Non-Competes For Integrators: Love 'Em Or Hate 'eM?

A frank question: Does this mean an integrator must sue an offending (former) employee who breaks the NDA? Even if the case goes to trial, what sort of settlement is hoped for? Does it mean spending thousands to get back pennies?

I understand NDAs where a manufacturer's intellectual property or technology is involved, but it seems like an 'nuclear option' in the case of integrators. Can tradespeople be prevented from engaging in their trade of choice?

Has anyone ever had a NDA enforced on them? I've found that most NDA's aren't worth the paper they are written on.

The majority of US states (not all) are 'right to work' states (or 'at will' as Undisclosed stated) which makes it very difficult for companies to sue former employees (even with NDAs) - unless they can prove real damages. i.e. loss of actual value.

Examples:

If an integrator tech quits to go work for another integrator - good luck enforcing any NDA; the move does not take any value from the company.

If an integrator tech quits to go work for the end user company (customer of integrator; cutting out the integrator), then the company has some basis to sue to enforce the NDA. By going to work directly for the customer, this move can (possibly) be shown to be 'taking value' from the integrator, thereby making the NDA more enforcable. Also, if an employee 'walks out the door, taking projects with them', I would imagine this would be an example of where a company has footing to sue to recoup this 'loss' under the NDA.

Keep in mind that no employer is going to expend the amount it costs to sue a former employee unless they are protecting 'value'. And this value has to be great enough to offset the costs of enforcement (unless they are just pursuing litigation out of spite - which can happen).

IMHO, if a company has low-level employees sign NDA's, then this is a sign of a company with retention issues, indicating this is probably not a great place to work to begin with. :)

We wrestled with this for years. We do not want to "Lord over" our employees, but, on the other hand, we, the company, oftentimes pay for the training and experience that makes someone much more marketable than when they first came to us.

How much does it cost to train someone? Travel, Time, Direct Training Costs. How about on the job training, where mistakes are made and that cost us?

Yes. Many will say it is the cost of doing business. Hopefully all that cost can be passed on to the customer.

What if an integrator wants an employee to get their CCNA. Who should pay for that? The CCNA goes with the employee, should they decide to leave.

Here is where we settled with training and non-competes:

If we require the training, then we, as the integrator should pay for it. If it is a cert (like CCNA), which can go with the employee should they leave, then there is an expectation that the employee will have some skin in the game.

Non-Competes have precedent in PA as not holding water due to the inability to keep someone from providing for themselves.

The other side of this question, is “How do you create a company culture that keeps people from leaving?”

A proactive approach, and associated thread, along these lines would prove productive in this community.

I actually worked for one company that wanted me to sign a contract saying I'd stay on for two years after they sent me to training. The training cost $500, took two days, and was required for us to even sell the product. That was insanity.

Here's the personal choice - The employer is giving you something of value - a job - in 'consideration' of that, the employee is granting the employer the right to restrict future employment for a certain period of time.

The employer would argue that it is not 'forcing a contract'. The prospective employee is free to accept or reject.

That said, obviously the practical power dynamic is frequently warped, which does make it essentially more coercive.

also kept his last check to help pay the training he had recieved prior to leaving

Also, training should immediately and noticeably increase the productivity of the employee. If you send an employee to a training class on X and X is part of their regular responsibilities, the employee should be able to install / configure / troubleshoot X more efficiently after the training (i.e., being able to complete tasks in less time or do tasks that higher paid employees would otherwise have to do). That should increase value for the employer.

Let's say you spend $5,000 training an employee - a fairly liberal estimate - that training should make the employee more productive. If the employee is only $100 more productive per week, the return to the employer in year 1 is ~$5,000.

I can understand an employer being pissed about an employee getting hired, getting trained and quitting with a few months time but that's not common. More typically is someone who has been employed for 3, 4, 5 years and then leaves. How much training did they really consume and how much increased value did that training lead to during their time of employment.

Can anyone really say, for the $5,000 or $10,000 the employer paid for training, the employee should now be barred from working in the same domain or market for X number of years?

Let me say, there is not a lawyer in the bunch of you. But I will say the 1. an NDA is a non disclosure agreement not a non compete. 2. A non-compete agreement in most cases is not enforceable unless there sever damage to the suing party. If the suing parties is willing to pay the lost wage etc of the breaching party then we may have an enforceable contract. There are many ingredients in the issue of a perfected contract breach. Is there any special knowledge obtained that can be used by the employee. Is there proprietary processes or info that the employing company has. Again this is a personal service contract and enforcable as suck.

As a short note, the guy who has the most money usually wins in a lawsuit not the righteous person. If you are warned of the policies of the company at the time of signing and sing it then and you intend to breach said contract you have committed a fraud. Which is a civil court issue.

"Employers should draw non-competes very narrowly, probably focusing on preventing former employees from cannibalizing the firm's customers."

Typically, that is called non-solicitation, i.e., the former employee cannot solicit (i.e., cannibalize) the firm's customers (i.e., the employee can work for a local competitor so long as they do not solicit the previous firm's customers). Non-solicitation is often handled / ruled differently than non-competes. I have seen companies include a list of specific 'house' customers and, while I am not a lawyer, I suspect having a narrowed, defined list would help in enforcing such agreement in many jurisdictions.

I also have a non-compete. And I know for a fact my company has tried to enforce it on numerous occasions.

The problem is not whether or not it is legal or enforceable, but it scares away the parties from hiring you.

For example, a former colleague was leaving to work for a competitor. Once my employer found out, their lawyers contacted the other firm. Suffice to say, the competitor decided not to hire the individual. On other occasions where a person was leaving to work for a customer, they tried a similar approach and the customer threatened to take all business elsewhere. Others they did nothing so I have found it is used when a manager's or executive's “feeling are hurt” like a girlfriend after you break up throwing your clothes out the window.

I understand that the employer invests a certain amount of $$ on the individual for training, however the employee must also put in their own time for the training such as research, study, etc...

Until the Department of Labor in each state outlaw this practice it will continue. I don't like unions, but this is a case where a union would help protect the employees.

Everyone has an opinion on this that you talk to, where they say don’t sign it… then they will fire you… or hire a lawyer to fight it… but who has the $$ to pay for a lawyer to fight this? My employer chose to start this on existing employees after working there for 3 years so I really had no recourse but to sign it.

How many of you have experienced poaching from competitors?

How about head hunters?

How about manufacturers and thier reps? Even getting someone to leave your company and go to another?

These are obviously some outside reasons we get defensive about our staff.

This is the type of thinking I find terrible. An attorney is trying to sell his employee agreements using the following scare tactics:

"All employers share a common concern that trying employees, giving employees a start in their career or a chance to make a living, comes with the risk of competition. So a few thoughts come to mind, like "no good deed goes unpunished", and the story of the turtle that took the scorpien across the river only to be stung on the other side. It's one thing to deal with competitors in your industry on a level playing field, and another to reveal your methods and secrets and endure training, only to have the ungrateful ex employee steal your secrets and compete against you..... When it comes to this good guys really do finish last, and broke or at least poorer."

The mindset that employers are doing people a favor is laughable. What is this ditch digging in the 14th century? Talented employees have lots of choices.

And if a security integrator owner is going to go broke for a key employee leaving, this implies 2 very important things: (1) the business itself has no intrinsic value beyond that employee (or else why would customers leave to a single guy) and (2) the owner is paying the key employee so little relative to what the owner is being paid that the employee is motivated enough to do this.

Recently, we have been talking about the security industry being a STEM field but, with tactics like this, it is more like slave labor.

Prior to making an employee offer, you should present to the prospective employee your non disclosure privacy agreement. This needs to narrowly defined to protect information and activities about your active clients and prospective clients, and your internal operations.

If the potential employee agrees to the terms of the NDA / Privacy agreement, then and only then do you make an employment offer. The makes the two agreements separate, and much more enforceable.

As part of the employee agreement, the employee agrees to an annual review of the NDA policy, and protected information. as part of the employee review process, include the NDA policy that discussed in writing your clients, processes, and internal secrets is a good thing to remind employees.

Of course all of your RMR and purchase agreements have a clause restricting clients from hiring past employees, or firms that might hire (past employees are restricted from being onsite) for a period, (The shorter the more enforceable.) 12 months is the max.

However, after 25+ years, I have one past employee that I really missed, but we remain friends, and he's brought us more business in his new role.