“All we have to do now
Is take these lies and make them true somehow
All we have to see
Is that I don’t belong to you
And you don’t belong to me…”
—George Michael, Freedom
We just had a nice long weekend in Lake Tahoe. On one of the days our family hiked above the big lake and Emerald Bay and I imagined the California-Nevada state line cutting its way across the lake.
On the Nevada side there’s legal gambling pretty much everywhere, and on the California side there’s legal gambling in very specific locations and with specific restrictions.
It got me thinking about what we discussed recently on the TalentCulture #TChat Show, the power of social media in your job search and how nurturing online and in-person relationships can improve your career prospects.
On the one hand the recommendations were important because we’re all perpetual candidates, whether gainfully and happily employed, or not. Nothing ever really stops us from wanting to be wanted. Any one of us can go from passive to active very quickly, pitting our hearts and minds against one another. With opportunity that abounds, there’s nothing wrong with a little window-shopping.
To the power of social! When we own our entrepreneurial career development, we are all free to stay or leave, to work wherever we want and whenever we want!
But that’s not the case, because on the other hand, more and more employees are being restricted as to where they go and what they do with potentially competitive employers. Noncompete and the nonsolicitation agreements are frequestly now required upon accepting employment, which are required of many sales, technology, R & D, marketing and management positions, among other positions.
Like the U.S. patent system today, which blocks innovative freedom more than it encourages it, these agreements can be scoped too broadly, or so specifically and far-reaching as to prevent anyone from ever leaving. Because if upheld, you couldn’t work for any immediate competitor or work with previous customers.
Why do employers need to do this? Is there really an imbalance in the workforce due to running willy-nilly to competitors? I seriously doubt it. Or, is it that the some businesses want to claim ownership over their employees?
Noncompete agreement, which are also known as a “covenant not to compete” or “restrictive covenant,” protect employers by legally binding an employee to promise not to work for a direct competitor in a geographic area for a specified period of time after he/she leaves the company.
Jonathan Segal, an employment lawyer and partner with the international law firm Duane Morris LLP, explained to me that for a restrictive covenant to be valid, it must ordinarily meet three requirements:
- Serve a legitimate employer interest such as protecting:
- Trade secrets and other confidential information or
- Customer relationships
- Be reasonable in terms of:
- Activity restrained (what you can do post-employment)
- Geographic scope (where you can work post-employment)
- Duration (how long you have to wait to work for a competitor)
- Be supported by consideration (meaning a requirement of employment):
- New hires – employment can be the consideration
- Current employees – states disagree as to whether continued employment can be the consideration or whether something else of value to which employee is not already entitled is required, such as bonus, higher pay increase, etc.
Jonathan also recommended that employers need to balance legal protection upon termination versus how tough their non-competes are and how they may push away talent. Plus, imposing the same restrictions on all employees may undermine the legitimacy of non-compete – how can you impose same restriction on a mail room employee as you do on CEO? And what do you think that does to keeping workforces productive and motivated?
The variation of enforcement from state to state can make the head spin. In California, these agreements are not only unenforceable, but in some cases invalid except in limited circumstances.
However, employers in California can use nondisclosure agreements to protect their trade secrets and non-solicitation agreement with regard to their employees but not their customers.
In an age where we celebrate the socially networked entrepreneurial employee, it’s counter-intuitive and counter-innovative that at the same time the complexity of legal protections seems to again favor the employer. We work harder and longer hours than in history and our productivity continues to hit new highs. Our inherent competitive nature commands it.
It’s truly a gamble either way, but I feel the legal restrictions on employees hamper the very capitalistic growth opportunities, not to mention the jobs, that keep innovative mindsets motivated. That’s why I empathize more with those who just need or want a new job than those that offer them.
By the way, my lawyer friend Jonathan wanted me to emphasize that this article should NOT be construed as legal or as pertaining to specific factual situations. We just wanted to make that clear.
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