Do I sign this non-compete? Is it legal?
December 12, 2010 5:17 PM   Subscribe

YANAL (or maybe YAAL). Been working for Company A for the past 5+ years. I'm being asked to sign a non-complete now. Live in MA, but may be moving to our NY office. Company A says if we don't sign they can withhold bonuses, MBOs and merit increases. Is this legal? Also, can you recommend an employment lawyer in the boston area?

It also happens I work in a very niche industry. All of my post college "real work" experience has been in this industry. The non-compete basically states I can't go work for a competitor for a period of 6 months post employment at Company A. This is substantially career limiting for me, as I can't afford to go without a paycheck.

Is it legal that they can threaten to withhold bonuses, etc -- unless I sign?
I know they can not fire me if I don't sign, but if I choose to move to our NY office, they say I must sign to stay employed.
Know any employment lawyers in the Boston area that might be able to give me advice?

Also, note they are not offering any compensation to sign. Looking for any insight mefites can provide. I can also provide the text of the non-compete.

posted by thatgirld to Work & Money (9 answers total) 2 users marked this as a favorite
My company (in Michigan) did the same thing after we laid off an account executive and he was snapped up by our competitor - demanded everyone who didn't already have a noncompete signed sign one. Automotive industry here, but we've only got basically 1 competitor to our core business. A handful of people have left since then and got jobs at the OEMs without any issue. I'd already signed one when I got hired (which was my first job - straight out of college), so it wasn't a big deal to me at the time, and still isn't a big deal as it very much looks like I could stay at this employer for a longggggg time.

I wonder if something similar is happening here - your company is reacting to a specific instance and/or specific competitor?

I've also heard (but have nothing to back me up) that companies interested in snatching competitor's employees or hiring them are willing to keep it pretty hush-hush until the noncompete expires.

Good luck.
posted by ish__ at 5:25 PM on December 12, 2010

Best answer: Also, can you recommend an employment lawyer in the boston area?

Done via MeMail.
posted by alms at 5:26 PM on December 12, 2010

Best answer: 1- Non competes are generally thought to be pretty easy to break. One option would be to sign it and deal with the consequences later, if ever. Or sign it with an attachment that says you don't agree with the terms and are only signing it to keep your job.

(That's how disciplinary write-ups are often done. Signing it is a condition of employment, but you can put a statement in that says anything you want. They have it on record that you saw it, you have it on record that you disagree.)

2- Try to negotiate on terms that reduce your exposure. If they end your employment, it won't apply, or if you get another offer, they have the right to match it. If they choose not to match it, non-compete doesn't apply.

3- I'm not sure if they can withhold future bonuses and raises. It seems like doing that would be making you sign the contract under duress, also making it unenforceable. It also might be a fair pay/equal rights kind of violation (depending on the state)- you generally can't dock someone for failing to follow the rules. And if they have a standard pay structure for people in your position, they can't really go changing one person's without changing everyone's.

4- I'm less sure that they cannot fire you for not signing it. The conditions of employment have changed, it is a new requirement of the position, if you don't meet the requirements, you lose your job. This seems more enforceable than #3. On the other hand, I don't think they can give two different choices like that: if you stay here you don't have to sign but you lose money, and you can only transfer if you sign.

4- You might try to one up them and basically say "if I am so important to you, I must be worth more money. Give me a 25% raise and I'll sign the paper." Or "if I sign this, I will have to save up six months of salary in case I ever need to change jobs. Give me a six month's worth signing bonus and I'll sign it."
posted by gjc at 5:49 PM on December 12, 2010

Best answer: In many states, non-compete clauses are often unenforceable against non-executive or specialist employees except in situations where someone is selling their business. New York is generally one of these states. A few minutes of Googling suggests that employers can generally enforce non-competes in Massachusetts.

So yes, I would talk to an employment lawyer. It may be in your interest to make sure that you sign the agreement in New York. It might also be in your interest to start making inquiries about another job with a less hostile employer.
posted by zachlipton at 5:51 PM on December 12, 2010 [1 favorite]

Are you an at-will employee? What makes you so sure they can't fire you if you refuse to sign the noncompete agreement? If they can fire you at any time, there's a decent chance they can fire you for not agreeing to the new term of employment they're proposing (the noncompete). If they can't fire you for that, they probably subject you to other adverse employment action that takes you outside the scope of your originally agreed upon deal.
posted by J. Wilson at 5:54 PM on December 12, 2010

>>Or "if I sign this, I will have to save up six months of salary in case I ever need to change jobs. Give me a six month's worth signing bonus and I'll sign it."

Second asking for this.
posted by J. Wilson at 5:58 PM on December 12, 2010

Response by poster: further clairification -- i'm saying they won't fire me for not signing it, because I asked if i would lose my job for NOT signing.
posted by thatgirld at 6:11 PM on December 12, 2010

They actually have to provide compensation to you in exchange for signing the agreement. So making your bonus or promotion contingent on signing the non-compete is not only legal -- it is generally a component of making it an enforceable agreement. They can even fire anyone who doesn't sign it (making the "compensation" continued employment) in most cases. Their haphazard approach to defining what your compensation is suggests they are unlikely to have done a good job on avoiding the other pitfalls of drafting non-competes, but in general they can tie a non-compete to future bonuses.

I would suggest finding an employment attorney via the National Employment Lawyers Association
posted by Lame_username at 10:13 AM on December 13, 2010

>>They actually have to provide compensation to you in exchange for signing the agreement.

Why is that? Offering continued employment to an at-will employee is usually sufficient consideration to make a contract altering the terms of your employment (i.e. by making a potentially enforceable noncompete).
posted by J. Wilson at 5:57 PM on December 13, 2010

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