In much of trading-related finance, non-competes or garden leaves are ubiquitous, with periods lasting between 6 months and 2 years. However, they are usually paid, and in many cases paid well (more than your annual base salary). In my view, this makes sense: you may have learned a trading strategy that is highly valuable to the firm you are leaving and it is expected to decay over time. You are being compensated not to share this with competition.
In that context, I eagerly sign non-competes with the expectation of having 6-18 months paid vacation at some point in the future. Some non-compete periods can be _glorious_. A guy in Chicago sued his former employer to have his non-compete enforced (and thus collect a massive pay cheque): https://www.natlawreview.com/article/employer-s-waiver-non-c...
In other words, just because someone puts something in front of you to sign doesn't mean you have to sign it, or even comment or push back on it. You can just ignore it.
Not signing the contract is one thing. Misrepresenting your position is something else. If you gave the impression that you agreed to the terms provided, then it's possible you could be held to those terms.
A contract isn't defined by a signature. A contract is defined by a "meeting of the minds." The signature is commonly-accepted evidence that such a thing occurred, but it's not essential.
By pocketing the contract rather than pointing it out to them, you've arguably violated the "meeting of the minds." The company was under the impression that was part of the agreement. You can dither about "due diligence" and say it was there responsibility to check, but in some cases that can be seen as an intentional misrepresentation on your part, for which there are consequences.
I will concede that this is unlikely to come back to bite you in practice. But others should be aware that it is technically playing with fire. And personally, I consider it unethical.
If they offer me a separate contract to sign for their non-disclosure terms and I agree neither verbally nor in ink, I think it's a stretch to call it a misrepresentation of my position. Given that this type of contract usually offers absolutely nothing in exchange, it would be more reasonable to assume that I don't agree, if I don't sign it or express agreement otherwise.
Also IANAL, but at the very least I don't think that this is unethical.
Verbally agreeing to the NDA then not signing might count. Signing a fake name would obviously count. Editing a digital contract before signing might count, and not highlighting the edits in a "track changes" negotiation would probably count. If you returned the papers and said "these are all set" or something, I guess you might be at risk.
But just... not signing a thing? If someone puts it in front of you without negotiating or asking for consent, then accepts it back unsigned? I've never heard of a lawsuit arguing anything even close to "I handed him a paper, so he should have spoken up to tell me he wasn't signing it", and I can't imagine it'd go anywhere.
(On which note, every NDA I've seen has been explicitly brought up to ensure that I was ok with it. But I guess that's not universal?)
I had a client once who worked for a company for a few years, then did not for a few years, and then did again for three decades. The company terminated this person. The company found out this person had had a side business for more than a decade in the same industry. My client had signed an IP assignment during the first tenure, which lapsed at termination, and then never signed a new one.
The company tried to take all of my client's IP. They failed for lack of execution.
(I did not represent this client on the IP/non-compete/employment stuff; I did NDAs/licensing for the side business. But I have first-hand knowledge of this.)
Just for clarity's sake:
Some kinds of contracts definitely do require signatures to be executed and others don't. If it's important to you, then make sure you know which kind of execution yours requires.
I have read cases where employment agreements are void for lack of signatures. But, I am not an employment lawyer, and every jurisdiction is potentially different.
More specific about what? I can try.
In any of these types of contracts that do not require writing, you can write your terms down on paper (or memorialize them in any way you agree upon; email, napkins, etc) and still verbally execute the agreement. The writing will then become evidence of the verbal agreement.
For any specific type of contract, you will want to consult a lawyer in your jurisdiction. There is just too much variability to account for.
If your question is, "If someone gives me this written contract, and I don't sign it, but I say, 'yes, I'll do this' -- can this contract be enforced against me even if I didn't mean it and didn't sign it?"
The answer to that could very well be: Yes, you're on the hook. So don't say yes unless you mean it.
Don't ever say yes just to get out of a situation. Say, "I need to think about this for a couple of days." And if they push you, then say you're really sorry but you can't agree without thinking about it.
Such arguments tend to hold weight in court.
That reminds me, I am going to add some of these points to "questions for my employment attorney" for next time I change jobs. It's not very expensive to purchase an hour of an attorney's time and they can answer a bunch of questions like these.
It seems ethically equal to a company using their bargaining position to advantage themselves and disadvantage their prospective employees.
I disagree that excuses unethical behavior on the part of the employees.
I'm being pointed here, but I feel that's a fair representation of what we're talking about.
Specifically for all but the most specific competitor-worded non-competes, the company knows exactly what it's doing: retaining employees through a cheaper method than compensation.
Second, in this particular situation there is an above-board alternative, which is to reject the terms in a clearly-communicated fashion. Were there literally only two alternatives which were "lie by omission" and "starve" then this conversation would be different. But I think in the real world, there are more alternatives available. If there are ways of achieving the same ends without deceit, then the use of deceit is unjustified.
Not that I'm using that as an argument to be an unethical person.
But I am saying I feel it's a justification to act in a more Rooseveltian realpolitik manner: treat someone ethically until they demonstrate a lack of ethics. And even then, strive to conduct oneself to a higher standard, but firstly protect yourself and your aims at all times.
Most unethical behavior seems advantageously predicated on others' ignoring / accepting it. To the contrary, confront it! And win!
To your second point, granted with a caveat. The "freedom to turn down a job" is a freedom many aren't afforded (and I daresay most don't have the benefit of affording at least once in their lives).
Saying "Yes, but we have better, more ethical alternatives" feels elitist and... inapplicable to the average working person.
So yes, while most people commenting here may have that option, there are a huge number that don't. (Hence why non-competes should be ruled unconstitutional)
You must be unfamiliar with the software development market. In which way do employers have massive market power which renders prospective employees vulnerable?
If anything, it seems like developers have the upper hand (perhaps with the exclusion of game developers).
Whatever the current market conditions are is irrelevant. They were different 10 years ago, they'll be different in another 10 years.
I was responding to the parent's claim that social engineering around signing non-compete clauses is unethical.
I consider trying to pressure an employee to sign such a clause unethical.
Maybe you feel differently.
but it's not essential
What were the circumstances in which they asked you to sign?
They want one year in damages for breaching the contract? They can pay for 1 year of salary.
I have run into trouble because of exactly this. There was a conflict in payment, I left. Their lawyer argued that even though the agreement was not signed, I had acted as if it had been (by not objecting and continuing the employment), so it was still valid.
I ended up settling, so losing money.
So I don't see how that could be construed to be 'part of the original offer'.
Especially if you asked (in writing) if such a clause existed and received a negative / no response before signing the contract.
* Could you initial every page but remove any pages you didn't like from a single contract?
* Could you insert your own subtly edited version of their non-compete that you signed?
"They signed the documents without looking. They said what usually their borrowers say in court: 'We have not read it',” said Mr Mikhalevich.
Oleg Tinkov, founder of the bank, tweeted: "Our lawyers think he is going to get not 24m, but really 4 years in prison for fraud. Now it's a matter of principle for @tcsbanktwitter."
Depending on work relationship (e.g. contract), they may not be doing this anyway. But there are some things they need it for.
As others here have already suggested, I would agree that not signing the given contract and just going forward is not the right approach if you truly want to avoid the non-compete trap. Instead, amend the contract (or have a new contract drafted, as also mentioned earlier) and return it signed; it shows both your commitment to the work, and your attention to detail. The ball is then in their court. YOU now possess an amended, signed and dated copy of THEIR contract, returned to them along with an advisory of amendment.
You know, the things that nobody reads but generally sign away all your rights.
Send a letter via snail mail that clearly states that you disagree with their EULA but were unfortunately only made aware of the EULA after your purchase. Include a printed, revised EULA with your proposals for changes. Be reasonable in the changes you propose.
If they reply to you that they disagree with the changes, they can prohibit you from using the software or service, but then you're also entitled to a full refund, of course.
If they forget to reply, their EULA will not be enforceable.
Even if they haven't replied, the original contract is still sitting there clearly stating that a certain set of assumptions are in place if you use the software. I don't see any way to argue that a non-reply implies consent to new terms or abandonment of any terms.
Are... are you... this is the internet and are you... you are serious? Can I believe this? I want to believe this.
They are only valid if you are able to accept them before paying for the product.
"I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intellectual property which I may disclose to anyone within one (1) year after the termination of my employment shall be presumed to have been made during my period of employment hereunder and shall become the sole property of the Company."
At first glance it looks like a typical "I assign everything I invent while employed" deal, but the 1 year post-employment clause sure looks like a non-complete to me.
What do you think?
I'm sure that can't be enforceable at all, but it's still completely sickening that a company would put something like that in its terms.
The only "non-compete" clauses that are even theoretically binding apply to stealing clients andn customers and the like so generally only apply to sales people.
This doesn't stop companies trying to include ridiculous non-compete clauses in employment contracts. It's sort of a silly pretence - both sides know it's not binding so the employer makes it sound as harsh as possible but the employee signs anyway.
At the end of your employment (whether fired or you walk), if they really want you to not complete, they have to offer you money - generally fully salary for the desired period of time regardless of what your contract states.
Do you think someone in Germany under such an agreement could work for another company that had no presence in Germany or, perhaps, the EU?
Thankfully the deal fell apart for other reasons, although I shouldn't have been surprised by any of it.
Consideration need not be during the same period. I can pay you $X today for something that covers the next N years.
(And as for why people don't just add "compensated via your salary" to the boilerplate - that's an open-ended transaction, not a defined amount of compensation for the year of noncompete restriction.)
But it's not. Inventions != copyright or code produced. If I author a book after employment they don't own the rights to my book. If I write code after employment they don't necessarily own my code or rights to it.
Yes. This is WAY CRAZY because enforceable or not it abuses the information and resource availability asymmetry between company and employee.
invention, discovery or item of intellectual property
Seems way unenforceable to me, but IANAL.
Very much possible, but as someone else alluded to, this clause is incomplete without the rest of the agreement. Somewhere in the agreement "intellectual property" may be defined [better] and it may include copyright, and it might include terms that narrow down what copyright falls within their definition of "intellectual property" (i.e. copyright-able works which pertain to the business of the company). They don't want to own everything... what if I write software for a personal pet project and it causes damages... they would open up themselves to potential liability (unless they cover that, again, somewhere else in the agreement). The entire agreement text is needed for clarity and to make conclusions.
We can't conclude what the agreement means by "intellectual property". See comment to sister reply. We need the entire agreement text to make conclusions.
Imagine someone quit that job today, 6 months later room temperature superconductors were invented, and 2 months after that the ex-employee invented a great new use for them. It's literally impossible that the invention was made at the job, but the contract still appears to claim it.
It's even worse than a non-compete: instead of you simply being prohibited from competing with them, they automatically own your creations.
Courts tend look unfavorably on any agreement that doens't allow you to earn a living doing what you know how to do. As such non-competes as bad as they are are very hard to actually enforce in court. The threat of going to court though can be scary.
Remember if you need legal advice ask a lawyer not some random idiot on a forum.
Now you have to sue somebody to get your rights upheld.
Obviously that's mostly going to work for people with major leverage in the job market, but there have been some notable success stories lately of people not getting sacked.
The “within 1 year” thing, however is one I haven’t seen before. Ugly!
edited to elobrate You can almost always reach a compromise if you aren't a jerk about it and can show you understand the company's concerns. Typically I have it modified so that if I'm using their resources at all (office, computer, pen they bought me, etc.) it's theirs. Or if it's directly related to their core business it's theirs. Note that this is separate from a non-compete.
The key thing is to find some clear dividing criteria that is 1. generous to the company and 2. within my control (like choosing to use my own machine). Same idea behind the "one person cuts, the other chooses" method of dividing a cake.
I'm never going to give a company all of my output carte blanche. I want to contribute to open source. I want to make little (unrelated) fun things on my own and not worry about being sued if it ends up becoming popular. The company has a reasonable fear of people competing against them while on their payroll. Both sides can reasonably expect some protection.
Or, if they really are your only option at the moment, you can also sign with the intention of claiming you did so under duress if sued, but I'm not sure I'd be comfortable with that.
I reliably hear from HR or contracts that I'm the only one they've seen fill that section out, and certainly to the length I typically provide, but they duly accept it and execute the agreement. I've never seen them send to an IP lawyer or anyone else to screen the list for legitimacy.
Considering how challenging litigating technical IP claims is, I think this should have some amount of reasonable deterrent effect regarding threats or actual wanton IP theft litigation after leaving the org's employ.
Many believe this is one of the reasons Silicon Valley became what it is.
Come to think of it, every email you write to them notifying them of new copyrighted work can itself be new copyrighted work...
I once got the the offer stage with IBM, and they wanted me to assign all rights to any invention or IP produced by me during employment, including on my own time. It's quite common apparently. I have side-projects I work on, and I specifically asked for an exclusion for them. They refused, and I told them where to stick their contract - even although I was borrowing money to pay the rent at the time. But I like to tell this story about IBM to everyone who will listen so other engineers don't waste their time applying. I hope I've personally cost IBM more sharing this story than they cost me in wasted time.
IANAL, but I read it differently from most other people, the accent is IMHO on the "disclose to anyone within one (1) year after the termination", even if you conceived the invention during the time you were employed, as long as you don't communicate it to anyone for 1 year after termination, you are fine.
Still - as I see it - the point of debate is more generally about the implied 24/7, there is a difference IMHO between something you invented (and developed) during working hours (and possibly utilizing the hardware/tools/resources of the company) and what one can invent (and develop) after hours, during weekends and holidays, etc., unless your pay is so high that it can be assumed to compensate for all your time.
Even then it seems more similar to slavery than anything else.
They did have a 'we own pretty much every thought you have while you work here' clause, though, because it was a game studio and the owner's reasoning was you could have inspiration for game ideas for what you're working on pretty much anytime, anywhere...which he's right about, and he was a cool guy and I don't think he'd enforce the clause to actually steal other people's outside projects, but that clause still made me uneasy and I didn't really pursue my personal projects while I worked there much as a result.
But what you received is much, much worse.
There's no reason to ask for what you don't need and never intend to enforce. Unless you intend to selectively enforce it, in which case I'll assume you'll select me to do so one day.
Considering everything I work on personally was somehow web or media related, it felt very draconian to me at the time. But I still worked there and don't regret my time there overall.
The problem with that kind of trust is that sometimes the person who makes the decision isn't the cool guy. It can be the company's lawyers who decide to make your life hard after termination for whatever reason (reduces your negotiating leverage at least), or someone else entirely if the company is acquired (for example).
But as I said, despite my comment about him being pretty cool about things, it was enough to make me uncomfortable, and I didn't work on my stuff much, and definitely didn't release anything while working there.
There is zero reason for him to have that clause unless he wanted to do just that.
It seems like one of those "Oracle's doing this, so why don't we do it as well?"
Of course they probably don't need any signed document to get the above, odds are your local state laws are already strong enough to cover them.
Toilet which makes farting sounds when you flush it.
Spoon with a hole in it so you spill on yourself.
Mug without an opening (solid cylinder with handle)
Computer monitor that only displays the color pink.
Headphones with integrated q-tips
iPhone but its a triangle
Strap for swinging a chainsaw over your head like a helicopter
That would make their investors / bankers absolutely freak out.
Better to just tell them to take a hike and (ideally) name and shame the company publicly.
The lawyer had her fill out quite an additional bit of disclosure about it and did not like that clause. At the time my wife really wanted the position, but I doubt she would bother going forward with such a contract.
By this agreement if you wrote a hit pop song 11 months after your employment they'd own it. That's utterly ridiculous.
I'm doing work in IoT, and I fully expected to retain that knowledge for the jobs afterward (for the record it was a job offer, not a current employer).
So this company could have really made my life a hassle if I quit them and went to work in a different field but was still doing IoT work. They could shut things down just to make life hard.
Most companies simply don’t care, save for inventions directly in their field. I would think this would typically result in a contract dispute with your new employer, not with you so much. The new employer is going to claim your inventions, file various patents and such, then the old one tries to wave your employment contract around and lay claim to them? It’s interesting, I don’t see it being withheld in many courts though. They’d be on the back foot, at best, if the new company already filed invention paperwork. Was there a signing bonus or something to pay for these future inventions? Or gauanteed future pay when you file them? Maybe I’m wrong, most of these documents arent terribly enforcable as it is.
So what this says is that they have IP on inventions you made while employed, even if you only disclose that invention after having left.
It does not say anything about inventions made after you left.
It's pretty redundant and there could be a fight regarding when the invention was made vs disclosed, but the wording limits it to the period of employment.
There's a lot of stuff in contracts that are more scary / intimidating / best-effort-squeeze-of-the-big-over-the-small that isn't enforceable in many states. I'm no lawyer, here, though.
I can't see how it's enforceable that once you cease working there, everything you do for one year is presumed to be related and subject to the same work you did for the previous employer/Client. Also, that might imply that they'd owe you money, right? I can picture a judge turning to the counsel of this company and asking that question.
Again, I don't like competitive restrictions -- I don't even like proprietary software business models! -- but if you are in that game, then this kind of risk allocating language is reasonable in that context. Refusing to sign a contract because of this clause means you are perhaps a closeted free software advocate (and good for you!) or do not really desire a long-term career in this (arguably exploitative) industry.
I have to disagree. I've had a long career in software development and I've never seen a clause this broad. If the clause was restricted to the term of employment, that would be one thing, but insisting that they own your brain beyond the time that they're even paying you is too overreaching to even consider.
As an appeal to authority, take the Confidentiality and IP Assignment Agreement generated by Goodwin Procter's Founders Workbench. It contains a much more exhaustive (and better) definition of assigned rights, and the obligation to disclose them survives indefinitely. It also is rather more nuanced, so it might not be readily apparent that it in fact is a much stronger assignment clause than the one criticized by the OC.
"I will promptly communicate to the Company ... during my period of employment, and I agree that any such invention ... shall be presumed to have been made during my period of employment..."
Wouldn't a simple assignment clause during the employment term be both clearer and provide the same rights?
The notion that a company owns you is just silly IMO. They make a big point of informing me once a year that I am employed at will and can be terminated at any time for any reason or no reason. So I am clear with them that outside of my work week, everything I do is mine. This is business.
I don't really see the link with free software either, preserving the right to use one's mind, the single most important thing a developer has, seems very important no matter what.
I've never once been asked if a previous IP assignment agreement of this sort is in force when taking a new position.
The first segment of this clause is prompt communication to the company of works created. This is so that they'll know whether or not you're seeking IP protections over work-related projects which is reasonable. Nothing here states that disclosure to the company triggers any assignment of IP to them.
The second segment follows the "and I agree". It indicates that if you disclose work to another individual within a year of having worked at the company, they will assume you made it on their time. They are trying to put some teeth on the clause in the case that you hid the invention during your time at the company.
The issue here is that none of the terms are defined; does putting together a presentation count as the creation of intellectual property which is then disclosed, triggering the presumption? That would be absurd. Can the presumption that creation was done during employment be rebutted with evidence that it clearly is not exfiltrated company material? Etc.
Would help to see the entire document. Also I'm not your lawyer.
So that second part: you say "if you disclose work to another individual"...which work would that be? Work that I performed for another employer after termination from the first? Or is that overthinking, and it means work performed for the employer but disclosed after the fact?
I had an ambiguous read about this, which is what threw up the red flags.
When my last company got bought, they tried to throw that in for existing employees, but it was a 3 year time period. I refused. They said my job depended on signing. I know I could pursue a number of legal arguments as to why that wasn't valid, but I went with my own standard advice to not work with bullies, and I quit.
Or maybe if they pay me 3 times the market rate. And that's without the "1 year after termination" craziness. For that, I'd ask continued pay (3 times the market rate, remember?) for the duration of the clause.
If this means walking away from a dream job, so be it. Can't be a dream job with such a clause.
In North Carolina, another Right-to-Work state, my government contractor tried to exercise the non-compete I had with them to prevent other companies from competing for the contract. My co-worker had us all sign up with his lawyer, who defended us breaking the non-compete as unenforceable in NC. The contractor didn't bother taking the case to court and was only using the non-compete to bully employees who didn't know better.
I've been hearing about lobbyists working to make non-competes enforceable in Right-to-Work states, and I'm not surprised. The point of the laws was to defend corporations against unions. I imagine the fact that it protects individuals against companies is undesirable to the powers that be.
> I’m a Computer Scientist. We don’t have unions and we don’t collectively bargain. Basic workers rights are our responsibility
I've always been bothered by this question. Why _don't_ we have unions? What is it about the tech industry that makes it so resistant (especially in the US) to labor organization? I work in the EU for a US company, and my American colleagues universally seem to find the idea of collective bargaining _preposterous_. Often, they even seem offended by the idea!
Is this a particularly American trait, or something endemic to tech?
We know we can do it all. And we do. Life slowly comes into play. Family, health, house... the dynamics change. Your control diminishes. You look behind and a new generation is at the employment door. You keep your skills up with what time you have available but not sure if you have chosen the right skills to upgrade. Too many variables. A good portion of your retirment is likely at the mercy of the stock market.
Having an entity representing the interests of an employee is not in the interest of an employer. It makes them more expensive. So change is going to be difficult. It is hard for a union to grow if the drivers are older. It requires the early and middle part of the employee age distribution participating to be effective as they are not easily replaced.
American society indoctrinates people with the negative aspects of labor unions. They're run by radicals or the Mafia, they have rules which limit innovation, hold back talented individuals, sanction goldbricking, and on and on. The pro-union side of things is not often promoted in the mainstream.
When the pro-union side of the story is promoted, it's usually in a context where a company was doing something extremely bad to extremely vulnerable people. It's a tough sell to convince an engineer that they're in the same position as an early 20th century lumberjack or coal miner.
I've known people in tech who think of themselves as self-made people and so they further don't like the idea of collective bargaining on a philosophical level.
However, knowledge workers like software developers can very in productivity by orders of magnitude. Companies can therefore pay far more for more productive employees if they can differentiate employee productivity. As someone who has worked with people whom I consider a net negative on our output, A union based pay that brings my income down to the lowest common denominator is the last place I would want to join.
Americans, in general, value their salary more than anything else, which is optimized by individual bargaining, rather than collective bargaining.
Indeed, if you compare US programmer salaries to (e.g.) UK programmer salaries, the difference is apparent: Outside of specialized industries like finance, the pay in the US is much higher, and the gap grows much more with seniority
I am not aware of any CS union in the UK, but in many senses every European country runs a lot of collective enterprises (healthcare, education), and has strong unions for many other industries, unlike the US; I believe the difference in  is, at least in part, due to the "collective" vs. "individual" mindset.
Certain professions; Legal/Software/IT Services/Accounting; make it very easy for one or group of employees, to just take a company's current clients, offer them a low price, and start a new firm thereby causing losses for the original service company.
Business which got burnt by their employees starting competitive business thereby started adding these clauses into their agreements.
Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
It's much easier for a Company to let a potential employee go then position themselves to a losing client situation.
Also Most software engineers when they leave the company take backup of not only the entire code they've written but also the entire code for the project they've been working on. Thats why the IP Protection clause.
Again, your blog content would be different if you stopped being a Computer Scientist and started your own Company.
Great way to get sued. That's going to be logged. Isn't this what got Levandowski in trouble when leaving Google?
I definitely do not do this. In fact, once you stop paying me, I don't care about your code in anymore. It goes in the trash. It's not my problem after that.
Hell... I don't think I'd even want a copy in most cases, it seems like it'd open me up to legal and privacy risks without any actual benefit.
Is that really common practice? I don't doubt some people do this but it seems very foolish to me so I'm surprised that you think most engineers do this.
One of my employees left the company and he took all the Unity assets (assetstore.unity3d.com) I had purchased. I realized this when I saw those assets being used in "his" newly released game on Appstore.
These strike me as the likely cases, yeah. Taking company-specific software seems like it's either useless (why would I even want some random inventory management system?) or spectacularly illegal, like taking a stock trading algorithm.
But I can imagine someone wanting random quality-of-life tools, though honestly just asking for those would probably suffice. And people certainly take expensive proprietary assets and programs that employers buy, though I'm not sure that really fits with the top-level fear of "our programmers stealing our data".
Sure, but this isn't a fair way to solve that problem. You don't need a non-compete to do this. A simple client list clause protects this legally for the employer, without removing employees right to work.
> Sometimes competitors itself would poach key employee which is working for a Client X thereby gaining an edge and thats why the clause for 'Client'.
This is a feature, not a bug. If the company had paid their employees decent wages, they wouldn't be so easily swayed by offers from competitors. Companies don't get to under-pay employees and demand they never get raises from any other company. Companies don't get to own people working in "field X" just because they have a product or service in that field.
They’ll say they just want quality employees, but interview with them and they’ll care little about your skills. They always want to know how much business your clients brought you, seek traders with a good "track record", ask how much profit you made, with the implied understanding that you will bring them that business.
IMO it’s fair to strike a balance, so companies can earn some returns on R&D, and employees can get fairly paid. Your employer shouldn’t lock you out of working forever, nor should competitors be able to hire away instantly by paying $x+1.
Financial firms, for example, give strict noncompetes but back them with actually-valuable payouts. Employees can't be hired away for inside knowledge or clients, because those connections will decay for 6/12/24 months before they start. But their loyalty is actually incentivized, rather than just compelled with "if you quit you're not employable".
Typical problem in finance is you have consistent top performers who are compensated very well and would never leave, you don't really need a non-compete for them, deferred bonus is more than enough, but also bring on junior team members who need to learn a lot of confidential information by necessity.
Hopefully all of the juniors become top performers too, but sometimes they don't. It's the middling guys where you worry about them taking all your secrets to another shop. They aren't very valuable to you, so you won't pay them a big bonus, but also not bad enough to fire, and their knowledge is more valuable elsewhere.
You have a source for this? I would strongly disagree that this happens by "most" software engineers. This is theft and it's completely unethical. I would never do this.
You mean like Anthony Levandowski? I think we all know how that turned out.
I never make copies and no one should. These days companies know when you put in a thumb drive, copy things on, etc. if you do anything like stealing code, they will know for sure. Why risk it?
If you're lucky, it might only cost you millions of dollars:
Or you could end up in jail:
Yeah, without getting too specific, I'm aware of one particular category of IT consulting firm that has a few big players in the market. One or two of them do indeed have one-year non-compete clauses that basically say that you can't go to another firm in the same space. And anecdotally they aggressively enforce. I've known people wanting to switch firms who basically just took a year off (unpaid).
You can still go to a client (as I've also known people to do) but not a competitor.
Most software engineers when they leave the company take backup of ... the entire code for the project
Because it is.
"but important enough from 'Employer' Perspective."
Because they want to limit my ability to better my position. They want me staying where I am, with the company.
"You have to also look at the how these clauses found their way into these contracts."
Sidenote: The company I now work for does business with the first company, I ended up inheriting the first companies code base written for my current company. It looks like they can't hire much beyond script kiddies.
I've never had any resistance to this. If a company doesn't want to show you legal contracts until you show up to the office, there's something shady going on.
What they're hoping for, is that you'll just bow down and take it, rather than pursue any other option, because you actually do want the job.
The next problem you run into, is if you do sign it, and then don't immediately start looking for another position, then they could argue back that you accepted the new terms of the agreement. In order to push the case that the non-compete is invalid, you have to immediately begin taking action in accordance with the idea that the non-compete is a deal-breaking change of your employment contract for you. If you continue working at the job for another 2 years, for example, you likely won't be able to convincingly make that case.
If you do leave the position, you likely have a case on your hands. In the event that they try to use the non-compete against you, you could claim the offer was invalid, because of the misrepresentation of your employment conditions, something you attempted to fix immediately upon starting the job (by attempting to leave again). This has been successfully argued in court before.
You may even be able to argue for damages, particularly if you moved across country, like you imply. It is grossly illegal for an employer to, for example, change your pay rate right after starting a new job, so you might be able to argue the same for an unexpected non-compete.
But obviously, I am not a lawyer. Everything I just said could be wrong, and you'd be crazy not to talk everything above through with one during the entire process.
But that's the general gist of how these things work.
Any company that does this is a very scummy company. Or they're just unorganized, and didn't think to send you all the paperwork before you started. I like chadash's suggestions above a lot.
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.
You can fit the entire planet through that loophole. Most employers can easily show that your side project “relates” to something they do or might one day do.
I have no source for this and I am not a lawyer (but nobody knows you're a dog on the internet...) – if anyone knows more about this than I do, I'll happily read and be glad to learn something, but this is a subject I've read a bit about.
OK, actually, it wasn't that hard to find a citation:
http://levinebakerlaw.com/publications/post-employment-non-c... see the phrase "independent wrong"
You still have strong protections as an employer against "unfair competition" but you are better off not trying to pass any non-compete agreement to your employees, as you may be on the hook for damages if it's determined that your NCA is unenforceable, so you misled the employee(s) who have signed it.
California law is (and has always been) very favorable to employees, compared to other states.
I just got out from under a biotech non-compete of two years recently, but after talking with friends in the legal friend they just laughed and said they love getting non-compete tossed because they are mostly unenforceable.
As a senior sysadmin I always saw it as a sort of test. I'm going to be entering the company into contracts (with the isp for example) so I better be able to actually read them and know how to modify and negotiate them. It's one of the things I tell my teams too... stop signing anything anyone puts in front of you, and that includes HR!
These are the sort of issues on the tech side that a MBA in a role like CTO/CIO should be catching and correcting. As for employment agreements, there is a lot of stuff that HR does that ought to be consulted with counsel but isn't, and is therefor is questionably legal or enforceable.
My policy is that I charge about 33% extra if they don't trust me not disclosing sensitive information. In fact, if the project requires such, my obligation is to use more work and resources to make sure that this will never leak, including encrypting project files separately, make sure I don't write down notes in my usual 'survival notebook', etc.
But the NDA has to be sane.
Has that ever come up for you in real life, with the client paying you the 33% extra and you accepting such a wide-ranging NDA/noncompete?
It seems to me that you'd be taking on a risk much greater than 33% of your earnings on the project, though I suppose the risk of actual "enforcement" of the letter of the agreement is not very high.
No one has ever sued me before but with my personal business as company structure, I am legally liable with up to all my private assets.
I am not an anonymous entity, I get jobs mostly by recommendation, getting letters from lawyers messes me up mentally easily and I can't mess with my client's sensitive data in the first place.
My extra charge is giving me extra time and compensation for adding extra security measures and most importantly (encrypted) documentation for myself if in any unlikely case they'd enforce their part.
In essence: I value mutual trust a lot, if I feel lack of trust on their side, I need to be extra careful. The more mutual trust I form with a client, the easier it is to get a mutual understanding and less likely that they'll escalate it to lawyers and courts.
-You are in a role with high search/discovery costs but low replication costs: A quant developing predictive signals, a salesperson or attorney building a client base, a researcher improving Google's machine learning techniques, a chemical engineer at a petroleum company improving their processes, a pharmaceutical researcher, a chef trying new dishes hoping to find a hot new idea.
-Your work can't easily be protected by a patent. If you're developing brake pads or some other consumer product, the company should protect itself with a patent instead since competitors will just buy the product in the open market and reverse engineer it. However, even for these cases, knowledge of ideas that failed is a valuable roadmap for a competitor.
-The non-compete is specific and targeted to direct competitive behavior. For example a law partner should be blocked from taking his book of business to another big law firm for a period, but working as a judge or government official should be permitted.
-If unpaid, the period should be short. For a year or more, there should be significant compensation to enforce. The primary purpose should be protecting the company, not trapping employees or lowering compensation. For retention, bonuses and deferred compensation should be used instead.
If used fairly, non-competes are good for both the employer and employee. Businesses that share ideas openly, with mutual trust among employees, tend to perform better. People in R&D all work very hard, and eventually each should generate results, but some people are just lucky and discover great ideas sooner. If all your lucky guys/gals walk out the door immediately, the company can't invest as much in R&D.
And NDA/confidentiality contracts can only do so much. In obvious cases like a salesperson downloading his client list and profit numbers, or an engineer putting the source tree or product designs on a USB stick, it's a slam dunk case. But you can't vacuum someone's head. Someone who created a system at one company will likely create a similar system elsewhere. It's hard to make the case that a different system with some similar ideas, thought processes, or architecture is a direct copy.
I worked for my employer for several years without a non-compete before I received my first chunk of restricted stock. In accepting the stock grant, I had to accept a non-compete for a period of 1 year, which included both competitors and customers of my employer. It was a significant sum, but not a year's salary. I feared that if I turned it down, I would be seen as disloyal, and it could cause my employer to pass me up for promotions or include me in the next reduction-in-force.
Since then, I've received almost yearly bonuses and stock grants which carry the same non-compete, so I am probably closer to having received a year's salary worth of additional consideration by now, but I still feel wary about the non-compete.
(edit) Note: I'm not in California
In some jurisdictions, enforceable non compete requires extra-ordinary compensation, which has to be comparable to a base salary.
If the industry (and especially the company) gives almost everyone a bonus, then it is ordinary and thus not enough to make the non-compete agreement valid.
It was customary for employers to negotiate a reasonable salary, say $96K, and write it down in the employment contract that "you get a base salary of $48K/year, and an additional $48K/year is compensation for your 2-year non compete". Courts struck this down many times, since this wouldn't be extraordinary in the first place; and also, because if employee quit after 1 month, they would get $4K in compensation for a 2-year non compete, which is not remotely of the same order of magnitude as the income lost due to that non-compete.
I'll sign that 'you will not work in IT for 2 years' and take 2 years paid vacation if you insist on enforcing it, thank you ;)
It was some of the best money I ever spent, and it allowed me peace of mind, and also allowed me to sign the company's contract, so there was some peace of mind for them as well. The language of my non-compete (and most non-competes I've seen) is so vague that just writing any kind of software for someone else could be seen to violate the agreement.
Those agencies typically have a non-compete which, if it's the Good Kind Of Non-Compete, disallows employees who quit to take a job at the company they were last seconded to. This means that you can't, on paper, quit the agency to work directly for the company you were already working at via the agency.
In practice this works out fine, because the agency adds two values: flexibility and recruitment. What happens in practice is that if a company wants to take you over (a bit like buying a top sports player maybe), then the customer has to negotiate with the agency for some sort of buy-off fee. They tend to come to a sensible agreement fast, because the job market is great and if Joe Employee just was told he can't get his dream job because his current employer pulled a legal trick, he's not gonna want to keep working for the screwover employer long. So there's an incentive for the agency to make the deal.
There's also plenty evil non-competes here btw. Like "you can't ever work in our industry anymore" or "you can't ever work for any of our customers (and oh by the way all tech companies in the area are a customer haha lol)", etc.
Turns out that in Israel, for example, where non-compete agreements require material specific pay, a non-compete lasting 3 years or more, is generally considered an asset sale and is taxed as a capital gain transaction (25% instead of the ordinary income which has brackets that go as high as 55%).
That's materially different. Anywhere in the United States, AFAIK, non-compete is not part of a "golden parachute" with continued post-severance pay except for C-suite people - sometimes. Employment is at-will on both sides in the United States in the vast majority of private labor.
However, it is my understanding that e.g. California is similar. It's not that asking someone to sign a non-compete clause is illegal; what is illegal is not properly compensating them for it. That is, a clause like "in the event of lawful termination of employment by either side, for a period of up to (at the employer's discretion) 12 months, you will continue to receive your salary and will not be allowed to compete with employer".
Such a clause is legal in Israel, and indeed it is how binding non-competes are implemented. I haven't had employees in California in almost 20 years now, but AFAIK it is similar there. It is probably worded differently because of how the non-compete laws on the books are written, but I've heard of cases where something to that effect was deemed legal and enforceable.
Don't go into reasons, or get into a philosophical debate about it. The only time I've given an explanation was for a volunteer gig where I refused to sign an NDA at all, and had to explain to the coordinator "We can either be employee and employer where you pay me a lot more money then you have, or we can be two buddies working on a thing for free. We can't be two buddies where one guy has a contract against everyone else."
I said that once to someone about a liability clause that would possibly have cost more than I'd make there.
He started accusing me of attempting to sabotage his business and was very angry.
I just left. So glad I found that particular bombshell before I signed anything.
Agree with that. Never explain your reasoning without being asked. It makes you look weak.
Or tell the HR person you'd like to have some time for your lawyer to review it. Come back with a refusal or just strike out the lock-out terms, or change the duration to something you can accept (1 year -> 30 days), etc.
Say this pleasantly and most HR types will accept it. I've had to walk away from a few offers, but most (maybe 4/5) firms accept my concerns with some version of "I understand."
It's my experience that large corporations are more likely to be rigid and insist you sign it, which is your first warning that it's probably not a pleasant place to (literally) spend your life.
However, I've found on the couple of occasions where (non-reasonable) NCAs were presented to me that simply claiming that the terms as stated are not acceptable and that a revised NCA must be prepared if I am to sign it results in a shrug and a 'Whatever. We'll just skip it, then.'
Now, if they'd stood their ground, I'd have had to look elsewhere. (I am not a big fish - just a lowly engineer who do some management on the side - so they didn't waive the NCA for REALLY wanting me to come aboard; more from reluctance to go through all the hassles of either doing another hiring process OR amending the NCA.)
(At a former employer, the NCA basically stated that anything I ever thought of, be it at work or after work, in my field of expertise or in whatever unrelated field, belonged to them. Oh, and this obligation extended past the termination of employment for a period of time decided at their discretion. Not enforceable in the least, but still...)
If the candidate accepts the contract as it is the company wins.
If the bargains around clauses it's still OK and having many clauses to drop makes it look like the company is being flexible.
Always push back!
Just speak to your future line manager and explain that you have returned a modified version of the contract and that you hope that they will agree to it soon because you are really excited to start working.
The presence of the clause that requires rejection is itself a lesser warning, but not necessarily cause for immediate alarm.
The whole premise behind the outrage is alien to me: any contract that you're presented with is just the first step of negotiation. Of course it favors the author. Present them with an alternative, and then, step by step, you come to a compromise.