01
May
12

The Sphere of Fear

Non-compete agreements are common in the IT support industry.  Employers fear clients walking off with their talent (and their future revenues) before they’ve gotten their training investment out of them.  They primarily fear that their practices might be used by an exiting employee to steal their future revenues by starting their own business.  To counter the chances of this, they have their new employees sign non-compete agreements.  The problem is not only that they are typically too broad in their future exclusionary requirements, but also that they are presented to the new employee after they have given notice to leave their old job.  Essentially what should be an early interview discussion point becomes economic extortion, especially for younger workers, inexperienced with job negotiations.

Below is a map of my area (made with Free Map Tools) with concentric distances from a local area.

The red indicates area based on a 25-mile radius while the yellow is 50 miles from the same center.  The green circle reflects a green-zone of a 5-mile radius.  The concept behind it was to counter the “standard” 50 mile exclusion radius with a more practical geographical model of exclusion.  Conceptually, beyond 25 miles, these IT services are not very practical for exclusive prompt service and thus the exclusion factor should be less in that zone.  The green-zone, based on the radius of where the employee actually lives and thus must commute from, should be fairly open due to long-term commuting practicality and its small footprint.  The linear radii on contracts don’t convey the unfairness of excluded area like the map does.

In terms of broadness, non-competes are often vague.  Employers want you out of their industry.  That’s hard to do in an increasingly specialized sector of the economy.  How does one do that for two years and still support their family at any modicum of the same standard of living?  Add to that the factor that in most households both spouses work, and you can see where the 50 miles becomes very unreasonable since relocating is pretty-much out of the question.  Staying away from the former employer’s sweet spot is one thing.  Being prohibited from a reasonable distance and from key existing clients is more reasonable.

The final insult is lawyer fee threats.  Most have the “winner take all” mentality of the losing party paying all legal fees of themselves and the winner.  This clause clearly makes sure the lawyer that wrote the contract is the one party that will not lose however things go down.  It also puts the onus of risk (and thus fear) on the employee who is less likely to be able to absorb legal fees than the business is.

The non-compete is a contract between the employing corporation and the employee.  At signing, it seems like a friendly safeguard between two people across a small table looking forward to a prosperous relationship.  Down the road, as the company grows and the employee grows more dependent on the salary, as well as their future expectations within the industry, personnel changes may well turn the safeguards between friendly parties into a sharpened instrument in the hands of new, less-agreeable management.

Corporate-centric non-competes seem harmless up front, especially when the fruits of a new job appear so rewarding.  However, we live in a fast-changing world and work in an even faster changing industry.  Don’t paint yourself into a future corner.  Insist on better flexibility with amendments to the non-compete.  Don’t underestimate the assets that you bring to the table in the prospective relationship with your new employer.  Use the non-compete discussion with them up-front to see where their ego really is.  Those two birds in the bush may not be any better than the bird in hand.

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