Sorry, but I am an absolutist on this.
Businesses are giving you a line of BS. There is adequate protection for their legitimate interests in trade secret and other intellectual property law, and in allowing non-poaching agreements, which are very legit. But limiting the livelihood of an employee — their ability to use the generic knowledge and skill about a field, skates perilously close to — sorry to say it — involuntary servitude — yes, that is slavery.
I just went through an intensive exercise in this with an employer, and I found that all his legitimate points were covered by intellectual property law backed up by specific agreement and non-poaching (I can’t take your customers with me) agreements. In the end, I gave in with a very limited business-non-compete, that is, I agreed not to set up an actual business, with advertising, that competed with him for one year (he wanted two). But I would not agree not to sign on as an employee with a competitor or to ply the knowledge he thought he was giving me — but actually wasn’t, it was actually more skill than knowledge — by word of mouth, without advertising.
Bottom line — employees do not compete, businesses do! Any remedies in law should express that principle. Limiting a person’s right to employment of her or his choice blatantly violates it.
So, what’s wrong with the California approach — except of course that you’ll have lots of businesses mad at at you. But frankly, the current system leads to many serious problems for employees who are not 1/100 as well organized as corporations. The case you cite is but one example.
California has a great idea here — let’s get as close as possible to that ideal!
David, thank you for your support for change!
I’ve been working on this for over four years now and I have a sense of the strength of the opposition. But I am hopeful we can make progress!
I hope I have helped with my points about the sufficiency of non-poaching and intellectual property agreements, along with legitimate *business* non-compete agreements for true principals. If logic and reason matter at all in this fight — I hope they do, but am skeptical — then these are at the core of the argument.
As I said, in my recent situation with an employer demanding a very unreasonable non-compete, I was driven to analyze things very carefully and thoroughly, and I concluded what I said above — given the other points, the case for a non-principal non-compete agreement pretty much falls apart.
In practical terms, you ask the employer (or businessperson lobbying you) what specifically they are trying to protect against. I guarantee that their answers will either fall into one of the above categories, OR it will amount to — I trained that guy, no way is he going to use his skill and general knowledge (not specific knowledge — that is covered by intellectual property) to help a competitor. If they respond that it’s just too hard to enforce intellectual property laws, then point out that it happens all the time, and that is no excuse for depriving a person of their livelihood. You can also ask if they themselves have ever hired anyone already knowledgeable in their field, that is, trained by others, and of course they have.
Non-poaching agreements are absolutely *not* legitimate. Non-compete agreements attempt to rob me of my skills, and the value they deliver to me and to the economy at large. Non-poaching agreements attempt to rob me of my social connections, and the value they deliver to me and to the economy. Both kinds of restrictions lessen my value as an employee, and harm the economy as a result. Good people are not islands: they work with other good people, on strong teams.
But we should at least get ourselves out of the stone age first. Thank you for working so hard on this.
I guess I have to disagree about non-poaching agreements. A company’s client and lead list represents tangible value to them apart from value to any one person. They have sunk a lot of money into such lists, and a sales-oriented business often has little or no tangible value beyond their customers and leads.
Though many of the same things could be said of the skills and knowledge that employees acquire on the job, I think that lead and customer lists are more akin to specific intellectual property rather than general skill. After all, a salesman also gains skill and knowledge on the job, and those are the subject of non-competes (which we agree are not legit). But taking a specific customer or lead is more like taking a product design or patentable/copyrightable technique that truly belongs to the company and not to the individuals who developed them using company time and resources.
As for the social connections, I do not think it is legit to bar you from *social* contact with a customer or lead. But that’s clearly distinguishable from dealing with them as an actual or potential customer for a competing business.
I realize the line here can be difficult to draw cleanly, but I still think non-poaching agreements are a legit and important form of protection for businesses.
Interestingly I was once presented a non-everything clause that included my potential employer’s *suppliers* as well as customers. I was fine with the customers, but I balked at suppliers and refused to sign. The CEO was taken aback — I was the first ever to object — but he recovered and ultimately saw the point — and had the whole agreement revamped.
My $000.02. –David
I don’t know anything about sales organizations. Stealing a rolodex sounds like an IP issue. For creative workers non-poaching agreements are used to keep former employees from recruiting other employees out of the organization: almost certainly the very same employees they helped recruit into that organization in the first place.
We don’t have lifetime employment anymore. Creatives jump from job to job as projects arise. That’s reality. Creative workers work best in teams of people they know and trust. When good people move, teams will want to move with them. Allowing that will make the best use of our workforce, and will generate the most value for the economy. Companies want to implement a “you can check in, but you can never check out” policy where they use their employees’ connections to build their organization, and then try to claim ownership of those connections after the fact. They should have to compete to retain those employees, instead of hiding behind a veil of lawyers.
That kind of non-poaching — non-recruiting, really — is indeed a tricky issue. IMHO, it is not generally a justifiable restriction on employees. As part of a *business* non-compete agreement for *principals* however, there is a case for it. In any case, non-recruiting can and should be handled by separate agreement for employees, if at all. It is not an excuse for a blanket employee non-compete, which should really be called non-work.
This is really the theme of my whole approach to this — legitimate issues can be handled by specific agreement and should not be used to justify draconian agreements that limit an employee’s right to work in their field.
As for customer and lead non-poaching, it’s similar to but not exactly the same as IP. For example, the customer or lead might initiate contact with the former salesman (or former anyone really). It does get tricky when, for example, your customer wants to move to a competitor that had hired a salesman away from your business, but they do so without any contact, direct or indirect, with your former salesman. But that can be litigated, if necessary, and there is plenty of legal machinery for that. Again — separate agreement, not blanket non-compete.
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