Can You Defeat The Non-Compete?

[dealmaker]

Can You Defeat The Non-Compete?
Waitresses might lose out to robots, but at least they don't have to sign non-compete agreements, right? Maybe not for long. "Signing Away The Right To Get A New Job," in the New York Times , reports that roughly one in five employees are now bound by contracts that bar them from taking a job with a competitor and that the rate of litigation of such matters has tripled since 2000. The surprising part is that these agreements are applied today not only to top executives but also to factory workers, laborers for drilling companies, and even hairdressers, according to the article. The tale of a quality control manager in a factory and his seemingly vengeful employer, TSG Finishing, is particularly chilling. The manager helped customers with their orders—he was hardly a repository of the company's deepest secrets—but was pursued in court for several years by TSG after he accepted an offer for a new job (with a $14,000 annual pay increase) from a rival. The company ultimately prevailed, leaving the worker $50,000 in debt.

The article points out that the area most associated with innovation—Silicon Valley—happens to be located in a state that bars non-compete agreements. Lately, too, states including Massachusetts to Utah (both of which compete with Silicon Valley as homes for tech companies) have begun moving to limit or eliminate such agreements. Will that be enough to turn the tide on this issue? I wouldn't count on it.


from Fortune Magazine

 

[sle]

Can You Defeat The Non-Compete?

Actually, the only enforcible non-compete is the one where they pay you while you are not working. In finance, for example, that means that the firm will continue paying your base salary while you seating out your non-compete period. I am surprised these people got railroaded over things that most employment lawyers can solve in their sleep.

 

[dealmaker]

FORTUNE 500
Amazon and Former Exec Settle Non-Compete Dispute
Barb Darrow
7:32 AM ET
Amazonand a former executive have settled their legal dispute, meaning that the executive, Gene Farrell, can work at Smartsheet.

Two weeks ago,Amazon sued Farrell,alleging that he could not perform his new job as senior vice president of product at Smartsheet, a provider of business collaboration software, without disclosing proprietary Amazon Web Services information. At issue wasAmazon Sues Former Exec, Invoking Non Compete Agreement

Last Friday, a Kings County court administrator in Washington stateissued a temporary injunctionto prevent Farrell from working at the software company. The lawsuit has now been dismissed, according to a Smartsheet spokesperson.

Smartsheet providedFortunewith the following statement:

The dispute between Gene Farrell and Amazon has been resolved based on temporary restrictions on the scope of Gene's role at Smartsheet consistent with his agreement with Amazon. We are pleased to have Gene back on the team as we continue to focus on serving our customers and growing our business.

Fortunecontacted Amazon(AMZN, -0.05%)for comment. In a statement, furnished to tech news siteGeekwire, which broke the news of the lawsuit last week, Amazon said it works to resolve such cases in a way that protects the company and enables employees to take new jobs.

"In this particular instance, we were‎ forced to resolve in court. Once we prevailed in court, we were able to reach an agreement with Smartsheet that placed temporary restrictions on the scope of Gene’s role at Smartsheet consistent with his agreement with Amazon," according to the statement.

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Non-compete agreements, which many tech companies make new employees sign as a condition of employment, are controversial. Such agreements preclude that employee from working for a direct competitor upon leaving his or her current job. Some states, including Washington, where both companies are based, recognize these agreements while others, like California, make them difficult to enforce.

But even in California, some execs joining tech companies in Silicon Valley have found they cannot work on projects that compete directly with their former employers for a period of time. Such was the case for former EMC executive David Donatelli, who took a job withHewlett-Packard(HPQ, -0.06%)a few years back. He was not able to work on HP's storage products—the area where HP competed most directly with EMC—for a year.

These contracts are controversial. Opponents say they restrict a person's freedom to move around. Proponents say they protect a company's investment in training employees. Legislators in Washington and Massachusetts, which also recognizes non-compete agreements, have introduced legislation to limit their scope.