# Signing a non-compete agreement long after hire



## 3kids4me (Jan 25, 2011)

A high-ranking member of our company, who happens to be someone to whom I "dotted line" reported, has resigned.  We had an excellent working relationship, and I would not mind working with her in the future should the opportunity ever present itself.

I work for a consulting company on pharmaceutical business and the company is small.  Perhaps because of lack of legal advice, none of us were ever asked to sign a non-compete agreement.  (This will be a boon for the person whom has just resigned.)  I'm assuming that a company can introduce such an agreement anytime during one's employment, correct?  If so, can they make continued employment contingent upon the signing of such an agreement? 

Thanks for any advice!


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## Timeshare Von (Jan 25, 2011)

3kids4me said:


> A high-ranking member of our company, who happens to be someone to whom I "dotted line" reported, has resigned.  We had an excellent working relationship, and I would not mind working with her in the future should the opportunity ever present itself.
> 
> I work for a consulting company on pharmaceutical business and the company is small.  Perhaps because of lack of legal advice, none of us were ever asked to sign a non-compete agreement.  (This will be a boon for the person whom has just resigned.)  I'm assuming that a company can introduce such an agreement anytime during one's employment, correct?  If so, can they make continued employment contingent upon the signing of such an agreement?
> 
> Thanks for any advice!



State laws vary so you would be best served seeking legal counsel where you are employed.

As an aside, non-compete clauses have been deemed unenforceable in some states when pressed through the legal system for enforcement.  If someone is working in a highly specialized field, expecting a non-compete to be obeyed is like telling that employee they cannot find another job.


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## caribbeansun (Jan 25, 2011)

As already mentioned you will need proper legal advice for your state.

Where I live you can get people to sign a non-comp after they are hired but:

1) Non-comps are generally unenforceable
2) Signing after employment starts makes them even of less value
3) Forcing someone to sign or lose their job would result in lawsuits against the company, which they would lose.

Your mileage will vary.



3kids4me said:


> A high-ranking member of our company, who happens to be someone to whom I "dotted line" reported, has resigned.  We had an excellent working relationship, and I would not mind working with her in the future should the opportunity ever present itself.
> 
> I work for a consulting company on pharmaceutical business and the company is small.  Perhaps because of lack of legal advice, none of us were ever asked to sign a non-compete agreement.  (This will be a boon for the person whom has just resigned.)  I'm assuming that a company can introduce such an agreement anytime during one's employment, correct?  If so, can they make continued employment contingent upon the signing of such an agreement?
> 
> Thanks for any advice!


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## BocaBum99 (Jan 25, 2011)

Non compete agreements are generally not enforceable.  They are only useful when significant dollars are involved.  Usually for top executives who have trade secrets to expose.  

Yes, it is not unusual for an employer to request a non compete agreement to be signed after you have already been employed.  It's usually done in conjunction with a claw back clause for compensation such as stock options or bonuses.  In those cases, it has teeth.

If you have such an agreement, it can be a pain if the employer comes after you.  In business, it's not whether you have an agreement that is important.  It is how much money your opponent has and whether or not it's worth their while to come after you.


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## svwoude (Jan 25, 2011)

The company I worked for wanted the employees to sign a non-compete many years after we had been there. 
After months of very few signing, they started offering substantial $$$'s
to sign.
Makes it much more interesting when there is money involved!

Steve


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## 3kids4me (Jan 25, 2011)

BocaBum99 said:


> Non compete agreements are generally not enforceable.  They are only useful when significant dollars are involved.  Usually for top executives who have trade secrets to expose.



In this case, the significant dollars would be the impact of losing clients who would travel with the person(s) leaving the company.  We are have agreements protecting the confidentiality of our work product; that is, any knowledge we have of potential advances in the industry (by clients) would never be shared with another client.


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## BocaBum99 (Jan 25, 2011)

3kids4me said:


> In this case, the significant dollars would be the impact of losing clients who would travel with the person(s) leaving the company.  We are have agreements protecting the confidentiality of our work product; that is, any knowledge we have of potential advances in the industry (by clients) would never be shared with another client.



It's generally not a good idea to steal clients or employees from your previous employer.  When you achieve an executive rank, it will impact your future marketability.  If you get a reputation as someone who steals clients or key employees, the next big employer will find it out and you won't be hired unless you have a knowledge or skill they can't live without.


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## 3kids4me (Jan 25, 2011)

I think in this case, the person who is leaving is the one with the real client following.  I wonder how she will handle a situation where a client simply wants to abdicate his/her current situation and follow her.  Would she have to turn them down?  I get the impression that this kind of thing (clients moving with management consultants) happens frequently in this industry, especially when the consultant has a special expertise.  In fact, my company just hired someone who brought several of his clients from his old company with him.


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## pgnewarkboy (Jan 25, 2011)

Its been a long time since I considered the law about non-compete agreements but I am very skeptical of the idea that they are universally unenforceable.  It used to be that such agreements were enforced if they were not overly restrictive.  One of the more recent and famous "non-compete" agreements involved Conan O'Brian when he left NBC.  He did not work on TV for quite a long time as a result of that agreement.  I am sure he had very good legal advice when he entered that agreement.

Your are  not Conan but your livelihood is at stake. You need legal advice in your jurisdiction.  I understand your post to state that you have not yet signed such an agreement. If you are given such an agreement be sure to have a lawyer review it before signing it.


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## Patri (Jan 25, 2011)

BocaBum99 said:


> It's usually done in conjunction with a claw back clause for compensation such as stock options or bonuses.  In those cases, it has teeth.



Yep. Don't want to lose those benefits.


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## BocaBum99 (Jan 25, 2011)

pgnewarkboy said:


> Its been a long time since I considered the law about non-compete agreements but I am very skeptical of the idea that they are universally unenforceable.  It used to be that such agreements were enforced if they were not overly restrictive.  One of the more recent and famous "non-compete" agreements involved Conan O'Brian when he left NBC.  He did not work on TV for quite a long time as a result of that agreement.  I am sure he had very good legal advice when he entered that agreement.
> 
> Your are  not Conan but your livelihood is at stake. You need legal advice in your jurisdiction.  I understand your post to state that you have not yet signed such an agreement. If you are given such an agreement be sure to have a lawyer review it before signing it.



Conan O'Brien got $30M for not working for that time period.  If he started working before that with a competitor, NBC would have sued him and he would have an excellent chance of losing.  Why risk it?  Keep the $30M and take a vacation.  The $30M is teeth.  It makes it enforceable.


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## pianodinosaur (Jan 25, 2011)

Non compete clauses are very common in the medical industry. A physician or a group will bring in a new associate and have them sign a non compete clause.  This is so that if a physician leaves the group, he or she will not take patients from the local community.  The usual limit in Texas is a 25 mile radius. 

Unfortunately, I have seen older physicians use non compete clauses to abuse younger physicians. This is particularly common in large hospital based practices such as radiology, pathology, anesthesia, and emergency room practices. The group brings in a young physician right out of residency for a two year contract at a low salary with the promise of having them join the group after two years and sharing in the larger profits.  However, many of these groups actually have no intention of bringing the younger physician into the group and keep large numbers of young physicians working at lower wages as they exploit new groups of young physicians every two years. 

The problem is that I might like working with the new, younger anesthesiologist or radiologist but,  the established group wants another low paid employee, rather than another partner.  This way they can get the younger physician out of town so they can bring in another young physician to abuse.

Be very careful.


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## Kal (Jan 25, 2011)

On the assumption the company wants the non-compete signed, it all comes down to money....your money! The company has deep pockets and leverage so they can apply pressure in various ways. The most common is sign the document in order for you to receive your next paycheck. No tickie, no laundry.

Is the non-compete enforceable? Can they withhold pay? Do I have any rights? are obvious questions but it will take your time and money to get the answer. How much legal costs are you willing to pay to prove your point? Do you really think the state will come to your rescue? and how fast? In the meantime, the lack of a paycheck may be an issue.

So when it comes down to it, take the high road, sign the non-compete, then IF and WHEN you leave the company, let them decide if they want to hunt you down to enforce the deal IF you violate the terms of the non-compete. Remember, you've got to do something seriously wrong in your next life to a point where your actions hurt the prior-company. Then if the new company will benefit, they will probably step in and work a deal.

Sign it!


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## Rose Pink (Jan 25, 2011)

What about me, the client/patient?  Do I have any rights to see who I want to see?  If my preferred professional leaves a business or a practice, it should be up to me if I want to follow without being told, "sorry, can't see you."


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## heathpack (Jan 25, 2011)

Non-competes are also common in vet med.  They are illegal for associates in the state of California.  However, I always strongly advise the kids against signing them if they are considering a job outside California.  Easy for me to say, my specialty is in high demand.  I have walked away from a job offer I spent 8 months negotiating- walked because the employer tried to slip a non-compete in at the 11th hour.  They did not even discuss it, one day it just showed up in a version of the contract, my guess is they hoped I'd sign it & not notice.  Our field is too small to get into a big to-do over it, so just said no thanks, we're done talking.  My lawyer's position is that noncompetes are indeed enforceable where legal, with the general principle being you should not be forced to move from your home.  If 25 miles is a reasonable commuting distance, then a noncompete with a 25 mile radius would likely be enforced.  He thought in my instance that anything less than 50 miles probably would have held up to legal challenge.

If my employer told me to sign one after I was hired, I would simply say no.  Ball in their court and I'd react no further unless they took some sort of retaliatory action.

Just one opinion.


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## heathpack (Jan 25, 2011)

Rose Pink said:


> What about me, the client/patient?  Do I have any rights to see who I want to see?  If my preferred professional leaves a business or a practice, it should be up to me if I want to follow without being told, "sorry, can't see you."



RosePink, you have identified another factor that my lawyer said would be taken into account by the legal system when deciding about the enforceablity of a non-compete.  For example, in my field, if I left my job, it would likely take 1-2 years to replace me, possibly longer.  If the non-compete is allowed to force me out of town and there is no one else to treat the sick neurologic animals, then there is public harm.  This makes the non-compete less enforceable.  If I can easily be replaced or there are lots of neurologists in town, then the public is not harmed by the non-compete and it is more enforceable.

BTW, the non-compete does not say you cannot go see a particular doctor.  Just that you would have to travel X number of miles to do so.

H


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## Kal (Jan 25, 2011)

Rose Pink said:


> What about me, the client/patient? Do I have any rights to see who I want to see? If my preferred professional leaves a business or a practice, it should be up to me if I want to follow without being told, "sorry, can't see you."


 
Of course, the customer/patient/client/buyer has full control.  The person who signed the non-compete must be very careful that there is no paper trail showing (s)he did not "steal" the customer/client/buyer by some overt action.  It's an age old tactic and the old company will always take every effort to retain ALL clients.  And they fully understand they cannot force a new relationship after the key person has departed.

Smart companies will routinely show the customer more than one face to minimize an obvious loss in the event a key person leaves.


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## pgnewarkboy (Jan 25, 2011)

BocaBum99 said:


> Conan O'Brien got $30M for not working for that time period.  If he started working before that with a competitor, NBC would have sued him and he would have an excellent chance of losing.  Why risk it?  Keep the $30M and take a vacation.  The $30M is teeth.  It makes it enforceable.



I am not privy to the terms of Conan's agreement.  I understand he was let go before his contract was up and they may have owed him money.  The bottom line for me is that this is an example of an enforceable non-compete agreement. As a general rule, every legal agreement must have some form of "consideration".  Whether it is the money that makes it enforceable or some other consideration in Conan's case I certainly don't know.  

I hope the OP gets a lawyer if presented such an agreement by his employer.  These can be quite complex and require experienced legal review and advice.


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## Ken555 (Jan 26, 2011)

Kal said:


> Smart companies will routinely show the customer more than one face to minimize an obvious loss in the event a key person leaves.



This is what we do! We try to have at least two or three staff be visible to a client, though we have a few clients who insist on a particular person service them.

Of course, we also have our clients sign a standard contract which includes a provision that they are barred from hiring our staff as an independent contractor (or via another company) for one year from the date our agreement ends. There's two ways to address this issue... we do both - have the staff sign a non-compete (before hire) and the client sign a will-not-hire. This way if/when one side breaks it, we have an additional avenue to explore. That said, I've never had to enforce this provision and in my business have had extremely good success rate (we're in a relationship business, so as long as we provide good service our clients are happy).


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## BocaBum99 (Jan 26, 2011)

pgnewarkboy said:


> I am not privy to the terms of Conan's agreement.  I understand he was let go before his contract was up and they may have owed him money.  The bottom line for me is that this is an example of an enforceable non-compete agreement. As a general rule, every legal agreement must have some form of "consideration".  Whether it is the money that makes it enforceable or some other consideration in Conan's case I certainly don't know.
> 
> I hope the OP gets a lawyer if presented such an agreement by his employer.  These can be quite complex and require experienced legal review and advice.



Here is what was reported on his severance package:



> Conan O'Brien, NBC finalize severance deal
> 
> *The network will pay the 'Tonight Show' host nearly $33 million* to make way for the return of Jay Leno. NBC will also spend $12 million in compensation for the show's 190 staffers.
> 
> ...


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## pwrshift (Jan 26, 2011)

Several years ago when I left a company after 20 years, the company asked me to sign a non-compete for two-years on the basis of putting me on full pay, benefits and all, as payout for signing.  I was starting a new business anyways, in a related field, and took the deal in order to take paid holidays and time to properly plan for my new business at which I work today.

I don't think a company can deny a terminated employee the opportunity to be gainfully employed but signing a non-competes does morally commit the person, IMO, whether or not either party has grounds for a lawsuit.  However, putting in a new non compete for existing employees is tough to do voluntarily without making it worthwhile as very few would sign otherwise.

Companies would be better advised to compensate their current employees better than they could get elsewhere, provide benefits that are the envy of their field, and ensure their quality work is recognized and not taken for granted.  80% of my employees have been with me for 10 years or more


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## geekette (Jan 26, 2011)

Mostly Unenforceable.

If threatened with losing your job, you could make a stink or just sign it and expect that it would be a hassle to come after you and just be another worthless piece of paper in your file.  I consider them to be instruments of intimidation.  "Better stay with us or you'll never work again!"   bull hockey.  

I've signed plenty of them and not a one has ever come after me because they cannot restrict my right to employment.  They did not give me my skills, I brought them to the business, and take them with me.  Sue me if you don't like it!


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## geekette (Jan 26, 2011)

3kids4me said:


> I think in this case, the person who is leaving is the one with the real client following.  I wonder how she will handle a situation where a client simply wants to abdicate his/her current situation and follow her.  Would she have to turn them down?  I get the impression that this kind of thing (clients moving with management consultants) happens frequently in this industry, especially when the consultant has a special expertise.  In fact, my company just hired someone who brought several of his clients from his old company with him.



We call those "non-poach" agreements and I have seen those enforced but in an employee situation, not client.  

Seems to me that if she does not broadcast where she's going or otherwise make more of an advertisement, she'll be fine if a client comes to her.  If she goes around trying to get the clients, that's a problem whether she signed anything or not.

I would want to stay with someone that did a GREAT JOB for me, no matter who they work for!  I'd be one of those clients.  And would be discreet so as to try to not cause trouble for her.  But in the end, the clients choose where to spend their money.


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## stmartinfan (Jan 26, 2011)

The other situation you can encounter can be with a hiring company - who will require you to certify before employing you that you are not covered by any non-compete agreements with prior employers.  I expect it's their corporate legal staff putting that into the hiring agreement so the company doesn't get somehow drawn into a lawsuit.


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