
Non-Compete Can Be Imposed Mid-Employment with No New Consideration - lutesfuentes
https://casetext.com/posts/continued-employment-adequate-consideration-for-non-compete-imposed-mid-employment-hawaii-federal-judge-rules
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lawstudent2
I _am_ a lawyer - and the headline is completely misleading.

 __Continued employment is, in fact, new consideration. __Each new paycheck
you get, in an at-will employment relationship, is further consideration.

This meshes perfectly, without any dissonance, with the commonly understood
function of at-will employment.

The judge did _not_ say that you can impose non-compete retroactively, for no
new consideration, or that non-compete can be imposed on an employee who has
an otherwise negotiated and executed employment agreement.

In other words - this represents absolutely no change, whatsoever, from the
commonly understood function of at-will employment. Water wet, sky blue. Move
along here, folks.

~~~
DannyBee
Are you a lawyer or a law student? :)

"The judge did not say that ... non-compete can be imposed on an employee who
has an otherwise negotiated and executed employment agreement."

This is plain wrong. They said exactly this. Did you read the case (STANDARD
REGISTER CO. V. KEALA)?

One of the people involved had a non-compete imposed after they had already
signed and executed an employment agreement. The court said this is fine :)

As it quotes "it is not logical for a court to treat differently a covenant
presented on the first day of work and one presented one week after the first
day in the at-will employment setting. "

~~~
x0x0
Here, btw, is the case

[https://casetext.com/posts/continued-employment-adequate-
con...](https://casetext.com/posts/continued-employment-adequate-
consideration-for-non-compete-imposed-mid-employment-hawaii-federal-judge-
rules)

My understanding is, if your Hawaiian employer demanded you sign a noncompete,
you could quit on the spot and the noncompete would not apply. Is that
correct?

~~~
lawstudent2
> My understanding is, if your Hawaiian employer demanded you sign a
> noncompete, you could quit on the spot and the noncompete would not apply.
> Is that correct?

Yes.

------
dsr_
Counter-argument: in the early 1990s, the company at which I was working had a
key technical employee leave. The next week, the company asked all the other
technical employees to sign non-compete agreements. We all refused. Nothing
more was said.

You always have the right to quit and work for a competitor up until you sign
that right away, and the worst that they can do to you for not signing is fire
you.

That was not Hawaii, though.

(I didn't realize quite how crazy some of the owners/managers of that company
were until years later.)

~~~
s73v3r
That's not much of a right, though.

~~~
herge
Not your company, not your rights. Go join a worker's cooperative or start a
union if you want more say in your employment.

~~~
AceJohnny2
Are you saying that, because the employee doesn't own the company (or, you
know, own shares), they don't get any rights?

That's... laughable.

~~~
masklinn
Isn't that effectively what happens though? Barring strong worker's
protections (which is not a thing in most of the US) or strong unions (which
is not a thing either in most of the US), the only rights an employee gets are
"take it or leave it". And that's pretty much what "at will employment" is.

~~~
brightball
For what it's worth, right to work states that have at will employment also
means that a noncompete cannot prevent you from using your skill set to earn a
living (aka - you have the "right to work" hence the name). In order for them
to be enforceable at all they have to be extremely specific in scope and for a
reasonable amount of time, usually only pertaining to not leaving for a direct
competitor and taking existing clients with you.

Basically, if you live in an area with a lot of employment options, going to a
competitor and trying to take customers with you would be enforceable. If
you're in an area without a lot of options for what you do, the noncompete is
toilet paper because you can't be prevented from earning a living.

------
animefan
For reference, "consideration" is the legal principal that contracts must be
exchanges not just one sided commitments. E.g. if you had just quit and your
employer asked you nicely to sign a noncompete, and you did sign, the contract
would probably be invalid because you are getting nothing in return (I.e. no
consideration) for your commitment not to compete with your former employer.

In contrast, the courts find "an offer of continued at-will employment is, by
itself, sufficient consideration for a non-competition agreement." To me this
is completely reasonable.

~~~
fnbr
I agree with you within the framework of at-will employment.

However, at-will employment is, IMO, entirely unreasonable. While Europe seems
to have gone too far in terms of labour requirements, the US (and Canada,
where I'm from) could do with more, such as introducing reasonable regulations
surrounding hiring/firing.

~~~
mcv
Has Europe gone too far? Europe is a very diverse place, but in general, I
think a lot of countries in Europe strike a very reasonable balance. The idea
that a company should be able to fire someone on the spot over absolutely
nothing, is completely unreasonable in an economic system where you need a job
to live.

Introduce Basic Income, and I'm totally fine with at-will employment, however.

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fiatmoney
... under Hawaii law. California law makes noncompetes generally unenforceable
regardless of consideration, and other states have other variations.

And it's not even a binding precedent under Hawaiian law; it's a federal
judge's interpretation of Hawaiian law necessary to resolve some federal
matter, but Hawaiian courts could differ in their interpretation.

~~~
FrankenPC
I work in California and hired a lawyer to nullify a non-compete clause. The
company backed off when my lawyer cited case law that basically says if a
company attempts to clamp down on a skill you had pre-existing to employment,
ALL previous contracts become null and void. California views this kind of
corporate behavior as a form of enslavement.

~~~
fixermark
Quite reasonable given California's history, as "You'll never work in this
town again" is a threat with some very real weight behind it for the
Tinseltown population.

~~~
vinceguidry
That particular case isn't helped by labor laws, as the threat isn't enforced
legally. They put your name on a blacklist and all of a sudden you find that
nobody will hire you. I don't know the specific provenance of that legal
precedent, but I doubt it had anything to do with Hollywood.

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Johnny555
Can't employers impose pretty much any (legal) new requirements for at-will
employees?

At-will means that your employer can terminate your employment at any time,
with or without cause (and you can leave your employment at any time). So if
you don't like a change in your employment terms, you are free to go, or your
employer is free to fire you.

~~~
dtparr
Yeah, something similar was mentioned in the article. If this wasn't legal,
they could just fire you, then offer to hire you under the new terms the next
day.

~~~
rhino369
I'd argue that is still fundamentally different than just requiring the
signature to keep your job. Getting laid off has different consequences than
quitting.

I realize most states disagree with me, but I think it's absurd. If at will
employment is so meaningless that it's no different from being fired, it
shouldn't even be consideration in the first place. These courts are treating
at will employment as a meaningless promise in one scenario, but as having
some value in another.

~~~
kd0amg
_Getting laid off has different consequences than quitting._

Yes, the first thing I wondered about this would be whether it's permissible
to describe being handed the noncompete with an order to sign it or leave as
termination with zero notice.

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dsmithatx
So this situation happened to me in 1996 in Texas a right to work state.

1.) My boss came and asked me to sign a non-compete after learning that I ran
a similar business in another city after 3 years of working for him.

2.) I was not competing as none of my customers were his customers. My
business in Houston. His in a small town 60 miles away.

3.) I went to a lawyer and asked if I had to sign and if this non-compete
(said I couldn't work on any computer in Texas within two years of
termination) would apply. Lawyer said it was ridiculous and while it wouldn't
hold up in court he had the right to lay me off for not signing it.

4.) I refused to sign on principle and was laid off. I went to draw
unemployment and he fought it. I was granted unemployment but, quickly found a
newer higher paying job anyway.

~~~
hwstar
Texas may be "Right to Work" but right to work has nothing to do with this. It
has everything to do with the doctrine of "Employment-At-Will" of which 49
states follow. (Montana, I thank you for not following the employment at will
doctrine)

I can't believe that there are so many people out there which get the two
terms confused. Maybe we need to teach public high school students basic
employment law in their civics classes.

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Raphmedia
From what I've heard, here in my part of Canada anyway, employers can you make
sign this but it's pretty much powerless. It is illegal to keep someone from
working and to slow down the economy. You can easily have this overturned by
the court.

~~~
dangerboysteve
[http://www.ehlaw.ca/publications/nov05/Positron.shtml](http://www.ehlaw.ca/publications/nov05/Positron.shtml)

------
hwstar
In some states, sufficient consideration is continued employment, in other
states, additional consideration must be offered. Here is a (rather old)
state-by-state list:

[http://www.beckreedriden.com/wp-
content/uploads/2012/09/Nonc...](http://www.beckreedriden.com/wp-
content/uploads/2012/09/Noncompetes-50-State-Survey-Chart-20130814.pdf)

IMHO: Non-competes should be illegal, OR they must pay you "garden leave" at
100% of your salary for the duration of the noncompete. Garden leave will
limit the use of non-competes to those cases where it is a absolute business
necessity and eliminate it being used as a tool to suppress the free movement
of talent.

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nxb
Is a new signature required from the worker, in order to make the newly added
non-compete binding, or not? This part seems confusing from that summary.

If the workers signed a new non-compete and then continued to work for the
company, this ruling seems pretty obvious.

If this is something like adding in a non-compete to an existing employment
agreement without needing to obtain a new signature (as the completely insane
UK laws allow,) then this is very bad.

~~~
matthewmacleod
_as the completely insane UK laws allow_

While you can technically make changes to an employment contract in th UK
without requiring a new signature, agreement from the employee is required. If
an employer tries to enforce changes without agreement, an employment tribunal
will almost certainly rule in an employee's favour.

~~~
mikeash
What constitutes sufficient proof of agreement there? A clear paper trail
would make sense. A verbal agreement not so much. What's required by the law?

~~~
matthewmacleod
I don't think the law specifies what form of agreement is required - however,
an employer must confirm all changes in writing. Agreement at this point is
implicit - if the employee does not agree with the changes, they have the
right to refuse to work, to take the case to a tribunal, or in some cases to
resign and claim constructive dismissal.

I know that if an employee doesn't agree with contract changes, they should
take action immediately; continuing to work and not expressing your
disagreement with the changes after you've been informed of them can be
construes as implied agreement.

Employment law in the UK seems pretty worker-friendly in the sense that most
companies will take great pains to avoid the risk of employment tribunals and
other employee action, but I concede it's a bit less formalised than in other
jurisdictions.

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DannyBee
So, this is definitely a clickbaitish headline, but things you should know:

~30 states agree that non-competes can be imposed after the fact and without
anything additional being given to you.

~9 states say otherwise.

IE this is a pretty standard ruling.

Next i think y'all are gonna learn that you basically own nothing done in your
own time when you work for large diversified tech companies. ;)

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joeframbach
Can I have an English translation please?

~~~
delecti
If you've been working at a company without having signed a non-compete, they
can legally provide the ultimatum of "sign a non-compete or you're fired."

Edit: NDA -> Non-compete, because I hadn't had my afternoon coffee.

~~~
15155
Non-compete != NDA, though the same logic would apply to that.

Non-competes are much more sinister than NDAs.

~~~
delecti
Thanks for the catch. Updated.

