Non compete agreement

[techguysolutions]

Hello everyone, after being in business for the past 8 years I have finally gotten to the point where I had to move into a small office and hire a part time person and a full time tech to help out. I was wondering if anyone would be willing to share their thoughts on making your employees sign a non compete agreement and if you do would you be willing to share the document(s) that you have them sign? Thanks in advance for any help.

 

[MotzTech]

Don't have a template for you, but I'll say this. Don't make it overly restrictive. If it's too restrictive I.E. They can't work in any IT related job for 5 years after leaving your company, it will NEVER stand up if challenged in court.

 

[techguysolutions]

Don't have a template for you, but I'll say this. Don't make it overly restrictive. If it's too restrictive I.E. They can't work in any IT related job for 5 years after leaving your company, it will NEVER stand up if challenged in court.

Thank you, since I posted this I did find a template online here http://goo.gl/pXf5Nt which seems like a reasonable price to pay opposed to what I would pay my attorney ($375!). I am just not sure what is a reasonable amount of time after he/she would leave the company i.e. 12 months, 24 months??? Thanks for the reply.

 

[Richard P]

Thank you, since I posted this I did find a template online here http://goo.gl/pXf5Nt which seems like a reasonable price to pay opposed to what I would pay my attorney ($375!). I am just not sure what is a reasonable amount of time after he/she would leave the company i.e. 12 months, 24 months??? Thanks for the reply.

Probably depends on what you are going to try and restrict them from doing and I imagine it would depend on your local/state laws as well.

Contacting your existing customer base? You can make a good argument for that.

Not working in the field at all for a year or two? I think you would have a hard time making that one stick.

 

[frederick]

Here is my bit.

72 hours within being fired/quiting, they can't compete. Period. 6 months, they can't work for or with or clients after termination. There are exemptions, I.e. they work for someone else, but didn't bring them the lead.

While working for me, if they work on someone's computer, its either for free and not representing the business in any fashion, or they do it as part of the company. Not going to have someone mess up a computer on their time and it come back on my business. If they visit one of our clients, they represent us, not their wallet.

There is an area restraint, its basically what we consider to be our primary area.

Like motz said, don't make it overly restrictive. But do keep in mind, some techs get this thing in their head they aren't making enough, and go around doing work for extra cash. He shows up wearing your shirt, or the client knows he works for you and the employee screws up something, it comes back on you. Some employees also get approached by dirty businesses where they are paid for a client list and what the costs for services and coverages are for those clients. Its hard to prove, but if your employee leaves and all of a sudden half your clients follow, there is something up. Same with employees who leave and start their own business.

Oh, and grab a lawyer. Templates are great, but laws vary state to state, county to county.

 

[altrenda]

It varies state to to state. In California you can't restrict someone from making a living with a non compete, but you can protect your company secrets, which include your client list, vendor list, methods and procedures.

$375 may sound like a lot to pay, but how much would the loss of even 1 customer cost?

 

[mtech88]

Protect your current clients, previous clients and prospects. Generally 18-24 months is a decent time frame. Make sure all employees sign it. If you have an attorney that will draft a non-compete for $375 its well worth it. Also look at putting together a employee handbook that covers things others have listed above.

 

[Tallgrass Computers]

It varies state to to state. In California you can't restrict someone from making a living with a non compete, but you can protect your company secrets, which include your client list, vendor list, methods and procedures.

$375 may sound like a lot to pay, but how much would the loss of even 1 customer cost?

Same in Missouri. I actually had an employer take me to court over this. The contract stated I could not work for any competitors within a 200 mile radius for 5 years.

When we went to court the judge ruled that I could not go after previous customers or share company secrets but that they could not prevent me from making a living in my profession.

 

[mraikes]

Same in Missouri. I actually had an employer take me to court over this. The contract stated I could not work for any competitors within a 200 mile radius for 5 years.

When we went to court the judge ruled that I could not go after previous customers or share company secrets but that they could not prevent me from making a living in my profession.

^^ This will be the essential result in most states.

The timeframe and geographic area of limitations will vary from place to place, but very few (I don't know of ANY) will allow an employer to prevent a former employee from working in their profession at all.

You're secrets and existing customers should be shielded for a reasonable time. But nothing else.

 

[clayb226]

Same in Missouri. I actually had an employer take me to court over this. The contract stated I could not work for any competitors within a 200 mile radius for 5 years.

When we went to court the judge ruled that I could not go after previous customers or share company secrets but that they could not prevent me from making a living in my profession.

Nice info, I live and work in MO. Thanks.

 

[frederick]

Same in Missouri. I actually had an employer take me to court over this. The contract stated I could not work for any competitors within a 200 mile radius for 5 years.

When we went to court the judge ruled that I could not go after previous customers or share company secrets but that they could not prevent me from making a living in my profession.

Some employers, like that one, take it too far. You can't expect me, or anyone, to pack it all up after I quit or get fired, or even laid off, and then move 200+ miles. That's a big thing right there. Employers like that, are A-HOLES! Protect your customers, your secrets, and yourself at a 100% security agreement while the work for you. But after they leave, it's different, you can only protect so much. I asked my lawyer what I could and couldn't do. I wasn't looking at preventing my employees from ever working again, I was looking at protecting my clients and assets. And in some cases, having to protect client's assets (the 72 Hour rule I have). It's well within in means, and is only there to facilitate the insurance that all 3rd party security badges (or other means of access) are collected, destroyed, or removed from the system as per client regulations. And within that 72 hour period, can be brought up on things relating to certain illegal situations.

 

[erik777]

The value of the non-compete agreement is going to be primarily in the mind of the employee who signs. If the employee believes he or she is unable to compete with an employer for a period of time the agreement will be 100% effective.

However, if the employee violates the non-compete agreement, it will be up to the employer to sue the former employee for enforcement. While this might sound like a good idea to seek legal enforcement of a non-compete it usually turns out to be an expensive hobby. The employer will be stuck with the legal fees. Although they may win the case and get awarded damages and court costs, if the former employee does not have any assets it might be easier getting blood from a stone. Since a non compete agreement is a civil agreement there are no criminal penalties if the former employee decides to wait a week and then violate the non compete agreement again.

That being said, typically your best bet for enforcement of a non-compete agreement is if:

The agreement is commercially reasonable in terms of:

- Time (how many months after employment);
- Area (how many miles from business); and
- Scope (what types of IT services)

 

[tom11011]

I would say yes your employees should sign a non compete agreement. It should be reasonable. Within the counties you do business, for a period of 1 year after employment, not allowed to work for an identical business as yours, not allowed to make contact with your customers.