A few thoughts on non-competes

Disclaimer: I am not an attorney. This is not legal advice. These are just observations.

“Individuals change jobs in orthopedics every day within the same orthopedic field without drama.”

1) Thoughts on non-competes when leaving a position in R&D, Marketing, Ops, Clinical, Regulatory, etc.

Broad non-competes are generally NOT enforceable. Courts say that an individual must have the ability to make a living in their field of expertise. Below is some real language from a real non-compete agreement. Ridiculous.

“[You cannot work on] any product, process, technology, machine, invention or service of any person or organization other than your current employer in existence or under development, which is similar to, resembles, competes with or is intended to resemble or compete with a product, process, technology, machine, invention or service upon which I have worked or about which I was knowledgeable during the last 24 months of my employment with the Company or while providing products of services to a Company customer. “

Many companies will “bully” a strong exiting employee by telling them they cannot go work for Company B. This is terrible. If they actually “valued” the employee, they would have invested in them more in the past.

In rare cases when a company sues an exiting non-sales employee, the non-compete is negotiated down from “all spine” to “stand-alone cages”.

Company B must be comfortable with your non-compete from Company A (and they usually are). Sometimes tiny companies are scared of Big company’s legal might.

If you feel it is necessary, Company B can change your incoming role a bit to make you feel more comfortable.

You should always leave on good terms. Be cooperative and help your Company A through the transition of your projects with training, handoffs, organizing, etc. 

You will probably get a letter from Company A reminding you to keep trade secrets, do not share insider knowledge and uphold your non-compete.  Put it in a folder.

Also, courts say that Company A must have compensated you for signing the non-compete. In other words, you must have been paid for giving up your rights. This is usually paid to you in cash, stock options or stock grants (RSUs). You may be able to give back the RSUs and void the non-compete agreement.

If you are really nervous about legal action moving from Company A to Company B then in rare cases Company B can indemnify you.

If Company B is nervous about legal action from Company A, then Company A can change your title of scope of work to move your position outside the stated “field” in the non-compete.

2) Thoughts on non-competes when entering a new Sales position.

(shared by Stu Brandon on LinkedIn)

Most people in our industry think a non-compete is not negotiable. Everything is negotiable. Some companies may take a stand they require a non-compete.

Try negotiating the following.
-non-compete goes away if commission % changes
-non-compete goes away if territory decreases
-length of non-compete reduces over time (on one year anniversary on employment non-compete reduces to 6 months, on 2nd year, non-compete completely goes away)

What does it tell you if companies or people are unwilling to negotiate a non-compete? Why do they want non-competes?
-to manipulate you
-to scare you
-to control you

If people are unwilling to negotiate a non-compete, why would you want to work for them?

Are you just a “unit of labor”?

I do understand there could be reasonable exceptions to this if a guarantee is involved. In this situation, I would suggest the length of the non-compete reduces over time.