Wednesday, July 9, 2014

Are non-compete agreements becoming more common?

Via WBUR in Boston, a couple of good stories about non-compete agreements (emphasis mine): 
BOSTON — Massachusetts lawmakers are considering a ban on noncompete agreements. Those are the clauses in employment contracts that bar an employee from working for a competitor, sometimes for several years... 
...Last month, James Mitchell gave his two weeks notice. The 32-year-old told the Boston Web marketing company he worked for he was leaving to join a startup. And he was sure that he was not violating the noncompete clause in his contract. 
“I have a list of 37 companies that I’m not to go work for,” he said. “The company I chose wasn’t on it. My actual boss who I resigned to hadn’t even heard of the company I was going to. And then all of a sudden in the legal documents I got it became a competitor.” 
Mitchell’s first day at his new company, set for last week, never came to be. His previous employer decided to enforce his noncompete agreement. Mitchell said he can fight his work ban in court, but it could cost tens of thousands of dollars and take months, if not years... 
...Colette Buser, 19, has worked for the last three summers at LINX, a camp for kids in the Boston suburbs. Buser said the part-time job paid minimum wage, and this summer, she wanted to work for another camp. But LINX evoked her one-year noncompete agreement. The head of the company told The Boston Herald the techniques and training are proprietary. 
That's a really crummy thing for a summer camp to do... "You will never teach the other kids our secret camp song with its proprietary clapping rhythm!"

It sounds like (according to this very similar New York Times article) that non-compete agreements may be becoming more common. This Wall Street Journal article from 2013 mentions more lawsuits stemming from them (up 60% over the last decade.)

We've talked about this issue before and no one has ever raised the issue -- are there non-compete agreements in academia*? If so, how long are they? Also, have they ever been enforced, or tested in the courts? (How would you even define a competitor -- in the case of a university, wouldn't it be any other university?) Readers, what do you think?

*A brief Google search seems to indicate that there are often non-compete agreements between university hospital systems and their clinical faculty. This article by a Virginia lawyer seems to say that one Virginia university (Old Dominion) doesn't have them with their faculty. 

13 comments:

  1. If the employee (hereinafter referred to as "serf") becomes surplus, serf agrees to discontinue living and must make arrangements to have themselves eviscerated at which time the organs become property of the company and the remaining carcass is delivered (cash on delivery) to the bereaved.

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    1. @DC&H,

      If the serf was employed by Soylent Corp., the bereaved should not expect the carcass.

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  2. To the best of my awareness, universities generally have no such clause in their employment -- moving from one institution to another is commonplace (as is poaching). Some BENEFITS may require paying back if you move too soon after they are awarded (e.g., a 5-year chair that carries with it research funding), but the other institution typically foots that cost.

    That being said, there are "internal" non-compete clauses in most contracts, usually couched in the language of conflict of commitment. Faculty at research universities are provided a fraction of their time for their own entrepreneurial activities (e.g., consulting), but they are NOT permitted to engage in an activity that would directly compete with the university for revenue. The most obvious example would be, say, teaching an online course for a for-profit provider on the same subject as a course offered at the university. Interestingly, you can give your teaching wares away for FREE (I do), but in the absence of a competing body that can offer similar accreditation as the university, that is not regarded as a conflict.

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  3. “I have a list of 37 companies that I’m not to go work for,” he said. “The company I chose wasn’t on it. My actual boss who I resigned to hadn’t even heard of the company I was going to. And then all of a sudden in the legal documents I got it became a competitor.”

    So he signed a contract that allowed his employer to unilaterally change that list of competitors? Didn't he realise that he was, in effect, agreeing that he wouldn't work for anyone else for the entire period specified in his non-compete clause? Or is this a case of the employer breaching the terms of the contract and using its financial power to make an employer de facto agree to this breach?

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  4. Non-compete agreements are becoming more common as is having to sign away all your intellectual property rights. What's next? Having to spend your free time in a way that's pre-approved by the employer? I'm getting more and more inclined to say "shove it".

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    1. The new trend toward mandated enrollment in "wellness programs" seems like an infringement on free time to me.

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    2. I presume that wellness programs are about mitigating employer health insurance costs at the expense of free time of the employee.

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    3. Isn't it already true some employers request you to have a presence on social media? There seems to be a rather disturbing trend here.

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    4. It could be worse...see Scotts and Cleveland Clinic for examples.

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  5. It's not quite the same but in my department, I have heard PIs say that they will not work on potentially interesting projects because they feel like it would step on the toes of other professors in the department. I know that is not universally done (is it even the majority case, or is my view just skewed by the departments that I have worked with?), but it seems like most universities do look to hire professors whose research "compliments the existing strengths of the department." That sounds like an implicit non-compete clause. Then you have cases like the Baran's work on Maoecrystal V, where there were no legal repercussions (as per a formal non-compete clause) for the student that went back to China and published his post-doctoral work independently, but you have to imagine that that sort of mark follows your career and affects you future credibility.

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  6. has anyone encountered counter offers from universities in which it was stated that the PI cannot seek or consider offers from other universities for 3(+) years?

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  7. One of the plant floor guys at my company recently left, and our HR guy made him sign a paper saying he wouldn't reveal his new employer to anyone at our company for a full year. I guess they're worried he'll recruit our employees, but this was a plant guy making a few bucks above minimum wage, not a white-collar professional. Sounds like the story above about the teenage camp counselor not allowed to work for another summer camp.

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    1. I think a good general piece of advice is never to sign anything when you're leaving a job- it can never help you, only hurt you. It's not legal to withhold your last paycheck (yet). I had a 6 month temp job right after finishing grad school in 2008 and when they kicked me out they had me sign somehing saying I "quit" because I was dumb and compliant, which meant I couldn't get unemployment benefits.

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