Why you should negotiate your non-compete

Posted on January 31, 2011 by Rob Radcliff

Illinois lawyer Ken Vanko does a great job on his blog, "Legal Developments in Non-Competition Agreements".  His latest entry addresses the reasons a job candidate should negotiate or at least attempt to negotiate their proposed non-compete.  A few of the reasons:

  1. The candidate will have a better understanding of the non-compete once they have scrutinized the agreement;
  2. They may get a better idea of the employer's previous issues with departing employees and enforcement of the non-compete; and
  3. The employer might actually make some concessions.

These are all great thoughts.  I can't tell you how often an employee will testify they never saw the non-compete or just assumed it was unenforceable. 

From an employer's side, discussion regarding the non-compete will show the employee was fully apprised of the agreement and it wasn't one of 10 forms they signed when employment began.  From an employee's side, there may come a time when they are considering changing jobs and need to evaluate how or if the employer's non-competes have been enforced in the past.

The large company may be unwilling to negotiate.  A smaller company might.  Either way you don't know until you ask. 

 

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Non-Competes That Don't Work

Posted on January 21, 2011 by Rob Radcliff

                    

In Texas a non-compete agreement has to be reasonable in time and scope and ancillary to an otherwise enforceable agreement.  The latter is difficult to decipher but basically there must be an agreement where the non-compete enforcer has agreed to give something to the enforcee and the non-compete protects what was provided.  In most cases this would include trade secrets or some type of other proprietary information.

What have Texas courts concluded does not give rise to a non-compete?  A few examples:

  • financial benefits;
  • a promise to compensate an employee in the event of economic hardship;
  • a deferred compensation agreement;
  • stock option; and
  • the payment of money.

We are waiting on an opinion from the Texas Supreme Court dealing with whether stock options can serve the basis for a non-compete.  Likely not considering the dearth of law stating that compensation cannot, but we shall see.

 

 

 

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Interview Questions - Make them "Legal"

Posted on January 8, 2011 by Rob Radcliff

                                      

 Here is a link to an article discussing some "different" questions asked during interviews this past year. Some  favorites:

  • "There are three boxes, one contains only apples, one contains only oranges, and one contains both apples and oranges. The boxes have been incorrectly labeled such that no label identifies the actual contents of the box it labels. Opening just one box, and without looking in the box, you take out one piece of fruit. By looking at the fruit, how can you immediately label all of the boxes correctly?" -- Asked for a software QA engineer position at Apple.
  • You are in a dark room with no light. You need matching socks for your interview and you have 19 gray socks and 25 black socks. What are the chances you will get a matching pair?" -- Asked for a quality assurance position at Eze Castle.
  • What do wood and alcohol have in common? -- Asked for a staff writer position at Guardsmark.
  • You are in charge of 20 people. Organize them to figure out how many bicycles were sold in your area last year." -- Asked for a field engineer position at Schlumberger.

Some of them are funny, some of the tough to answer, but hopefully all give some insight into the job candidate and are related to what he or she will be doing.  Make sure anyone conducting interviews on behalf of the company asks appropriate and legal questions.  A script is nice but the standard questions may not get you the insight to the person you need.  Asking "illegal" questions can be easily avoided.

 

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Tweets + Coutney Love = Defamation?

Posted on January 5, 2011 by Rob Radcliff

Let's face it there is a lot of nastiness out there in cyberspace.  For some reason some feel more empowered to say about anything on message boards, social media outlets, and chatrooms.  Those statements however can form the basis for a lawsuit.  Kurt Cobain widow and Hole lead singer Courtney Love has been sued by a fashion designer over tweets authored by Love that were less than flattering. 

Let me state the obvious - statements on Twitter can serve the basis for the defamation suit.  There is no social media exception.  Additionally, those statements will be seen by many and are easily accessed - this can lead to a large damage claim.  While it is a lot easier to rip into someone on Twitter as opposed to in person it may ultimately have the same legal consequences. Let's be nice out there.

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Employers - Ask potential candidates if they signed a non-compete!

Posted on January 3, 2011 by Rob Radcliff
                                           
 
Employers  should be asking potential employees and even independent contractors whether they previously signed a non-compete/non-solicit agreement.  Of course, some employees may have forgotten or are unaware they signed one - if possible ask to see their previous employment agreements to screen for any restrictive covenants.
 
What should a potential employer be looking for: 
 
  • a non-compete agreement;
  • a non-solicitation agreement;
  • a non-disclosure agreement; and
  • an anti-raid provision.
 
The first is self explanatory.  A non-solicit could have the effect of a non-compete by keeping a new hire from contacting previous customers/clients.   A non-disclosure could have a non-compete effect depending on the circumstances (i.e. a non-disclosure that prevents an employee from disclosing previous client/customer information).  The anti-raid prevents an employee from attempting to hire folks from their previous place of employment.
 
Why should the employer be worried?  When a company sues over a non-compete they almost always sue the former employee and their new employer.  By doing so a plaintiff can shut down the employee and also the employer who may or may not be benefiting from the former employee's non-compete breach.
 
Employers should be pro-active in the hiring process in determining whether a non-compete is in place.  If one is in play, the employer needs to assess its risk, hopefully with the help of a lawyer.

 

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