Why I do not sign a non-competition agreement

Original author: Sumit Khanna
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After university, I got a job in the IT department of a company for processing payments and collecting debts. My desk was next to the call center: I listened all day to how people on benefits do not afford to buy and get into debt. When several sales people left and started their own business, taking with them customers, the company took action. She made everyone in the office, from data entry workers to support operators, sign non-competition agreements. This was the first non-competition agreement that I refused to sign. Over the next fifteen years, I will be asked several more times to sign such papers, always before being hired. I always refused, and until recently, this never became an obstacle to recruitment.

A non-competition agreement is usually part of a standard employment contract, job offer, or non-disclosure agreement. It states that the employee for a certain time (usually one year) after the dismissal agrees not to start a business that competes with the business of the current company, or not to work for a competitor. If this sounds illegal, then in the state of California it is .

Illinois passed law in 2017prohibiting such agreements for low-paid workers, usually at a rate below $ 13 per hour. Even in states where such contracts have not been banned, they are often recognized as null and void. From a purely ethical point of view, they limit one of the most basic premises of capitalism: freedom of choice, whom to work for. This agreement actually puts the employee in the position of the debtor in relation to the current employer, although the debt is not financial.

Real examples

Below is the non-competition agreement that I found in a job offer from a company I worked for in New Zealand:

24.1. Until the written consent of the Employer has been obtained, the employee does not participate directly or indirectly in any business that is in direct competition with the employer's business for two (2) months from the date of termination of this Agreement. This restriction can be lifted if the Employer makes sure that the Employee is not “in conflict” with the company when he transfers to a new job.

I expressed objections on this part - and I was invited to speak with the director. The contract clause is not very limited in scope, although it is limited by a reasonable period (two months). Nevertheless, I expressed my concern. The director said: “In New Zealand, this still doesn’t work,” and then: “Maybe we just delete this item for you?” Later that week, I received a version of the contract without this clause and immediately signed the paper.

In 2016, I came across an agreement on non-competition in the contract of the Apex recruitment agency. The recruiter said that they had situations where potential employees had disagreements with the standard contract, and that the legal department would not allow any changes. She then tried to convince me that the following statement was not a non-competition agreement:

9. Within six (6) months after the end of the last assignment of the Contract Worker for the Client, this Worker shall not be entitled to perform any actions for this Client that are identical or substantially similar to the activities carried out by the Contract Worker for the Client when he was hired Apex - as an employee or contractor from any other company that engages employees to provide services on a temporary basis in the interests of third-party enterprises and, therefore, is a competitor to Apex. This Clause 9 does not apply to Contract Workers residing in California or North Dakota.

Despite the recruiter's statement, the above clause is obviously a non-competition agreement. This is clearly indicated by the fact that it does not apply to California residents where such agreements are illegal. I had to challenge him. Although I experienced a shortage of funds after a long trip abroad , I still felt uncomfortable, putting my basic right to work at risk. But the recruiter offered an additional agreement signed by the director, removing any working restrictions from my contract. The following agreement effectively repeals the non-competition clause:

... As discussed, you contract with Apex and work under the direction of the Getty Seattle office. ... If you or Getty Images terminate the contract, Apex Systems Inc. will not prevent you from working under a contract or directly through any competing recruitment agency. You, Sumita Hannah, will not have any restrictions on working after leaving, except for working in Getty Images under the direction of another recruiting agency. ...

So technically, I still signed a non-competition agreement, although I had a separate agreement that actually annulled it. Over time, it becomes increasingly difficult to take an uncompromising stance on such agreements. The following items are part of the SpringCM non-competition agreement:

1e. Restriction on Intervention in Employee Relations. During the Work of the Worker for the Company and within 1 (one) year after the termination of the Agreement (for any reason), the Worker must not directly or indirectly contact or hire any employee of the Company for any kind of employment, consulting or other types of work with the Worker or any other person . An employee should not in any way encourage such an employee of the Company or any of its subsidiaries and affiliates to terminate their employment with the Company.
g. Warning. While working at SpringCM and for two (2) years thereafter, the Employee agrees to: (a) provide the company with a written notice at least thirty (30) days before starting work for the Competitor or participating in the Competitive Activity; (b) provide the Company with sufficient information about its new position so that the Company can determine whether the actions of the Employee in the new position may lead to a violation of this Agreement; and (c) within thirty (30) days from the date of the Company's appeal to participate in negotiations through an intermediary or in person to discuss and / or resolve any issues arising in connection with a new position. The employee is responsible for all indirect losses caused by the failure to provide the company with the notice provided for in this clause.

This is a very strange agreement, as it includes not only a one-year non-competition agreement, but also requires an employee to ask for permission to work with a competing company for two years after leaving! In which inverted world does anyone even consider it ethical or moral to require a person in a free society to ask permission to work for someone else? Their HR spokesman said a change in the agreement requires the approval of the CEO, which happened only once in the past six years. In the end, I left this company.

Even worse, many non-competing companies often ask potential employees to disclose all of their non-competition agreements with other companies. They ask if you have previously signed such a binding agreement, and then they ask for another similar agreement. An example can be seen below in the job offer that Rally Health sent me.

10. Lack of Conflicting Obligations.
I declare that my fulfillment of the terms of this Agreement and my work do not violate and will not violate any agreement between me and any other employer, client, individual or legal entity. I have not and will not conclude any written or oral agreements contrary to this Agreement.

When I was looking for work in Chicago, two companies offered me a job with a non-competition agreement in labor contracts, which their lawyers refused to delete or change in any way. In the past, five different companies have offered me contracts with this clause. When I paid attention to him, they all changed the document, usually without any problems. Now it seems to me that even if I want, I do not have the right to sign a clause on non-competition - simply out of respect for all previous employers who listened to my opinion and helped to reach an amicable compromise.

I rejected both proposals and ultimately agreed to work, which included an agreement on non-competition, but they agreed to amend this clause so that it does not work after dismissal.

Ignoring Agreement

Regarding the non-competition agreement for a new job, several friends told me: “I sign them, but then just ignore them.” Handling an employment contract like EULA on iTunes or mobile app agreements is probably not the wisest option. One good university friend of mine once tried to quit after two years of work. He wanted to accept an offer from another advertising and marketing company. She directly asked if he had signed a non-competition agreement with the current employer. He answered positively, and this did not allow him to switch to another job. Even if the law is not enforced, most companies simply will not take risks. A potential lawsuit is never the best option when hiring a new employee.

Intellectual Property Protection

Some companies will argue that such agreements are necessary to protect their investments and intellectual property. This is simply not true. When hiring, engineers are often required to sign a non-disclosure agreement (NDA), copyright, patent, non-enticement agreements, and countless other agreements that guarantee that all employee work is exclusively owned by the company. Non-competition agreements are a way to show that the company's assets seem to go beyond ownership and extend to the person himself, as if an employment contract gives the company rights to employee skills and mandatory loyalty .

When Uber Hired Anthony Lewandowskithen Alphabet, the parent company for Google, did not have to rely on a non-competitive agreement to accuse Uber of stealing intellectual property on autopilot technology. While living in California, Lewandowski could, after being fired, work freely for a direct competitor Waymo (a subsidiary of Alphabet). In the startup capital of the world, this makes sense if the engineer feels that, in the absence of restrictions, the current employer is able to create the best product. This resolution of competition can foster innovation, but it requires engineers to erase everything from memory. It does not allow an individual to directly steal assets created while working under a contract and resell them, which Waymo accuses Lewandowski of.

We have no unions

Many engineers known to me are ready to sign an agreement on non-competition, if it is narrowly formulated. Personally, I have never left a single company to work for a competitor, so I have purely moral beliefs against such agreements. Non-competition, in fact, puts a potential employee in debt dependence. If the agreement is narrowly worded, then we can say that this is a limited form of debt. But still duty.

So what is debt? Debt is just a perverted promise. This is a promise distorted by calculation and violence. If freedom (real freedom) consists in the ability to make friends, then it must necessarily imply the ability to make real promises. What promises can truly free men and women give each other? Here we even have nothing to say. The question rather is how do we get to the place where we can figure it out. And the first step along this path will be the recognition that in the broadest sense of things no one has the right to say our true value, just as no one has the right to tell us what we really should. - “Duty: The First 5000 Years of History,” David Graber

One of the main essences of capitalism is freedom. In particular, workers should have the right to decide freely to whom they will give their time and resources. Non-competition agreements jeopardize this basic right. The employer already owns all the work and intellectual property rights of the employee. The rights of the employer should be limited to the work performed, and not extend to the actual knowledge or skills of the person. From a purely capitalist point of view, non-competition agreements are very anti-competitive. I told some employers that I would sign a non-competition agreement only if the company paid me full wages for one year, during which this agreement is valid. If this sounds crazy, then the same can be said of the non-competition agreement itself.

Workers in the technology industry have already transferred to their companies many rights in the field of copyright, patents, inventions and intellectual property. The consent of so many engineers to sign non-competition agreements is damaging to our industry. Such documents have the ability to suppress innovation - and this is one of the reasons why they are banned in California, the startup capital of the world.

I am a computer programmer. We do not have trade unions, and we do not conclude collective bargains. The basic rights of workers are our responsibility, and refusal to sign non-competition agreements is important to protect our right to work.

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