Comments on: 'I signed a noncompete – but now I want a new job' http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/ Editors from FSB magazine answer your pressing small-business questions. Tue, 15 Dec 2009 12:52:55 +0000 http://wordpress.com/ hourly 1 By: David, Tampa, FL http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2051 David, Tampa, FL Thu, 12 Nov 2009 00:19:27 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2051 Please help. All these comments are great and have been very helpful, but if I may, please help me with the following: I have signed a non-compete with my current employee of a year and a half. It has also become quite obvious to my employer that I would be more successful if I broke out on my own, as I am making little money thus far and have a lot of downtime due to lack of business. My employer also knows that if I did break out I would probabley be more successful and profitable, since I wouldnt be giving away 95% of the commission anymore. So heres the deal. We have a Client who no longer wants to work with my company, but in fact, only wants to work with me. They dont see any value in paying my company a huge fee if it's really me thats doing all the work. They have said they will look somewhere else for the services we provide if they have to work with my company. They have now asked me to work with them on the side, as a "consultant", providing them with the expertise they have come to value from my job at my current company. I realize that if I take this side job, I can make nearly the same amount of money I make in a whole year with my current company. Also, if I was to take this side job, I would most likely quite my current job and begin to freelance. With that said, does anyone have any advice as to how my current employee could use my non-compete clause against me? Or how I could get out of it? Please help. All these comments are great and have been very helpful, but if I may, please help me with the following:

I have signed a non-compete with my current employee of a year and a half. It has also become quite obvious to my employer that I would be more successful if I broke out on my own, as I am making little money thus far and have a lot of downtime due to lack of business. My employer also knows that if I did break out I would probabley be more successful and profitable, since I wouldnt be giving away 95% of the commission anymore. So heres the deal. We have a Client who no longer wants to work with my company, but in fact, only wants to work with me. They dont see any value in paying my company a huge fee if it's really me thats doing all the work. They have said they will look somewhere else for the services we provide if they have to work with my company. They have now asked me to work with them on the side, as a "consultant", providing them with the expertise they have come to value from my job at my current company. I realize that if I take this side job, I can make nearly the same amount of money I make in a whole year with my current company. Also, if I was to take this side job, I would most likely quite my current job and begin to freelance.

With that said, does anyone have any advice as to how my current employee could use my non-compete clause against me? Or how I could get out of it?

]]> By: Need2Work http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2043 Need2Work Thu, 05 Nov 2009 16:07:19 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2043 My previous employer is in MA where I did sign a non-compete agreement, but I live in California where non-compete agreements are void. I know this means I can work in CA, but does it also mean I can work in any other state because I live in CA? My previous employer is in MA where I did sign a non-compete agreement, but I live in California where non-compete agreements are void.

I know this means I can work in CA, but does it also mean I can work in any other state because I live in CA?

]]> By: Chuck, NYC http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2034 Chuck, NYC Wed, 28 Oct 2009 22:47:27 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2034 correct... I don't know why these attorneys got the panties in a bunch over this clause. Plus courts favor employees over employers. correct… I don't know why these attorneys got the panties in a bunch over this clause. Plus courts favor employees over employers.

]]> By: Tom, Northern New Jersey http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2033 Tom, Northern New Jersey Wed, 28 Oct 2009 22:45:34 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2033 Daniel from Middletown NJ is correct. There is a huge difference between a non-compete clause and a non-solicitation clause. A company can not prevent somebody from making a living but they can restrict them from soliciting customers and employees. I disagree that poaching fellow former employees is protected by the first amendment. Sure, they have a right to speak with them, but they don't have the write to solicit them for employment with the new firm. These two issues are contradictory to each other. The other point I have not seen raised is a plaintiff employer enforcing a non-compete or non-solicitation is hard pressed to prove an amount of recoverable damages and will most likely spend more money defending the case at which point the harassment of the previous employee could become an issue but how does the employee then prove damages of harassment... I thought in order to win money in a law suite you have to prove damages, no? Or is enforcing the clause only for the purposes of preventing the possible future loss of potential business? You can see what that this clause is weak but in some cases my be strongly applicable and damages very easy to prove. Daniel from Middletown NJ is correct. There is a huge difference between a non-compete clause and a non-solicitation clause. A company can not prevent somebody from making a living but they can restrict them from soliciting customers and employees. I disagree that poaching fellow former employees is protected by the first amendment. Sure, they have a right to speak with them, but they don't have the write to solicit them for employment with the new firm. These two issues are contradictory to each other. The other point I have not seen raised is a plaintiff employer enforcing a non-compete or non-solicitation is hard pressed to prove an amount of recoverable damages and will most likely spend more money defending the case at which point the harassment of the previous employee could become an issue but how does the employee then prove damages of harassment… I thought in order to win money in a law suite you have to prove damages, no? Or is enforcing the clause only for the purposes of preventing the possible future loss of potential business? You can see what that this clause is weak but in some cases my be strongly applicable and damages very easy to prove.

]]> By: Shawn, Dayton, Ohio http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2031 Shawn, Dayton, Ohio Wed, 28 Oct 2009 19:45:27 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2031 The comments seem to be a little one sided. Non competes do serve a purpose. Is it fair for a company to spend money and time to train an employee and grant that employee access to proprietary information only for that employee to turn around and use that as leverage to get another job? The article mentions the chill effect on employee mobility, but what about the chill that will result if non-competes cant be enforced. Guess what, I'm not goning to hire anyone. I'll have to resort to nepotism, because I'll have to hire people I can trust if I cant contractually bind them. These non-compete agreements are mutually agreed to by the employee and employer. Nobody has a gun to the employees head forcing them to sign. If they dont like it, find a job elsewhere. But if you do sign it, then you have agreed to abide by that legal obligation. If you didnt read it before signing it, thats just stupid on your part. The comments seem to be a little one sided. Non competes do serve a purpose. Is it fair for a company to spend money and time to train an employee and grant that employee access to proprietary information only for that employee to turn around and use that as leverage to get another job? The article mentions the chill effect on employee mobility, but what about the chill that will result if non-competes cant be enforced. Guess what, I'm not goning to hire anyone. I'll have to resort to nepotism, because I'll have to hire people I can trust if I cant contractually bind them. These non-compete agreements are mutually agreed to by the employee and employer. Nobody has a gun to the employees head forcing them to sign. If they dont like it, find a job elsewhere. But if you do sign it, then you have agreed to abide by that legal obligation. If you didnt read it before signing it, thats just stupid on your part.

]]> By: Paul, Baltimore http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-2029 Paul, Baltimore Wed, 28 Oct 2009 17:34:43 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-2029 The potential future can't be sued for simply hiring someone. A potential future employer could be sued for making use of proprietary information, however. This is most common in sales, where a salesperson brings customer contact lists and such with them, or in engineering/software development, where design information with them to a new employer. A new employer who knowingly makes use of such information puts themselves at risk. The potential future can't be sued for simply hiring someone.

A potential future employer could be sued for making use of proprietary information, however.

This is most common in sales, where a salesperson brings customer contact lists and such with them, or in engineering/software development, where design information with them to a new employer. A new employer who knowingly makes use of such information puts themselves at risk.

]]> By: John Toradze http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1992 John Toradze Thu, 08 Oct 2009 16:07:25 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1992 That lawsuit against the employee is rubbish. A counter-suit is in order for harassment and abuse of process. The station was trying to stop the reporter from practicing her profession. That lawsuit against the employee is rubbish. A counter-suit is in order for harassment and abuse of process. The station was trying to stop the reporter from practicing her profession.

]]> By: John Toradze http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1991 John Toradze Thu, 08 Oct 2009 15:58:35 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1991 Absolutely not Billy. Since your employer broke the employment contract with you by not paying you, an employment contract you signed with them is voided by the employer's failure to fulfill it. Furthermore, since the non-compete is a "nasty one" it is almost certainly unenforceable on its face, since it prevents you from practicing in your profession. Absolutely not Billy. Since your employer broke the employment contract with you by not paying you, an employment contract you signed with them is voided by the employer's failure to fulfill it. Furthermore, since the non-compete is a "nasty one" it is almost certainly unenforceable on its face, since it prevents you from practicing in your profession.

]]> By: Billy, Orlando FL http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1956 Billy, Orlando FL Thu, 27 Aug 2009 04:13:15 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1956 I had to quit my job because my employer missed payroll on a regular basis. We were notified that we were not getting paid until payday. After we left, our employer started to threaten us to sue us if we break the non-compete which it turned out to be a very nasty one. Can one consider the non-compete invalid since the employer broke the employment contract by not paying us on time to begin with? I had to quit my job because my employer missed payroll on a regular basis. We were notified that we were not getting paid until payday. After we left, our employer started to threaten us to sue us if we break the non-compete which it turned out to be a very nasty one. Can one consider the non-compete invalid since the employer broke the employment contract by not paying us on time to begin with?

]]> By: Keith, Raleigh NC http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1826 Keith, Raleigh NC Wed, 03 Jun 2009 17:08:29 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1826 Your argument becomes stronger if your new job would be your sole means of support -- that is you were unemployed or about to be laid off. What about talking to your employer about your job and try to improve your current situation, maybe even renegotiate your noncompete agreement? Is the only reason you want a new job is become of this agreement? If so, I think that it would make it harder for you to win in court. Your argument becomes stronger if your new job would be your sole means of support — that is you were unemployed or about to be laid off. What about talking to your employer about your job and try to improve your current situation, maybe even renegotiate your noncompete agreement? Is the only reason you want a new job is become of this agreement? If so, I think that it would make it harder for you to win in court.

]]> By: Daniel, Middletown, NJ http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1798 Daniel, Middletown, NJ Wed, 27 May 2009 01:23:06 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1798 Some have commented that 'poaching' former fellow employees can be protected by a 'non-compete' agreement. Again, utter nonsense. That is a constitutional right to free speech violation. Can't be enforced in a US State. Some have commented that 'poaching' former fellow employees can be protected by a 'non-compete' agreement. Again, utter nonsense. That is a constitutional right to free speech violation. Can't be enforced in a US State.

]]> By: Daniel, Middletown, NJ http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1797 Daniel, Middletown, NJ Wed, 27 May 2009 01:09:54 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1797 Non-compete 'agreements' really go against the grain of America's founding. Essentially, you are attempting to accomplish a 'restraint of trade' upon an individual. Who is a company to tell someone that they cannot practice their craft? That is simply nonsense. I have been in the IT field for almost two decades and during that time have consulted several attorneys in multiple states and they have all told me the same basic thing. Unless you are taking a 'client list', a piece of physical or intellectual property, or attempting some form of patent/copyright infringement a 'non-compete' is basically un-enforceable in a US state. Non-compete 'agreements' really go against the grain of America's founding. Essentially, you are attempting to accomplish a 'restraint of trade' upon an individual. Who is a company to tell someone that they cannot practice their craft? That is simply nonsense. I have been in the IT field for almost two decades and during that time have consulted several attorneys in multiple states and they have all told me the same basic thing. Unless you are taking a 'client list', a piece of physical or intellectual property, or attempting some form of patent/copyright infringement a 'non-compete' is basically un-enforceable in a US state.

]]> By: Eric, Tampa, FL http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1796 Eric, Tampa, FL Tue, 26 May 2009 23:26:32 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1796 I have signed many noncompete agreements and every time the employer has tried to enforce them I just say "Go for it" and that usually ends it. I flat out told my last employer that if they wanted to lay me off then I would be starting my own gig and that all customers were fair game. Things are going pretty good. Even if the previous employer tried to enforce it there is really not much they can do about it. They can sue but when it comes down to it, it's their word against your word. He said, she said and unless they have physical proof that you are biting into their business they haven’t much of a case. You only need a lawyer if a case against you can be proven. I have signed many noncompete agreements and every time the employer has tried to enforce them I just say "Go for it" and that usually ends it. I flat out told my last employer that if they wanted to lay me off then I would be starting my own gig and that all customers were fair game. Things are going pretty good. Even if the previous employer tried to enforce it there is really not much they can do about it. They can sue but when it comes down to it, it's their word against your word. He said, she said and unless they have physical proof that you are biting into their business they haven’t much of a case. You only need a lawyer if a case against you can be proven.

]]> By: Charles Noonan http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1747 Charles Noonan Tue, 05 May 2009 02:14:02 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1747 If you get laid off your noncompete should be discarded. If you leave on your own, it should be enforced. If you get laid off your noncompete should be discarded. If you leave on your own, it should be enforced.

]]> By: Srini, Boston, MA http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1733 Srini, Boston, MA Wed, 29 Apr 2009 18:53:23 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1733 Though non compete agreements seem innocuous, it is best to get it reviewed by a lawyer prior to signing. Trust me it is worth the few hundred bucks. Some of the legalese terms that are used may be too restrictive Though non compete agreements seem innocuous, it is best to get it reviewed by a lawyer prior to signing. Trust me it is worth the few hundred bucks. Some of the legalese terms that are used may be too restrictive

]]> By: JH, New York, NY http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1730 JH, New York, NY Wed, 29 Apr 2009 15:31:24 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1730 We run a <a href="http://www.hotdigital.net" rel="nofollow">web design company in new york</a> and have encountered this situation many times in the past. The most that can be reasonably protected or enforced is sales/marketing to existing customers, soliciting employees to change companies, working for a competitor in the same city, or advertising in the same print publication or to the same mailing list. We've found that judges will not enforce unreasonable agreements that attempt to prevent someone from continuing their profession or career. We run a web design company in new york and have encountered this situation many times in the past. The most that can be reasonably protected or enforced is sales/marketing to existing customers, soliciting employees to change companies, working for a competitor in the same city, or advertising in the same print publication or to the same mailing list. We've found that judges will not enforce unreasonable agreements that attempt to prevent someone from continuing their profession or career.

]]> By: Ralph, Phillipsburg NJ http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1721 Ralph, Phillipsburg NJ Sat, 25 Apr 2009 00:35:20 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1721 most non competes are only valid if they keep you. From my understanding, if they fire you, then they break the contract... if you quit, well then you are screwed... for lack of a better term. But you did say leaving- so it sounds like you quit, or are going to, but just look for ways that they did not obligate their end of the deal. most non competes are only valid if they keep you. From my understanding, if they fire you, then they break the contract… if you quit, well then you are screwed… for lack of a better term. But you did say leaving- so it sounds like you quit, or are going to, but just look for ways that they did not obligate their end of the deal.

]]> By: Andy Arnold, Greenville, SC http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1713 Andy Arnold, Greenville, SC Tue, 21 Apr 2009 16:24:44 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1713 First, remember that each state is a bit different. Second, the primary problem with non-competes is that even if they will not be enforced, threatened enforcement and litigation expenses is enough to keep a company from hiring a new employee. Third, preventing employees from pursuing their greatest worth hurt everyone. Andy Arnold <a> First, remember that each state is a bit different. Second, the primary problem with non-competes is that even if they will not be enforced, threatened enforcement and litigation expenses is enough to keep a company from hiring a new employee. Third, preventing employees from pursuing their greatest worth hurt everyone.

Andy Arnold

]]> By: sugar land, Tx http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1703 sugar land, Tx Sun, 19 Apr 2009 04:19:21 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1703 The distance of the non compete area has to be reasonable say like a 100 miles other wise they are trying to make you stop making a living which is against the law.Also you cannot solicit the customers of the party you contracted with. The distance of the non compete area has to be reasonable say like a 100 miles other wise they are trying to make you stop making a living which is against the law.Also you cannot solicit the customers of the party you contracted with.

]]> By: Edward McHampton, Boston MA http://smallbusiness.blogs.cnnmoney.cnn.com/2009/04/08/i-signed-a-noncompete-but-now-i-want-a-new-job/#comment-1692 Edward McHampton, Boston MA Sat, 11 Apr 2009 23:34:11 +0000 http://askfsb.blogs.fsb.cnn.com/?p=1003#comment-1692 A minimum of 50% of your total compensation should be paid for consideration by your former employer for the duration of the non compete. A minimum of 50% of your total compensation should be paid for consideration by your former employer for the duration of the non compete.

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