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Dealing with Non-Compete Clause

本文发表在 rolia.net 枫下论坛A friend was recently asking for advice on dealing with a non-compete clause in her new employment contract. While I must emphasize that one needs to consult a lawyer on matters like this, here are some basic information and thoughts I wish to share. I hope this also serves to invite a discussion of your actual experience and thoughts in this matter.

What is a non-compete clause?

In general effect, a non-competitive clause states that should the employee choose to leave the company, he or she will not go to work for a competitor for a specified period of time, often two years.
Such clause particularly concerns employees who have access to critical information through job responsibility or social interactions with owners or high-level executives. This clause protects an employer from damages caused by losing an employee to direct competitor since the leaving employee might bring commercial intelligence to the competitor causing unfare advantage in the compeition.

A standard non-compete agreement might read like this: "Employee agrees as a condition of employment that, in the event of termination for any reason, he/she will not engage in a similar or competitive business for a period of two years, nor will he/she contact or solicit any customer with whom Employer conducted business during his/her employment. This restrictive covenant shall be for a term of two years from termination, and shall encompass an area within a 50-mile radius of Employer's place of business."

What is the catch for a non-executive employee?

The primary purpose of a fair non-compete clause should only ensure that when an employee leaves the company, he/she does not take any clients or any information that is the property of the employer with him/her. In reality, most clauses are phrased so that the contracted employee can not work in the same field for a specific period of time after leaving the company. It will be actually quite difficult for an employer to enforce a non-compete clause in a contract. Employers keep putting them in, though, in the hope of limiting competition for even a short period of time.

How to respond to non-compete clause in general?

Even though such a clause is difficult to enforce, you still have three options: a. Sign the contract; b. Do not sign the contract; c. Ask to have the clause removed or standardized/generalized.

It is possible to get such a clause removed from a contract. Two things you can consider doing:

1. Explain that signing a contract containing that clause would endanger your ability to earn a living after your employment end with the employer in any event. While you do wish to contribute to and develop with the employer in the long run, and while you think it is a resonable expectation for an individual to build a continuous career in one industry, a strict interpretation of a very restrictive non-compete clause would mean that you are unable to take on any work similar to what you had been doing in a specific industry for a lengthy period of time.

2. Suggest if the employer is truly concerned about the information you will have access to, the employer can add a clause to the contract stating that you will have access to that information that is necessary for general work pupose during your employment period, but the employer can revoke your ability to use that information after your employment ends.

Above is not the best solution to protect you in the long run. The best advice should come from your lawyer. Weigh your cost and benefits and take it seriously should you need to and should you afford to seek legal advice.更多精彩文章及讨论,请光临枫下论坛 rolia.net
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Replies, comments and Discussions:

  • Dealing with Non-Compete Clause
    • In the real life It's true that the employer is difficult to enforce it
    • GC: 拜读了Dealing with Non-Compete Clause 一文,让我想起一个有趣的例子。我的前公司老板多年前不知因为Non-Compete Clause 或破产的原因,被法律限定两年内不能在方圆N公里内经营类似企业。
      在经历了破产和离异等中年危机后,他决定从头来起,首先让他的前下属兼two milk担任president, 客户没有丢失。两年解禁后两人分享公司权力。经营了五六年后老板再婚,女拍档决定"有条件地"退出公司。老板从银行贷很大数目的款项,按揭每月还她的股份。如果五年内无法还清,女老板还要回到公司经营。如此,他继续经营公司,她和丈夫去海边度假去了(当年42岁)。

      我当年从这个故事中解读了三点:

      1、本地法律在完善Non-Compete Clause 还有工作可以做。
      2、男同学如果要改变家庭或感情格局,请三思。如果同时面临这样的责任:赡养前妻和家庭,供养和现妻共同购买的房子,及由two milk产生上述经济责任,这样的事儿只有智商情商都比较高的人士才能担当。
      3、指责中国男同学爱包N奶的观点可能有地域性歧视。

      周末愉快!