Employment Attorney Recs? Re non compete agreements

[slow99]

Word came down that the new gig will be making us sign non compete agreements in the next couple of weeks. None of us on the investments team knew about this coming in. We are launching a hedge fund in a couple of months and that's why they're bringing them. If it's a year or 2 after I leave before I can work for a competitor there's no way I can sign that. We are not in sales; we are investment analysts. I have no doubt the CEO will tell us to pound sand if we don't sign it. Any recommendations for an attorney are appreciated.

[Broncojohnny]

I would be asking what i get. There better be a nice check involved.

[bcoop]

I don't have a recommendation on a good employment attorney, but... We just went through this. I was told three conditions have to be met.
1. You have to get something in return.
2. There has to be reasonable geographical restrictions.
3. There has to be a reasonable time limit.

They used to almost never hold up in court in TX. Now, it's harder to fight if those conditions are met. I would assume a good attorney could argue that a 2 year NC is unreasonable. And to point #1, "on the job training" could be argued by the employer as the compensation for signing it. Good luck man. Now that the laws have changed, this is becoming increasingly common. I'm kind of surprised you've been hired in positions in that field without one.

[Strychnine]

I would be asking what i get. There better be a nice check involved.

That would make the agreement much more sticky if he wanted to leave.



While I know your situation is not a direct comparison, we went through this with some contractors. Due to some workers basically using my wife and her business as a learning tool then striking out on their own (generally not being successful), I had some talks with our attorney about non-competes and things.

What I got out of it was that they are generally a pain in the ass for the employer, especially if there is no incentive - and they will have to prove that you caused them a loss of revenue.

For many years, the courts required that non-compete agreements be ancillary to an agreement that was enforceable at the time the agreement was made. Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642, 644-45 (Tex. 1994). This requirement made it extremely difficult to draft an enforceable non-compete agreement because most employment relationships in Texas are "at-will," and in an "at-will" relationship the employer can avoid its obligations by simply terminating employment. Thus, the courts reasoned, the employer failed the first prong of the "ancillary" test because it was not really giving anything in exchange for the employee's promise not to compete.

Non-competition agreements became much easier to draft and enforce with the 2006 case of Alex Sheshunoff Management Services, L.P. v. Kenneth Johnson and Strunk & Associates. There, the Texas Supreme Court held that an employer's future promise could form an "otherwise enforceable agreement" so long as the employer actually makes good on the promise. Just three years later, the Texas Supreme Court expanded the law again in Mann Frankfort v. Fielding, holding that the consideration need not even be explicitly promised, so long as it could be inferred given the nature of the employment. In 2011, the Supreme Court relaxed the standard even further when it held in Marsh USA Inc. v. Cook that stock options given to the employee in exchange for a non-competition agreement were reasonably related to the employer's interest in protecting its goodwill. Prior to Marsh, most lawyers believed that money or other financial incentives would never support a noncompete.

Even now, however, the consideration given by the Promisee must still "give rise to" the Promisee's interest in restraining the Promisor. Basically, this means that the Promisor has to receive something that would give him a competitive advantage compared to the Promisee's general competitors. For example, when the Promisee agrees to give the Promisor access to trade secrets or other confidential information, he has a legitimate interest in ensuring that information is not disclosed to a competitor. However, if all the Promisee gives up is information that is available from other sources, or a promise to provide a particular notice of termination, or even cash, the covenant will likely fail this test because none of these things give the Promisee any competitive advantage.

We ended up adding a non-compete into the employment contracts, but I honestly believe it is more of a scare tactic to keep them honest.


Here's another kicker in your favor:

A great deal is at stake for both parties to a non-compete agreement. In the case of an employer or the buyer of a business, the economic viability of the enterprise may depend on its ability to prevent someone from using "inside" knowledge against it. On the other hand, the agreement limits the ability of the employee or business seller to make a living. These weighty considerations play out against a backdrop of laws that have been substantially revised over the years, and that have not been uniformly applied. This is one area where using an outdated form, or one from another state, could have disastrous consequences. To make matters worse, these agreements are often drafted as an afterthought, and presented to an unsuspecting employee with some sort of "sign it or take a hike" ultimatum. In our estimation, if the agreement is worth doing it is worth doing right.

(these quotes are not from our attorney, but from another site with the same sentiments http://www.robertslegalfirm.com/busnoncomp.html )

[Big A]

I'd read the agreement before getting too concerned, hopefully the terms are completely reasonable, and fair to both sides.

Being that Texas is a right to work state, I don't know that you really have an option, don't sign and they don't have to keep you employed. Perhaps I'm wrong on that though.

[GE]

Being that Texas is a right to work state, I don't know that you really have an option, don't sign and they don't have to keep you employed. Perhaps I'm wrong on that though.

I don't think this means what you think it means.

[Broncojohnny]

If you read what is out on the net about them, texas agreements depend on you getting some secret knowledge of the business that offers a competitive advantage in order to be binding. Accepting cash to sign the agreement or just having a job somewhere doesn't meet that requirement. I would have no problem signing one as long as i got a sizeable amount of cash for it.

[kingjason]

Maybe, PM sent.

[BradM]

If you read what is out on the net about them, texas agreements depend on you getting some secret knowledge of the business that offers a competitive advantage in order to be binding. Accepting cash to sign the agreement or just having a job somewhere doesn't meet that requirement. I would have no problem signing one as long as i got a sizeable amount of cash for it.

I agree, 2/300 bucks and I'm golden.

[BP]

My employer has a 9 month/75 mile radius non compete clause. It used to be 2 years/150 miles and it wasn't enforceable.

[Broncojohnny]

I agree, 2/300 bucks and I'm golden.

I was thinking more around 100K lol

[slow99]

I was thinking more around 100K lol

I'm thinking the number should be my market rate of wages over the lockup period. Regardless, I won't sign a year, just cannot do that. Thanks for the input and the pm guys.

[Roscoe]

I'm in sales, so I'm used to dealing with them during company changes....

The last employer actually came after me and my current employer, however the lawyers behind the scenes settled it - which was my current company telling them to piss off.

Problem with non-competes is they are always overbearing and will not allow you to "earn a living" - be it too broad of a territory (in the US), too long (over a year, one year is standard), or too limited to field ("For anyone in the financial industry").

None of those are enforcable, but it doesn't prevent them from coming after you - if you let them know where you went... My downfall was updating LinkedIn after 6mo which is what gave them the proof they wanted. Guess they weren't looking to hard.

On the other hand, if you are privy to their "trade secrets" that would give you a competitive advantage or place their intellectual property or confidential information at risk (typically higher level corporate officer is viewed by the courts), I wouldn't worry too much about it either.

[GeorgeG.]

I actually brought this up with our HR rep and she said what while you may be "forced" to sign, they don't actually hold up in court. Something about how an employer doesn't have the right to prevent you from making a living.

edit** ha, or what Roscoe said.

[BradM]

I was thinking more around 100K lol

Do you know how many ramen noodles you can buy for $100.00?!