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Q: You have been at your company for three years. New management has taken over and they are trying to make everyone sign a non-compete agreement (NCA). There is no existing NCA in place. You don't want to sign. What's the best way to deal with this?
Nick's reply: As a business practice, asking longtime employees to sign an NCA ranks right up there with the waiter changing the price of the rib eye steak after you've eaten it. I'd tell them very politely: "I need to look into my legal position before I can sign anything. I'll get back to you after I have my attorney review this."
If they're using the NCA as a way to avoid losing employees, you've got to wonder if they're willing to lose you if you don't sign it. If they leave you alone, they can avoid losing you to the competition at least for now. The key is, without a signed NCA, they can't stop you from going to work anywhere, and if you leave without signing it, they lose. So I think you actually have some leverage. That means you should try to negotiate the terms of the NCA.
An NCA restricts you from working in certain kinds of companies in a certain geographical area and for a certain time period. The more narrowly these terms are defined, the less restrictive the NCA will be. Some NCAs last for five years -- that's ridiculous, unless the company compensates you somehow for staying out of its way. A decent NCA might say you can't work within 100 miles of the old company -- that leaves you with the rest of the country, assuming you're willing to move. A short list of named companies you are not permitted to work for may be perfectly acceptable to you.
Another approach is to suggest that instead of an NCA, a non-disclosure agreement (NDA) is a reasonable compromise. That would leave you free to work anywhere you want, as long as you don't divulge anything that's confidential to your current employer -- for example, customer lists. (Make sure the definition of what's confidential is clearly spelled out. Talk with a lawyer about this, too.)
The risk, of course, is that the NCA is so important to the new management that they'll fire you if you don't sign it. That puts someone between a rock and a hard place. What's not clear is who -- you or the company.
Now that we've looked at your side of this, let's consider the company's. When a topic involves heavy-duty Human Resources policy, I always turn to my good buddy Marilyn Zatkin, a top HR consultant in California. She has a way of tempering my advice.
Zatkin points out that NCAs have become complex and controversial and each state is developing its own laws. In some states, an NCA may not be enforceable even if you sign it. Thus, it's important to consult an attorney to find out what the rules are in your state. She cautions that a merger may in fact create a legitimate new reason for a company to want to protect assets like intellectual property or customer lists. A company has a right to protect its assets -- and you have a right to protect the terms of employment that you originally agreed to.
Bottom line: This is one for a lawyer. I hope the perspective I've provided helps you stick to your guns without getting yourself into trouble.
Copyright 2009. Distributed by Universal Press Syndicate
Nick Corcodilos is author of "Ask The Headhunter: Reinventing the Interview to Win the Job" and the host of www.asktheheadhunter.com. He can be reached by e-mail at seattle@asktheheadhunter.com or at North Bridge Group, P.O. Box 600, Lebanon, NJ 08833. Sorry, no personal replies.
By tevis on May 2, 2009 10:45 PM
This article overlooks a critical point. Following a 2004 decision by the Washington Supreme Court, Labriola v. Pollard, Inc., non-compete agreement in Washington State are unenforceable if the employer asks the employee to sign the agreement after (not while) he or she is hired, unless it is supported by independent consideration (that is, money or some other form of value).
By Quincy on May 4, 2009 9:11 PM
I was hired by Siemens and they required us to sign a NCA. All of us had good skills, but instead of telling us they were happy to have us, every team meeting was a scare fest reiterating that we could not work anywhere else, because of the signed NCA. In my opinion, never sign a NCA, if they require it, then you don't want to work for that company anyway. It's just a large company's attempt to ride rough shod over it's timid workers.
By JR on May 7, 2009 7:16 PM
When workers organized, they didn't have to pay an attorney to deal with these things for them. Dues go a long way.
By Shattah206 on May 8, 2009 8:33 AM
One local company bought another, required NCAs, then terminated most of the existing employees anyway. This was their way of inhibiting competition. Now these people are prohibted from making a living in the industry where they've invested years of their professional lives. In this electronic age, their clients could be nationwide, so no geographical limitations were in effect. One gal tried to ignore it, but the nasty wretches threatened to sue the new employer.