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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 would like.

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, 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.

Other restrictions

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 consequences.


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:

He can reached via email at

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