Non-Compete Agreements

DENVER, CO -- Last night, a candidate reached out to me regarding his desire to change jobs.  He has been a top ecommerce executive at his current company for several years, and he's ready to make a change.

However, he has a non-compete agreement with his current employer.  I have not reviewed the agreement and I don't plan to, since I'm not a lawyer.  But I do have some hard-won first hand experience with non-competes, and here's what I told the candidate:

First, talk to a good labor lawyer about the legality of your non-compete.  Don't pick some random lawyer from the phone book.  Get a real labor lawyer -- preferably one who has very solid trial experience.  Your town's legal community is smaller than you think, and if you hire a well-known badass gun slinger who has fifty notches in his belt, then your employer's counsel is much less likely to pursue a showdown in court.  This is what President Reagan used to call peace through superior fire power, and it works like a charm.

Now obviously, if your agreement is legal, then by all means "render to Caesar that which is Caesar's."  But if it isn't, then you MUST pursue a future-oriented career path that leverages where you've been, what you have done, what you enjoy, and what you are naturally good at.  In my opinion, it's a sin to do otherwise.

Think of it this way:  Imagine you are a pro baseball player.  God gave you talent, and you've spent your whole life learning to play the game.  It's what you know how to do.  More than likely, your current team operates in a "Right to Work" state, like Colorado in my candidate's case.  An employer cannot prevent you from making a living in the state where you live.  You have a right to work.  So there.

Moreover, if a non-compete is invalid in ANY SINGLE respect, then the ENTIRE agreement is worthless.  Clauses in an employment contract are like stones in an arch:  If one stone crumbles, the entire structure comes tumbling down.  Re-read this.

Also:  Most non-competes are illegal because they are "overbroad."  They try to go too far in marking where a former employee cannot compete.  For example, some companies will say that "an employee cannot do business with any prospect in our database."  Yet only a small handful of those hundreds (or thousands!) of contacts are actually paying clients.  That's overbroad -- and it renders the entire agreement worthless.

Again, my personal experience is that non-competes are total BS.  Don't let your employer bully you out of your industry.  You know the trade and you probably have a ton of built-up relationship equity there!

But don't be stupid, either.  Talk to a lawyer.  There are plenty of cases where non-competes have not only been valid, but have been enforced.  Trust in God and tie up your camels, as they say.
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Comments

[Harry Joiner]

jim,

all too often, just being good at her job makes a former employer want to sue a departed employee. it's a spite thing.

some agreements are valid and need to be respected.

but many agreements are not valid and need to be fought.

-hair

[Jim Durbin]

Ah, non-competes.

Great post Harry - but be careful with the advice - what matters more than the language of the non-compete is the judge, the lawyer and the state you're in.

Missouri is a right-to-work state, but judges have enforced non-compete, non-solicit orders here.

It's a crap shoot.

So the best time to see a lawyer, is before you sign it.

Afterwards, the judge may ask you if you knew what you were signing, and if you say yes, that may be all she wrote.

At the same time - the best advice, is not to do things that would make your former employer want to sue you.

[Ted Grigg]

Interesting post. It confirms my understanding of the real worth of most non-compete agreements.

Based on your astute comments, it sounds like the employer should protect the company by hiring a powerful labor lawyer to write the non-compete so it is enforceable.

On the other hand, the employee should pass the agreement through a reputable labor lawyer to make sure they understand what they are agreeing to before signing it.

Though not a lawyer myself, I believe that non-competes that are signed under duress AFTER the date of employment are essentially non-enforceable.

Such agreements, though common, really undermine the spirit of employer-employee relationships. It feels like pre-nuptial agreements in a way. It's like the TV ads we've been hearing lately referring to square shaped fish, "That ain't natural!"

But it is a reality, so both parties need to work on fully understanding the agreement.