I happened to listen to a non-compete lawyer on his blog. He was having a discussion about drawing up non-compete agreements and he said first here are the basics. If you’re drawing up a non-compete agreement, the first thing you should do is make sure it is fair and reasonable.
Now, if I was taking a sip of bottled water for example, this would be the point where I would probably spit it out and fall on the floor laughing. I guess that if you are a non-compete lawyer and you’re delusional, which most if not all seem to be, then I guess you can talk yourself into believing anything.
Just for kicks, let’s take a look at a typical non-compete agreement and see how fair and reasonable it really is.
The first part of a typical non-compete agreement is that it never expires. That’s right. When you sign it, you’re agreeing to work at this company and you will not move on to another company that is a competitor.
The next question to ask is who are the competitors. Actually, that’s pretty vague since a typical non-compete will say that you can’t work for a company that has a competing product. So, if your company has 15 products, you can’t work for a company even if it has one product. Doesn’t matter how weak that one product is, you can’t work for that company. Obviously, it’s not about Coke and Pepsi. It’s about Coke and bottled water. Let’s face it, if you’re not drinking Coke and you’re drinking bottled water instead, then Coke is losing money. Another words, you can’t work for a competing company even if it has a 1% impact on your employer.
What happens when your company expands and creates more products? The answer is that since you’re working for that company and your non-compete states that you can’t work for a company that has a competing product, then you can’t work for the competitor even when your company expands into another industry.
Now of course, at this point, there is that part of the contract that is supposed to be fair and reasonable. It’s the part that states that you’re an at will employee and you can be fired at any time for any reason and you can’t work for a competitor for 2 years. That’s right, you owe 2 years. It’s not like the company owes you anything. Not even the cost of health insurance that you end up paying.
The strategy behind this is to make sure that the employee loses knowledge and can’t get back into the industry so easily. It’s all in an effort to destroy your career. And since the stipulation in your non-compete is that you can be fired at any time for any reason, we have to ask how is that fair and reasonable.
Of course, since there is argument that this is fair and reasonable because the employee can get another job in another industry, how easy will it be for the employee to reach that goal since they are applying for a job that they are unqualified for? And if by luck - yes I say by luck since there will be applicants with better qualifications - they get that job, what are the chances that they will be successful in their new position. And will have to take a huge cut in salary that could be as much as $15,000 if not more, how fair is that since they will not have to take a cut and could even get advancement if they get another job in their industry.
Now that you’re fired and you’re looking for a new job, you will need to be clear of your non-compete agreement when you apply for a new job with a competitor because once they see your contract, they will not hire you because they will send the contract to their lawyer and their lawyer will say that they can’t hire you because the company can be sued for any lost business and your company can take out an injunction to stop you from working for that company because you could have trade secrets even though we can’t really prove in court that you have trade secrets since you probably don’t attend board meetings and you don’t talk to the owners of the company on a regular basis, if at all.
All this based on the premise that when a non-compete is signed, that there is a possibility that the company could lose revenue and the employee could share trade secrets. Nothing definite. Just a possibility that this could happen.
In the end, it’s safe to conclude that all this is unfair and unreasonable to the employee. And while the non-compete lawyers claim that they they are not putting people out of work, it seems to me that they are doing just that.
Rick Holman
Now, if I was taking a sip of bottled water for example, this would be the point where I would probably spit it out and fall on the floor laughing. I guess that if you are a non-compete lawyer and you’re delusional, which most if not all seem to be, then I guess you can talk yourself into believing anything.
Just for kicks, let’s take a look at a typical non-compete agreement and see how fair and reasonable it really is.
The first part of a typical non-compete agreement is that it never expires. That’s right. When you sign it, you’re agreeing to work at this company and you will not move on to another company that is a competitor.
The next question to ask is who are the competitors. Actually, that’s pretty vague since a typical non-compete will say that you can’t work for a company that has a competing product. So, if your company has 15 products, you can’t work for a company even if it has one product. Doesn’t matter how weak that one product is, you can’t work for that company. Obviously, it’s not about Coke and Pepsi. It’s about Coke and bottled water. Let’s face it, if you’re not drinking Coke and you’re drinking bottled water instead, then Coke is losing money. Another words, you can’t work for a competing company even if it has a 1% impact on your employer.
What happens when your company expands and creates more products? The answer is that since you’re working for that company and your non-compete states that you can’t work for a company that has a competing product, then you can’t work for the competitor even when your company expands into another industry.
Now of course, at this point, there is that part of the contract that is supposed to be fair and reasonable. It’s the part that states that you’re an at will employee and you can be fired at any time for any reason and you can’t work for a competitor for 2 years. That’s right, you owe 2 years. It’s not like the company owes you anything. Not even the cost of health insurance that you end up paying.
The strategy behind this is to make sure that the employee loses knowledge and can’t get back into the industry so easily. It’s all in an effort to destroy your career. And since the stipulation in your non-compete is that you can be fired at any time for any reason, we have to ask how is that fair and reasonable.
Of course, since there is argument that this is fair and reasonable because the employee can get another job in another industry, how easy will it be for the employee to reach that goal since they are applying for a job that they are unqualified for? And if by luck - yes I say by luck since there will be applicants with better qualifications - they get that job, what are the chances that they will be successful in their new position. And will have to take a huge cut in salary that could be as much as $15,000 if not more, how fair is that since they will not have to take a cut and could even get advancement if they get another job in their industry.
Now that you’re fired and you’re looking for a new job, you will need to be clear of your non-compete agreement when you apply for a new job with a competitor because once they see your contract, they will not hire you because they will send the contract to their lawyer and their lawyer will say that they can’t hire you because the company can be sued for any lost business and your company can take out an injunction to stop you from working for that company because you could have trade secrets even though we can’t really prove in court that you have trade secrets since you probably don’t attend board meetings and you don’t talk to the owners of the company on a regular basis, if at all.
All this based on the premise that when a non-compete is signed, that there is a possibility that the company could lose revenue and the employee could share trade secrets. Nothing definite. Just a possibility that this could happen.
In the end, it’s safe to conclude that all this is unfair and unreasonable to the employee. And while the non-compete lawyers claim that they they are not putting people out of work, it seems to me that they are doing just that.
Rick Holman