Would you sign a non-compete for a side-gig consulting agreement?

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tjhar
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Would you sign a non-compete for a side-gig consulting agreement?

Post by tjhar »

Seeking non-legal advice here from like-minded folks.

For the last few weeks, I've been engaged in some light consulting with a small start up in the tech sector. I'm basically doing it pro-bono. Recently, we've talked about formalizing our relationship with a paid consulting arrangement. The deal is that I'll get some stock options, which probably means nothing since most start-up goes bust. I'm still seeing it as a pro-bono thing, but if it kicks off maybe I'll make some change, but definitely not expecting a life-changing amount.

The trouble is that there are significant non-compete clauses in the consulting agreement. They have stuff like don't leak our IP, and don't poach our employees, that I am perfectly fine with, but their non-compete clause seems somewhat overkill.

Basically, it says I can't work for (or in general have any association) with companies of a similar nature (very subjective) in North America during and up to for 12mth after the contract terminates. The start-up is in Canada, I am based in US, and I do find this overly restrictive. The contract states that we both agree to litigate in Canadian jurisdiction too.

As much as I like them (I am doing this pro-bono), I'm not fond of restricting my employment options in the near-term future. What if I decide to go work for Amazon (another US-based tech company) that does basically all sorts of stuff, which could conceivably overlap with this small start-up? If it helps, think of the start-up as being in the drone business, and guess what Amazon does drones too, although that is not their main business.

How much trouble will this cause me? What complications will arise since I work in US and the start-up and contract is in Canada?

Comments? Thoughts?
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og15F1
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by og15F1 »

Some thoughts:

1. Check your state laws to develop an opinion of whether the agreement is enforceable. See: California.

2. Consult an attorney.
ArchibaldGraham
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by ArchibaldGraham »

Not a lawyer, but my understanding from dealing with this a little bit is that overly restrictive non-compete agreements are typically unenforceable everywhere. As alluded to above, some states such as California have worker friendly laws that almost always make non-compete agreements unenforceable except in special circumstances.

But regardless of the legal implications... if you suspect that the business may try to screw you after you work for them for free then why are you working for them for free in the first place?
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by ccieemeritus »

Ask them for a list of “sensitive competitors” that the non compete would apply to.

At least two of my former employers had a list of “sensitive competitors” distributed to management. If you gave notice to go to one of those, they would walk you out the door immediately (they still had to pay you for another day until they could cut your final paycheck per CA law).
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by SpaceCowboy »

Why would you even consider signing a non-compete for such a minimal financial gain. Not worth it. Stick to non-disclosure and IP agreement.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by ArchibaldGraham »

Agree with rrppve sentiment.

That being said non-compete agreements are typically unenforceable if they are overly restrictive, and as alluded to by og15F1 in some worker friendly states such as California they may almost alway be unenforceable except in special circumstances.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by junior »

rrppve wrote: Wed Dec 27, 2017 12:24 pm Why would you even consider signing a non-compete for such a minimal financial gain. Not worth it. Stick to non-disclosure and IP agreement.
+1. If you are doing it largely for fun/ beer money it makes no sense sense to sign something like this.

Ask them to take it out.
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Watty
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Watty »

tjhar wrote: Wed Dec 27, 2017 11:42 am How much trouble will this cause me?
Even if you are applying for a job that is totally unrelated the fact that there is a non-compete contract could cause the company to not make a job offers since they didn't want to even pay to have their lawyer review it.
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ResearchMed
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by ResearchMed »

tjhar wrote: Wed Dec 27, 2017 11:42 am Seeking non-legal advice here from like-minded folks.

For the last few weeks, I've been engaged in some light consulting with a small start up in the tech sector. I'm basically doing it pro-bono. Recently, we've talked about formalizing our relationship with a paid consulting arrangement. The deal is that I'll get some stock options, which probably means nothing since most start-up goes bust. I'm still seeing it as a pro-bono thing, but if it kicks off maybe I'll make some change, but definitely not expecting a life-changing amount.

The trouble is that there are significant non-compete clauses in the consulting agreement. They have stuff like don't leak our IP, and don't poach our employees, that I am perfectly fine with, but their non-compete clause seems somewhat overkill.

Basically, it says I can't work for (or in general have any association) with companies of a similar nature (very subjective) in North America during and up to for 12mth after the contract terminates. The start-up is in Canada, I am based in US, and I do find this overly restrictive. The contract states that we both agree to litigate in Canadian jurisdiction too.

As much as I like them (I am doing this pro-bono), I'm not fond of restricting my employment options in the near-term future. What if I decide to go work for Amazon (another US-based tech company) that does basically all sorts of stuff, which could conceivably overlap with this small start-up? If it helps, think of the start-up as being in the drone business, and guess what Amazon does drones too, although that is not their main business.

How much trouble will this cause me? What complications will arise since I work in US and the start-up and contract is in Canada?

Comments? Thoughts?
DH recently began a new consulting "second job" that was of interest to him.
He's done that in the past, but the non-disclosure was more specific than those in the past.

I was reading it over for him (that's in *my* job description around here :wink: ), and suddenly, I'm reading that he isn't even to disclose that he has this relationship with the start up. Not to *anyone*!
Well... Bingo - he's already violated it, and not just by having me read it, but just by telling me who his newest consulting client is. Huh!?

So we marked it up, deleting some thing entirely, and changing some a bit.
We've each done that in the past, editing non-disclosures so we could discuss with an attorney or accountant, or if askd by a regulator or such.
Sometimes there was a bit of bickering, but usually, it was "of COURSE you can discuss this with your attorney", or in this case, "your wife, and yes, of COURSE she can brainstorm with you" [two for the price of one, or 1.5 for the price of one, or such...], etc.
I was expecting to be asked to sign a non-disclosure, too. But nope. We're sure they are just new to this, and haven't thought it entirely through.
And yes, DH is aware that they may/may not make it. This isn't money he needs; he's genuinely interested in the area, so however long it lasts, that's fine...

Emphasize the "non-disclosure" part, if you can, instead of restricting future employment or such.
In this case, you might mention that by "allowing" you to do pro bono work, they were already trusting you without any written agreement, if that helps.
After all, you've *already* got a lot of that "info", without any promises, and they trusted you, so formalize the IP issues, and try to avoid that other nonsense. It's "nonsense" in this case, because you've already been working with them.

The non-compete is crazy in this case.

Keep in mind, they may be new and small, and still using some sort of boilerplate agreement.
That was the situation in DH's case. They didn't even fully realize what they were asking him to sign, as it turned out.
It certainly wasn't what they had intended (it had made them just look a bit foolish, given the circumstances).

RM
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vitaflo
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by vitaflo »

I would not sign that. I have signed contracts that have non-compete agreements in them. However when I do, A) I am very well compensated to make up for this fact and B) all of the non-compete companies are laid out in writing. This way I can decide before hand if the increase in pay is worth not being able to contract at said non-compete companies for the duration laid out.

Never ever sign anything this general for non-compete. It's foolish, and even more so when you aren't being paid. I've turned down contracts because the non-compete company list were many F500 companies I may very well would have wanted to do business with. If you sign it, you're not only giving your time away now but also giving up a potential income stream in the future. Lose-Lose.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by noco-hawkeye »

junior wrote: Wed Dec 27, 2017 12:28 pm
rrppve wrote: Wed Dec 27, 2017 12:24 pm Why would you even consider signing a non-compete for such a minimal financial gain. Not worth it. Stick to non-disclosure and IP agreement.
+1. If you are doing it largely for fun/ beer money it makes no sense sense to sign something like this.

Ask them to take it out.
Agree. I work in tech / have come across these things.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by stan1 »

Talk to the principals. This is a good opportunity to find out how valuable you are to them and that's always good to know no matter how you proceed.
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dm200
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by dm200 »

Consider that, even if by the letter of the law/contract, you are not in violation - the company could make such a claim and sue you. Even if you win (or do not lose), your legal bills could wipe you out.

PLUS - it seems - you might have to pay US and Canadian attorneys.

Another factor is that, with all the mergers and acquisitions going on, you might have no knowledge of who is or is not a "competitor" (as they broadly define it).

It also seems that you will probably get very little compensation for a potentially huge restriction and risk.
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Raymond
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Raymond »

With the restrictions stated by the OP, I would say:

"No way I'm going to sign that, eh. Take off, hosers!"
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by monsterid »

Start-up CFO here.

1. A non-compete is virtually unenforceable in CA, so if you are there it isn't worth the paper its written on. Start-ups try and get it even in CA because the threat of it gives people pause.

2. Rip it out if you are an adviser, or limit it very strictly i.e. doesn't apply to full-time etc. Presumably you are an industry expert of some sort thats helpful to them, you have to keep your flex in your day job.

3. Their lawyer isn't going to want to give this an counsel his/her client against it, but at the end of the day this shouldn't be a deal killer.
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tjhar
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by tjhar »

I did consult with a local (US-based) attorney, but they turned my job down, with the reason that the contract jurisdiction is in Canadian court. This was after clarifying with the US lawyer that I work in the US.

I am now puzzled as a quick Google tells me CA does not enforce non-compete contracts, so where does the jurisdiction lie? Let's pretend that I intentionally decided to work full-time for their competitors that is based in CA, which laws would apply? Canada or US? The international nature of this also makes it hard for me to search for similar cases, and I can't seem to find an Avvo-type service for Canadian lawyers to get clarification.
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tjhar
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by tjhar »

ArchibaldGraham wrote: Wed Dec 27, 2017 12:20 pm Not a lawyer, but my understanding from dealing with this a little bit is that overly restrictive non-compete agreements are typically unenforceable everywhere. As alluded to above, some states such as California have worker friendly laws that almost always make non-compete agreements unenforceable except in special circumstances.

But regardless of the legal implications... if you suspect that the business may try to screw you after you work for them for free then why are you working for them for free in the first place?
I'm not suspecting they are trying to screw me, but when dealing with legal document I always assume the worse.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by farnsy »

Normally I'd say 12 months is really not a big deal and these types of agreements are not worth enforcing for them unless you are actually taking IP and giving it to their competitors or starting up a competitor--little to no risk of lawsuit unless you actually do something bad.

However, you are already doing the work for them (for free). It doesn't sound like they are interested in some kind of hard negotiation over this. I'm sure the noncompete was just boilerplate stuff left in from a copy/paste from a different consulting agreement. If you ask them to take it out or nerf it (like restrict it to a fixed list of companies or be very specific about what a "competing" company would do) I'm confident they will do it based on your description of the situation.

I do some side consulting and am under a similar noncompete but the description of a "similar" company is in the document and is very specific. There is basically no risk of it ever affecting me unless I tried to start my own company that uses their IP and does the same thing as they do. This type of action is what noncompetes are really there to protect against.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by dm200 »

tjhar wrote: Wed Dec 27, 2017 1:59 pm I did consult with a local (US-based) attorney, but they turned my job down, with the reason that the contract jurisdiction is in Canadian court. This was after clarifying with the US lawyer that I work in the US.

I am now puzzled as a quick Google tells me CA does not enforce non-compete contracts, so where does the jurisdiction lie? Let's pretend that I intentionally decided to work full-time for their competitors that is based in CA, which laws would apply? Canada or US? The international nature of this also makes it hard for me to search for similar cases, and I can't seem to find an Avvo-type service for Canadian lawyers to get clarification.
No lawyer here, but (from bitter experience) even if they lose, a company can destroy you by forcing you to run up legal bills and agree to "settle". It happened to me.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Tamarind »

Absolutely not. Non-disclosure and non-poach make sense in this situation. The non-compete does not, and the time and geographical restrictions seem excessive.

I don't think it would hold up in court, but there's no reason for you to chance it. Tell them to take that off, or you can stick with the pro-bono consulting for as long as you both feel like it.
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dm200
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by dm200 »

Tamarind wrote: Wed Dec 27, 2017 3:18 pm Absolutely not. Non-disclosure and non-poach make sense in this situation. The non-compete does not, and the time and geographical restrictions seem excessive.
I don't think it would hold up in court, but there's no reason for you to chance it. Tell them to take that off, or you can stick with the pro-bono consulting for as long as you both feel like it.
A weak non-compete while doing actual compensated work would not be unreasonable - but not for relatively small side job for 12 months after leaving.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by SmileyFace »

Tamarind wrote: Wed Dec 27, 2017 3:18 pm Absolutely not. Non-disclosure and non-poach make sense in this situation. The non-compete does not, and the time and geographical restrictions seem excessive.

I don't think it would hold up in court, but there's no reason for you to chance it. Tell them to take that off, or you can stick with the pro-bono consulting for as long as you both feel like it.
+1
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by CppCoder »

I would never sign any kind of non-compete, especially if I weren't being paid. Why would you put future employment opportunities and money at risk for no compensation? Madness...

That all said, and I'm no lawyer, so take this with a grain of salt, but what can a Canadian court really do to an American in the U.S. If you have no Canadian assets, even if you lose in Canadian court (why would you even show up?), what are they going to seize? It's not like the U.S. would extradite you over this. Of course, it may make you persona non grata in Canada, but there are probably worse things that can happen to an American (and I say that as an American who really likes visiting Canada).
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by harrychan »

ccieemeritus wrote: Wed Dec 27, 2017 12:21 pm Ask them for a list of “sensitive competitors” that the non compete would apply to.

At least two of my former employers had a list of “sensitive competitors” distributed to management. If you gave notice to go to one of those, they would walk you out the door immediately (they still had to pay you for another day until they could cut your final paycheck per CA law).
This is exactly my thoughts. Get them to amend it to list specific companies.
This is not legal or certified financial advice but you know that already.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Pajamas »

tjhar wrote: Wed Dec 27, 2017 11:42 am Seeking non-legal advice here from like-minded folks.
Basically, it says I can't work for (or in general have any association) with companies of a similar nature (very subjective) in North America during and up to for 12mth after the contract terminates. The start-up is in Canada, I am based in US, and I do find this overly restrictive. The contract states that we both agree to litigate in Canadian jurisdiction too.
Years ago, when I was unexpectedly asked to sign a non-compete agreement that was significantly less restrictive than yours in specifying a geographic area in which I would not be able to work for a competitor, I did research and found that the it was too restrictive to hold up in court both in the geographic area and with the broad type of employment being barred, so I signed it knowing how ridiculous and unenforceable it was legally.

Your situation is more complicated in that it is a Canadian company and you are based in the U.S., so it may or may not be enforceable, but it is less complicated in that it is not regular, full employment and you are not being very well compensated, so you can just say no without complications.

In your situation, I would probably ask for the restrictions on employment and anything else unacceptable to be removed from it and be willing agree to the reasonable parts protecting their proprietary information, and if that is not acceptable to them, say "no thank you" and walk away.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by adamthesmythe »

The great thing about not "needing" a part-time consulting assignment is that it makes it easy to say no. Or, more accurately, to say "yes, but with the following changes..."

Strike it out, and see what they say. Personally I do not believe in agreeing to scary lawyer language even if I don't think it's enforceable.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by RetireBy55 »

Totally unreasonable in my opinion, as ALL non-competes are.

Every one of us has every right in the world to sell our skills to anyone who will pay us. Asking us to restrict our ability to do so - unless the company is willing to pay you for your time during the entire non-compete period, is totally unacceptable.

I got hit with this on a prior job - was told AFTER I started work that my continued employment was contingent on singing a non-compete. I went absolutely nuclear as it was never discussed at any point, and the offer was not contingent on me agreeing to this. Long story short, I was able to negotiate and significantly change the wording but boy was I miffed - and the relationship between me and the employer, who I wound up working for nearly 3.5 years for was never the same.

Basically, non-competes are TOTAL BS in my opinion. Are they going to give you an equal guarantee of continued employment? If not, tell them to pound sand.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by monsterid »

tjhar wrote: Wed Dec 27, 2017 1:59 pm I did consult with a local (US-based) attorney, but they turned my job down, with the reason that the contract jurisdiction is in Canadian court. This was after clarifying with the US lawyer that I work in the US.

I am now puzzled as a quick Google tells me CA does not enforce non-compete contracts, so where does the jurisdiction lie? Let's pretend that I intentionally decided to work full-time for their competitors that is based in CA, which laws would apply? Canada or US? The international nature of this also makes it hard for me to search for similar cases, and I can't seem to find an Avvo-type service for Canadian lawyers to get clarification.
CA law would apply imho.

Just change the governing law in the contract to CA to avoid all doubt =)
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by quantAndHold »

Sign a non-compete to work for free? No. Even if it isn't enforceable.

Small companies that don't know what they're doing try all kinds of ridiculous things, mostly because they don't know what they're doing. Point out their mistake. If they insist, then you have your answer.

The NDA and non-poaching agreements are perfectly reasonable. Those should protect their interests thoroughly enough.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by staythecourse »

ArchibaldGraham wrote: Wed Dec 27, 2017 12:20 pm Not a lawyer, but my understanding from dealing with this a little bit is that overly restrictive non-compete agreements are typically unenforceable everywhere. As alluded to above, some states such as California have worker friendly laws that almost always make non-compete agreements unenforceable except in special circumstances.

But regardless of the legal implications... if you suspect that the business may try to screw you after you work for them for free then why are you working for them for free in the first place?
Not true. They are very enforceable and have been enforced MANY times by courts including state supreme courts. There are plenty of states though that have precedents set making them mostly unenforceable in those states. So in the end it is state to state. Typically, if they are reasonable in scope (duration and geographical range, i.e. x miles) and involve a real business interest they are enforceable. Either way, it takes money to fight one so even if you win it still costs you $$ to do so along with time and headaches.

Keep in mind the OP question involved NOT only non compete, but non solicitation. Meaning don't poach our employees and/ or clients. That is plenty enforceable. In my humble opinion, restrictive covenants are so unamerican I don't see how it even exists in America, but penalties for non solicitation are too benign and the aspect as I run my of my own practice I would care much more about.

Interesting question for a lawyer is how enforceable would a restrictive covenant be in a "consultant" agreement (1099) vs. a straight forward employee situation (W2). Considering the heart and soul of a consultant agreement is you are NOT an employee and can not be controlled even while you working for company X. For them to control you via your schedule, work hours, etc.. is already a violation of the labor law where they are treating you as a W2 employee and just trying to get out of paying their fair share of FICA taxes. So if they are not supposed to control you while you work for them how can they control you AFTER your contract ends?

Either way, best to talk to an attorney if you are interested in pursuing it.

Good luck.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by bhough »

North America is the geography of the non-compete? No thanks. Stop helping them.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Jack FFR1846 »

California has written into its charter that except for specific circumstances, non-competes are invalid.

Other states have strong enforcement of them. I live in one....Massachusetts and worked for a company under one, not really considering how big of a deal they are when I took the job. Anyone leaving the company to any company who made similar products was followed by company lawyers and they....and the new company were notified that they were about to be sued. In every single case, the new employers withdrew their offers. I testified several years ago at the Mass State House how non-competes are unreasonable restrictions on employees. No additional consideration (money) was given to me for working under the non-compete and because I'm in a very specialized industry, considered leaving that job and working for Home Depot for a year to get out from under it. Note that a non-compete is NOT a non-disclosure. All us engineers are fine with non-disclosure.

I will NEVER work for any company who requires a non-compete ever again and if my employer came to me tomorrow with one, I would not sign it and would leave the job if it was required to continue working.
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staythecourse
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by staythecourse »

bhough wrote: Wed Dec 27, 2017 8:24 pm North America is the geography of the non-compete? No thanks. Stop helping them.
That would be a GREAT non compete geographical restriction as it has NO chance of being enforceable. It would fail at the TRO stage if it went that far. Heck, their attorney's themselves, if ethical, would tell them there is no use arguing for a whole country restriction. They would charge them to send out a stern letter and if not followed to let it go.

No judge is going to expect a worker to either find a new career OR leave the country to make a living. I would have loved this situation when I sued to get out of mine (broke mine and won in a different fashion, but this would have been a lot easier :D ).

Good luck.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by dm200 »

staythecourse wrote: Wed Dec 27, 2017 8:44 pm
bhough wrote: Wed Dec 27, 2017 8:24 pm North America is the geography of the non-compete? No thanks. Stop helping them.
That would be a GREAT non compete geographical restriction as it has NO chance of being enforceable. It would fail at the TRO stage if it went that far. Heck, their attorney's themselves, if ethical, would tell them there is no use arguing for a whole country restriction. They would charge them to send out a stern letter and if not followed to let it go.
No judge is going to expect a worker to either find a new career OR leave the country to make a living. I would have loved this situation when I sued to get out of mine (broke mine and won in a different fashion, but this would have been a lot easier :D ).
Good luck.
I agree -- BUT this does not prevent an angry company/person from suing you and causing you to spend a ton of money (relatively speaking) on lawyers. I speak from bitter experience.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by staythecourse »

dm200 wrote: Thu Dec 28, 2017 9:55 am
staythecourse wrote: Wed Dec 27, 2017 8:44 pm
bhough wrote: Wed Dec 27, 2017 8:24 pm North America is the geography of the non-compete? No thanks. Stop helping them.
That would be a GREAT non compete geographical restriction as it has NO chance of being enforceable. It would fail at the TRO stage if it went that far. Heck, their attorney's themselves, if ethical, would tell them there is no use arguing for a whole country restriction. They would charge them to send out a stern letter and if not followed to let it go.
No judge is going to expect a worker to either find a new career OR leave the country to make a living. I would have loved this situation when I sued to get out of mine (broke mine and won in a different fashion, but this would have been a lot easier :D ).
Good luck.
I agree -- BUT this does not prevent an angry company/person from suing you and causing you to spend a ton of money (relatively speaking) on lawyers. I speak from bitter experience.
Very true. That is why If I signed one I would have an addendum to the contract stating something to the effect of: If one takes it court due to a breach in the contract over the section pertaining to restrictive covenant then the person who loses has to pay both sides attorney fees. This prevents folks from just suing to sue as they would be liable for a LARGE attorney bills. The would insure that it is fair for both sides as it is up to the person bringing the breach of contract to be confident they are going to win. The other option is to write an addendum stating both sides agree to mutual arbitration.

Good luck.

(p.s. I sued as well so have quite a bit of knowledge of the subject material based on researching the topic, looking at past course case opinions, and my own experience)
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by Jack FFR1846 »

Something I'll add. There are employers who don't want to be potentially involved with legal costs if someone has signed a non-compete agreement. Feel free to fill out an online employment application with Arrow Electronics, one of the nation's largest electronics distributors. In the application is a question: "Are you bound by a non-compete agreement?". Answer yes and the application is placed into the "discard" file.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by birdog »

I have ran into this a few times. I recommend you tell a lawyer what conditions you must have in the proposed agreement and have him/her edit it to say such. Contact the employer verbally and let them know your conditions and why (example: I will not do a non-compete because I don't agree that one person can tell another person who they can work for in the future after the original two people are no longer working together.) I always say that I'm fine agreeing not to disclose IP or solicit employees after I leave but I won't let someone dictate my future livelihood to me especially after we've parted ways. I then submit the red-lined proposed agreement and wait to hear back. I have been surprised by how accommodating many employers will be if you handle it in the right manner. Good luck!
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by bottlecap »

rrppve wrote: Wed Dec 27, 2017 12:24 pm Why would you even consider signing a non-compete for such a minimal financial gain. Not worth it. Stick to non-disclosure and IP agreement.
This. Just tell them that you won't agree to a non-compete for what may very well be little to no compensation. You are already taking a big chance on them. Plus, the non-compete undoubtedly applies if they decide to get rid of you.

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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by 123 »

An alternate "take" on the presentation of a non-compete agreement to you may be that someone at the company doesn't want you involved and is pushing the company to get a non-compete from you as a politically correct and diplomatic way to chase you away.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by bottlecap »

staythecourse wrote: Wed Dec 27, 2017 8:44 pm
bhough wrote: Wed Dec 27, 2017 8:24 pm North America is the geography of the non-compete? No thanks. Stop helping them.
That would be a GREAT non compete geographical restriction as it has NO chance of being enforceable. It would fail at the TRO stage if it went that far. Heck, their attorney's themselves, if ethical, would tell them there is no use arguing for a whole country restriction. They would charge them to send out a stern letter and if not followed to let it go.

No judge is going to expect a worker to either find a new career OR leave the country to make a living. I would have loved this situation when I sued to get out of mine (broke mine and won in a different fashion, but this would have been a lot easier :D ).

Good luck.
Although it does sound quite broad, it is a little more complicated than this. A geographical territory this large could be okay under certain circumstances (and depending on the country/state). Granted, there are few industries in which this is likely the case. It further does not restrict the career choice of the the "worker", just the nature of the next company the worker may work for.

It could be unenforceable as written, but to be sure it's not a problem, I'd just say "no" given that the compensation received is completely uncertain.

JT
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by MathWizard »

You are asking me, so I would say that it would take a LARGE amount of money, unless the arrangement applied only
for a short time.

If you want to proceed:

Tell them that this is an uncompensated risk. If they do not consider it a risk to you, they should take it out.
If it is a risk to you, you should be compensated for it. They are asking to have legal control over what you do,
that can have enormous consequences, so don't think of this as a minor thing.

If you do sign, you will need to know the length of time for which this applies, both for non-disclosure and for non-compete.
Then apply some rate per month that this may limit you from making money, and multiply that rate times the number of
months that these will apply.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by staythecourse »

bottlecap wrote: Thu Dec 28, 2017 11:08 am
staythecourse wrote: Wed Dec 27, 2017 8:44 pm
bhough wrote: Wed Dec 27, 2017 8:24 pm North America is the geography of the non-compete? No thanks. Stop helping them.
That would be a GREAT non compete geographical restriction as it has NO chance of being enforceable. It would fail at the TRO stage if it went that far. Heck, their attorney's themselves, if ethical, would tell them there is no use arguing for a whole country restriction. They would charge them to send out a stern letter and if not followed to let it go.

No judge is going to expect a worker to either find a new career OR leave the country to make a living. I would have loved this situation when I sued to get out of mine (broke mine and won in a different fashion, but this would have been a lot easier :D ).

Good luck.
Although it does sound quite broad, it is a little more complicated than this. A geographical territory this large could be okay under certain circumstances (and depending on the country/state). Granted, there are few industries in which this is likely the case. It further does not restrict the career choice of the the "worker", just the nature of the next company the worker may work for.

It could be unenforceable as written, but to be sure it's not a problem, I'd just say "no" given that the compensation received is completely uncertain.

JT
Thanks for the insight. Do you think a judge would tell someone who has been doing the same field for 20 years (for example) to just stay enslaved or have to leave the country or pick a new career at his point in his/ her life as their only options? I really don't see that happening. Just curious, if you have seen it happen in this BROAD geographical restriction situation. If I remember reading many an opinion one of the salient features to enforce a restrictive covenant is that it has to be reasonable in geography and duration along with the usual has to a protectable business interest.

I would think the risk here on going to court over such a large geographical restriction is that if it likely not be enforced one is sort of at the mercy of the judge to decide what is reasonable. That is a bit subjective and not worth getting into the situation of paying a lot of money to a lawyer not knowing what a judge would think is reasonable, i.e. 5 miles, 10 miles, one county, etc...

I'm a doc and there are clear precedents been set in my state of up to 3 years and 10 miles being enforced n past and others being shot down. Not exactly a line in the sand being drawn but much easier to see what a judge would think of doing. Of course, the distance is based on rural vs. urban. 10 miles in a metro area is much different then a rural area.

Good luck.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by SpaceCowboy »

What is a reasonable geographic restriction for a non-compete in the case of a physician who must physically see patients is very different than what could be reasonable in the case of an engineer developing products for worldwide sale. I think you’d be surprised at the willingness of some courts to enforce fairly broad geographic restrictions. I have no knowledge of Canadian law and precedence in this regards.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by cherijoh »

vitaflo wrote: Wed Dec 27, 2017 12:44 pm Never ever sign anything this general for non-compete. It's foolish, and even more so when you aren't being paid.
I think you missed the part about the non-compete being tied to converting it into a paid gig.
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Re: Would you sign a non-compete for a side-gig consulting agreement?

Post by matt fe2o3 »

I've run a profitable service/consulting company since 1994 - even when I went public sector I retained old and new clients - mostly big oil and large ocean transports. I can share with you my observations - but your mileage may vary and what do I know, eh?

1). I won't sign non-compete agreements whatsoever UNLESS;

a). The non-compete is in a project area/trade I have absolutely no experience in and have zero desire to enter into, ever.

This may sound odd, but for instance taking a gig working on a structured tender as book-boss for oil drilling project in the Antarctic when I handle vessel conversions for lifting grain out of the US Midwest as a specialty is an example. The non-compete is for the geographic region and specific trade. That my skills as pulling together a tender are what are desired - those are still mine without any further restriction.

b). There is cash on the barrel that compensates me. Other consideration, well I guess I can consider it - and I have done no-cure-no pay work, but never with a non-compete attached.

2). The deal here is if the firm wants you - they want you. Not signing a non-compete should not change that and you have to be very careful if you have skill - that you are not traded or screwed later on. Seen it happen, just sayin...

3). Confidentiality - that's a given. Sign those if they are fair.

Good luck!
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