My first job out of University was in the IT department of a payment processing and debt collection company. My desk was juxtapose to a call center where, all day, I listened to people on welfare collect bad checks and credit card debt from other people on welfare. When several of our sales people left to start their own business, taking many of the company’s customers with them, the company began to have everyone in the office, from those in data entry to customer service, sign a non-compete agreement. It was the first non-compete agreement I refused to sign. Over the course of the next fifteen years, I would be asked to sign non-competes several more times, always prior to employment. I’ve always refused, and until recently, I’ve never been denied a position because of that refusal.
A non-compete is a type of contract issued by an employer, typically part of the standard work agreement, job offer or non-disclosure agreement, which states that the employee agrees not to start a business that competes with their current company or to work for their company’s competitors, for a set length of time (typically one year) after leaving or being terminated. If that sounds like an illegal contract, in the state of California, it is1.
In 2017, Illinois enacted a law banning non-competes for low income workers, typically those earning less than $13 per hour2. Even in states where non-competes are not banned, they are often considered unenforceable. From a purely ethical perspective, they limit one of the most basic premises of capitalism: the freedom to chose who one works for. They’re an agreement that effectively puts an employee into debt, even if that debt is limited in scope, to their current employer.
The following is a non-compete that I discovered in my job offer for a company I worked for in New Zealand:
24.1. Unless the Employer consents in writing, the Employee will not engage directly, or indirectly in any business, which is in direct competition with any business of the Employer for a period of two (2) months from the date of termination of this Agreement. This restraint may be waived if the Employer is satisfied that that the Employee is not “in conflict” with the Company when the Employee moves on to new employment.
I brought up my issues with this part of the contract with the company and was brought in to talk to the director I interviewed with. The contract clause wasn’t very limited in scope, even though it could be argued it was limited to a reasonable length (2 months). However, I voiced my concerns and the director I spoke with told me, “It’s not really enforceable in New Zealand anyway” followed by, “How about we just remove it for you?” Later that week, I received a version of the contract with the above section removed, which I immediately signed.
In 2016, I was met with a non-compete agreement in the contract for a staffing company. The recruiter informed me they’ve had situations where potential employees had issues with the standard contract and how their legal team would not allow any changes. She then tried to convince me the following statement was not a non-compete:
Despite the recruiter’s claims, the above statement is obviously a non-compete. It’s clearly indicated by the fact that it’s not applied to residents of California where they are illegal. Part of negotiating work agreements is comprising. Even though I was low on funds after returning to the US after a long journey, I still wasn’t comfortable with compromising my basic right to work. However, the recruiter was willing to give me an additional agreement, signed by their director, which removed any work restrictions from my contract. The following agreement effectively nullified the non-compete clause:
So technically, I have signed one contract with a non-compete, even though I had an independent agreement which effectively nullified it. As time has gone on, it’s become increasingly more difficult to not compromise on my stance on non-competes in some way. The following was part of a non-compete from the company SpringCM:
g. Notice. While employed by SpringCM , and for two (2) years thereafter, Employee will: (a) give the Company written notice at least thirty (30) days prior to going to work for a Competitor or engaging in Competing Activities; (b) provide the Company with sufficient information about his or her new position to enable Company to determine if Employee’s services in the new position would likely lead to a violation of this Agreement; and (c) within thirty (30) days of the Company’s request, participate in a mediation or in-person conference to discuss and/or resolve any issues raised by Employee’s new position. Employee will be responsible for all consequential damages caused by failure to give the Company notice as provided in this paragraph.
This agreement is absolutely bizarre, as it includes not only a one year non-compete, but also requires an employee get permission to work with a competing company for up to two years after leaving! In what backwards world would someone even consider it to be ethical or moral to require someone, in a free society, to ask for permission before working for someone else? Their HR representative said overriding this agreement required approval from the CEO, which has only happened once in the past six years. I ended up walking away from this company.
What’s even worse is that many companies that have non-competes often ask potential employees to disclose all their non-competes with other companies. They ask if you’ve previously signed into such a binding agreement, and then ask you to enter into another similar agreement. An example can be seen bellow in a job offer I received Rally Health:
I represent that my performance of all the terms of this Agreement and my Service does not and will not breach any agreement between me and any other employer, customer, person or entity. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.
When trying to find work in Chicago, two companies offered me jobs which had non-competes in their work contracts, which their legal teams would not remove or modify in any way. In the past, I’ve had five different companies offer me contracts with non-competes. When I raised my concerns, every one of them modified their paperwork to remove such agreements, most without issue or challenge. I feel at this point of my life, I couldn’t accept a non-compete, even if I wanted to, out of respect for all the previous employers who listened to my concerns and helped reach an amicable compromise.
I walked away from both of those jobs, and eventually took a job which did have a non-compete, but they were willing to modify it so that it didn’t apply post employment.
Ignoring the Agreement
In regards to non-competes at new jobs, I’ve had more than one friend tell me, “I sign them, but then just ignore them.” Treating an employment contract like the EULA on iTunes or the click through agreements on a phone app, probably isn’t the wisest course of action. I had a close friend from University who attempted to leave a job he had worked for the past two years. The job offer he wanted to take was from another advertising and marketing company, who explicitly asked him if he had signed a non-compete with his current employer. He had signed such an agreement, and the contract prevented him from being able to move positions. Even if the law is not enforceable, most companies who know that their competitors make employees sign such agreements simply will not take the risk. Starting out with a potential court case is never good when accepting a new hire.
Protecting Intellectual Property
Some companies will claim non-competes are essential to protecting their investments and intellectual properties. This is simply not true. When signing onto a company, engineers are often required to sign non-disclosure agreements (NDAs), wavers of copyright, wavers of patent discovery, anti-customer poaching and countless other agreements guaranteeing all work produced by an employee is owned solely by the company. Non-compete agreements are a way of saying the company’s assets extend beyond property to the person themselves, as if hiring the individual entitles the company to their skill sets, and to contractually mandated loyalty.
Alphabet, parent company for Google, didn’t need to rely on a non-compete when they went after Uber, suing them for allegedly stealing the intellectual property around their self driving car technology via their hire of Anthony Levandowski3. Being based in California, Levandowski was free to work as a direct competitor to Alphabet’s Waymo after leaving the company. In the startup capital of the world, this makes sense if an engineer feels that he or she can build a better product if not constrained to their current employer. This allowance for competition can foster innovation, but it does require that engineers rewrite everything from memory. It doesn’t allow for an individual to directly steal assets produced under contact and resell them, as Waymo accused Levandowski of doing.
We Don’t Have Unions
Many engineers I know are willing to sign non-competes so long as they’re narrowly worded. I’ve never personally left one company to go work for a competitor, so my beliefs around non-competes come from a purely moral reasoning. Non-competes essentially put a potential worker into debt. If the agreement is narrowly worded, then it can be said it’s a limited form of debt. But it’s still putting the worker into a form debt.
“What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence. If freedom (real freedom) is the ability to make friends, then it is also, necessarily, the ability to make real promises. What sorts of promises might genuinely free men and women make to one another? At this point we can’t even say. It’s more a question of how we can get to a place that will allow us to find out. And the first step in that journey, in turn, is to accept that in the largest scheme of things, just as no one has the right to tell us our true value, no one has the right to tell us what we truly owe.” -Debt the First 5,000 Years, David Graeber
One of the most basic tenants of capitalism is freedom. Specifically, workers should be free to decide whom they give their time and resources to. Non-competes are agreements that challenge that basic freedom. An employer already owns all the employee’s works and intellectual property. Their rights should stop at the generated work, and not extend to the person’s actual knowledge or skill sets. From a purely capitalistic perspective, non-compete agreements are very anti-competitive. I’ve told some employers I would only sign a non-compete if the company offered to pay my full wage for the one year period that the non-compete was in effect. If that sounds insane, the same could be said of the non-compete agreement itself.
People in tech already give away many of our rights relating to copyright, patents, innovation and intellectual property to the companies that employee us. The willingness of so many engineers to sign anti-competitive agreements hurts our industry. They have the potential to stifle innovation, and that’s one of the reasons they’re banned in California, the startup capital of the world.
I’m a Computer Scientist. We don’t have unions and we don’t collectively bargain. Basic workers rights are our responsibility, and refusing to sign non-competes is essential in defending our right to work.