Non-compete clause

Nathan (SD) · Jan 5, 2016

A small company is selling out. The dept heads (who are just hourly wage employees)have been asked to sign a non-compete contract so the sale can go through. What dollar amount should the dept. heads be charging for their signature ?

paul · Jan 5, 2016

Employ me or set me free.

I'm not much for being in never never land.....

Paul

Formerly PaMike · Jan 5, 2016

Boy that is a tough one. Maybe a percentage of the sale price...
The real question is how you will earn a living if you cant go work in the industry you are familiar with.
Its one thing to sign a form saying you wont start a competing business, its another to say you wont work for a competing company...
You might want to lawyer up...

DLMKA · Jan 5, 2016

110% of annual salary for the duration of non-compete.

rrlund · Jan 5, 2016

That's my thought. I'd either want them to provide me with what I'd been making plus benefits until I could draw a pension they provided for me or I wouldn't sign anything at all. It's not my fault they want to fire me and sell the company. Any more than it's their business what I do with the rest of my life after they sell out.

ss55 · Jan 5, 2016

Employees at high tech companies are usually required to sign non-compete clauses (with a fixed time limit) and non disclosure agreements when they are hired. When they leave the company they are reminded of the agreement. If the new owner is asking for the non-compete clause, it is probably a requirement for continued employment and is not negotiable.

Nathan (SD) · Jan 5, 2016

Sounds like both. For a period of 2 years. If they don't sign, sale will fall through and will probably be out of a job anyway.

Sign it, and new outfit cans you? Looking for work in a new career field aint too easy for old dogs.

Owners are offering $0. Just expecting a signature so they can live happily ever after.

rrlund · Jan 5, 2016

Kind of like a wife divorcing you and telling you that you can't start dating other women.

Greg K · Jan 5, 2016

2 years from the signing date or 2 years from the time they leave the company? I'd hold out for compensation or a guarantee of x number of years of employment

da.bees · Jan 5, 2016

I'm often amazed at information people seek at YT. What's even more amazing is the number of experts responding with specialized information (some members are even qulified in several fields). And with so few details to work with.

Nathan (SD) · Jan 5, 2016

I believe 2 yrs from the signing date. There is no guarentee the new outfit is even gonna hire them.

johnpop1 · Jan 5, 2016

It is my understanding that "non-competes" are basically not enforceable because a person cannot be denied the right to future employment in their chosen field. I have been in this situation more than once and it has never stopped me from moving forward with my career. These documents tend to be a way of keeping other companies from stealing good employees. Sometimes, when moving to another company, the previous company will make some noise and the new employer might choose to terminate his new employee rather than entertain the legal headaches.

Dodgeit · Jan 5, 2016

(quoted from post at 11:05:44 01/05/16) Boy that is a tough one. Maybe a percentage of the sale price...
The real question is how you will earn a living if you cant go work in the industry you are familiar with.
Its one thing to sign a form saying you wont start a competing business, its another to say you wont work for a competing company...
You might want to lawyer up...

The non compete clause cannot effect your ability to work. I.E. if you are a machinist, they can't keep you from doing what you know. They can only ask that you don't quit and go into business doing / making the same thing. do not sign until you have let a lawyer review it. I went through this 5 years ago. My said that even my heirs and assigns would be bound by the agreement.

Ken Macfarlane · Jan 5, 2016

Talk to local lawyer, they have been tossed out left and right lately in courts. Mostly there to scare folks most aren't worth the paper they are written on.

flying belgian · Jan 5, 2016

Well with this post Nathan you make it sound like you have nothing to lose by not signing. I don't think I would sign anything unless I get some guarantees in writing. However even those guarantees won't hold up in court as "your dismissal was performance based"

Dean · Jan 5, 2016

Good luck with that.

I would simply not sign.

Dean

dhermesc · Jan 5, 2016

Its all in the wording. Are they barred from opening a competing company? Are they barred from approaching the current customer base? Are they barred from taking employment in that specific field? All, one or some?

As a condition of employment I was barred from taking future employment in the same industry within a 100 miles in the event I quit (if I was fired they didn't care). My skills transfer from one industry to the other so it wasn't a big deal for me. Asking for this while a person departs can be very expensive - as a condition of future employment not so much.

hd6gtom · Jan 5, 2016

In my case-- the Co the that I leased my complete truck fleet came to me and wanted to buy my truck fleet, in 1985. At that time I had the chance to buy another company that did the same thing I was doing, in the same county I was based in--fuel business to the farmers. I had a non compete clause in the contract with the 1st company. Lawyer said it was enforceable for the 5 year duration. These folks need to get together and see a legal beagle in their area.

RandyB(MI) · Jan 5, 2016

I'm not seeing any incentive at all for these people to sign anything at all. And as far as it being "enforcable"? The company I retired from would just tie you up in court for a year and until a judgement even the judge would not allow the employee to take employment at a competitor. Basically speaking , they would "starve" you even tho the eventual judgement was against them and/or compromise in middle. Saw it happen and the future employer lawyers don't want any part of it until settled either.

Tom OConnor · Jan 5, 2016

I like your answer Randy, I was looking at it like getting married the second time while still paying alimony payments on the first wife.

longmeadowfarm · Jan 5, 2016

Get legal advice..don't rely on the well intentioned folks on this forum. In New York State if you are well down the totem pole the non-compete clause is not worth the paper it's written on. IN THOSE STATES WITH A RIGHT TO WORK MENTALITY/LAWS.. it may be different... courts backing the employer vs the worker... If it was me I'd tell them to stuff it...

JOCCO · Jan 5, 2016

I have seen that used example you own a big ace hardware store and sell it, the agreement is you will not open one for so long and so close to the one you sold. Far as employee that's a tough one like telling a truck driver he cannon go driving for another company etc. I AM ALSO WITH MEMBER DEAN I QUESTION THE LEGALITY OF IT AND PROBABLY WOULD NOT SIGN IT. (UNLESS THEY COMPENSATED ME!!)

Bonnan · Jan 5, 2016

If it is most likely that you will lose the job (remember it is not "your" job; the company owns the job) then all you can do is negotiate for the value of your signature. Tough situation to be in.

Brian Jasper co. Ia · Jan 5, 2016

Talk to a lawyer. I'd tell them the only way I'll sign is 110% of annual wage guaranteed for the duration of the agreement not dischargeable in any sort of bankruptcy with full balance due in the event of a sale.

C. Amick · Jan 5, 2016

Most non-compete clauses have a time limit, usually about 5 years. I guess if it is 5 years, then you could ask for 5 years' of wages and so on.

Andy Martin · Jan 5, 2016

(quoted from post at 14:38:46 01/05/16) Get legal advice..don't rely on the well intentioned folks on this forum. In New York State if you are well down the totem pole the non-compete clause is not worth the paper it's written on. IN THOSE STATES WITH A RIGHT TO WORK MENTALITY/LAWS.. it may be different... courts backing the employer vs the worker... If it was me I'd tell them to stuff it...

I think you've got it backwards. Oklahoma is a right to work state, and non-competes cannot keep you from working in your chosen field. Really don't think forcing people to pay union dues to get a job has any effect on a state's laws concerning non-compete laws. I was involved in a non-compete lawsuit (I was sued) but I was toward the top of the totem pole, the non-compete agreement was vague (I didn't realize I had signed one) and was exonerated.

As other have said, the employees should seek legal advice. A lot depends on state law. If the owners are trying to sell to retire the employees may have some sympathy and allegiance to a long term employer, but the employer should not participate in restricting the employees. Only more details would tell us what the new owners have to fear. The sellers may not have much of an asset.

Aaron Ford · Jan 5, 2016

This is very true. However, do not ask any questions about amp, volt, resistance, etc... Any questions regarding code should be avoided altogether. The resultant fecal storm is not pretty. On a brighter note, I have had major problems solved by one answer. Old Onan generators running and charging within minutes of asking. Complete systems laid bare and explained in laymen's terms. This site is great, but mainly due to the human element.

Aaron

JRSutton · Jan 5, 2016

Non compete agreements aren't usually written to attempt to keep you from competing if they let you go. Even if it were, I think that'd be real hard to challenge in court. Read the fine print to be sure.

It's just insurance for the employer, and it's perfectly reasonable. If I hire a programmer, I wouldn't want to spend all the time and money bringing them up to speed on our propitiatory software just to have them to leave six months later with our code and processes in his head to go work for our competition for an extra 10 grand a year.

You either sign a non compete or you don't get hired. There's no negotiating that, and there's no premium paid for it, it's just a term of your employment - just like you won't come into work drunk - and you'll work 40 hours a week. If somebody doesn't want to sign it, there's just no room for them.

That said - read the fine print, make sure there's nothing crazy in there. If in doubt, consult a lawyer familiar with your state's labor laws.

I think what you'll probably find if you talk to a lawyer is that it's a non-issue.

Frank41 · Jan 5, 2016

In the medical profesion, grain business, and manufacturing, I have heard of this. I have also heard that these can be broken. So get a Perry Mason and cover your back side. It seems like a overkill for blue collar though.

I hope as farmers, we as being jack of all trades and master of none aren't included.

LAA · Jan 5, 2016

That is a pure formality, if no type of offer accompanied the request it means they don't care whether you sign or not, if you can compete then start your own company and put them under.

paul · Jan 5, 2016

If you guys walk in with a reasonable dollar amount per person for signing it, the ball is in the owners court.

They stand to lose more than you do if the sale doesn't go through......

Without knowing the details, I see no reason to sign such a thing with an exiting owner. Nothing in it for the worker.

I presume the buyer would require it if any one they rehire.

Paul

RodinNS · Jan 6, 2016

As much as the salary would equate to for the duration of the non-compete.... You're not the one doing the sale, they are. No reason for you to make yourself unemployable.

Rod

RodinNS · Jan 6, 2016

Sounds to me like the new bunch entirely intends to do some house cleaning once the sale goes through... This way they want it locked up that you can't take the secrets with you for spite after they can you.
Others are mentioning a non compete as a hiring clause. That I can understand. That is a term and condition of employment that you accept or walk. This.... is holding a gun to your head and telling you to sign or you'll be unemployed.... and if you sign you'll probably be unemployed too. So I'd just tell them to get stuffed. Unemployed with options is better than unemployed with no options... It's not really a legal question. It's a logic question.

Rod

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