Non-competitor clause? Should he sign?

[Brooke]

Darren's boss has decided that he wants to have one-on-one meetings with all of the management this week to go over their responsibilities.

One of his co-workers had his meeting today and he was asked to sign a non-competitor clause stating that if he leaves the company he cannot go to work for a competitor doing a similar job for 2 years. If he's fired, the clause is void.

The co-worker is taking it to his lawyer.

I've heard of these before and I never liked the idea of them. What happens if they make your life hell and you quit? You can't work in the same job for 2 years?

Darren's meeting is scheduled for Thursday. Should he sign the clause? What should we do?

By the way - Darren is an estimator for a commercial roofing and restoration company. He also manages their service department. Another co-worker, a superintendent, had his meeting last week and he was told that his responsibilities now include managing roofing crews, being a project manager, AND he's expected to sell $600,000 worth of work each year.

[Bev]

Never heard of it Brooke. Can he talk to a lawyer before then?

[~Andrea~]

What happens if he doesn't sign? Will they let him go?

[bunybomb]

Two years seems way too long. I've dealt with them and the longest has been six months. It's typical in sales to have a non-compete clause. Is Darren in a position where the competitor would "steal" him?

I would look into the length of the term before signing.

[KimInCanada]

About a year ago, DH got fired (wrongful dismissal) and he hasn't been able to work in the computer field for another company, because of the contract he signed when he started. If he didn't sign, he wouldn't have been given the job. It really sucks!!

[Brooke]

They didn't say what would happen if he didn't sign. He hasn't officially gotten it yet but we're pretty sure he'll get it on Thursday.

I guess someone could "steal" him. He does estimating for a roofing contractor so he is surveing buildings and writing contracts and proposals for work. He's not soliciting work directly but the company is invited to pre-bids and asked to submit bids for work and that's what he does. It sounds like they might want him and his co-worker to do more direct selling/soliciting, too, but we're not sure yet.

[Mrs.Greevy]

well I had to sign one, and I have found they are very hard to enforce, especially if the employee is terminated. NOw if it is a sales person it is easier, but for tech's it is nearly impossible, UNLESS you go and work directly for a previous customer.

This is pretty standard in the computer industry.

[Kate]

A have signed three non-competes. The only time that I have ever seen them inforced is when a former co-worker left the company and then stole some of the companies clients. Other than that I have had many friends leave one company and go work for a competior without any problem.

[Dennis]

From what I've heard, they are pretty hard to enforce. Do you know a lawyer you could call for a quick opinion on it?

Dennis

[Brooke]

No, we don't have a lawyer. Maybe I could get the name of my aunt's lawyer. She does divorces, though.

[Karri]

From what I've heard, they are pretty hard to enforce. Do you know a lawyer you could call for a quick opinion on it?

Dennis
Actually, the opposite is true. Having worked in HR and made people sign these in the past, I can say that I've encountered two instances where the company did pursue it when the employee went to a competitor. However, when the company does the termination, I've never seen it enforced.

[Lissa]

Brooke, definitely have your hubby talk to an attorney before Thursday. Each state varies as to the strictness and enforceability of non-comp contracts. It would be great if he could have all of the info BEFORE the meeting.

Since I'm not licensed in your state, I can't give you legal advice. But in Arkansas, they have to be reasonable on several grounds --- last time I saw/studied one was in law school almost 10 years ago so I am really rusty on the exact criteria. In Arkansas, if I remember, they had to be reasonable as to time, place (i.e. how many miles from the business they could restrict work), etc.

You may be able to find some info on this website. http://mgasearch.state.md.us/search97cgi/s97is.dll

good luck!

[gulp!]

My DH has had to sign them, and I regularly encounter them when we deal with our clients, whose management has all signed them. 2 years is pretty standard for someone they consider to be "upper" management. It's designed to protect them against Darren leaving, going to a competitor or going out on his own, and stealing their clients. It's not enforceable if Darren is fired. If he leaves, he can always get the non-compete waived so that he can go work somewhere else, which shouldn't be unreasonably withheld as long as they don't see his new job as a threat.

I've generally seen employees "get" something for signing the non-compete, though, especially management. Either a nice, pre-determined severance package, additional compensation, or something of value in exchange for signing the non-compete. Hopefully the company is going to incent Darren in some way to sign?

A divorce lawyer won't work- you need to speak with a corporate lawyer.

[Brooke]

I've generally seen employees "get" something for signing the non-compete, though, especially management. Either a nice, pre-determined severance package, additional compensation, or something of value in exchange for signing the non-compete. Hopefully the company is going to incent Darren in some way to sign?

This is what he was thinking but the other guy didn't say anything about an incentive. Darren's thinking they'd have to give him severance if they are going to prevent him from working for 2 years.

Oh - he works in Virginia, the company is in Virginia, so I guess Virginia laws would apply, not Maryland (where we live).

[Roger]

This is what he was thinking but the other guy didn't say anything about an incentive. Darren's thinking they'd have to give him severance if they are going to prevent him from working for 2 years.

Oh - he works in Virginia, the company is in Virginia, so I guess Virginia laws would apply, not Maryland (where we live).
Definitely see a lawyer - these are always hard to enforce, but can vary greatly from state to state. Also - if it is a "good" agreement, they definitley should not have a problem with him taking it home to think about it rather than signing on the spot.

These are pretty common these days. I am subject to one here (as a CPA), to protect the owner of the practice from me drawing a salary while building up a client base that i can take with me when I leave. Based on the nature of your DHs work, this type of relationship would seem less likely, and would I think work against enforcement of a noncompete (as it would be hard for his employer to show it is needed to protect them against anything BUT your DH leaving; I think one of the grounds for enforceability are legitimate other business needs of the employer.)

[Mrs.Greevy]

The only time that I have seen anyone gone after for this was this idiot that gave work (taking it from his current company) to his friend with whom he was starting a new business. Because technically he was still working for the original company.

[bunkie68]

Each state varies as to the strictness and enforceability of non-comp contracts. It would be great if he could have all of the info BEFORE the meeting.

Since I'm not licensed in your state, I can't give you legal advice. But in Arkansas, they have to be reasonable on several grounds --- last time I saw/studied one was in law school almost 10 years ago so I am really rusty on the exact criteria. In Arkansas, if I remember, they had to be reasonable as to time, place (i.e. how many miles from the business they could restrict work), etc.
Brooke, I was going to say the same thing (except change Arkansas to Texas :lol: ). If I remember correctly, non-compete clauses have to be reasonable as to time, scope (i.e., what they ask you not to do) and geographical location. For example, it would probably be unreasonable to ask Darren to sign something saying he'd agree not to work for a competitor in anything having to do with construction for five years in the state of Virginia. But it might be OK to ask him to sign one that says he won't work for a competitor as an estimator for a year in a particular city or county. There again, what's "reasonable" would probably vary depending on the industry and the circumstances. If Darren can talk to an attorney who works in this area, it would be a big help to him. Maybe your aunt's attorney can refer him to someone?

[Brooke]

When I googled "non-compete clause in Virginia", I got this -

It's off a law firm's website. They do employment law in Virginia. Maybe we should call them and see if they can help.


http://www.albo-oblon.com/ASP/Employment/main.asp?Action=Detail&ID=18


Non-Compete Agreements

http://www.albo-oblon.com/IMGS/Letters/q.gif What is a "non-compete" agreement?



http://www.albo-oblon.com/IMGS/Letters/a.gif A non-compete agreement is a contract between an employer and an employee that prevents the employee from competiting with the employer after the employee leaves the company. This includes the prohibiting the employee from working for a competitior, so the agreements can be very limiting.

New employees often do not realize the significant consequence of entering into such an agreement, naturally assuming that the relationship will run smoothly. Many employees sign non-compete agreements with the mistaken assumption that they are unenforceable. As a result, employees often sign such non-competition agreements, wherein they agree to not work with the company's clients and/or competitors for a period of years after the conclusion of their employment, with little negotiation. A non-compete agreement should be negotiated with the same vigor as one negotiates salary.



http://www.albo-oblon.com/IMGS/Letters/q.gif If I have signed a non-competition agreement, or are considering signing one, what is the legal standard that would apply to determine its enforceability?
http://www.albo-oblon.com/IMGS/Letters/a.gifMost states determine the enforceability of non-competition agreements under a so-called "reasonableness" standard. For example, in Virginia, a court will review the agreement under a three prong standard: (1) From the employer's standpoint, is it no broader than necessary to protect the company's legitimate business interests; (2) From the employee's standpoint, is the agreement unduly harsh and oppressive in precluding his or her ability to earn a livelihood; and (3) Is the agreement consistent with public policy? The agreement must be reasonable under all three prongs. Each agreement is considered under the particular facts. of each case, depending upon the particular wording of the agreement at issue and the attendant facts of the case. As a general matter, such agreements are generally disfavored under the law of most states, and in such circumstances will be strictly and narrowly construed against the company and in favor of the employee. Each individual should carefully read and assess a proposed non-competition agreement before they accept an offer and submit their resignation to leave a job. Particularly in the sales field, a prospective employee should ask at the interview whether he or she would be expected to execute such an agreement.

[Susan]

Brooke, definitely have your hubby talk to an attorney before Thursday. Each state varies as to the strictness and enforceability of non-comp contracts.


VERY true. In California, they are VERY hard to enforce, for example. Barely worth the paper its written on. It really is a state by state thing and you (or an attorney) would have to check some case law to see what sort of precedent they have in enforcing them.

[Katrina]

I've seen them pretty regularily in sales stuff as well as in stuff like Sports Management. 2 years is not terribly uncommon, neither is a geographic restriction. Just make sure, like previous posters said, its not over broad. EVen if it is, though and you sign it, if they try to enforce it and it turns out it was unfairly overbroad or whatever, it would be overturned by the courts. Even in conservative Virginia (where I work for attorneys)

[Brooke]

VERY true. In California, they are VERY hard to enforce, for example. Barely worth the paper its written on. It really is a state by state thing and you (or an attorney) would have to check some case law to see what sort of precedent they have in enforcing them.
I read online that they are illegal in California.

Well, they didn't ask him to sign anything at the meeting today. They didn't even mention it. So I don't know what's going to happen now.

[jenr812]

Hmmm, weird :scratch: