Help me understand my rights (non compete) 2

[lifeofnoregrets]

I'm sorry this has to be my first post but Google brought me here when I was looking for info, so here we go..

I started with a company in 1997 as a technician and worked my up and eventually went back to school and finally got into the engineering department while continuing school. In 2009 we were acquired by a large corporation but nothing really changed. In 2011 my part of the business was sold off and the new owners required everyone to sign an "employee agreement" or be fired. This agreement contained some non-compete and confidentiality stuff. I had no real professional experience outside this job and had not even finished my degree yet, and being a one income family with kids I signed it out of fear of unemployment. The new owners proceeded to run the company into the ground (still running unfortunately). So I left in May of this year for another job while I finished my degree. Well I'm finally graduating in two weeks and have an incredible opportunity with a company that will be a direct competitor with the company I signed the agreement with.

My main question is does signing this agreement two years ago cover everything for the 14 years prior to them owning the company? The two years I spent with them was doing sustaining work almost exclusively. And I did not have any contact with customers or anything like that. The job offer I have is available to me because of the vast experience I have in the industry even though I am a new engineer and I'm afraid I severely hampered my career path, I don't know much outside this industry and that makes the jobs I can get seriously less desirable than within the industry.

I plan on talking to a lawyer but it takes forever to get in to see one and they are expensive. I am hoping for some insight from some experienced professionals here. I'm in PA by the way. Also the agreement I signed says its governed by Arizona law because that's where the purchasing company is from. I'm really sick to my stomach over all this, I feel like I've messed up my chance and I'm afraid my family will suffer for it. Thoughts???

Thanks!

 

[Maui]

I was in a similar position once. I eventually found a lawyer who was knowledgeable regarding non-compete contracts in both the state where I had worked and the state that the contract said it would be enforced in. I paid her about $1,000 to research the laws regarding the content of the contract and to provide me with sound legal advice. It boiled down to "Do you believe that your former employer would be vindictive enough to sue you over this? If yes, then don't take the job." What a waste of money. I let the contract expire before accepting my next gig. And that was a very long wait. Yours apparently would be much longer (5 years).

You would be wise to not sign one of these agreements again. If your potential employer requires it, walk away. Nobody needs this kind of headache. Life is too short.

Maui

http://www.EngineeringMetallurgy.com

 

[lifeofnoregrets]

lesson learned for sure.

 

[Ron]

Noncompete clauses usually have several provisions required for enforcement. These are:

1. Is the time period reasonable? Usually up to one year is considered reasonable.
2. Is it limited in geographical area? Usually up to 50 or 100 miles from the location is considered reasonable. If companies have multiple offices, this becomes an issue.
3. Was the signing voluntary or coerced? In this case, you have a good defense...sign or be fired. Not acceptable.
4. Is the receiving firm in direct competition? You have said "yes" to this one.

 

[IRstuff]

" Plaintiffs must be party to an agreement to take on any liability. "

I don't think that's true. If LONR violates his employment contract and steals IP, then the receiving party is receiving stolen goods; there is no requirement to have been a party to any prior agreement, or even that they necessarily were fully aware that the IP was stolen. I think case law has been fairly consistent about this, assuming that the plaintiff can actually show, or cause to be shown, that the defendant received and made use of stolen property.

TTFN
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[zdas04]

Receiving stolen property is a crime. Violating a non-compete agreement is civil. My understanding is that simply hiring someone in violation of a non-compete is not actionable. Benefiting from illegal acquisition of IP is both a violation of the law and makes the use of the IP a legitimate cause for a lawsuit. But it is the benefiting from the theft that makes it actionable, not the non-compete agreement.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

 

[IRstuff]

I was not suggesting otherwise, only that not being a party to the noncompete agreement would not immunize the new company from being sued.

TTFN
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[Ron]

I have interviewed professionals for hiring who were under non-compete agreements. In each case, I told the interviewee that any non-compete agreement was to be resolved before hiring...either through a release or expiration. Some employers also require an indemnification by the prospective hire for any repercussion that might fall; however, that's somewhat worthless because you are asking a "shallow pocket" to indemnify a "deeper pocket".

Some employers will go to significant lengths to enforce a non-compete agreement, even bringing action against the new employer. The action might not stick, but costs the new employer money to fight...one of the goals of the non-compete agreement holder!

 

[TomDOT]

I've taken to hand-modifying (and initialing modifications) to boilerplate bullsh*t "agreements" I am asked/required to sign in order to modify them in my favor. I view it as completely fair, as the initial document is always dramatically slanted to benefit the other party. The single noncompete I have seen I modified to say that the employer would continue to pay my full salary for the duration of the noncompete. Again - this seems completely fair to me. If you don't want me to work for someone else, you can continue to pay my salary.

I've never had one of these kicked back. The drone collecting them usually just cares that they have a piece of paper with your signature. I had one of them verbally admonish me once, and I told them that we could discuss it if the paperwork was kicked back from higher up. It wasn't.

 

[Maui]

One of my friends was actually threatened with a lawsuit by a former employer over a non-compete agreement that he had signed. They said that they would not pursue it if he paid them $5,000. After consulting with an attorney, he paid them that amount of money because his attorney told him it would cost much more than that to fight it in court, and with no guaranteed outcome of success. This in my opinion is tantamount to extortion.

I signed one of these agreements once, and I learned my lesson. I will NEVER sign one of these agreements again.

Maui

http://www.EngineeringMetallurgy.com

 

[looslib]

Unless your job is high tech, fast paced like a Formula one engineer/aerodynamicist, does a non-compete clause even have any valid reason for existing? I have heard of chief engineers in F1 who have had 6-9 months of 'gardening leave' before they can start a new job. Like someone said, if the person doesn't want to work someplace, why do you still want them around. We have grown beyond the days of 'owning' the employee.
I have worked in 7 different jobs over the past 35 years and in a few have signed non-disclosure and patent assignment agreements, but I don't any have ever asked for a non-compete agreement. Like someone pointed out, they need to be restrictive in terms of time and distance. Since all but one of my job changes has been more than 750 miles apart, a non-compete would usually fall through for me anyway.


"Wildfires are dangerous, hard to control, and economically catastrophic."

Ben Loosli

 

[TomDOT]

I view (most) non-disclosure agreements as sensible and fair. I shouldn't give away company secrets when I leave the company.

 

[wadavis]

Kind of a tangent here,

Would anyone take that non-compete agreement to the potential employer, who has presented you with an offer, and ask to have their lawyer review it (on their dime)? I understand any assurances would be worth less than the paper they are wrote on, but then again I don't want to work for a firm that will not protect it's employees.

 

[Ron]

wadavis....I have done this when interviewing a professional for a higher level position within our company. I offered to have our attorneys review the non-compete agreement to determine if it could be worked out. Ultimately the individual decided he did not want to risk it.

 

[Maui]

And that is the problem - it comes down to what the employee is willing to live with. If the former employer decides to sue them (which they could do at any time if they believe it is in their best interests), it has the potential to ruin the individual financially. If the agreement expires, then the problem disappears. I decided to let mine expire. Although it was tough financially to be out of work for that length of time, it was the right decision for me. But if you are confident that either the former employer will not be able to successfully sue you or that they simply won't even bother, then you can do what you like. I know of one situation where an employee did this, and had absolutely no fear of repercussions. And he was right. They never went after him, although they probably should have. Your mileage may vary.

By the way, your new employer has no obligation whatsoever to defend you against a lawsuit brought about by a non-compete agreement with a former employer. And if you ask them many will tell up front that they will NOT defend you.

Maui

http://www.EngineeringMetallurgy.com

 

[aaronPTeng]

I know it is easy to say this now and does not really help, However I recommend to never sign such a document. You do not want to work for people who expect you to sign these (Unless you at the top and earning a decent profit share). When I was given the you must sign it, I left the job!

I know in AU, they are only partially enforceable, especially if it was signed under duress. Someone cannot stop you earning a living and putting food on your plate. However the issue is this costs money to fight in court.

When it comes to IP, it is only physical drawings or software of programs.
Your brain is not there IP.



"Structural Engineering is the Art of moulding materials we do not wholly understand into shapes we cannot precisely analyse, so as to withstand forces we cannot really assess, in such a way that the community at large has no reason to suspect the extent of our ignorance." Dr. Dykes, 1976

 

[TenPenny]

I think in most, if not all, of Canada, if the non-compete essentially makes it impossible for you to be employed in your field, it's unenforceable. In reality, what the employer wants to do is prevent you from using proprietary information when working for a competitor. I was asked to sign a similar thing, all I had to do was to agree not to divulge confidential company information.

 

[tbuelna]

If you signed a non-competition or non-disclosure agreement with an employer or a client, then you need to abide by the terms of the agreement. However, it would be unusual for these agreements to be enforceable for more than about 4 or 5 years.

 

[MacGyverS2000]

FOUR or FIVE years?! If someone told me I couldn't work in my area of expertise for 10% of my career there would be a slew of words coming out of my mouth involving their mother that would make a sailor blush.

ONE year is more typical (particularly in the tech industry), and as has been mentioned before, the enforceability of even that is subject to a lot of conditions.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[tbuelna]

One year would only be typical for a non-competition clause. Non-disclosure agreements are typically for at least 4 years for commercial IP, proprietary matter, or information that is competition sensitive. Also, non-disclosure agreements regarding classified information can last for a person's entire life.

The moral of the story is consider carefully any agreement you sign with an employer/customer/client. If you don't like the terms, either don't sign it or ask for it to be revised.

 

[TomDOT]

Why ask for it to be revised? These corporate-wide paper deluges are just a checkoff for the HR person. Easier and causes less waves to simply modify the form, initial and date the changes ("Employer will continue to pay full salary and benefits for the duration of the agreement" or somesuch) and send it back to HR. The HR drone is just looking for the paper with your signature on it.