Who here has had to deal with this. Anyone have to go to court? I’ve had garden leave, but it seems like some of the non-compete agreements these days are out of control. As Alphie would say “corporatism” run amok!
Yeah, it’s pretty standard. Especially if you have equity in your firm.
I have one. Basically, I can’t solicit clients or employees of my current firm for some period of time after I leave. Most people in my industry (business valuation) “get around” their noncompetes simply by having their new employer announce their hiring, making sure to send the announcement to any clients who might want to follow the person to the new firm. My firm recently revised our noncompetes to make them less onerous, because the old ones were so strict that they weren’t enforceable.
My company has some non-compete stuff, but the policies are pretty dick. So, usually when someone leaves, it’s structured in a way that it doesn’t trigger the issues. Sometimes, management just ignores the terms. In most cases, the person isn’t going to cause an issue by working somewhere else, so enforcing the non compete is just a dick move.
Noncompete contracts aren’t enforceable in California, so I’ve never had a problem.
^ these do tend to vary on a state-by-state basis. It’s recommended to consult with an attorney. In my case, I learned that in my state a covenantor must be compensated in some way (money, promotion, etc) for the agreement to be enforceable. Simply keeping your job was not adequate compensation.
I have a pretty strict one, I think. 1 year lock up, not allowed to work for (or be associated with, ie be a “consultant”) another company with the same stated benchmark that my fund has now. I’m not sure if it’s enforceable, but I guess we’ll see when the time comes.
I have a very one-sided (to my employer) agreement that I naively signed in my first gig and renewed because I am basically trapped and wasn’t in a position to leave at that time and deal with the consequences. I put myself in a position to leave now by completing CFA, paying off all debt, and saving a ton of cash. It is so onerous that I think a court would throw out most of the provisions. I am planning to leave the firm within the next year when my agreement ends and I am pretty uneasy about it.
Highlights:
Non-compete - may not participate in any business that is in any way competitive with the company for 4 years after the end of the agreement within 400 mile radius around every office or place of business that the company has. My company could spin this to basically any type of investment activity and this could basically cover the entire United States so I don’t see how this is enforceable.
Liquidated Damages of $60,000 for a breach of the agreement, including unilateral termination by the company.
They can terminate me at any time and the above would apply. I need to give notice 180 days prior to contract expiration.
^thats some hardcore agreement you signed. pretty sure it wont be upheld by the courts.
note: law degree for U of Phoenix
Maybe not a non-compete, but garden leaves certainly are. We’re waiting to hire a person now in CA that has to wait out their garden leave. Of course, that’s a little different since you’re still getting paid, but it’s still a pain.