WOT: Non-Compete Agreement, what to do?, I'm inclined not to sign it Options

[914rrr]

Figures. After only 5 months on the job, the company I work for has been sold as of this afternoon. Ex- employer is asking me to sign a termination agreement.

New employer wants me to sign a non-compete (among other things). I really don't want to, as it is too vague, WAY too broad reaching and there are no geographic limitations (world wide). I didn't sign one with the ex-employer since they didn't ask for one. New employer also has not extended any employment offer what so-ever. I was told the new owner is 'working on it'. Yeah, right. (IMG:style_emoticons/default/dry.gif) Kinda sounds like "...I'll only leave it in for a minute, baby..." (IMG:style_emoticons/default/sheeplove.gif)

What would YOU do?

[flesburg]

Ex-employer wants a termination agreement?? sorry, but what are they offering in exchange? Must be something, or they expect you to agree to be terminated? Does not make sense?

New "owner" of the company wants you to sign a non-compete? In exchange for what? They generally offer you something in exchange, so is it you will not be terminated but get to keep your job? For how long and etc, and how long do you have to agree to "non-compete"?

No one can make you sign away your ability to make a living, that will not hold up in court, but you may need a Lawyer to defend yourself. Can you afford that?

Have you seen a lawyer? Have one read the agreements for you. Probably cost a couple hundred. Might be the best money you ever spent. I have refused to sign non-compete agreements in the past, even with threats of termination. I "bought enough time" to find another job. Be careful what you sign.

[terrymason]

How specific is your job function? Do you do computer support, or do you sell super specific medical widgets? It kinds of depends on what you do as to who they would call a competitor.

Are they asking you to sign a non compete, but not offering you employment? I'd hold of on signing anything until after you get an offer of employment.

One final thing, remember when you leave that you are under no obligation at all to tell them where you are going! No matter what company you are going to, just keep it quiet. Say that you are going to a small company they wouldn't know, or that you are taking time off for a while. That is the easiest way to avoid these situations at all.

[914rrr]

Ex-employer wants a termination agreement?? sorry, but what are they offering in exchange? Must be something, or they expect you to agree to be terminated? Does not make sense?

New "owner" of the company wants you to sign a non-compete? In exchange for what? They generally offer you something in exchange, so is it you will not be terminated but get to keep your job? For how long and etc, and how long do you have to agree to "non-compete"?

No one can make you sign away your ability to make a living, that will not hold up in court, but you may need a Lawyer to defend yourself. Can you afford that?

Have you seen a lawyer? Have one read the agreements for you. Probably cost a couple hundred. Might be the best money you ever spent. I have refused to sign non-compete agreements in the past, even with threats of termination. I "bought enough time" to find another job. Be careful what you sign.

Thanks for the reply. Employment attorney my wife had once said not to sign non-competes, no matter what.

All the online stuff points that way as well. Bitch is, I really like this job!!!

[drgchapman]

In my profession, Dentistry, a non-compete agreement must be minimally defined as to time, distance and activity. If any of these are defined in a manner as to make them "ridiculous", then it becomes unenforcable. We typically deal with distances of 1-10 miles, 1-2 years, sometimes 5 years, and defined as to dental specialty.

If they are asking you to sign a non-compete that is as for ranging as you say, then one might consider it a moot point, as a ridiculous document.

Have an attorney take a look, they need to understand the "usual and customary" for your situation. He will advise you specifically on your situation.

[GWN7]

I was asked to sign one by a company I worked for a few years ago. The agent next to me was a lawyer (he made more $$ selling stuff than lawyering). He told me to sign it and not read it and hand it back in.

His advise afterwards was you were told to sign it or else your employment would be terminated (infered), so you signed it. You can not be forced to sign anything you don't understand or agree with and be held accountable for it.

I'm not sure of the laws in your state but you usually have the right to work and if your employer fires you (lets you go/lays off, ect) after making you sign such a document you can go out and get a job in the same line of work you were in before.

Usually these are handed out so you don't run off with their client list and start your own company supplying the same services for less.

[914rrr]

How specific is your job function? Do you do computer support, or do you sell super specific medical widgets? It kinds of depends on what you do as to who they would call a competitor.

Are they asking you to sign a non compete, but not offering you employment? I'd hold of on signing anything until after you get an offer of employment.

One final thing, remember when you leave that you are under no obligation at all to tell them where you are going! No matter what company you are going to, just keep it quiet. Say that you are going to a small company they wouldn't know, or that you are taking time off for a while. That is the easiest way to avoid these situations at all.

Job function is very specific and quasi-upper management, Business Development Manager for intellegent vision equipment (License Plate readers and under vehicle inspection cameras primarily). My predecessors blew it for me as most of them went to direct competitors, most of them local!

To top it all off, I just brought in over $650,000 worth of new biz this month!

[914rrr]

In my profession, Dentistry, a non-compete agreement must be minimally defined as to time, distance and activity. If any of these are defined in a manner as to make them "ridiculous", then it becomes unenforcable. We typically deal with distances of 1-10 miles, 1-2 years, sometimes 5 years, and defined as to dental specialty.

If they are asking you to sign a non-compete that is as for ranging as you say, then one might consider it a moot point, as a ridiculous document.

Have an attorney take a look, they need to understand the "usual and customary" for your situation. He will advise you specifically on your situation.

Tennessee law used to side with the employee in most cases. In the 80's , the laws were 'blue-lined' / modified. Now if it went to court, even if the agreement was deemed 'unreasonable' , the court would change the language to make it 'more reasonable'. In some cases they may still throw it out, but I'd rather not spend thousands of $$$ proving I'm 'right'.

[rick 918-S]

That's the reason the old guy wants the termination agreement, so if you don't read the new guys paper and sign it they still have the short hairs. I would feel them out. See if they find value in your work. I highly dought I would sign anything like that. Any chance of scoring a position with a competitor? Sounds like you have some Skills!

[DBCooper]

Whether or not it's enforcable is pretty much moot. Deciding that in court will cost six figures, which is equal to how many months of salary with a new company? And with an agreement in place you won't be able to find a job with a competitor anyway, since you would be an uncertainty and liability to them if you're simultaneously fighting your previous employer in court. So accept that if you sign it you accept the agreement's terms. But don't give it away, that "what do I get for doing this" question is the key. Let them answer that and then decide accordingly. If the answer is "nothing" you know where you stand. If the answer is "you get to keep your job" then certainly they'll be willing to support that with a new contract.

[BarberDave]

(IMG:style_emoticons/default/smilie_pokal.gif)
I doubt they are dumb enough to do this but is there request for non compete contract ( in writting) if it is you have them by the balls . It,s to far reaching and you signed under threat of termantion. And can prove it! This is only good if you want to go to court ever. Start looking elseware. It appears they have very little regard for your contribution to the growth of the bussness. My 2 cents. Dave (IMG:style_emoticons/default/slap.gif)

[terrymason]

Are you in a situation where you can walk away from this job? If you have family and are a sole provider, it may make up your mind for you.

I was presented with a "comittment letter" saying that if I received training, a security clearance or anything else, and left for any reason within 3 years, I would have to pay it back. I decided against signing it (to the astonishment of management) and since it was a sign it or you don't have a job situation, I begain to pack up my desk. They hastily backpedeled and decided that it wasn't necessary.

If a competitor has just purchased your company, that means that they paid money for your products and people (including you). They want to do the best they can to ensure that they didn't waste money. Their position is understandable, but they should have presented the noncompete as page 2 of your offer letter.

[d914]

I'm in sales so I'm always asked to sign.

First procrastinate,,,,make them ask twice or more...

Second, wait to hear that you have a job first...wait for the offer..no reason to sign a thing without the job..

third,,,push comes to shove you have to make that decision..I usally end of signing but my company asked a year ago for me to re-sign...One e-mail and my follow up on such matters just sucks....!!! They are still waiting..

[draperjojo]

The business I used to be in, they put that paperwork in front of us to sign. I think I usually signed them "Jim Shorts".....no one ever noticed.

[914rrr]

Are you in a situation where you can walk away from this job? If you have family and are a sole provider, it may make up your mind for you.

I was presented with a "comittment letter" saying that if I received training, a security clearance or anything else, and left for any reason within 3 years, I would have to pay it back. I decided against signing it (to the astonishment of management) and since it was a sign it or you don't have a job situation, I begain to pack up my desk. They hastily backpedeled and decided that it wasn't necessary.

If a competitor has just purchased your company, that means that they paid money for your products and people (including you). They want to do the best they can to ensure that they didn't waste money. Their position is understandable, but they should have presented the noncompete as page 2 of your offer letter.

Thanks for all the replies! Teeners ROCK!!!! (IMG:style_emoticons/default/aktion035.gif)

I am prepared to walk. It'll smart for awhile, but I was self employed prior to this job and always have a lil' somethin' on the side (real estate, selling parts, cars, inventions, etc.)

Purchaser isn't a competitor, rather a buy-and-hold venture capitalist type. Ex-employer is a HUGE Govt. contractor that wouldn't give our division the time of day.

The other gripe I have is that they knew in Jan 06 that the company was up for sale. I probably wouldn't have taken the job had I knew in advance.

[sgomes]

I just went through the same thing. I talked to a lawyer who handles these things and she told me not to stress about it. Most of the agreements are not even close to defendable. Like you have already pointed out, courts don't like vague wording.

[rick 918-S]

I'm in sales so I'm always asked to sign.

First procrastinate,,,,make them ask twice or more...

Second, wait to hear that you have a job first...wait for the offer..no reason to sign a thing without the job..

third,,,push comes to shove you have to make that decision..I usally end of signing but my company asked a year ago for me to re-sign...One e-mail and my follow up on such matters just sucks....!!! They are still waiting..

I like that! See, you can use your sales skills for them or against them. Worst case, your out of a job. With the old guy wanting a termination agreement, your out anyway.

Best case the new guy realizes he's discarding assests of a new company, and backs off.

If you don't sign, you could always bail with your customer list. The old company can't touch you cause you didn't sign anything, and the new company can't touch you cause you didn't sign anything. I'm not a lawyer, but I stayed at a Holiday express once.

BTW: I worked for a couple of guys that did just that. They were the marketing guys for an independent adjusting company. They quit and opened up their own office and took 70% of the companies customers with them. It's an open market, there wasn't a dang thing they could do about.

[aircooledboy]

I agree with virtually everything said above but one thing.

You are correct in noting that your particular state's laws are the key in in anticipating how a court might decide the enforceability of a non-compete covenant. Some states are more flexible than others, but the general rule is that the broader the terms, the less likely it becomes that it would be enforceable.

The one thing I disagree with that was said above is the cost of challenging the covenant in court if it became necessary. I have represented probably a dozen or so clients in challenging non-compete agreements, and I don't think it has cost any of them more than 10k. The evidence that can be offered in these types of cases is very limited, and is almost always decided through pleadings and depositions, as opposed to a trial.

Ultimately, my advice is always the same to clients: Don't enter into non-compete agreements unless you are getting something of real value to you in exchange. While most are unenforceable (I haven't lost one yet), you still need to look at it like any other contract. Do a cost/benefit analysis, and if the potential cost outweighs the potential benefit, don't do it.

Hey, was that an amulance that just went by?????? (IMG:style_emoticons/default/burnout.gif)


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[rwjames]

I have experienced this same scenerio a couple of times in the state of Kentucky. You pretty much sign it or most likely get canned.

One the second occasion, I consulted a lawyer. I actually traded my lawyer some 914 parts for his services. He was restoring a couple teeners and needed some parts. He basically said the agreement they wanted me to sign would be difficult to enforce in the state of Kentucky, given the wording and the fact that the geographic area of the no-compete was not well defined. It's a 50/50 shot that they would even try to enforce the no-compete if you left and went to a competitor.

Most people sign these without even thinking about it, but I sort of see it as, "Looks like the company will try to screw me in more ways than this if I sign".

Good Luck!

[Mark Henry]

I signed one when I sold my cabinet shop back around 1990, but I was shortly hired back on as the sales/shop foreman. I quit a couple of years later when I caught the boss doing coke. He had put the whole thing up his nose less than a year later, so it didn't matter anymore.

also...
A friend had this happen when his company got bought out. He said sure for a 2 year contract or $150,000.

They fired him, so he went straight to the competition, took half of his clients with him and he got his contract.
He really screwed his old (but bought out) employer, cost them way more (maybe into the millions) then he was asking.

He's in the medical field....home care, lifts, supplies, etc.