or a large company. What difference does it make?
What's the situation in New York, do you have give cause? Or it it at will and you can fire for no reason?
Interesting here is that it's the new employer firing an employee for non compete rather than the previous employer trying to enforce it against the signator.
Note that New York City also has a some additional protections that are not present state-wide[0]. I'm not sure if any of those come into play here.
[0] For example, discrimination against gender identity is protected in NYC and Long Island, but not state-wide. IIRC New York also protected against discrimination for sexual orientation before SONDA (state-wide law) was passed.
>Interesting here is that it's the new employer firing an employee for non compete
She wasn't technically fired for non-compete. From the article:
> On the application there was a question asking me to check a box acknowledging I wasn’t subject to any restrictive covenants that would prohibit me from doing my job at Reuters. I checked it.
[...]
>I was technically fired for “dishonesty,” because of the box I had checked.
I worked at a place once that had a not only non-compete, but barred me from buying anything from a supplier the company used (including Walmart). I objected and crossed it out before signing. Never came up again. A lot of these agreements are legally useless but often put in just in case it might be useful later.
Outside of selling your company why do we have these and why are they enforceable? Well I know why we have them, but why are they allowed to exist? What is even worse are companies forcing noon compete on essentially unskilled workers
Meanwhile, the HR flackey at Law360 who incompetent advise her still has their job:
When I signed the agreement, the HR representative who conducted my orientation called it a formality and told me it just meant I couldn’t freelance for a competing site while still working there.
That was very competent advice from the point of the company -- the HR person convinced her to sign the provision the company wanted her to sign, the company didn't have to face a choice between agreeing to strike the non-compete or letting her walk, and there was no record of the misleading "sales pitch" the HR representative used (which might have served as evidence of conflicting intentions, allowing a court to strike the non-compete provision on the grounds that the parties didn't intend it to be binding, or even caused future liability for the company if the HR rep's description of the non-compete crossed the line between legal sales techniques "oh that's not important, you don't want to think too hard about this part of the thing, everybody signs it" and illegal fraudulent misrepresentation "it says X" when it clearly it actually says Y which is totally different).
It sounds like the HR person did their job competently.
I later found out that other reporters had run into trouble when moving from Law360 to Reuters, but those were before my time. Law360 has had a non-compete since around 2011.
Assuming one did such a thing, would it be possible to take them to court and get a summary judgement that the clause of the contract is unenforceable and to be removed, so they can't use that as pressure against your new company as in the instance in the article?
It might be possible to commence a legal action for a declaratory judgement (a summary judgement is a different thing) on the matter (declaratory judgement rules vary by jurisdiction.)
Sure it is. If the employer wants you, and you refuse to sign, they'll still hire you. If you can't find an employer who wants you badly enough, then work in another industry.
You don't have to read very far on this page to find an example of someone who refused to sign an NC and was still hired.
Non-competes are immoral, and anyone who uses them deserves to be ruined so bad they have to live under a bridge. I hope her employer gets sued into oblivion.
I couldn't believe how overreaching their contract was. The most egregious paragraph stated that if I introduced a bug I would be liable for not just what they paid me - I would be liable for their estimated loss of profits !!!
I quoted that part of the contract and wrote back:
"Nice try but yeah, no."
I had my lawyer go over it and take out all the stupid stuff and we came to an agreement.
Lesson: Read the contract. If you find that the contract is unduly unfair, ask if you can cross out the parts you don't like. If they say yes, turn it over to your lawyer.
Lesson: There is no "standard contract".
Lesson: If they say "It's a formality that we'll never enforce." Cross it out. ("Then you won't mind if I cross it out.")
Lesson for contracts [my lawyer taught me this]: If you put something egregiously one sided in your contracts you will break trust with the other party. In my case it triggered a "Whoa, where else are they trying to screw me?" response which triggers the "this is job for my lawyer" response.
If the contract is for your enemies, do whatever you want. If it is designed for parties that you want to work with, it's sending the message that you can't be trusted is not a good way to start the relationship.