# non-compete contract



## rtztgue (Jul 9, 2010)

I have non-compete contracts with all of my employees except one. The one that has been with me the longest and started employment before we used them. I am trying to get him to sign it, but the contract I have is pretty strict and he wants to make changes. Those changes would make the thing kinda pointless. Now the basic facts are that he is a great employee and we get along well. He is my lead tech and knows most the clients and coordinates a lot of the work. I do not want to cause a serious issue with this. My fear is that as I pull away from the tech side and do more Business owner stuff, our customers will see less of me on the jobs. I will coordinate ads, legal stuff, bids etc... If for any reason he moves on, my customers will know his face more than mine and he could pull those clients. 

I do agree with his thoughts that he knows this industry, and to limit him in the a manner that he could not work in the industry would be tough. So we talked about modifying it in such a way that he could work in the industry but could not approach my clients for a set period of time. 

We are a service company and travel a lot so even limiting area is tough. 

So, ideas on keeping this civil, easy ( a no big deal thing) or other avenues?


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## Anti-wingnut (Mar 12, 2009)

rtztgue said:


> I do agree with his thoughts that he knows this industry, and to limit him in the a manner that he could not work in the industry would be tough.


As well as illegal and unenforceable



rtztgue said:


> So we talked about modifying it in such a way that he could work in the industry but could not approach my clients for a set period of time.


That would be resoanble. My guess is that your present no-compete is illegal. You can write whatever you want, and even have a lawyer write it for you, but they are usually pierceable.


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## tbronson (Feb 22, 2010)

About your only option is to provide compensation for the non-compete and limit it to solicitation of customers by him. You can't stop him from working in the industry or from going to a competitor. But you can stop him from doing work that he goes after or using your customer contact list as long as you pay him for the period he is not allowed to do that. I used to work at a place that had a 6 month non-compete clause but in return if they sacked me I got 6 months of severance. You could do it that way.


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## CookeCarpentry (Feb 26, 2009)

A few thoughts:

1. You are depending too much on one guy if you believe that if/when he leaves that your customers will leave with him (or you are just paranoid).

2. Forget the non-compete clause - you may actually be doing more harm than good with this. Fairly early in my career (before being self-employed) I had a contractor do this to me and I walked immediately because I felt he didn't trust me that if I did go on my own I wouldn't back stab him.

3. Focus on delegating more. Make him train one of the junior guys. It's a win-win. He feels more important (and you show him that thru responsibility and more $) and you are getting better trained guys.


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## Framer53 (Feb 23, 2008)

Non-compete contracts do not hold up for hourly workers.


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## rtztgue (Jul 9, 2010)

The compensations sounds fair, but in this economy one of my thoughts was a possible lay-off. So 6 months severance would be tough. In our state though (Washington) it is legal to have a non-compete within the industry for a certain radius, say 75 miles. I was just checking and our state recently passed a clarification which states I have to offer him something in exchange for the contract. A raise, or a promotion or something. That seems fair.


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## Mike Finley (Apr 28, 2004)

Yeah, like Mark said, you're way over-reacting to this if you are doing your job right.

You should have a company that customers are dealing with and not some lead. You might want to think about creating a brand and a face to the company.

Your company handbook should address the issues of side work and approaching your customers, it should go over company secrets and the like and signing that would be what you want. After they are gone employees can call every customer you have if they remember them. They can't call them all off your company created list that they steal from the computer on their last day.


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## rtztgue (Jul 9, 2010)

CookeCarpentry said:


> A few thoughts:
> 
> 1. You are depending too much on one guy if you believe that if/when he leaves that your customers will leave with him (or you are just paranoid).
> 
> ...



Good points and I have thought about (or done) all of these. I really dont think i would lose a lot of clients (if any) and the only reason this came up is because I had a small remote office and the main guy there did this. (that is more a distance management issue) He took the clients and worked behind my back... So i looked to non-compete contracts

the comments about forgetting it and leaving it be is why I have let it drag on for the past 6 months. We do delegate to several employees and this is not a big fear, more of me just looking at options. I do like the .. treat them right and fair, pay them well. This seems to work the best.


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## DPCII (Mar 14, 2010)

Easy, change it from a non-compete to a non solicitation agreement.


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## rtztgue (Jul 9, 2010)

DPCII said:


> Easy, change it from a non-compete to a non solicitation agreement.




LOL... never even occured to me lol.. and that sounds like what I want. 

Thanks everyone for all the great input.


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## CookeCarpentry (Feb 26, 2009)

Do you have a company/employee manual?

If not, you should get one right away.

Have all employees sign it, and you can cover everything about side work, solicitation, etc.


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## rtztgue (Jul 9, 2010)

I looked at one a few years ago, but the attorney wanted several thousand dollars to put it together. Anyone know of a decent place to get a contractor style handbook. eg, the last ones i saw had casual dress friday, no suits and ties. Not exactly relevant


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## Anti-wingnut (Mar 12, 2009)

rtztgue said:


> In our state though (Washington) it is legal to have a non-compete within the industry for a certain radius, say 75 miles.


Maybe I live in a different Washington State, and maybe i use a different Google. Here are some Googlized tid-bits I found out, which jives with my other knowledge of Washington law



> In general, Washington courts are more likely to enforce nonsolicitation and nondisclosure agreements. The theory being, I think, that it is one thing for a business to tell someone that they cannot work in their field, and quite another for a business to protect itself from piracy (of employees, knowledge, secrets). Even if the clause does not make specific reference to it, Washington courts look to the Uniform Trade Secrets Act, RCW 19.108.010 et seq., for guidance. “[A] former employee may use general knowledge, skills and experience acquired during the prior employment in competing with a former employer. However, an employee may not use or disclose trade secrets belonging to the former employer to actively solicit customers from a confidential customer list.”





> This overlooks a critical point. Following a 2004 decision by the Washington Supreme Court, Labriola v. Pollard, Inc., non-compete agreement in Washington State are unenforceable if the employer asks the employee to sign the agreement after (not while) he or she is hired, unless it is supported by independent consideration (that is, money or some other form of value).


Unless you are working for Boeing or Microsoft, you are going to have a hard time with any non-compete or trade secret contract. Especially if john Henry Browne drops the Bare-foot Bandit, and comes to work for your employee


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## Anderson (Sep 7, 2009)

I have signed them in the past no big deal as CT has a right to work law, which basically means you cant stop me putting food on the table for my family. As it should be.


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## gallerytungsten (Jul 5, 2007)

In general, the more "strict" your non-compete is, the harder it will be to enforce it. Maybe you should have a talk with your employee about what it is you are trying to accomplish. Perhaps you can find a way to align his interests with yours. For example, by bringing him into the business, over a period of time.


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## olligator (Nov 23, 2007)

I've thought about this as well as I expand my company. I'm not so concerned about stealing customers as much as proprietary business info. Stuff like marketing techniques and planning procedures, etc. I keep all that info locked down on an absolute need-to-know basis. I also don't share the real trade-secret stuff, analysis and market modelling, project modelling, with _anyone_. 

Perhaps a non-disclosure agreement would have better traction in that respect, but the burden of proof that the guy is using your proprietary info would still be on you to enforce the NDA legally. At least it seems that way to me.


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