Non-Compete Clauses

Screen Shot 2016-05-17 at 10.42.00 AMIf you’ve never experienced a non compete clause, and aren’t sure what they are, they’re a part of some contracts that limit your ability to work doing the same work for another employer or for yourself. They are meant to protect your employer, so you don’t set up shop next door with all your employers proprietary methods and steal all their clients.

I think we can all see the logic in restricting an employees ability to take all his employees clients with him. That’s common sense. But what about taking proprietary knowledge with you?

In reality, in most cases, there’s nothing proprietary. To summarize, I’m going to go old testament on you.

“What has been is what will be, and what has been done is what will be done,
and there is nothing new under the sun.” – Ecclesiastes 1:9 (ESV)

If you’re a nurse, a mechanic, in marketing, if you’re in technology or many other industries the services your company is providing are based on industry wide knowledge. If there are proprietary methodologies, not taking them with you shouldn’t be a problem even if you go to work for a competitor. So if you are a mechanic working at a garage that has custom equipment for analysis of engines, you really shouldn’t have a problem going to work for another garage, as long as you don’t take away clients, or that special system that you used. Being a nurse for one service or hospital is most likely not hugely different from being a nurse elsewhere because of some proprietary method.

Non compete clauses have a feudal feel to them, where the employer is in the power position. Over the past 30 years the US economy has moved from a labor/management model to where many people, whether they know it or not, are really free agents. Lifetime employment is a thing of the past.

Even if you are a W4 employee and not a 1099 your employment is likely dependent on particular work or clients. What this means is it’s pretty likely that an employee will lose their job, move along, and maybe take a job where they’d be in a position to hire their former employer. One day you’re the boss, one day you’re the employee. When this is the case, it’s a pretty horrible idea to make employees feel subjugated. Treat them well, and even when you can’t pay them anymore they’ll still add value to your company.

Non compete clauses can scare away great employees, too. Many people would not consider positions with restrictive non-compete clauses. The value of them over the cost of restricting hiring possibilities hardly seems worth it today when competition for talent can be so fierce.

This isn’t just my opinion, or that of a small number of trouble makers. The White House and many state governments are looking very critically at non compete clauses, and limiting or even completely doing away with their power.


developer, writer, speaker

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