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Ocutter
02-22-2001, 09:25 AM
I was talking to a buddy of mine about an employee he had last season. This guy worked for a big co. in the area. Turns out he didnt like his position there, quit, and worked for my friend. He had been sent to school for a pest. license and other things by the big co.

At the time they hired him, they had him sign a form saying that he was not to work for any other co. for 3 yrs. if his position was terminated. I was thinking of doing the same for employees I sent to classes. If they do quit on me, how do I follow up on whether or not they are keeping their end of the bargain. Anyone else do this type of thing?

John Allin
02-22-2001, 10:12 AM
My experience is that non-compete's are enforceable as long as the employee received some sort of compensation for siging it. $200 is adequate compensation and it will hold up in court. However, you may need a lawyer to help you enforce it, and unfortunately they don't work for nothing.

Stonehenge
02-22-2001, 10:50 AM
Here's what I've heard on the topic. I'm no expert.

However, if the employee is educated, trained, etc., you will have a hard time enforcing any kind of non-compete; the guy has to earn a living. The courts will not look kindly on a company trying to prohibit a guy from finding employment in the feild he has prior training/education in.

I wish I could quote the articles I read on this, but it's been awhile.

If he's just a pair of arms, I don't know if a non-compete is worth your effort.

kutnkru
02-22-2001, 01:33 PM
I thought that the non-competes (even though we have one) were basically to keep the disgruntled employee from going after an account of ours for a short period of time(18 months) and to protect things like trade secrets, the company name (- so they cant put an add in the press about what a ?? .. ?? .. ?? we were) and the like.

Kris

dan deutekom
02-22-2001, 03:22 PM
Most non-competes arn't worth the paper they are written on.
The courts will not stop a person from earning a living in thier field of work. Non-competes really only apply if the ex employee uses confidential company information (customer lists, secret manufacturing processes, financial knowledge etc.)to steal customers or do other damaging things to the origional company. This type of thing usually applies only to people in upper management, research or similar positions. Also you need good lawers to make them stick

kutnkru
02-22-2001, 03:40 PM
Most non-competes arn't worth the paper they are written on.
...Non-competes really only apply if the ex employee uses confidential company information (customer lists, ...
Dan
The prupose of the Restricive Covenant as far as Im concerned is to stop disgruntled employees from contacting my clients.

So how is it that the agreement isnt worth the paper its written on ... Yet it will hold up in court if they go after our clients??

Is this NOT the major purpose of this agreement to begin with??

Now Im Confused
Kris

Stonehenge
02-22-2001, 03:51 PM
As I understand it, there are many purposes to a non-compete. So they don't go after your clients, so they don't steal company secrets, so they don't even work in the same industry, or within X# of miles of your business.

If you were to hire someone with a masters in horticulture, and after a few years he decides to leave your employment, while you may prevent him from stealing your customers or using your trade secrets (though you'd have to catch him, sue him and prove damages), you can't prevent him from working in horticulture. You can try, and even if he signed a document saying so, the courts (as I understand it) would side with this employee.

But I know they can't put ads in the paper talking about what a horrible employer and person you are. Or he could, but your slander/lible lawsuit would put him in the poorhouse fast.

kutnkru
02-22-2001, 04:02 PM
Thats what I thought Stone. But when I read what Dan had written, he was contradicting himself by saying the papers no good, but if they try to break that paper then we have a case.

Kris

kutnkru
02-22-2001, 04:15 PM
RESTRICTIVE COVENANT

Governing the Confidentiality of Information and Non-Solicitation of Company Business Or Customers by Contractor after Assignment with the Company.

This Restrictive Covenant is made between (Joe Landscaper D.B.A. JOES LANDSCAPING INC., Hometown, USA, the Company, Work Designator, and/or John Q. Public, D.B.A. SOUTHERN TIER LAWN & LANDSCAPE, Hometown, USA, the Sub-Contractor.

Whereas, the Sub-Contractor expressly understands and agrees to abide by the following covenant:

In recognition of the value of the trademark, corporate name, reputation, and good will of the Company, and the value of the training and operating methods and techniques of the Company, Sub-Contractor expressly covenants and agrees that in the event his work assignment is completed or terminated for any reason, he will not for a period of 18 months thereafter engage either directly or indirectly as a principal, alone or in association with others: in the solicitation of or in contracting with, existing customers of the company as specifically shown and listed hereto attached, similar services provided such customers by the company.

In the event that JOES LANDSCAPING INC. ceases operation, sells its business and/or accounts, or should become financially insolvent this covenant shall no longer be binding and will be considered null and void.

I, John Q. Public, the Contractor/Sub-Contractor, Have read, understand, and agree to the above covenant, and so acknowledge by my signature and date below.


Since we're on the subject. This is what we use and it basically states that for a period of 18 months they cannot solicite our customers.

I have worded it so that it does not try to keep them out of the Industry. This is what they do for a living I understand this aspect as well.

Have I overlooked something possibly??

Thanks for the help.
Kris

John Allin
02-22-2001, 05:41 PM
It appears that there are two different subjects being discuss here at the same time.....

A non-compete for a subcontractor is much different than a non-compete for an employee. They are worded differently and have different intents.

Kris's wording is for a subcontractor, and there are several ways to word this. It IS enforceable as I have been in court and have enforced it in an absolute manner. You may not restrict a subcontractor from working for others within the same industry, however you can stop them from going after your customers. Ours is worded slightly different, but accomplishes the same thing, and has been upheld in the PA court system. I also know that our wording has been upheld in several different states (as I have had this conversation with a number of snow contractors around the country).

For an Employee non-compete there must be "consideration" given ($$$) to the employee for it to be enforceable. No 'consideration', no enforcement. In this case you can stop an employee from working for a competitor in the same market area. It cannot state that they cannot work anywhere but must state a specific market area. They can be stopped from "competing" with you by working for someone else. I've been here too and have had to enforce ours (in the court system) and it was upheld as legal (keeping in mind that I'm in PA and other states may be different). We used a labor lawyer for this (and that ain't no cheap date).

I think it is entirely possible that two people here have been talking about different type non-compete's in the same paragraph..... They are different.....

Sorry this is so long and involved. I just got carried away somewhat....

[Edited by John Allin on 02-22-2001 at 05:45 PM]

kutnkru
02-22-2001, 06:41 PM
John

I realize now that it was worded for the sub contractor. However, would it not be virtually the same for employee's if I were to change the word 'Sub-Contractor' to 'Employee' though?? At least this is what we have done in the past.

This is why I was wondering what I might have been overlooking previously. I think that I understand what you are relating to as far as a demographic for the non-compete for the employee.

Thanks again for the help.
Kris

dan deutekom
02-23-2001, 10:43 AM
stone said it better than me but that is basicly what i was trying to say. Sorry i sound so confusing kutnkru (my wife says i confuse her too) The main things about these agreements are that they are supposed to prevent someone from having a unfair advantage in doing business with another companies knowledge. But no one will ever be able to stop someone from earning a living or starting a business of thier own without knowledge from someone elses business. Let's face it all of us who have worked somewhere else and started a business have used information from our previous employer to our benefit and their detriment.

Ocutter
02-23-2001, 12:19 PM
Hmmmm, intricate stuff this non-compete. Thank you all for the information. Since I'm still small I'll stick to the "no steal/take customer" aspect. I know my customers very well and would think they would report any side offers to me by anyone.

Of course if I were to take in a "newbie" and teach him evrything from the getgo, I would do the non-compete to the hilt.

[Edited by Ocutter on 02-23-2001 at 12:23 PM]

kutnkru
02-23-2001, 03:06 PM
Let's face it all of us who have worked somewhere else and started a business have used information from our previous employer to our benefit and their detriment.

I will agree with you there Dan. That is pretty much how we learn about any business and whether or not its something we would like to pursue as a carrer or vest in as entrepreneurs. I do think that the ethical aspect is what so many people forget about or just plain ignore in these situations.

Kris