I'd bet most people on HN think this is lunacy, because most of them aren't in situations where client lists are truly confidential. As a salesperson, when you add a client contact to your LinkedIn profile, you're putting your employer's client list in your "back pocket" (as it were). This isn't ambiguous; the fact that you've shopped your employer's client list piecemeal instead of all at once doesn't make it better.
What makes this a sticky issue is that your employer probably wants you to groom a LinkedIn rolodex, because they're helpful for selling.
I'll add a few points from a California law perspective:
This is one area of trade secrets law that often catches employees by surprise. Most employees who have substantial contact with customers (e.g., those doing sales) merely assume that the information relating to those customers belongs to them. In the past, they used to keep such information in a day book, today perhaps on some electronic device. As such employees interact with the customer representatives, they often develop close relationships with them, sometimes becoming personal friends, etc. From this, they come to assume that this network of contacts is a personal asset that they can take with them wherever they go for future business purposes.
The law sees it differently, however, even in California where restrictive covenants are normally highly disfavored. The legal theory is generally as follows: as long as an employer pays the salary of the person who is interacting with its customers, the information gleaned from those contacts - to the extent it is not otherwise publicly available in convenient form - becomes confidential, proprietary information belonging to the employer. This can sometimes include the identity of the customer itself, though not when it is widely known in the industry who such customers are. Even in such cases, however, the particulars associated with those accounts - i.e., the names and contact information of actual customer representatives, information relating to a customer's buying needs or to pricing or to any similar item that is or may be valuable for an employer to know concerning the relevant market and which is not publicly available - do tend to be treated as employer-owned confidential information and any former employee who attempts to use such information to the competitive disadvantage of the former employer can potentially be sued for misappropriation of trade secrets and unfair competition. The theory is that the employer makes a significant investment in assembling such information by paying the salaries of its sales team and the like and no employee should simply be able to rip it off for nothing and use it competitively against the employer who paid to assemble it. This is where many employees miss the point: they see their contacts as belonging to them ("these are my customers") when in reality they may be quite restricted in what they can do with such information as long as they obtained it while being paid a salary by some employer.
Of course, in traditional sales and similar areas, the lines tended to blur in economic reality. For example, an employer hires an experienced sales person in x industry. The very purpose of doing so is to gain the benefit of that persons substantial contacts. When that sales person is hired, the customer information he brings with him does not become the property of the employer simply because he happens to have gotten that job - indeed, all such information continues to belong to him and is merely being made available for the benefit of his employer during the term of the employment. On the other hand, if that very person then works for a decade in that position and thereby obtains a much expanded set of customer information because of things done on that job, that expanded information set can be treated as proprietary information belonging to the employer. Thus, in theory at least, once that employee leaves that job, he can freely use all his pre-employment customer information but may well be restricted in using the information he learned while employed on that particular job.
One can posit all sorts of variations on this arrangement by which complications are injected (e.g., if someone is an independent sales agent and not an employee, who owns the information? or if an employer makes the information company-wide on a database without placing special restrictions on who can use and for what purpose, is it still to be regarded as "confidential"?). The lines can easily blur, making it hard for an employer to claim that certain information is "proprietary" and belongs to the employer.
In our modern, inter-connected world, LinkedIn and similar services have created a real problem for employers seeking to enforce these traditional restrictions on an ex-employee's use of customer contact information, in some cases making it virtually impossible for an employer to stop such contacts.
This piece discusses some of the legal attempts being made by employers to block use of LinkedIn, etc. as a way of making contacts with customer representatives of the former employer. Basically, such services have thrown this area of law into chaos and this is the employers' attempts to restore control consistent with the past practices of a much less inter-connected world, i.e., to use contract language as a way of legally reasserting control over a situation that was practically out of control.
In states like California, this is likely a losing fight but perhaps not so much in other states where restrictive covenants are more strongly upheld. It will be interesting to see how this develops over time.
I work in a field where these are bright-line issues. In software security, client relationships are often covered by explicit per-client confidentiality agreements. Disclosing prior relationships can kill long-term contractor arrangements. Anyone who's ever been involved in an M&A project probably has a similar appreciation for the problem.
I think LinkedIn actually may make this easier for employers in some respect, because it datestamps the links and makes it clear who was part of a salesperson's prior rolodex and who's a contact made by/for the company.
If you link on LinkedIn while you're covered by explicit per-client confidentiality agreements, I think I see where the problem is. If you don't do that, then I don't think a problem exists.
This strikes me as bizarre. In investment banking it's common for people to invest with a salesmen and not even know who he works for. If he switches to another company he just has them sign some papers to move their account and that's that. At least that's how it was explained to me by the European senior executive who was bitching about working with the US because of this.
You'd think tho', that if salesman A takes client B to dinner and charges it to expenses A at least would clearly understand that it was not a social relationship. Interesting bit of cognitive dissonance that they don't.
I refused to sign the non-compete that my current company asked me to sign. It was a deal breaker for me.
And a former company asked me to sign a non-compete after I had been there for a year. No chance, didn't sign.
It's obvious why companies have non-competes but unless the position you are applying for is going to pay you sufficiently to where you don't mind staying on the sidelines for six months, or even a year, (think C level) I see no reason why you would give your employer that kind of leverage over you.
what I find is that most non-competes are ignorable. I've never been rejected for refusing to sign a non-compete (and I almost always refuse to sign the non-compete)
Personally, yeah, if they wanted to continue paying me for that period, I'd feel quite differently; but I've never been offered something like that.
(now, I work as a computer janitor; Unix SysAdmin, DBA, etc... and occasionally some programming work, not sales, so non-competes are pretty rare, actually, and usually a sign that the person asking you for the non-compete is a scumbag.)
One way this sometimes happens is that the company has to pay you while you're not working.
I know of a guy who worked at Capital One (credit card company) who left and Capital One had to pay his salary to him for one year while he agreed not to work for any of their competition -- if he wanted to he could have drawn his salary while sitting on his ass at home doing nothing. He took his salary and also worked a job in a different industry.
I've also heard of similar arrangements where companies pay a certain percentage of the salary (if not the entire salary) for the duration the non-compete. I don't think it's very common, especially lately.
I've never received that type of offer. I will say that depending on the circumstances, that type of offer could be a very reasonable solution.
When I think back to my current job situation that I already discussed in this thread, in theory I might have accepted that type of offer. Although I really don't see how it would benefit my current company today. We're still a small company and run things pretty lean. That type of expense for them would be pretty prohibitive. They are better off just letting me do my job, help grow their business and when the day comes that I walk away, they will most definitely be able to find a solid replacement who will take the business to the next level.
That's interesting, because it seems to me that sales (RM/AM) work is one of the few places where there's a bona fide need for (appropriately narrowed) noncompetes.
How can it possibly be reasonable for a company to invest millions in lead gen and awareness campaigns, double (or even triple) you up with sales support (SE's, PM's, postsales), sponsor conferences, and fund expense accounts, only to have you walk the resulting client list to a direct competitor when you get in a fight over what your yearly number should be?
I don't know you personally, so this obviously has nothing to do with you, but it was my perception that most sales staff worked under noncompete. We're hiring sales right now, so maybe I'll find out otherwise.
You have some good points. But there is another side to consider...
In my case, in large part I was hired specifically for the customer contacts that I brought with me. So for my company to tell me that I could not work for a competing company in my industry, specifically not selling to those same customers, seemed totally unreasonable to me.
I decided to hold my ground on this one (at the risk of maybe not getting the job) but in the end, my company agreed to pass on the non-compete. Two years later, I'm really glad they did, I hope they're happy too.
If you're hiring sales people now, chances are you'll want people with some experience and or contacts in your industry. That's one of the primary reason to hire certain sales people.
(Also, I am not opposed to companies that require confidentiality from their employees (e.g., IP). There is probably some reasonable legalese that you can write into an employee's contract in that regard.)
Your company's situation might be entirely different but that is my experience.
You hit the nail on the head. It's ridiculous for them to expect you to hit the ground running with the network you've established while working for former employers, but then be unable to carry your network with you onto new employers. It's absurd, hypocritical, and reeks of bad attitude.
It would be like asking for software developers with 4 years of experience, and then turning around and expecting them to unlearn the skills and connections they picked up during their time at your company, just because they're working for a competitor.
On the other hand, how often would a customer care whether a salesperson switched jobs? Is it really the case that the only thing keeping a customer in a business relationship is that they like the salesperson? If the product and the rest of the relationship is still solid, I'd hope they'd be stickier than that.
From the article:
"many, though admittedly not all, courts have held that contacting former clients regarding a change in employment constitutes a solicitation. See e.g., Merrill Lynch v. Schultz, 2001 WL 1681973, *3 (D.D.C. 2001) (noting that “such initiated, targeted contact is tantamount to solicitation because there is no reason to believe that a customer on the receiving end of such a [communication] does not assume that the [employee] wishes for him to transfer his account.”)."
This reasoning doesn't necessarily hold for linked in. If a person has lots of contacts on linked-in, some of which are customers and some of which aren't, changing your employment status isn't targeted, wasn't specifically initiated, and can't be assumed to be a solicitation.
This is why I don't like small companies; the owners read blog posts like this and then add "social media clauses" to their employment agreements.
I think the counter is to get employees to ask for salary for 2x the length of the noncompete period. Sure, I won't solicit your customers for 6 months after I quit. Because I'll be taking a one year vacation at your expense.
What makes this a sticky issue is that your employer probably wants you to groom a LinkedIn rolodex, because they're helpful for selling.