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"Competitive Disadvantage "
When hired by a firm, (company X), I signed a non-compete clause, which I signed, because otherwise I would not have been hired. The clause states that should I leave this position for any reason, I cannot call on any of the clients that I had been calling on in company X for a period of six months. Most of the clients that I was calling on in company X were clients that I had developed over several years with other firms. I was laid-off from company X with four months pay as severance package. Three months later I found another job, but company X is threatening to sue. How can company X threaten my livelihood...if I cannot call on any of these clients for eight months, I will not be able to receive any commissions, nor will I be able to help build the client base at my new firm. Digging In
Dear Digging In, You are faced with a legal issue here, and Dr. John does not give legal advice. You should take your non-competition agreement to a lawyer and obtain her or his opinion about how it applies in your situation and whether there is a way in which you might not be bound by its terms. The ethics of non-competition clauses in general is a challenging issue for employees, such as yourself, who have little option but to sign them if they want to be hired. In many cases requiring such an agreement is a reasonable protection of the employer's client lists and inside information. It recognizes that the relationship you have been able to develop with clients is not personal, but as a representative of the firm. In a sense business contacts are the property of the employer, not the employee. On the other hand, however, there is no denying that client relationships do become personal. In your situation you came to this position with relationships that were already developed. It does seem unreasonable that you should have to give those up because of a short stint working for a particular employer. I wonder if my readers have some further thoughts on the merits of non-competition clauses, from either the employer or employee perspective? Good luck in dealing with this situation and thanks for writing. Dr. John
Reader Comments: Non-compete issues in sales are very important they mostly protect the companies involved. I have heard of many sales people hiring assisstants and having the assisstants contact the customers on behalf of the new company and announcing John Doe as a new Rep for the new company and offering the Rep's #. This is so the client contacts the rep and not the Rep contacting the client. Mass mailouts from the new employer announcing the hiring of John Doe have been known to include previous customers in the list of many that recieved the mail out. I do not know if this is legal or not, but based on the # of people I have heard doing this there must be an advantage or legal loophole. I have also contacted previous employers and told them what I was marketing and would like to approach some customers that I brought to their company. This was not a problem as it was a different product from the previous employer. I always made sure I had a signed release from the previous employer before any customers were contacted.
Thanks for your insights and some helpful advice in dealing with non-competition clauses. We appreciate your comments. Dr. John
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