Should I violate this non-compete agreement?

January 17, 2006 6:07 PM

Should I violate this non-compete agreement? If I do, what's the worst that could happen?

Here's the situation:
I was offered two part-time jobs. Job A is working remotely from my home computer for The Widget Factory providing a service for Widget-A. Job B is working locally for a company that makes Widget-B Guidebooks. Widget-A and -B are not related except that they are made by the same company. The Wiget Factory wants to me to sign an agreement stating that I will not have any other work involving Widgets, including making guidebooks.

On the one hand, I have some quick google research showing that these agreements would not be enforceable in my state, but within limits.

On the other hand, I'm having an ethical dilemma. I have to sign it to get hired by Job A, and I like to think that my word is worth something.

On the other hand, I'll have no access to any information about Widget-B (which is truly the company's cash cow), and Job B does not make any books about Widget-A. I can do absolutely no damage.

Any ideas, suggestions, experiences.

Apologies if my lame attempts to veil the companies and products is overly confusing!

posted by lalalana to work & money (20 comments total)

I think that once you state you have an ethical dilemma the answer is clear. You might also consider that a future prospective employer might Google you, find this post, and discover that you have an ethical dilemma involving your ability to adhere to a non-compete agreement.

If you prefer job A, take it and keep your word. If you prefer job B, or it doesn't matter, take job B and then ask A if they will allow you to work there without signing the non-compete, or offer your own that's compatible with what you want to do and see if they accept it. You may even be able to explain the situation to them and resolve the issue.
posted by ldenneau at 6:23 PM on January 17, 2006

I think The Widget Factory is concerned about the potential for such a situation to become awkward, were you to be caught in some way between the demands of the two jobs. The fact of the matter may be that you "can do absolutely no damage", but I can still accept the Factory's position on this, and it may be more broad-sighted than we think.

That said, the law is the law - IANAL, so I can only pose a question: can The Widget Factory legally make an employment candidate waive their right to work for any company producing products ancillary to The Widget Factory's products?; can they ethically do so? It seems like a very restrictive request, but if the Factory is within reason to make it, it may be the cost of the Widget-A job.

If you do agree to the arrangement and sign a contract specifically containing provisions for the arrangement, then I'd suggest you keep your end. I'm sure the Factory could justify quite a lot of prejudice in termination proceedings if things turned out that way.
posted by chudmonkey at 6:23 PM on January 17, 2006

How long do you think your Widget A job would last once they'd found out you'd lied to them and dishonoured an agreement? Enforceable or not, you're not going to remain employed with them past the point when they find out.

Then there's that whole honour thing.
posted by jacquilynne at 6:25 PM on January 17, 2006

If you just do both, regardless of the noncompete, the penalties range from termination (even long after the breach) to the company seeking damages in court. Without any idea of what these products are, we could give you no idea of how much the damages would be. However, just the cost of hiring a lawyer would be expensive.

Given that these are made by the SAME COMPANY, you would be foolish to think that they would never find out.

However, if these two positions are truly not incompatible, the company might be open to negotiating a provision that allows you to do both. If you approach the situation honestly and professionally, the company will not only respect you for it, they might even let you do it. At the worst, they won't let you but they'll have a concrete example of you making the right ethical decision.
posted by MrZero at 6:29 PM on January 17, 2006

Yes your explanation is very confusing.

What service are you providing to Job A? Are job A and B the same company? Are they resellers of the widget?

If it's the same widget but 2 different companies...hmm

Does job A involve making widget guidebooks? in other words, does company B compete with company A? If they're both making widget guidebooks, then that's the whole point of the non-compete agreement, you don't help company B thru X if they provide the same product or service as company A.

I guess it really depends on what job A is.
Although I suppose you can do both if there's no chance of either finding out...then that just depends on your ethics/morals.

Or you could look at it yet another way...you could work for each one of them as an idependent contractor or consultant, produce the same guidebooks and sell it to them both.
posted by eatcake at 6:31 PM on January 17, 2006

Yeah, my basic feeling is that if I'm having this much turmoil, it's best not to even bother with the deceit. So many friends seem to think I'm crazy, as both are short-term pre-grad school drone work. Still...

To answer eatcake's questions:
At Job A, I'd be reviewing consumer-generated documents that relate to Widget A. They are not the same company, and no one resells the Widget. Job A does not relate to guidebooks. Job B does not compete, but make supplementary products. The point of the non-compete is so that I don't leak info to Job B about Widget B.
posted by lalalana at 6:41 PM on January 17, 2006

How are your relations with the folks inside Widget Factory?

If they are reasonably friendly, you should ask them if they could narrow the language. Or you could say "Look, I'm going to mark up this agreement. Let me know what you think." Then write your own language to let you do what you want. The worst thing they would do is say "no, we like our original language, please use that."

Whenever you are given an agreement to sign, you can mark up language that you don't like. Maybe it'll fly, maybe it won't, but it's worth trying. I've marked up NDAs without receiving flack.
posted by adamrice at 6:45 PM on January 17, 2006

If I were you (and please note, I know very little about job/professional etiquette) I would tell company A that company B has also offered me a job, and vice-versa. I would try to use that as leverage to get a full-time job at one of the companies.

Alternatively, you could explain the situation to each company, innocently asking if this violates the non-compete agreement. Explain why you don't think it does, and maybe they will agree.
posted by elisabeth r at 6:49 PM on January 17, 2006

there's no reason to companies can't go to/hire the same person or company for similar type of work in the same industry.

I would second elisabeth r's suggestion. Tell A that you got an offer from B. Is that the competition. Do they have an objection to you working with them also? Can you do both without leaking information? etc...

Are you interested in the job(s) for the experience or the paycheck? or both?
posted by eatcake at 7:07 PM on January 17, 2006

I'm not sure what state you live in, but most states have bar associations that offer a very cheap one-time consultation with a lawyer in a field relevant to your question. I suggest doing a search on "[your state] bar association" and check it out. I used this service in California and it was great.

And I echo MrZero's comment: Getting sued (regardless of whether you've broken the law) is very expensive. And if you sign, your company can certainly try to sue you. If you prevail in court, you still have a hefty legal bill to pay.
posted by lilybeane at 7:16 PM on January 17, 2006

You shouldn't sign a contract you don't intend to honour. But most non-competes are generic lawyer fueled crap that no one, including the employer, takes too seriously. If you're a contractor I suggest you talk it over with them and see if you can get it in writing that what you want to do is OK.
posted by Nelson at 7:46 PM on January 17, 2006

Ya... The correct answer is to act in good faith, and let the legal technicalities take care of themselves, if it ever comes to that.

In this case that means telling them what you plan on doing, and asking them if that will be a problem. If it is a problem you have something to negotiate... If they just dump you like a hot potato, they probably aren't worth your time anyway. If they bother to negotiate at all you know you have a lot of leverage - they wouldn't invest that much time if it wasn't important to them - so be professional, but don't let them push you around.

I guess that is pretty much a rephrasing of elizabeth r and eatcake.

I don't think you should alter the agreement without stating your intentions. That would look like you are hiding something important, and that would be unprofessional.
posted by Chuckles at 8:01 PM on January 17, 2006

Notes from my Business Law class: (obligatory IANAL, duh)

Clauses Not To Compete (CNTCs): Courts don’t like them, but they will enforce them, under certain strict conditions.

Courts will enforce when they are reasonable within time and scope ... including ... [applicable to this question] ancillary to employment at a high level. Even if courts can't enforce entirely, they will try to reform the agreement so it is enforcable.

-What is "employment at a high level?" That means a CNTC is probably unenforcable if you are flipping burgers at McDonalds then go flip burgers at Burger King. But a real example is of an OBGYN in Austin that signed a CNTC for 2 years w/i 25 miles of previous job, and had to move when she quit. The worst thing is when you get fired and you can’t compete.

Sounds like trouble.
posted by fourstar at 8:25 PM on January 17, 2006

Enforceable or not, companies can and often do sue employees who violate non-competes. If you feel you're in an ethical pinch, that should tell you something right there.

Suggestion 1: take the best job first, then ask for permission to work part-time at the other job, explaining the precarious widget situation.

Suggestion 2: accept job offer B, which doesn't have an associated non-compete; then accept job offer A contingent on employer A acknowledging and writing a memo of understanding stating a non-compete exception for your work on job B.
posted by mumeishi at 9:43 PM on January 17, 2006

I'm with adamrice: tell them that the non-compete isn't OK as it stands, and if you can, offer them a marked-up version that wouldn't preclude doing what you want to do. All contracts are negotiable. If company A insists on the noncompete, then you have to choose between jobs A and B. But in my experience, prospective employers are usually willing to negotiate at least a little. The contracts they give you are the worst-case boilerplate they got from their lawyers.

The fact that you're acting in good faith here suggests that an acceptable and above-board compromise should exist. After all, you're working part-time, so they shouldn't have a claim on 100% of your working time. But sometimes companies are just plain unreasonable. In which case, I'd say, take the job from the more reasonable company.

Re enforceability, lots of non-competes are totally over-the-top. I once signed one saying I wouldn't work for any company in the same broadly-defined industry for a full year after leaving the job. (I was young and foolish.) That's the kind of thing that doesn't get upheld in court. The agreement you describe seems a bit more reasonable.
posted by hattifattener at 1:17 AM on January 18, 2006

Company B will probably have the same non-compete clause in their contract - it's standard boilerplate that any lawyer worth his salt will put in.

I suggest simply explaining things to whoever's hiring you. Every employer I've ever bought this up with has said "yup, no problem, we don't really care". If they say no... well, they're probably too bureaucratic to work for anyway.
posted by Leon at 3:34 AM on January 18, 2006

Yup, non-compete is standard fare for full-time jobs, but less so for part-time work, where it varies more.
posted by mumeishi at 5:21 AM on January 18, 2006

They also like to think that your word is something, but since it isn't they make you sign a contract. Do not enter into a contract if you cannot or will not live by the terms.
posted by JamesMessick at 2:02 PM on January 18, 2006

Well, it seems that one job at decided to offer me fulltime employment, so problem solved!
posted by lalalana at 9:24 AM on January 19, 2006

Good to hear, congratulations!

I assume that the change had nothing to do with the issue raised here, but it would be helpful if you could clarify.
posted by Chuckles at 10:04 AM on January 19, 2006