Let's Talk No Compete Agreements

[Big A]

The only time I saw one stick was with a former co-worker that went to a direct competitor/part time vendor. When he left, he printed out usage, sales, margins, and everything else that would give him a competitive sales edge. The original company lost large amounts of sales (one account was good for $200k/month), because he was able to go into customer accounts and slash prices. What caused the greater issue, is that the company took the info and used it for competitive advantage.

There was a settlement, due largely to the fact that the non-compete had expired by the time it reached court.

I would hope that something like that would stick, that is the exact scenario that non-compete agreements are for.

[Roscoe]

The only time I saw one stick was with a former co-worker that went to a direct competitor/part time vendor. When he left, he printed out usage, sales, margins, and everything else that would give him a competitive sales edge. The original company lost large amounts of sales (one account was good for $200k/month), because he was able to go into customer accounts and slash prices. What caused the greater issue, is that the company took the info and used it for competitive advantage.

There was a settlement, due largely to the fact that the non-compete had expired by the time it reached court.

That's fucked up - what the former coworker did.

I haven't shared any information, even when asked by a few. I will say that now when 12mo is up, all bets are off.

[MustangPoser]

In Texas, I'm fairly certain an NCA will only have merit if you are poaching old clients.

Guesstimates:

• Over 1 Year is unreasonable without just cause
• Your safe outside your existing sales area
• Your employer must have given you confidential information they have an interest in protecting (product formula, client list, etc)
• Is this your trade? Before the company hired you, were you already working in the field? If you have been an electrician for 10 years prior to being hired, they CANNOT tell you not to seek work as an electrician.
• Also, say you worked for a company like DuPont selling commercial bonders, you should be only limited from that product, not EVERY product they sell.

Even if your non-compete is too broad, the terms can be amended by the court and you could still be in violation, so use common sense. The main point is that your non-compete cannot protect a company from YOUR LOSS, only protect their confidential information. If your non-compete is ONLY to prevent you from leaving and going to a competitor, it's nill.

[Bassics]

Non competition agreements are not the same as non disclosure and non solicitation agreements. I don't think you would find any competent company attempting to combine all of them into one.

Right to work laws are simply an extension of the Taft-Hartley act. They have nothing to do with non-competition agreements.

If you are asked to sign anything you should note that there will likely be language dictating what court system will be used for disputes. It is usually where the corporation is located on paper, not physically; Delaware is very popular in the banking industry for instance. How are you going to fight something in Delaware that is likely going to get rubber stamped and served with a judgement before you can even react?

I have seen two examples of non-competes succesfully enforced in Texas, in Marketing and in Manufacturing/Wholesale. Neither case was warren buffet style money, but they were definitely above the choochoolios who do their investment banking with an ATM card and lotto tickets.

[Vertnut]

That's fucked up - what the former coworker did.

I haven't shared any information, even when asked by a few. I will say that now when 12mo is up, all bets are off.

Whatever happened with this? Any update, Roscoe?

[Roscoe]

Whatever happened with this? Any update, Roscoe?

As of two weeks ago, my employment atty is working with their atty to find out exactly what they want. I don't think we are willing to give up anything, but no news is good news, I suspect.

The longer we drag it out, the quicker we'll be at 12mo.

[bcoop]

This problem has come back. We have a company wide meeting on the 11th. Some new programs and opportunities are being rolled out. They are trying to force everyone to sign a no compete now, and a non disclosure. And I mean everyone. Customer service, sales team, warehouse labor, etc. I have to admit, I think the whole situation is pretty funny.


I'll walk away from it all before I sign anything. That seems to be the consensus of everyone there who generates revenue. Will be interesting to see how this all plays out.

[ceyko]

I'll walk away from it all before I sign anything. That seems to be the consensus of everyone there who generates revenue. Will be interesting to see how this all plays out.

I won't lie, one time after a merger I just filled out everything else and did not sign the non-compete stuff. Problem just went away.

Sometimes, the ostrich approach works well.

Unfortunately, the next merger I was 1 of 4 employees under a new umbrella - so that approach worked terribly.

[bcoop]

I won't lie, one time after a merger I just filled out everything else and did not sign the non-compete stuff. Problem just went away.

Sometimes, the ostrich approach works well.

Unfortunately, the next merger I was 1 of 4 employees under a new umbrella - so that approach worked terribly.

When I made the original post about my buddy, that's exactly what he ended up doing. He told the CEO that he had issues with this, the way it was written, and that he would not sign it unless changes were made. CEO said they would get it revised, but he forgot and the problem went away. Until yesterday, anyways. Our CEO can't figure out why anyone would not want to sign it. I know of 5 other sales people who refuse to sign. There are 3 more I have not yet talked to, but it's looking pretty bad for the company if push were to come to shove.

[Baron Von Crowder]

You know, I havent gotten one to sign since I changed offices. We used to have to sign one every year, and I assume that we still do, but I try to lay low and not ruffle any feathers, so I tend to get forgotten frequently.

[ceyko]

When I made the original post about my buddy, that's exactly what he ended up doing. He told the CEO that he had issues with this, the way it was written, and that he would not sign it unless changes were made. CEO said they would get it revised, but he forgot and the problem went away. Until yesterday, anyways. Our CEO can't figure out why anyone would not want to sign it. I know of 5 other sales people who refuse to sign. There are 3 more I have not yet talked to, but it's looking pretty bad for the company if push were to come to shove.

Yup, even if half buckle - it's still probably a decent hit.

Ours are not that bad and it has been proven over and over again that they do not try to enforce it. There are companies out there that DO try to enforce theirs and they don't get the better talent either.

They can be written to protect the company, but not screw the employee. If you take off and try to steal all their business - you kind of deserve to be hammered. If you take off and do something else - you deserve to be left alone.

[Roscoe]

This problem has come back. We have a company wide meeting on the 11th. Some new programs and opportunities are being rolled out. They are trying to force everyone to sign a no compete now, and a non disclosure. And I mean everyone. Customer service, sales team, warehouse labor, etc. I have to admit, I think the whole situation is pretty funny.


I'll walk away from it all before I sign anything. That seems to be the consensus of everyone there who generates revenue. Will be interesting to see how this all plays out.

I've heard of that happening many times...... right before the company was acquired. Don't know of the probability, but if that's the case, something big is going to happen to/for the company.

[bcoop]

I've heard of that happening many times...... right before the company was acquired. Don't know of the probability, but if that's the case, something big is going to happen to/for the company.

We are amidst a takeover, but current employees are buying out the current partners. We have three partners. The first is retiring on 12/31. The second to follow in one year, the third is probably 3-5 years from retiring. There are currently two minority partners, and I'm the third, though my deal is not in place yet (Dec/Jan is when it's supposed to happen). So yes, the company is being sold, but not to outsiders. There are some other big things happening, which is why he wants this non compete signed. But no chance of an outside takeover.

[talisman]

Good luck with everything Brent. Sounds like you'll be rolling in the cowskin rugs in no time.

[ceyko]

I hate buyouts, mergers, acquisitions and any other term you want to use.