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Non-compete edition


A year ago today I was evaluating what I was going to do next as far as my career. Officially separated from my employer I looked over my non-compete until my eyes were fully crossed. I had signed this document 6 and a half years prior and didn’t think twice about what it could mean. I was 20, it was my first real job, I accepted the simple run down and understood that it was expected that I would sign in order to continue employment. I didn’t feel bullied or tricked into signing it, I just knew I was supposed to sign it. 6 and a half years later I was not doing the work I did the day I signed it. I had climbed a considerable amount and positioned myself to bring home a pretty nice paycheck. Besides the fact that I obviously couldn’t do similar work I also wouldn’t find a position that allowed me to earn the income that I was earning in a different industry.

I had always heard “you can fight your non-compete” from everyone and their mother; even while I was still working and not even considering the need to fight it. In fact, there was a well-known story of a woman who did win the fight against our company and the non-compete we signed. I decided to start looking for work and just see what happened, if a job came up that would require me to look at the non-compete a little closer than I would do it at that time. I really wanted to honor my non-compete, but I wasn’t sure I was going to find decent employment outside of it. I was really good at what I was doing and I made a good amount of money doing it. Of course the first couple of calls that came through after putting my resume out there were from direct competitors who I easily turned down. Those offers were clearly very similar to the job I had just been doing, no gray area.

The area became a little gray for me when I had an offer to work as an on-site coordinator for a competitor. I pulled out the non-compete so they could send it to their legal department, who decided they didn’t have a problem with it and we could move forward in this position without breaking my standing NC. I still didn’t take the offer, I wasn’t sure that’s what I wanted to do. I was working somewhere already and happened to know that my former employer was tracking where I was to see if I did violate my NC. Rest assured the owner of the company declared my current position did not violate the non-compete agreement and the sleuths laid off a bit. After 6 and half years with one company I did have a lot of information and a pretty strong client base. Had I any intention of using what I knew against them it could mean trouble for them so I was not shocked that they were making sure I was abiding by our agreement… annoyed, but not shocked.

A little of what I found out:

…The employer has the burden of showing that any restriction is reasonable and necessary to protect against unfair competition. California, Louisiana, Alabama, Florida, Oregon and Michigan have the most restrictions against non-compete agreements…

…However, in order to be enforceable courts have ruled that: (1) the employer has to have a protectable interest; (2) the restriction has to be reasonably related to that interest; (3) the restriction is reasonable as to time and place; and (4) the restriction imposes no undue hardship on the employee…

…But when an employer asks an employee to sign a non-compete agreement after starting employment and there is no extra payment or benefit to the employee for signing it, then almost all courts will invalidate the agreement for lack of consideration…

…If your job was to go through the phone book and cold call people and ask them to buy your product that probably would not constitute a protectable interest because a phone book is something that is available to the public…

I’m in Alabama and have always heard they are tough for the employer to win here. A protectable interest became unclear when considering my job did indeed require me to pull out a phone book and cold call people. I was also told by an attorney (side note, I did not seek out an attorney this attorney volunteered this to me) that my non-compete was excessive and could easily be won because a) the 200 mile radius had previously been deemed unreasonable by a court in Alabama b) 18 months waiting period was previously deemed unreasonable by a court in Alabama. I signed my non-compete 7 days after I started my job, 8 days after accepting and was not given any extra payment or benefit for signing it. Even with all of this information and much, much more I decided to honor my non-compete. It wouldn’t be like me to fight against something that I had signed and I couldn’t bring myself to do it even with multiple companies and legal departments and people telling me I could do it and cheering me on.

I share this with you to remind you to think into the future when you sign things. It’s nice to think that we are going into a forever relationship with a company, but you honestly never know what will play out in the long-term.

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