Confidentiality and No Compete Agreements in Web Dev. Companies



  • I work part time (I'm a student) for a local company that does hardware support and web development/design.

    They are currently assembling a Confidentiality and No Compete agreement and I have a few questions to any of your employed as developers (web or not).

    Firstly, I personally believe its borderline unethical to apply a 100mile radius, 1 year no-compete clause to a contract for part time labor. They do this mainly for a clause that covers me not being able to leave the company and take clients with me (as one did previously), which I believe is well within their right, however the strict no-compete for a part time employee at a company that does just about everything computer related is quite excessive. For a full time employee with more than $10-$15 an hour and benefits and not a full time student, yes it is reasonable; for a part time worker within $10-$15 an hour and a student, no. Am I alone in this sentiment?

     
    Also, there is much wordage about assigning the ownership of inventions and such. Their intention is to cover code and software developed for the company, which I agree with. I'm being paid to develop code for my company, this is fine and good. However the agreement is worded such that: "I understand that inventions or discoveries or software developed by me which relate to the business of the Company, whether patentable or not, are the property of the Company when made or conceived by me during my period of employment. This specifically includes, but is not limited to, inventions, discoveries, programs, and software developed by me outside the normal working hours or off the Company's premises."

    I believe that is extremely invasive and destructive to my future career prospects as that essentially means I cannot produce any code for an open source program like Drupal as I will not have the legal right to assign the GPL/LGPL/Apache/BSD license to the code that I produced as it was conceived during my employment and relates to the business of the Company. Frankly, given that the problems web development typically sets out to solve are fairly common and that the number of unique ways said problems can be solved is very minimal, I believe it a serious breach of my rights as an individual and as a programmer to arbitrarily own any such 'discoveries' I make even if I wasn't on the clock.

    I informed my manager that I would not sign this agreement until that and another related section were rewritten to explicitly assign ownership of software developed for Company projects/contracts to be owned by the Company, while any ideas not fleshed out for Company projects or conceived on company hours are not subject to Company ownership.

    Am I crazy for thinking this also is much too excessive for part time work?

    How does this compare to any NDA / No-Competes you've had to sign (if you are legally eligible to give me information as to the breadth of rights you signed away).


     



  • I would not accept any of those clauses. (In fact, I might even be tempted to accept them, knowing that they are most likely not enforceable by my country's law).

    Especially for a part-time employee, it's completely unacceptable that code you produce outside of your company's premises (and not for the project you are doing for them) is covered by their claims.  What if you have another part-time  job, doing some programming as well?

    There is one kind of no-compete I always have to sign, and I do that without reservations: I'm not allowed to work for my company's clients. That's all that is about no-compete. A clause saying "may not work in the same business field withing 100 miles" is definitely unethical (and most likely also unenforceable here), since this effectively bans you from your profession.

    All of my contracts contain some kind of reasonably-written confidentiality clause, covering the sensible data we get from the clients and the like. (But not the stuff I've invented myself!)



  • You already have a job, and they cannot legally fire you for refusing to sign a non-competition agreement. Refuse, point blank, to sign anything with a non-competition clause in it; they can't make you and it would give you no benefit. And never, under any circumstances, sign one of those without your own lawyer studying it. Signing one without legal advice is guaranteed to leave you unable to work in the field after leaving the company - that happens a lot. It wouldn't be legal in most of the world outside the US. In the US, it is legal only if you willingly sign it. If they say it is non-negotiable, then it is not enforceable; this is known as a "contract of adhesion", and non-competition clauses are usually not valid in those. If they make a fuss, have your lawyer point this out to them.

    Clauses that claim ownership of things you do outside company hours are legal, but you should never accept them. As a general rule, reject any clauses that claim ownership of your work: the law already gives the company ownership of the things that they pay you to do, so any such clause is either useless or trying to grab something that they aren't paying you for. It's easiest to just get rid of them. Point out to them that if they aren't willing to pay for those hours outside "company time", then they have no valid reason to expect to own the results.

    Whenever your current employer asks you to sign anything, the first thing you always ask yourself is: do I gain any benefit from signing this document? If you do not, then refuse. They cannot force you, they have to offer you something in exchange. Most of the time you can get a raise, at the very least. They wouldn't be asking you to sign it if it didn't have some value to them, so always ensure you get something out of it. It's usually easiest to approach this by explaining: what they are currently paying you is the agreed "fair compensation" for what you are currently doing, so now that they are asking for something more from you, it is reasonable that you be compensated for that as well.

    The only terms on which you should accept a non-competition agreement are ones which continue to pay your salary during the period of your forced unemployment. If they want you to stop working in the industry for 1 year after leaving the company, then they should pay you 1 year's extra salary when you leave. Don't settle for anything less. (Some companies will accept this, most will just drop the whole subject of non-competition, depending on how important it is to them; don't let any of them tell you it's unreasonable, because they know damn well that it isn't)

    Employee NDAs are typically harmless - but still, there's no reason why you shouldn't get something for signing it. It's a good idea to ensure that your employer understands that you won't do things for free.



  • I would definitely say some of those clauses are excessive.  First, the part about the no-compete applying to a part-timer is just flat out wrong.  Full-time is questionable, but I've seen it before.  Now, to be fair these types of agreements are not specifically for developers and technical employees.  They are really meant for sales reps, middle managers, and upper management as they are the ones that are most likely to take clients with them.

    As far as owning the code you develop outside of work, that is also flat out wrong.  IANAL, but the NDA/ownership is a contract of sorts so I would think you'd have to abide by it if you signed it. 

    I've signed several NDA/No-compete agreements in my days and none of them are this excessive.  The first one I signed, stated that the company owned the code, but not the concepts or ideas behind them.  That one did have a non-compete clause for a year time frame, but I was told that the company didn't really care about that for someone at my level, so I signed it.  That was the best management team I've ever worked with (absolutely first class) so I definitely trusted them.

    My current NDA/Non-Compete is similar except I can't have a second job without prior approval by my manager.  I don't see me ever wanting a second job since I'm a full timer.  If anything, I'd volunteer my services to charitable orgs which wouldn't apply.

    I certainly wouldn't sign something this restrictive.  It is definitely not appropriate for someone at your level.

     



  • I agree with the above - don't sign it, and make sure you talk to your lawyer if they try anything else.  Demanding ownership of everything you think of, even in your time off, with while employed as a part-time employee, is unacceptable under any circumstances, and probably not even enforcable.



  • I cannot produce any code for an open source program like Drupal as I
    will not have the legal right to assign the GPL/LGPL/Apache/BSD license
    to the code that I produced as it was conceived during my employment
    and relates to the business of the Company.

    Wait. How do your personal projects relate to the business of the company? 



  • @dhromed said:

    I cannot produce any code for an open source program like Drupal as I
    will not have the legal right to assign the GPL/LGPL/Apache/BSD license
    to the code that I produced as it was conceived during my employment
    and relates to the business of the Company.

    Wait. How do your personal projects relate to the business of the company? 

    If a dispute ever arises, the trick here is going to be the interpretation of "relate".  The widest possible interpretation could be, "your project is computer stuff, and we do computer stuff, so it's related".

    Very few judges would accept such an interpretation, however, getting the dispute to that point is potentially very risky, financially.  It doesn't count for much to know that you're right when you don't have the legal resources to prove it. 

    My strictly IANAL advice on the non-compete in particular? Say, "look, we both know this is unenforceable, so let's negotiate something reasonable that we can both live with".  I've never tried that in real life (never really had to), but maybe it'll work.
     



  • These things are simple standard contracts I guess.

    I noticed the same thing in my contract before I signed it.  While it only stated inventions (which is pretty vague), it also added a nice timespan of a few years after you contract ends. I had a good talk about it with the company before I signed it. And it was pretty simple, they could specify it better, but the more specified they make it the more chance it has to hold up in court.

    If I make any 'inventions' that do not have a strong relation to the market of the company I work at, then they have nothing to stand on.

    Now if you for example work at a place where they make compilers, then I would suggest you don't start working on GCC as a hobby.

     

    (Ofcourse, IANAL, and am Dutch, other side of the ocean might work different) 



  • I can't resist chiming in; this sort of behavior really aggravates me.

    The only jurisdiction in the world where such an agreement could actually hold up in court is Texas. I don’t mean that in a sarcastic/Texas-bashing way; the courts in that state are not employee-friendly. Anyone remember the case where that poor Texan unwittingly signed over all his intellectual property by merely joining some company? IIRC, they sued him when he continued to work on personal projects that he started long before joining the company. Oh, and they won.

    I know it can be hard sitting on your side of the table, but it’s very important that you cross off those sections and refuse to agree to them. Replace their entire non-compete section with this:

    Employee agrees that he/she (or a company which he/she is a majority owner of) will not directly work for and/or directly solicit for work, for a period of one year following Employee’s Termination, any clients of Company that Employee worked with while at Company.

    Anything less or more than that and you are seriously putting your career (during the binding period of the contract) in jeopardy. If, for example, you signed an agreement saying that you would not work with their clients (but excluded the world “directly”), and then you came to work for me, who also happens to be a vendor with one of their clients, I’d have no choice but to fire you.

    As for the inventions bullshit, that can be replaced with a single sentence:

    Employee understands that all work performed for Company is considered “work for hire” and therefore property of Company.

    There are more than enough federal IP laws that very clearly define what "work for hire" means. It's a specific legal term with a very specific meaning. They need no more protection than that. Anything more or less and you put your personal projects (from blogs to open source programs) at serious jeopardy.



  • I live in Texas ... :P

    The agreement is being reworked. Everyone I work with has told our managers "We will not sign this until its fixed."
     



  • I know this is a bit of a late reply, but, I just have to point out that there's a 99.99% chance that you legally would not be able to sign the contract anyway. Specifically to do with the fact that you are a student.

    OK, to start off a college is run as a business, when you enter into any course you are signing a legal agreement that all material that you hand up as part of any assignments,projects,exams,etc.. are property of that college. Which conflicts with the wording of the contract from the company that you are currently working for. Depending on where you live this could mean that the company could fire you on the spot if you do sign the contract for "Breach of Contract", or nullify the contract/that particular section of the contract for confliction with a previously existing and valid contract.



  • @Alex Papadimoulis said:

    I know it can be hard sitting on your side of the table, but it’s very important that you cross off those sections and refuse to agree to them. Replace their entire non-compete section with this:

    Employee agrees that he/she (or a company which he/she is a majority owner of) will not directly work for and/or directly solicit for work, for a period of one year following Employee’s Termination, any clients of Company that Employee worked with while at Company.

    Anything less or more than that and you are seriously putting your career (during the binding period of the contract) in jeopardy. If, for example, you signed an agreement saying that you would not work with their clients (but excluded the world “directly”), and then you came to work for me, who also happens to be a vendor with one of their clients, I’d have no choice but to fire you.

    I disagree a little bit with that; IMO it's understandable if the company wants protection against "indirectly working for clients of Company that Employee worked with while at Company". Without that protection, you could (if in the right position) easily take the clients with you to your next employer, which would make you very valueable for them.

    Finding the right balance between your freedom to work and their protection might of course be a bit tricky, though. Might need a lot of clauses, e.g. "... also may not work indirectly for any clients of Company that Employee worked with while at Company, except a) when said clients where clients of the new employer previously, or b) work is not specific for that client, or c) work is completely unrelated to previous work at Company" IANAL



  • @ammoQ said:

    IMO it's understandable if the company wants protection against "indirectly working for clients of Company that Employee worked with while at Company". Without that protection, you could (if in the right position) easily take the clients with you to your next employer, which would make you very valueable for them.

    I think alex did actually cover that :

    @Alex P said:

    and/or directly solicit for work


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