Would you/have you signed a non-compete?

[cristina47454]

Dh just got a job offer in his field.  His employment the past couple of years has been rocky and we've been doing everything we can to keep our heads above water. He was roofing last year. THis year he is doing full commission sales.  He hasn't done a full-blown job search bcs his skill set is so specific and he never imagined there would be a job out there that would be a good fit (he was self employed for years before his company fell apart). And then this job shows up. YAY!

The compensation isn't as much as he was hoping, but there is talk of a bonus, which would make it worth it...except the employment contract arrived yesterday and there is a 5 year non-compete/non-solicititation clause that would essentially make it impossible for dh to continue to work in his field should this job not work out.

I've done a lot of reading about non-competes and talked to people who are stuck in them...I keep hearing that if they are not reasonable they are not enforceable...but that doesn't stop you from being tied up in a mickey mouse law suit that will cost an arm and a leg in legal fees.

We are trying to be cautious, and are consulting with an attorney, but dh really wants the job, and we really need the income. We just don't want to do something out of desperation, and then pay for it in spades...

WWYD?????

[TiredX2]

I would need more information.

DP is in the software business and one year non-compete clauses are not uncommon for upper levels.  5-year?  The compensation better be *amazing.* 

Does your DH have contacts in the specific industry so he can get a feeling for how normal this is?

[cristina47454]

The compensation, after taxes, would cover our basic expenses and give us some money for a snowball.  Nothing extravagant by any means.  But dh is essentially in training for a much higher paying position and then there is the whole bonus/commission aspect.

All of dh's contacts are in NYC and NJ and are working for heavy-hitters. The non-compete is not standard, esp. not for 5 years. But this company is small, and I guess the guy is worried about dh having access to proprietary info, his contacts, client lists, etc. Could do someone his size more damage maybe? 

Dh is the most ethical person I know, but I understand this guy doesn't know him from anywhere and is trying to protect himself "in case of...", but dh can't put himself in a situation where HE'S not protected.  What if this guy is a nightmare to work with? Or if dh gets stuck in a lowish paying job and that higher paying job just never materializes?

We realize that all things NEED to be negotiated into the contract, but we are so desperate for steady income that it makes it hard to push back...

[TiredX2]

Yeah, I don't know what we would do in that situation.  The only people we've known with *serious* non-competetive contracts were making enough to truly make it "worth it" AND that was only with a one year non-compet.

Good luck!

[zebra15]

5 yr non compete, no way... 1 year possibly.  A company this concerned doesnt sound like a company that I would want to work for (for a number of reasons)- and I've been out of decent work for quite some time.

[texmati]

I"m also in software and signed a non compete when I was hired as a lowly new grad. It was for a year, and I was told that they are rarely enforced... I needed the job badly, so I really didn't have a choice, yk?

ETA! just realized I'm a sahm now, so that should read that I *was* in the software business.

[GoGoGirl]

DH was just offered a job that was very attractive except for the non-compete clause.  It would basically prevent DH from working in his field at all, in any major US city (including the one we live in) for the next 12 months.  We decided that it wasn't worth the risk for our family.

[Contrariety]

I signed a non-compete with my current employer for 1 year within a 50 mile radius.  I had no problem signing it because for me the benefits of this job far outweigh any negatives of a non-compete, and it's not a specialty job.  It's highly unlikely that when I leave this job I will work in this field ever again. 

5 yrs for a specialty field is extreme.  I would have serious reservations about it.

[syn_ack89]

1 year is all i've ever heard. I like the idea of geographically limiting it too (1 year, 50 miles). 5 years seems excessive unless it GUARANTEES the higher paid job at specific pay etc. I'd want a lot in my favor with so much in their favor. Employment should be beneficial to both parties - hopefully equally beneficial.
Edited by syn_ack89 - 4/4/11 at 12:00am

[montlake]

I have a 3 year non-compete, with a 100 mile radius. Though my business has moved to calling them "Non-Piracy" agreements because the clause about working in the same field is near impossible to enforce, only the issue of soliciting clients. I have always had a 3 year agreement and I have worked without gap for 3 different firms over the last 15 years. They rarely seem to be an issue unless clients are solicited. I would do some more checking on the company to see if they have a history of trying to enforce them, maybe check for reviews on glassceiling or something.

[honeybunmom]

The enforceability of non-competes varies from state to state and the length that is enforceable in each state varies as well.  They're not enforceable at all in California unless they are entered into in connection with the sale of a business (by the owner of that business).  I would try to at least find out what the standard is in the state whose law governs the contract.  Also, what is the scope of it?  Is it working for all competitors?  Maybe it could be negotiated to a specific list of competitors?  Generally, noncompetes that prevent someone from making a living are disfavored.   And, if you find that this non-compete is vastly different than that which is normally enforceable under the state law that governs the contract, I'd be a bit concerned about this employer because to me it would me the employer is either heavy handed or not financially sound enough to invest in some basic legal advice to create a good, enforceable document.  The non-solicit, on the other hand, wouldn't worry me much.  Does your dh need to be able to pluck off clients or employees from this employer?  Probably not.

[cristina47454]

Thank you all for  your replies.  It helps so much to hear other people's perspectives! DH is hopefully meeting with the guy this afternoon to iron things out...

Originally Posted by honeybunmom 

The enforceability of non-competes varies from state to state and the length that is enforceable in each state varies as well.  They're not enforceable at all in California unless they are entered into in connection with the sale of a business (by the owner of that business).  I would try to at least find out what the standard is in the state whose law governs the contract.  Also, what is the scope of it?  Is it working for all competitors?  Maybe it could be negotiated to a specific list of competitors?  Generally, noncompetes that prevent someone from making a living are disfavored.   And, if you find that this non-compete is vastly different than that which is normally enforceable under the state law that governs the contract, I'd be a bit concerned about this employer because to me it would me the employer is either heavy handed or not financially sound enough to invest in some basic legal advice to create a good, enforceable document.  The non-solicit, on the other hand, wouldn't worry me much.  Does your dh need to be able to pluck off clients or employees from this employer?  Probably not.

The problem with the non-solicit is that it is so broad. It excludes dh from all lenders, vendors, sellers, buyers, trades that he has contact with.  Which means that if BofA finances a deal, dh can't work with BofA for five years (!?) Or if CVS leases a space, dh can't work with any CVSs for five years?? The guy gets upwards of twenty bids for each job he does...so DH wouldn't be able to work with any of those trades for five years?? It's just not realistic.  Esp. since they already have crossover in their contact lists. And the clients he is talking about are national. 

[cristina47454]

Originally Posted by montlake 

I have a 3 year non-compete, with a 100 mile radius. Though my business has moved to calling them "Non-Piracy" agreements because the clause about working in the same field is near impossible to enforce, only the issue of soliciting clients. I have always had a 3 year agreement and I have worked without gap for 3 different firms over the last 15 years. They rarely seem to be an issue unless clients are solicited. I would do some more checking on the company to see if they have a history of trying to enforce them, maybe check for reviews on glassceiling or something.

I think a radius limit might make sense. We have turned up several lawsuits, but not with former employees I don't think (dh is the one that checked into that) Do you ming me asking what your field is? How did you manage to work without gap? Is there no overlap in your field? Seems like in dh's field (real estate development) there is always overlap. Our atty. suggested a list of exclusions, which might be a starting place.

[honeybunmom]

This still doesn't make sense to me. I feel like I'm missing something.  A non-solicit usually means not that you cannot work with those vendors, lendors, sellers, buyers, etc., but that you cannot solicit them for employment.  Is this a non-solicit for business opportunities as well?  In that case, I've seen these work where an individual goes to work for a competitor, but, in their new capacity, they cannot work on any projects for the clients that they worked with at their old employer's.  But, if your husband cannot go to work for a competitor due to the non-compete, this sounds like they are trying to make sure he cannot set up his own business either.  And how does the non-compete run?  Presumably, it begins on the date of separation and continues until 5 years are up.  Are there any events that can shorten it?  Does the non-compete go away if he is fired?  Ordinarily, the non-compete only comes into play if the employee leaves voluntarily.

[cristina47454]

Originally Posted by honeybunmom 

This still doesn't make sense to me. I feel like I'm missing something.  A non-solicit usually means not that you cannot work with those vendors, lendors, sellers, buyers, etc., but that you cannot solicit them for employment.  Is this a non-solicit for business opportunities as well?  In that case, I've seen these work where an individual goes to work for a competitor, but, in their new capacity, they cannot work on any projects for the clients that they worked with at their old employer's.  But, if your husband cannot go to work for a competitor due to the non-compete, this sounds like they are trying to make sure he cannot set up his own business either.  And how does the non-compete run?  Presumably, it begins on the date of separation and continues until 5 years are up.  Are there any events that can shorten it?  Does the non-compete go away if he is fired?  Ordinarily, the non-compete only comes into play if the employee leaves voluntarily.

Good talking points...I've been feeling like I've been missing something too, but I'm just not familiar enough with any of this to make sense of it. The clause is titled "non compete/non-solicit" but then specifically talks about non-solicit. Not sure of events that would shorten the term, but as it stands the contract for employment covers a start date until either of them decides for it to be over "without cause". I don't think it is specifically addressed in the non-solicit clause, I'll have to look.

DH talked to the guy at great length yesterday and is feeling much better about the contract in general...but we have yet to see the new contract, so no idea what it actually says.