No Compete Agreement

Discussion in 'Landscape Architecture and Design' started by MarcusLndscp, Dec 20, 2004.

  1. MarcusLndscp

    MarcusLndscp LawnSite Senior Member
    Messages: 634

    This is a different question I haven't heard much about in here. What are everyones opinions on No Compete/ Confidentiality agreements between a company and its employees. Has anyone used them before or had to sign one for an employer? Looking for pros and cons both from an employer stand point and from an employee stand point. Also what are the legalities behind much can an employer put into one?
    Any thoughts would be appreciated.
  2. Ecobjs

    Ecobjs LawnSite Member
    Messages: 55

    A non-compete agreement can be very useful, but must be worded very carefully for a court of law to enforce them. The US is a free market, or at least that is the preception, so courts will only enforce agreements that are limited in scope and duration and which protect a business trade secret or a set of skills taught to an employee. For instances, if you train an employee to do quotes and teach them your methods for developing a project you MAY be able to enforce a non-compete for up to 1 yr and with all of your current clients. You could not however barr a employee who didn't have access to your confidential information and a court would not enforce it if it was for say..... 5 years, thats too long. This is a rather simple example, so ask if you want more detail.....

    States really differ on how they approach this (in some states its almost impossible to enforce these and in others its not too hard), so if you are serious get a local Labor or Employment Attorney to prepare the document, not just a regular attorney. Its like going to a denist to look at your teeth, you need someone with specific experience doing them in the area you work.

    My basic opinion is that for the money it would take to enforce one of these it does not warrant doing them, however they could be used to make the employee think that you would enforce them, but that is a personal decision. We do not require these.
  3. Ecobjs

    Ecobjs LawnSite Member
    Messages: 55

    Side Note - Confidentialty Agreements are enforcable and I do recommend those, especially for anyone with access to company work product, forms, pricing sheets etc.
  4. MarcusLndscp

    MarcusLndscp LawnSite Senior Member
    Messages: 634

    So here's an example:
    Say you have a company with a series of division managers, a group of skilled foreman in the areas of maintenance, turf, construction, nursery/plantings, and equipment operation. All foreman have training, education and a complete knowledge of their specified area of specialization prior to employment with the given company. All confidential information is restricted to the managerial staff except for a once a year download of company spendings, profits, losses, overhead, labor costs, equipment maintenance, etc etc. Foreman essentially only have knowledge of time and materials for every costs are ever made public knowledge to the field staff. What can be asked of the foreman in a no compete agreement. What are some examples of things that make one of these documents legal or not legal.
  5. Ecobjs

    Ecobjs LawnSite Member
    Messages: 55

    In your example what are you trying to protect against? (e.g. stealing clients, etc)

    If that is all, in your example, there is not much the law will do to help you. In a free market employees are allowed to quit and go and compete against you. Since you didn't train them with any special skill (and I mean special that your company does differently than other companies) and since they do not have access to anything that I would consider confidential work product, this is not a good example of a case that would win.
    Let me give you an example of a case that was a winnner. A new sales person is trained to sell a very specific product line (a type of office product), the sales person was trained from the start, and at the start of thier employment they signed a non-compete. In exchange for this they were paid an additional $500 dollars and were allowed to work for the company. Over the years the company developed detailed pricing and a list of clients that wanted to buy the product line. The sales person had access to all of this. They quit and tried to take the clients with them. The court upheld the non-compete to within the city limits for a period of 1 year. In that case the sales person got something inexchange for sigining the agreement ($500 and continued employment), they were taught a skill and had access to confidential company information that they could use against the company.
    I know its a rather simple example. Examples with more detailed (e.g. what your trying protect and why) would help.
    Hope this helps!
  6. MarcusLndscp

    MarcusLndscp LawnSite Senior Member
    Messages: 634

    What difference does the exchange of money have to do with it, if any? Is that a factor in making one of these documents legal???? Even if it is one of the foreman previously mentioned with no access to any confidential information or specific training from the company.
    Are the laws and facts you are stating pertinent to U.S. laws or are they state specific? For example, can they only be enforced for one year? Or can you make an agreement for as long as you wish?
    Reason for all this discussion is that I am being asked to sign one and want to know what the facts are for the benefit of the whole staff and the company.
  7. Ecobjs

    Ecobjs LawnSite Member
    Messages: 55

    I'm not trying to be unclear, but these things are very fact dependant. Different states take different stances on this issue. I wish you would have stated on the front end that you were coming from the employee view point (we could have cut some fat in this discussion), I do think I understand your reasoning - no bigge. As an employee what you need to be fearful of is the employer taking you to court and making your life a real pain for a year plus. They might not win, but they could mke your life difficult for awhile. Since I don't know them I can't say what they would do. I would be very careful before signing anything. Mainly becuase if they can afford to keep it tied up in court that could be enough of a problem to justify signing it. ASK THEM why they require this / what is their reason for it. I would be intersted to know that first. Also what are the restrictions? You can email it you want too.

    The exchange of money is based on contract law. Basically, For a contract to exist 2 or more parties must exchange something of value (not equal vaule, just value, really if could have been $5 dollars I guess). That is a real simple answer. IT would take a few pages for the whole discussion ... I just don't want to waste your time with too much junk that you might not care about.
  8. MidAtlantic

    MidAtlantic LawnSite Member
    Messages: 123

    I paid an attorney last year $700 to review my existing and or create a new one. This will be the 4th time in 7 years that I have had it revamped. They are very enforceable but you have to watch how it is worded. I wanted a 5 year but my attorney told me that anything over 2 years might be hard to enforce with a sympathetic judge. The argument is that you are effecting their lively hood especially if they have been doing this for many years prior to working with you. The other issue is keep your market area small. Don't use the an entire state. If the judge finds out you dont serve that entire area he will throw it out. Make sure everything in your contract is reasonable and enforceable. If one clause is unenforceable then the judge will throw out the entire agreement.

    I hear more about non competes in Technology, IT and the medical fields alot but never hear much about landscapers using them. I use them for any administrative employee. Wouldn't was your time enforcing an agreement on a laborer.
  9. newleaflandscape

    newleaflandscape LawnSite Senior Member
    Messages: 348

    Non competes are a waste of time. You can have an attorney word it perfect and anyone can still easily get out of it. I know because I got out of one. Employer wouldnt pay me what I wanted so I cut and run. There are so many things to keep in mind. One is that the maximum a non compete can be for is three years at least here in michigan, no court will allow it to go longer then that, and in fact most that do end up in court last a max of six months. Also a radius of 20 miles is the farthest the contract can go in effect for. Again that is here in michigan. What is easy to burn on these is that if any of the terms in the contract seem at all unreasonable, Like you put down a term of 5 years the courts will more then likely throw the contract out. I have heard that they are not enforcing non competes at all here in michigan, because the want more business to open since our state needs the jobs, just what I have heard though. I guess all that I am saying is that you shouldnt rely on that non compete. Personally I think all they are usefull for is a scare tactic.

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