It's nice for some anonymous internet person to say "Non compete clause? just don't sign them" but if you are ever lucky enough to get high up in a company this often just sometimes isn't an option.
So if you do have to sign one then the below is the advice I've been given by the employment lawyer's I've spoken to over the years.
1) make sure it says you are compensated for the time you can't work. ie if it says you cant' work for a competitor for a year then you should be getting a salary for the same duration. Some companies will try to give you a signing bonus and include language that the signing bonus is consideration for you waiving this compensation. I mean it's nice to get $50,000 in stock vested over 3 years just for signing, but it won't feel that way if your former employer also views this as compensation for you not working for a year.
I've had 3 or 4 employment lawyers go over this with me, both as an employee and as an employer and they've all repeated this, if the company doesn't' pay your salary during the non compete period then you just cant' sign it. Now they also stressed that this means the non compete is probably not enforceable but that won't be much consolation if they drag you to court.
2) Be very clear as to what "salary" means. So if you are a Google engineer and you have a salary of say $125,000 and then a bonus of say $100,000 worth of restricted shares vesting over 3 years and maybe a signing bonus of $50,000 worth of shares vesting over 3 years, you might brag that you just got paid $275,000, but the company will probably argue that they only need to pay you the pro rated amount of your salary over the waiting period.
Finance especially gets burned by this, as small salary and huge bonuses are how many hedge funds compensate their key employees, also known as the "you eat what you kill" compensation package.
3) Be very wary of telling your former employer of where you are going to work. There just is no real upside to it.
I've also been told not to hire former employee's in the first year you leave for a competitor. It's one thing for a company to loose you, but if you leave and take an entire team with you then even though you've probably done nothing wrong, it own't be very comforting when you are out of pocket $10,000's of dollars in lawyer fees and stress.
As always, IANAL, I've just happen to work in the most incestuous industry around, finance, and I've seen and heard too many horror stories of people leaving for another firm and bringing their team with them and then being in court for years.
I think the key point isn't not to automatically sign or not sign non-competes.
It's to realize they are a negotiable item (just like salary, stock, vacation, severance, etc.) and to ask for appropriate compensation in return for signing it. This can include a guarantee of salary during the time of its application. You can also narrow the conditions under which they're invoked or the scope of what's considered competition.
> 3) Be very wary of telling your former employer of where you are going to work. There just is no real upside to it.
This!
I live in Ireland where non-competes are illegal under EU law, but that doesn't stop some employers trying their luck.
I was made redundant from a company that provided a SaaS retail reporting/analytics system. They had never added a mechanism or developed a business process to easily cut off customers who weren't paying their bills, so rather than fix it they made a few people redundant to make up for the shortfall.
A friend introduced me to a rival firm who liked me enough to hire me, this was during my 30 day notice period when I was still working for my old employer. I never told my old employer that I had been hired as I knew the MD would lose his shit. Unfortunately I told one person there whom I considered a friend. I swore him to secrecy, but he had a drinking problem - I think you can see where this is leading. The MD got wind that my friend knew where I was going and one day (after I had left, but before starting the new job) when he arrived in a bit hungover the MD said "Tell me where he's working or I'll fire you for being hungover". So he blabbed on me.
The next thing I know I'm having abusive texts and emails sent to me, a motorcycle courier delivered a letter ordering me to not start with the new company. He even went to the Garda and falsely claimed that I was stealing trade secrets - they told him to go see a solicitor.
Then he came banging on my door in a rage. I had to call the Guards on him.
Although the new employer initially supported me, after a while they said I had baggage and they had to withdraw the offer.
As for my old boss, I had to ask the Guards to get him to back off.
Yep, you old employer does not need to know where you are going.
So if you do have to sign one then the below is the advice I've been given by the employment lawyer's I've spoken to over the years.
1) make sure it says you are compensated for the time you can't work. ie if it says you cant' work for a competitor for a year then you should be getting a salary for the same duration. Some companies will try to give you a signing bonus and include language that the signing bonus is consideration for you waiving this compensation. I mean it's nice to get $50,000 in stock vested over 3 years just for signing, but it won't feel that way if your former employer also views this as compensation for you not working for a year.
I've had 3 or 4 employment lawyers go over this with me, both as an employee and as an employer and they've all repeated this, if the company doesn't' pay your salary during the non compete period then you just cant' sign it. Now they also stressed that this means the non compete is probably not enforceable but that won't be much consolation if they drag you to court.
2) Be very clear as to what "salary" means. So if you are a Google engineer and you have a salary of say $125,000 and then a bonus of say $100,000 worth of restricted shares vesting over 3 years and maybe a signing bonus of $50,000 worth of shares vesting over 3 years, you might brag that you just got paid $275,000, but the company will probably argue that they only need to pay you the pro rated amount of your salary over the waiting period.
Finance especially gets burned by this, as small salary and huge bonuses are how many hedge funds compensate their key employees, also known as the "you eat what you kill" compensation package.
3) Be very wary of telling your former employer of where you are going to work. There just is no real upside to it.
I've also been told not to hire former employee's in the first year you leave for a competitor. It's one thing for a company to loose you, but if you leave and take an entire team with you then even though you've probably done nothing wrong, it own't be very comforting when you are out of pocket $10,000's of dollars in lawyer fees and stress.
As always, IANAL, I've just happen to work in the most incestuous industry around, finance, and I've seen and heard too many horror stories of people leaving for another firm and bringing their team with them and then being in court for years.