Would You Sign This Non Compete Contract?
Business By madras650 Updated 5 Aug 2011 , 5:59am by xoxoemilyrae
The argument might be valid if I was given a one-year severance package. But trust me .... it was no where NEAR that long. Let's just say it kept us in groceries until the unemployment kicked in (which, FYI, is a 2-4 week waiting period around here.) My choice was no income at all for a short time, until unemployment kicked in OR ..... signing and having food on the table for my kids for the next month or so.
Basically, I got severance for a few weeks ...... and had to sign an agreement to stay out of their backyard for over a year.
Anyone besides me find that just a little one-sided? 
In our situation, it will throw us into a whole new tax bracket. One we cannot afford.
That's not the way tax brackets work. If you make more than the threshold for a tax bracket, only the income above that threshold is taxed at a higher rate. All the income below that threshold is still taxed at the rate for the lower bracket. For example, if you are married and make $200K/year, the first $17K of your income is still taxed at only 10%. Only the top $60K is taxed at the highest rate (28%).
Jason, are you a tax specialist? And besides, for all you know, we may make over $200K.
If, and that's a big if, my husband takes a new position with the leading competitor, we would have to move to avoid the non-compete.
I think IndyDebi's point is that it's worth taking the gamble, since the legal costs/settlements involved in defending yourself against a potential lawsuit are probably less than the amount of the severance package. If you give up the severance package to avoid noncompete issues, you are taking a guranteed loss in the amount of the severance to avoid a potential expense down the road.
The severance package quoted to my husband is two years salary.... that's a little different than a couple of months. don't you think?
But this is really not answering the OP's questions. She just needs to go to her employer and state her situation and be honest about what is going to work for her in the long run.
The argument might be valid if I was given a one-year severance package. But trust me .... it was no where NEAR that long. Let's just say it kept us in groceries until the unemployment kicked in (which, FYI, is a 2-4 week waiting period around here.) My choice was no income at all for a short time, until unemployment kicked in OR ..... signing and having food on the table for my kids for the next month or so.
Basically, I got severance for a few weeks ...... and had to sign an agreement to stay out of their backyard for over a year.
Anyone besides me find that just a little one-sided?
Yes, they were trying to intimidate you right out of the ballgame. You were a threat to them and their business. Which is the exact reason companies have non-competes in the first place. You can take business away from them. If you have loyal customers that will follow you, they will go wherever you go. Hair dressers, Paper vendors, Food vendors, reak estate agents, the list goes on.
can you really be fired over not signing a non-compete? I would think that would be illegal!! I mean, if you agree with one part of it you can disagree.
I wouldn't sign this thing. maybe it's the first one she's ever done and she doesn't know the rules...i would think she would revise it if you brought that up.
I have worked there about 2 months with NO MENTION of this contract until this past week. Never mentioned at interview.
ALL of a sudden the owners want all employees to sign a non compete contract.
If FIRED, or if I quit, I cannot work at any other BAKERY within 90 miles for a year from date of termination.
I cannot start my own business, 90 miles, one year
I cannot own interest in any other business, teach, consult, advise, assist in any business that is SIMILAR to my current employer.
The best thing you can do is to talk to someone that is in the legal field and understands this area of the law. Laws do vary from state to state, so the best place to get information is in your state, by someone that deals with this kind of stuff every day.
I personally can't see how it is legal to present you with a document that was never mentioned until after you have been hired and have worked for them for several weeks (and assuming they have had people working there for a lot longer than that as well?). And then say you pretty much it doesn't matter if you sign it or not. If you quit and or fired for not signing it you still can't work in your field.
To me it sounds like they haven't read up on the laws and think if they write it it is so. You signed it, there for it is binding. Or they are using it as a scare tactic to employees, thinking they won't look into what the laws actually say. Especially when they give you a damned if you do, damned if you don't ultimatum.
It would be a totally different thing if they had you sign it in the very beginning. Then you had the right to say, nope I don't want this job. But the way they are presenting it now, to me is fishy, with their stipulations.
Jason, are you a tax specialist? And besides, for all you know, we may make over $200K.
I'm not a tax specialist, but I do know how progressive tax brackets work. If you talk to a tax specialist they will tell you the same thing, being pushed beyond the threshold of the next tax bracket has absolutely no impact on how income below the threshold is taxed, whether you make $20K or $200 million a year.
Here's an article with more info:
http://www.thesimpledollar.com/2007/04/27/dont-fear-the-higher-tax-bracket-or-why-a-reader-needs-more-cowbell/
The severance package quoted to my husband is two years salary.... that's a little different than a couple of months. don't you think?
If anything, that would weigh the decision even more in favor of accepting the severance, ignoring the noncompete, and taking your chances with a possible settlement later. Unlike the tax brackets issue this is a more complex situation and a labor attorney would be able to advise you better.
can you really be fired over not signing a non-compete? I would think that would be illegal!!
Most states have at-will employment, which means either you or your employer can legally terminate your working relationship for any reason, as long as it does not involve discrimination of a protected class (race, gender, sexual orientation, etc.).
I wouldnt sign that as it is. My dh has had to sign several NC contracts in his line of work (IT). Many years ago, when he was just starting out, he was asked to sign one similar to what youre being presented with. He refused. He was taking the position as the lead tech at Best Buy and we had our newly established technology business going strong on the side. It was a conflict of interest for him to work on computers at BB in their tech bench then go home and work on other peoples computers under our business name. They wanted him to agree to not do tech work of any kind for a year after he quit/was fired from BB. He refused that part. But he did agree to not do any tech work on the side while he was employed there. They were fine with that and we put our business on hold for a while (remember this is Best Buy, not some mom and pop electronics store. If they wanted to sue the pants off of us they could easily do so). That part was hard because we already had a very established customer base by then and we had to just let them go.
Years later after he had his BS in Computer Science and all his Microsoft Certifications he was offered a job as the Network Administrator for a security company. They also had a non-compete. He could do tech work on the side but not for any of their clients or any employees who worked for them. He also couldnt work for any other security company as a Network Admin for a year after leaving this company. He could work for anyone else as one just not any of this companies competitors. That worked for us so he signed. We got our tech business up and running again since it was okay to do that now and everything worked out great. We did have some snags along the way. Occasionally the company would take on a client that was one of our IT clients and wed have to sever ties with them because of the non-compete but that didnt happen very often.
Years later after he got his BA in business administration and several more tech certifications he was offered a job as the IT Director for a pharmaceutical company. They have no non-compete clause. My dh asked during one of his interviews if it would be okay for us to continue running our tech business. It had grown to that point it would be very detrimental to our income to close it down. They couldnt have cared less, so long as he wasnt using company time to mess with it. At this point we could easily support ourselves (with a little downsizing) from the income from our rental and IT businesses but having that extra chunk from him having a full time day job is very nice. But if they were to all of a sudden present him with a non-compete similar to what youve been given he wouldnt sign it. The potential to make money with our business or because of his expertise and credentials getting an IT position with another company at a higher salary is way more important then keeping this current job.
I would negotiate the terms of the agreement with them. Agree to not do cakes on the side (except for your own family) and not run off to one of their competitors with all their recipes and trade secrets. I understand them not wanting you to take off and give away all their secrets to the other guys. That is why my dh had to sign a non-compete with the security company. But it worked for us because it only applied to security companies and there are a lot more businesses out there that need IT experts besides technology companies. I wouldn't sign that NC as it is. It's not fair to you. What happens to you in the future if your offered a better bakery job or decide you can do this on your own and open your own shop from home? They are killing all hope of that.
I wouldn't sign that contract as you've stated it, no. I've signed non-compete contracts in the past (outside of the baking industry) and they were never that unfavorable. I don't see any problem with those types of contracts, I've never had the intention of running away with anyone's clients, but I wouldn't sign anything that feasibly disabled me from working in the field in which I was trained, completely.
I think a contract needs to provide a reasonable, mutual benefit. IMO, the benefit of retaining part time employment by signing a contract that could potentially put you out of work for a year is not beneificial enough to pursue.
I would talk to them to find out what their genuine concerns are and address them fairly. I wouldn't have a problem signing something that barred me from pursuing their clients or owning/taking ownership in a competing bakery within the area. I would definitely have a problem with them trying to completely take away my livelihood, at their discretion, should the relationship be severed. I think they should be open to coming up with an option that doesnt completely threaten your financial stability.
I had to sign a similar contract for my day job. Only, I can't work for a company that provides the same products anywhere IN THE WORLD for 1 year. Now, that is void if they get rid of me.
To me, this is what makes sense....
I don't think its fair for it to say "Even if we fire you, you cannot work for another company for a year."
That means that, at will, they can get rid of you, and if you don't have any other job skills, you're on the streets for a year until you are allowed to get a job again. That can't possibly be enforceable.....? Especially if they fire you over downsizing?
I had to sign a similar contract for my day job. Only, I can't work for a company that provides the same products anywhere IN THE WORLD for 1 year. Now, that is void if they get rid of me.
To me, this is what makes sense....
I don't think its fair for it to say "Even if we fire you, you cannot work for another company for a year."
That means that, at will, they can get rid of you, and if you don't have any other job skills, you're on the streets for a year until you are allowed to get a job again. That can't possibly be enforceable.....? Especially if they fire you over downsizing?
That's exactly what that means........
sooo...three pages of advice! what's the verdict? what's happening
*as the cake world turns*
nothing is for sure in this wonderful world.... Everyone has an opinion.... they're all different.... they all have some value to some extent. OP needs to CYA because she is the only one looking out for her own interests!
I would never sign that contract. And from what I understand the contract sounds quite illegal. Non-compete clauses are designed so that you don't switch to a rival company. So you can't work for Pepsi and then jump ship for Coke. The contract you decribe prohibits you from making a living which is not permitted. The contracts are supposed to have resonable limitations in regards to time and distance. A year of no income is not reasonable.
I would refuse to sign, and also refuse to leave the company if they say you "have" to since they did not state this as a hiring requirement in the first place.
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