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Tuesday, June 4, 2013

What non-competition clauses tell you about your potential employer.

We admit it, non-competition clauses are glossed over, laughed at for being unenforceable, and generally are ignored by doctors and professionals alike. They are the awkward pause in employment negotiations that potential employees just sign rather than deal with.

Yet these newly minted employees don't usually realize that the devil is in the details and the complexity and awkward nature of these "employment prenups" is calculated to work in an employer's favor. We should know. We draft, explain, and require restrictive convenants like non-compete agreements for our client's businesses. Although we rarely get it, we expect some struggle over non-competition clauses.

We find that two situations commonly occur:

A. Employers intentionally set the tone of employment by the terms of these restrictive measures and how (or if) employees negotiate these terms, or

B. Employers strategically neglect to look at their potential relationship with their employee carefully and try to cut administrative costs by relying on norms. 

For both types of employers it is a choice about where to put their attention to maximize their return. They both expect a fight.

Intentional employers constantly look to their own benefit, yet can be persuaded to change the means of achieving their goals if it benefits them (and you).

Strategically neglectful employers commoditize their employees and expect them to work like cogs in a machine, despite different roles, responsibilities, and depend on adhering to a business plan that ultimately others have set up.

We think of these like employment prenups, because they should be direct conversations about the goals of your long term partner, and how your partner wants to achieve those goals by associating with you. Both intentional partners and strategically neglectful partners may be good or bad based on the actual goal they have in mind. 

Like potential spouses who are active in relationships, intentional employers can strive for employee happiness if it benefits them. However they may also take hard stances and try to modify contracts based on circumstance. However like potential spouses who are hands-off, strategically neglectful employers may provide a standard level of benefits if it is the norm, but also may harshly enforce restrictive covenants to set a norm. The key is finding out both how and why the employer conducts business.

How do we gather this? As attorneys we are afforded some small luxuries in life, one of them is the expectation that we are both disinterested and very blunt, the second is we know how it works from top to bottom. While this works for us, we don't usually recommend potential employees acquire the attributes of an attorney (remember the philosopher we emulate, Socrates, wasn't beloved by all). 

Yet, among the steps that you should have taken (like having a frank discussion with a decision maker about the goals, asking former employees about the work environment,  and anonymously stopping in to see how they treat customers or clients) there should be a negotiation about the non-compete clauses or agreements to see not only if you can do better, but the justifications the employer gives in wanting you to sign one.