
Millions of workers believe they are bound by non-binding contracts - sprechen
http://thespeakernewsjournal.com/business/millions-of-workers-are-bound-by-non-binding-contracts/
======
notacoward
There are other ways in which the papers you sign might not be as binding as
you think. Story time.

A while back, the startup I worked at was acquired by a large company known
for its aggressive legal department. Everyone had to sign an agreement,
including both intellectual property and non-compete clauses, or be fired. One
guy actually did refuse, and was fired. A few years later, I left that big
company to work for another startup. I was concerned about that non-compete,
so I did a bit of checking and found that it was NOT A CONTRACT as far as the
law was concerned. You see, a contract by definition requires consideration on
both sides. The relevant courts had repeatedly found that an offer of
_initial_ employment counted as consideration, but an offer of _continued_
employment did not. Thus, what I had signed was not a contract. Legally, it
wasn't a non-binding or unenforceable contract. It was a non-entity. A piece
of paper with some irrelevant squiggles on it.

I've heard that other ex-employees (and their lawyers and the courts) reaching
the same conclusion is the reason that the big company in question adopted a
policy of technically firing everyone from any startup they acquired, and then
re-hiring them immediately under the same terms. The sole effect was to turn
that continued employment into initial employment, non-consideration into
consideration, validating the rest of the contract. It's now standard practice
throughout the industry.

~~~
lb1lf
-A former employer nagged me into signing a rather draconian agreement - basically, anything and everything I came up with, be it within their business area or outside it, be it on my time off or whatever, while I was employed by them or for a period of 12 months after I had left them, belonged to them.

I signed it ‘Juul E. Nissen’ (the equivalent of S. Anta Claus’)

Nobody bothered to verify the signature. I wonder how that would have held up
in court.

~~~
angry_octet
Signatures are a modern thing. It used to be you 'made your mark' on a
document -- many people couldn't write. So the question is, would you perjure
yourself when asked "Is this your mark on the contract?". After all, many
signatures bear only a slight resemblance to a printed name.

Did they ask you to sign this contract after you had accepted their offer, or
after you had already started working for them? Or was it provided as part of
the job offer? Did you receive any additional compensation (consideration) for
signing this contract?

~~~
itronitron
not sure about the OP's experience, but typically 'all your brain belong to
us' forms are presented during the first day orientation, many days after the
offer letter is received and accepted.

------
maxander
It doesn’t need to be enforceable, as far as the minimum wage class is
concerned- if the spurious suit alone would have the defendant summoned to
court multiple times over months, and likely unemployed during that time, it’s
just as destructive as a real, successful suit would be for an ex-Googler, if
not moreso. Without wages they can’t pay rent or feed their family (because
this class is rarely able to accumulate savings.). If they _can_ get a job
before the suit resolves, having to move shifts around to get to court
appointments could make them lose it again. And that’s assuming they have
complete faith, somehow, that the law would rule in their favor- when they’re
fighting a corporation, have minimal legal resources if their own, they would
have to be _very_ sure they live in a no-enforcement state- because a
successful suit would end their financial life.

~~~
brokenmachine
Justice only for the rich.

------
djsumdog
I can't find it now, but there was a case that was talked about on the Mic
Dicta legal podcast about this false idea that contracts are a negotiation
with the employer. They're not and shouldn't even be though of contracts in
the traditional sense.

You sign it if you want the job. You disagree with it: there is no
negotiation. I have always refused to sign non-competes and wrote this post
about it:

[https://penguindreams.org/blog/why-i-dont-sign-non-
competes/](https://penguindreams.org/blog/why-i-dont-sign-non-competes/)

Usually it hasn't been a problem, but this past year I had to walk away from
two jobs because they wouldn't adjust the contracts. I'm a skilled worker
though, and I have that ability due to my line of work. The average labourer
does not.

Even if these contracts are not enforceable, if a company sees that you have a
previous employer that is a competitor and knows they make workers sign those
contracts, they are less likely to hire you because they don't want to get
into a court case.

California prohibits non-compete clauses in their contracts and nullifies the
enforceability of non-competes from other states for workers who take jobs in
California. The Federal government needs to go the same route. No employer has
a right to your loyalty after you leave a company, unless they're willing to
be like Germany where they pay your wages during the period of the non-
compete.

~~~
notacoward
I went back and forth several times with one employer over some parts of the
employee agreement, all very cordial, and ended up never signing it. When I
later resigned, the admin emailed me saying that they didn't seem to have a
signed agreement on file so could I please sign the one she'd attached. I
explained as nicely as I could that the ball had been in their court when it
got dropped, and that I wouldn't be signing any version of the document at
that point.

I'm not sure I'd recommend that as a deliberate strategy, but it worked out OK
for me that time.

~~~
rhacker
I've done this too. There have been many situations where I kinda bypass the
HR stuff - kinda don't acknowledge it happened or whatever, and just continue
my discussions with the people interested in getting me employed. works great.
HR doesn't win those.

------
ilovetux
I find it strange that one can put anything in a contract with a disclaimer at
the bottom saying that it is "enforceable to the fullest extant of federal and
local law" knowing what is enforceable. This is misleading at best. In my
opinion such contracts should be entirely null and void, not just the
unenforceable parts.

I do admit that were I in an even remotely close position to changing the law
around this it would probably disproportionally affect workers, some penalty
would need to be levied against the infringing party, but where would that
end?

~~~
slededit
You can make an unenforceable contract in good faith though. How would you
protect those circumstances?

~~~
tyre
You have a lawyer review the contract and they are held responsible if they
are approving known-unenforceable agreements.

~~~
cimmanom
What about the case where the contract is enforceable at the time of signing
but the law changes after it's been signed?

~~~
s73v3r_
What about it? At the time it was signed, it was enforceable. So the lawyer
would be fine.

~~~
cimmanom
Should the entire contract then become void when one subclause becomes
unenforceable?

If not, how is this different from the case where a previously unenforceable
clause becomes enforceable?

~~~
tyre
No. There are standard, specific clauses in contracts to prevent this. If one
clause is deemed void, the rest of the contract stays as is.

~~~
s73v3r_
But that's the problem that we've got now. Being able to have such a blanket
clause encourages putting in all kinds of crap to see what sticks.

------
gpm
I find it strange that having people sign contracts you know (or should know)
are invalid isn't considered fraud. It seems to me that this is lying for
monetary gain at the expense of the other party and should result in both
civil damages and criminal charges in a sane legal system.

~~~
jessriedel
Unenforceable and invalid are not the same thing.

[https://en.m.wikipedia.org/wiki/Unenforceable](https://en.m.wikipedia.org/wiki/Unenforceable)

More generally, contracts can have moral weight (by the lights of the signing
parties) even if the state declines to enforce it in court.

~~~
marcosdumay
That moral weight is part of the problem. If the State did go through the
bother of taking an style of clause apart, pointing into it and saying "look,
you can't do this", it's because there is a moral problem with that style.

People pushing unenforceable contracts are exerting some immoral power into
other people, expecting them to comply due to those others' morality.

~~~
jessriedel
> If the State did go through the bother of taking an style of clause apart,
> pointing into it and saying "look, you can't do this", it's because there is
> a moral problem with that style.

It says something about the moral assessments of the people forming the
political system (plus something about non-moral political factors), but that
doesn't mean that the parties signing the contract don't find the clause moral
by their own lights. (And likewise, if you're a moral objectivist, the clause
can continue to be moral even as the political system is making a moral
mistake.)

------
mehrdadn
Does anyone know if my understanding is correct? The way I understand it, if
you have an unenforceable contract, then as soon as the law changes to allow
its enforcement, you're bound by it. Whereas if that clause wasn't there, then
you wouldn't be. Hence even having unenforceable terms is a risk. Is this
correct?

~~~
tathougies
In the United States, a law cannot apply to anything before it was passed.
This is in the constitution. I am not aware of any case where what you claim
happened.

~~~
mehrdadn
I meant that the instant such a law comes into effect, it applies to all
existing contracts from that point onward, right? So any violations from that
point onward could be enforced based on a past contract, even though that
contract used to be unenforceable. The contract wouldn't need to be
renegotiated, right?

------
Animats
Discussing wages with other employees, by the way, is something employers
cannot prohibit in the US.[1] Although many employers try.

[1]
[https://www.dol.gov/wb/media/pay_secrecy.pdf](https://www.dol.gov/wb/media/pay_secrecy.pdf)

~~~
intopieces
I have been a strong advocate for spreading this fact to both my direct
reports and to my colleagues. I will never discuss other people’s salary
(especially my directs’, that’s against company policy) but I will discuss my
salary and encourage others to do the same.

If the guy next to you is making 1.x times your salary and you think he’s dead
weight, time to discuss it with your boss or move on. You have to be your own
advocate, and you’re actively hindering others from being their own advocates
if you keep to that anti-union, salary secrecy bullshit.

------
pasbesoin
Lawyers who regularly engage in this should be disbarred.

It is abuse of the law, to intimidate, restrict, and silence. Abuse of the law
should be _and is_ grounds for disbarment.

Having a degree and passing a test does not give you the _right_ to work. No
more so than all the degreed people who are "under-employed".

The law holds lawyers to standards. Unfortunately, the current administration
of the law severely curtails actually enforcing those.

P.S. U.S. perspective, although I expect this is not restricted to the U.S.

------
thadjo
Amazon famously did this to their warehouse workers:
[https://www.theverge.com/2015/3/26/8280309/amazon-
warehouse-...](https://www.theverge.com/2015/3/26/8280309/amazon-warehouse-
jobs-exclusive-noncompete-contracts)

Some of the workers most affected by this sort of tactic are those that have
the least understanding of the contracts' enforceability. Feels like there
should be some kind of recourse for this kind of thing.

~~~
Washuu
When Twitch/Amazon acquired Curse through Twitch they made everyone in the
Alabama office sign very broad non-complete contracts as a condition of
continued employment, but the California office was spared. When someone spoke
up in the meeting with Amazon HR onboarding about the issue the representative
spoke up, "Because it's legal to do so here.". The rest of the meeting was
uncomfortably quiet.

------
AdmiralAsshat
It probably doesn't help the murky legality question when some non-compete
contracts are somehow enforceable even in the event that the employee is
fired.

------
throwaway5250
As a practical matter, they're not wrong. If you can't afford to litigate a
contract, it doesn't matter that the terms are unenforceable.

The only real solution is to outlaw even the utterance of such terms, to be
enforced by the Feds. Compare, for example, how a clause like "only Caucasians
will be considered for this position" would be treated.

------
tw1010
Education, I feel like many are screaming. If only they knew more about this
stuff, then they wouldn't fall into this trap. But isn't this an arms race? If
workers got smarter, wouldn't industry find something else to exploit, giving
workers just as little leverage as before (possibly exploiting the fact that
workers have to trade away something to have time to learn more)?

~~~
moorhosj
This depends on what you mean by “workers getting smarter”. If it relates to a
specific legal clause, you are correct that more knowledge of that clause
would just lead to a new clause that benefits the corporation. If it relates
to systematic worker protections through legislation, we might see different
consequences.

------
bargl
If you think a non-compete is bad, look at something like a non-disparagement
clause.

I'd recommend anyone who encounters a Non-disparagement clause (in this case
strictly in a employment agreement) in a contract walk away from said
contract.

I am not a lawyer this is not legal advice.

~~~
galaxyLogic
I walked away from such a contract because I thought it would seem to limit my
freedom of speech. And I didn't want to work for people who in essence said I
could never criticize them in any way. That's a form of abuse, of mental
slavery.

Now I understand a contract that says some things should be kept confidential.
But say what if your employer commits a crime and you contract says you are
not allowed to talk about it?

~~~
__jal
Contracts involving illegal acts are not enforceable.

And I'm with you - I've never been shy with my viewpoints and refuse to start
now. There's no way I'd sign a non-disparagement.

In fact, it would be interesting to compile a list of companies that do. It
would increase both job-market efficiency and help rectify a bit of consumer
informational asymmetry. (If I know former employees are gagged, I'm going to
discount company claims on the assumption that they wanted the gags for a
reason.)

------
tmaly
Besides California, is there some map or list of states and how they handle
non-competes?

------
ryandrake
It’s unfair that companies, who have extremely high power in the relationship,
can load their contracts up with one-sided and often unenforceable stuff.
Employees, who are the party with low power, must accept the terms or GTFO.
Then the onus is on them to spend their time and money fighting the legal
battle to invalidate these unenforceable bits.

Wouldn’t it be fairer if the party with all the power, and who dictates the
content of the contract, must convince a judge that it’s enforceable before a
defendant has to lift a finger or shell out money?

Currently contracts seem to be nothing more than one-sided weapons that
powerful companies use to get vulnerable people to do things that they
otherwise wouldn’t and can’t afford to fight. Let’s not pretend that more than
a small fraction of employees out there actually get to meaningfully alter the
contracts under which they work.

~~~
sneak
Why do you think employees have less power? Both parties have exactly the same
power: to kill the deal. Contracts only happen by mutual consent.

~~~
cmiles74
Employers have a much larger pool from which to choose employees than the pool
of employers from which any one employee may choose.

In addition, the majority of employers have (either by coincidence or
agreement) landed on a similar set of crappy and unreasonable contracts. For
the vast number of employees out there, it's either submit to the contract or
remain unemployed.

~~~
ryandrake
Yes, and yes, and don’t forget: employers tend to have ready access to legal
advice which is too expensive for the average employee. Our legal system gives
strong advantages to entities the more they can afford.

------
ChuckMcM
digression: What an interesting non-news news site. If you want to give the
impression that you are a 'fake news' site, this might be one way to do it. No
contacts have been filled out, the site has been under reconstruction since
2013, and the stories don't have bylines or other information that would let
you know who wrote them.

That said, it would not surprise me in the least if people felt bound by such
contracts because they are at an extreme disadvantage when it comes to
litigation. I did not see the call for better unions at the end (I may have
missed it) or legislation that would provide a financial defense for people
improperly accused of violating an unenforcable contract (something like an
Anti-SLAPP law[1] for working contracts)

[1] [http://www.casp.net/california-anti-slapp-first-amendment-
la...](http://www.casp.net/california-anti-slapp-first-amendment-law-
resources/statutes/)

------
fzeroracer
As others have mentioned it doesn't matter whether or not the contract is
binding. The fact that the company could use that contract regardless to take
someone to court and drag their reputation/banking accounts through the mud is
the reason why they exist.

It's intimidation.

------
ccrush
Are they enforceable in New York? I am finding conflicting information in
Google.

~~~
zekevermillion
In general, restrictive covenants are enforceable in New York to the extent
that they protect the employer's "legitimate business interests". The leading
case in NY last time I checked, a few years ago, was BDO Seidman, if you want
to look that up on Google scholar.

Usually if there's a noncompete case, there is also a trade secret
misappropriation claim at the same time. So unfortunately there is little
chance that a complaint based on overly broad noncompete would just be
dismissed as a matter of law in NY, regardless of how stupid the thing is.

~~~
KSS42
Here's another case.

International Business Machines Corp. v. Papermaster

[https://en.wikipedia.org/wiki/International_Business_Machine...](https://en.wikipedia.org/wiki/International_Business_Machines_Corp._v._Papermaster)

~~~
zekevermillion
Oh, that's a good one!

------
whycombinater
Can we have

#include <stdcontract> #include <boost-clause>

int main() { specialCase = "we fire you for any reason whatsoever and eat your
baby"; return 0; }

And then it's much more clear? More directly, can we have libraries of
contracts, i.e. convert spaghetti legal code into properly factored legal
programs?

Or are we doomed to copy and pasted, IOCC winning EULAs that say that you can
only use Apple if you don't nuke stuff.

Dude I just want to program a thingy, without reading 1000 pages of "WE OWN
YOUR SOUL", trying to figure out which percentages of my soul may or may not
be enforceably eatable.

Fuck off.

