You want me to sign what?
by Douglas E. Welch
October 1, 1999
© 1999, Douglas E. Welch
As high-tech jobs become more and more important to the overall
health of companies and the economy, the restrictions placed on
employees increases as well. Over the last several months I have
noticed an increase in litigation over so-called "non-competition"
agreements between companies and their high-tech employees.
Non-competition agreements threaten to complicate all aspects
of being a high-tech employee. A few months ago I noticed that
if things got any more complicated you might find yourself in
the position of having to engage an agent just to get a job as
a network manager. See "Taking your time", ComputorEdge, June 25, 1999) As ludicrous as this sounded at the time it just
might be more on target than I thought. The high-tech job market
is starting to resemble the entertainment industry more than I
Since NCAs are increasingly being used it is important that you
understand what rights you might be signing away when you agree
to take a job. Below is a basic explanation of an NCA and some
of the more excessive clauses you might encounter. Read any agreement
thoroughly. If you don't understand a particular clause or think
it is unenforceable, contact a lawyer experienced in employment
issues. It is always better to spend a few dollars now than spend
many years and thousands of dollars in litigation later.
The company owns your mind!
Non-competition agreements (NCAs) in their most basic form state
that on leaving a company an employee may not work for the company's
competitors for a specific amount of time. They usually forbid
employees from using any proprietary information they might have
gained at the company. While the company has some expectation
of protecting its interest, the requirements of an NCA can be
so onerous as to leave the employee without any options at all
should they decide to leave.
Interpretation of the NCA is always trickiest. Recently some Wal-Mart
employees left to join Amazon.com, the online bookseller. Wal-Mart
argued that the technical knowledge they carried with them could
directly assist their competitor and tried to invoke the NCA the
employees had signed. In court, Wal-Mart argued that since there
was no way the employees could avoid using the information, even
inadvertently, they should be barred from working for a competitor.
As you can see, if the interpretation or competitor was broad
enough, these employees would be unemployable by nearly any company.
Thankfully the courts ruled that the NCA was unenforceable as
written. Unfortunately, litigation such as this is only going
to increase as companies try to protect their interests in a market
where employees move around with abandon.
A different slant in some NCAs is the geographic restriction.
Basically, this states that an employee can work for any company
when they leave except competitors within a certain radius of
the first company. While it seems less onerous than some restrictions
it can actually be more damaging. Not many of you would want to
move your home at the same time you are changing your job, especially
if you are being forced.
Watch out for any restrictions that you feel are unenforceable.
If you have doubts about the restrictions then it is more than
likely you will end up in court if the NCA is ever invoked. While
it can delay your hiring it is better to have all the kinks worked
out before you start your first day on the job. Don't be rushed
into signing anything unless you are prepared to live with the
Further adding to the confusion of NCAs is the fact that each
state has their own restrictions on the use and interpretation
of them. California law tends to frown on any agreement that interferes
with a person's right to work. Although laws change over time
this is one ray of light in a cloudy employment future.
If you haven't run into an NCA yet, consider yourself lucky. It
seems only a matter of time until you all will face restrictions
in one way or another. With every increase in employee turnover
the restrictions will become greater. The technical knowledge
you carry is becoming more and more important to companies and
they will become even more vigilant about keeping that information
from their competitors. It also provides one more reason to look
outside of the traditional corporate environment for employment.
NCAs are just one more burden being imposed while the traditional
benefits of employee loyalty, health benefits and retirement plans
are being reduced or removed altogether. Companies need to realize
that with actions such as these they are driving their employees
to become independent contractors instead of full-time employees.
Douglas E. Welch is a freelance writer and computer consultant
in Van Nuys, California. Readers can discuss career issues with
other readers by joining the Career Opportunities Discussion on
Douglas' web page at: http://www.welchwrite.com/
He can reached via email at firstname.lastname@example.org