Thursday, April 10, 2008

More on non-compete agreements

A few months ago, Bijan Sabet, a partner at Spark Capital blogged about how non-compete agreements, maybe, weren't such a good idea. It created a reasonable amount of gnashing of teeth in the blogosphere at the time. I agreed and relayed my own experience in a blog entry of my own here.

Apparently, Google just did a classic non-compete bait and switch on the Doubleclick folks they recently fired (about 300 of them) after acquiring the company.

Valleywag has the text of non-compete, which looks like this:
8. Covenant Regarding Competition. I agree that for a period of one (1) year after my employment with the Company terminates, I shall not (a) engage in any employment, business or activity that is competitive with the Company's businesses; or (b) solicit business from, do business with or render services to, in any capacity, directly or indirectly, any entity that is or was a Company client or customer within the last twelve months of my employment with the Company, for a purpose or in a manner that is in any way competitive with the Company's business. If, during or after my employment with the Company, I seek work elsewhere, I agree to provide a copy of this Agreement to any person or entities seeking to hire me before accepting employment with or engagement by any such person or entity.

9. Solicitation of Employees. I agree that for a period of twelve (12) months immediately following the
termination of my relationship with the Company for any reason, whether with or without cause, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company's employees to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage or take away employees of the Company, either for myself or for any other person or entity.

You can make the argument that it won't stick, but apparently the employees who were fired are worried that it's Google and they don't want to risk crossing Google's legal department. Seems they felt compelled to look for work outside of their industry, following the demands of the non-compete Google asked them to sign, right before firing them.

If I look at my own business and imagine what I'd have to catch up on if I left for a year, frankly, I'd look at it long and hard and wonder if it was worth trying to get back in the game. Things just move too fast in the high tech world.

Now, this brings up some questions about Google's business practices I won't go into here, but more importantly, it makes clear how a big company known to enforce it's legal rights, can really screw up someone's life with a non-compete.

How an employee that was defined as unnecessary after an acquisition can be considered a threat to the business just acquired is beyond me. If they were so critical to the business, why have them sign a non-compete and then fire them?

Giving Google the benefit of the doubt, it's possible it wasn't their intent to lock someone up and then fire them, but the result was they did just that.

Locked em up, then locked em out.

And this underlines (several times) why non-compete agreements are, maybe, not such a good idea.

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