[kwlug-disc] non-compete agreement.

john at netdirect.ca john at netdirect.ca
Thu Dec 31 10:44:46 EST 2009

kwlug-disc-bounces at kwlug.org wrote on 12/31/2009 10:05:29 AM:
> From: Chris Irwin <chris at chrisirwin.ca>
> A previous place tried to pull the whole "We own everything you do, 
> even off company hours". Why they wanted to own the designs for the 
> support guy's new bathroom is anybodys guess. I crossed that section
> out, but it seems that voided the offer..

I had to stroke out a clause like that many years ago. It was make more 
specific by stating that any software that I developed that related 
directly to my work with the company was theirs. It seemed reasonable. 
Since I knew it was in place I didn't do anything significant in that 
regard. I saw two reasons for this. First, if an employee created a 
program while working that became integral to the company it would be 
clear who owned it, The employee could not claim after-hours development 
and extort money from the company. Second it prevented the employee from 
going to customers and extorting money for software (s)he may have 
developed for them.

> If you do decide to go the non-compete route, make it as specific as
> possible. The last thing you need is negative influence from an 
> employee that had to move away for some reason that suddenly finds 
> they can't market their skills. It may make it harder for you to 
> find future replacement employees as well -- I google'd the crap out
> of all the companies I was interviewing with, and disgruntled ex-
> employees were strong warning signs.

Be specific in time, location and activities. Courts tend to side with the 
employee and if an agreement is too broad it will be unenforceable. The 
more specific it is the more enforceable it is. You certainly don't want 
to (and cannot) unreasonably prevent an employee from working after they 
> Also note that Non-competes in some places (like California) are 
> generally non-enforceable due to those "we own everything" clauses 
> being challenged, and I could imagine a similar situation here if 
> the issue was pushed (it may already have been). I'd avoid making it
> too grandiose and rigid simply because it will probably be 
> unenforceable if challenged, thus wasting a lot of time and money (I
> suppose that makes non-competes the DRM of the workforce).

The move is to include non-solicit agreements as well. Depending on the 
company and industry it's not tremendously hard to think that one employee 
could lure away customers when leaving. I've see it done with consulting 
organizations where the assets are usually only people.

Another clause I've seen is to prevent employment with customers. This is 
best done between companies as part of non-disclosure agreements, it's 
referred to as a non-poaching agreement. Again it may be typical with 
consulting, but one doesn't want their biggest customer to lure away an 
employee and sever a significant amount of business.

The presence of an agreement implies the threat of a lawsuit and this is 
often enough to prevent one party from breaking the agreement even if they 
think they can win. It costs time money and effort that simply may not be 
worth it.

John Van Ostrand
Net Direct Inc.
564 Weber St. N. Unit 12
Waterloo, ON N2L 5C6
john at netdirect.ca
Ph: 866-883-1172
Linux Solutions / IBM Hardware
Fx: 519-883-8533

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