<p>Anyone have any experience with one of these?</p>
<p>Since the contract is between employee A and company A, would company A have any case against company B for hiring employer A or would company A just have a case against employee A. </p>
<p>Sounds confusing I know but a friend (company B) just got a threatening letter from “company A” regarding employee A.</p>
<p>I thought since Company B has no contract, or relationship of any kind with company A, the contract between two other parties would have no legal impact on him, other than possibly losing employee A, because he has to resign.</p>
<p>This is not legal advice. (I am a lawyer). I have a lot of experience with non-competes in the corporate world. The action against company B would b based on interference with the contractual relationship between employee and A and also possible receipt/use of proprietary information that employee brought with him.</p>
<p>Non-competes aren’t really legal in some states - notably CA. But generally, they’re limited in geography, in time, etc. So a local lawyer is essential.</p>
<p>While my H’s non compete wasn’t “legal” in our state, a lot of his perks/stock options/RSU’s, etc., would disappear if he violated his 3 year non compete. And a lot of $$$$ would be spent by us on legal fees if he jumped ship to competitor. (Amazingly/irritatingly, former company still holding H to contract–even after they downsized him out of a job two years ago. Fun times.)</p>
<p>Non-competes seem rather unethical for all but limited ones for executive-level employees. Given how many companies are in many markets, a non-compete may severely limit an ex-employee’s ability to find work because most other companies hiring for the ex-employee’s type of job compete in at least one of the markets that the ex-employee’s former company competed in. It could mean that employees may feel like they are “indentured” to their employers, since their ability to find other jobs is limited.</p>
<p>Seems like the only ethical way to have a non-compete for most situations would be if the company continued to give pay and benefits for the duration of the non-compete after the ex-employee’s termination of employment.</p>
<p>Of course, what is ethical and what is legal are not necessarily the same, and it is a lawyer’s job to figure out the difference.</p>
<p>Some have theorized that the fact that nearly all non-competes are unenforceable in California may have helped create the Silicon Valley startup culture, in that employees unsatisfied with their current companies were not restricted from starting new companies that may compete in some market where their former companies competed in. (They could still be held to non-disclosure agreements regarding company proprietary information.)</p>
<p>The last company I was with had non-compete clauses. The employees that had the clauses were paid for this. The non competes usually lasted 6 months to a year. The general partners had non competes for 2 years. They received preferential stock ownership deals. You give the general partners extra stock, they cash out and then they split? That’s not good for existing limited partners. So that was the deal…preferential treatment, but you can’t compete.</p>
<p>Stock options or restricted stock grants can be subject to a vesting schedule so that the employee has to stick around for a while after the grant date to make use of them.</p>
<p>From an employee’s point of view, a non-compete is basically an agreement to be unemployed for that period of time after terminating employment with the company.</p>
<p>However, a large employer may compete in a lot of markets, and have lawyers that define “competitor” broadly, so that the ex-employee has little chance of finding a job suited for his/her skills, since most of them are at companies that have some presence in the same markets.</p>
<p>Large companies do seem to have noncompete clauses. I worked for one that had them. However everyone had to sign the noncompete agreement when they were hired, It didn’t matter what your position was. In the end you had to be a ‘valuable’ employee with either clients or trade secrets for them to care who your new employer was. HR doesn’t have time to be checking that kind of stuff.</p>
<p>In California, where almost all non-competes are unenforceable, it is routine for employees to agree to non-*disclosure<a href=“of%20company%20proprietary%20information”>/i</a> agreements. Beyond that, non-compete agreements only serve to restrict the employee’s ability to find work after the employment relationship is terminated.</p>
<p>Even if a big company does not have time to routinely enforce the non-compete agreement, would you want to take a job knowing that you could be sued back into the unemployment line, especially since your ex-employer has more money to spend on lawyers than you do, even if you believe that you are in the right with respect to the sometimes fuzzy line of what defines a “competitor”?</p>
<p>The problem is that in order to work for some of the large companies you have to sign a non compete clause. So what if the job ends up to be awful? Sure you don’t take a job with the competitor across the street. But in the fuzzy area for a lower wage worker??</p>
<p>In our family business, the ethical intent of a non compete is to discourage employees from going across the street and taking ratings, clients or revenue ideas to a direct competitor.</p>
<p>Unfortunately, there are some companies in the industry that use non competes to harass former employees.</p>
<p>I can’t understand how a company could sue a former employee whom they laid off. By their actions couldn’t an attorney argue the non-compete clause is null and void? It’s a double whammy to the individual.</p>
<p>When I was in sales I always had to sign non-compete contracts, and even have one with my current employer. Many customers are loyal to their salesperson rather than the company. My former company took the Vice President of Sales and Marketing to court. He spent a lot of money in legal fees defending himself. He finally had to take a job in a different industry. Our company went downhill after he left and new VP’s came and went.</p>
<p>Our general manager commented on the clause in an office meeting a few years ago. He didn’t care if we left the company to go to work for a competitor. But he did care if we began taking customers from his company or badmouthing the company. So former employees find ways to “quietly” pick off our customers and nobody is the wiser.</p>
<p>Remember- you have to be going to a competitor. One of the strongest non-competes I saw was for a pet groomer at a national chain. The employer didn’t want the groomer moving down the street to the competitor and taking all the clients. I get that.</p>
<p>Wouldn’t all other pet grooming jobs be considered “competition” if the pet groomer left the company? In other words, the pet groomer would not be able to work in pet grooming after leaving the company, even though it may be what s/he does best. (And a “national chain” might be in other businesses that restrict other pet-related jobs that s/he can work at.)</p>
<p>There was a geographical restriction. So, yeah, no pet grooming in that area if you leave the job. The geographical restriction (which I don’t remember) was probably reasonable, since customers probably weren’t going to travel too far for the grooming. The guy we were trying to hire and get around the strict clause wasn’t a groomer- he was an IT guy and moving out of state. It was interesting. We did all sorts of legal research, decided to take a chance (including covering the guy if he got sued) and in the end he took a job with Nike in Oregon! #wasteoftime</p>
<p>ucbalumnus - You can’t disclose your particular skill to a competitor which is where the non compete part comes into play. You have a skill that others do not have, which is why the other company wants you. You compete with your prior employer without disclosing specific business practices.</p>
<p>In our case, there are geographic parameters. At lower levels, people occasionally go to work for competing companies but in a non competing area. Then when the non compete expires they start their “competing” job.</p>
<p>At higher levels, people just move out of the area. </p>
<p>I’m not saying that it always makes sense or is never abused but it is the industry standard. We could get into minute details here but ultimately it all depends on the particular contract.</p>