job shop--non-compete clause??

Subject: job shop--non-compete clause??
From: Alisa Dean <Alisa -dot- Dean -at- MCI -dot- COM>
Date: Mon, 30 Dec 1996 09:45:00 -0700

>>>She wants me to sign what she says is a standard "non-compete" clause
>>>before she even thinks of introducing me to a client. Effectively it would
>>>bar me from working for a company she "introduced" me to "directly or
>>>indirectly" for up to a year after I leave her employ.

I've been a contractor off and on for over five years, and 100% this last
year (still am, at the moment). Having discussed this with several
agencies during various job searches, and with co-workers, here are a
few things that I would suggest you consider.

o Get in writing the extent of the non-compete clause. One firm I
talked to extended it to include *all* of their clients, whether you
know about them or not. I felt this was very excessive and declined
to have them represent me. Other agencies say it is the client as
a whole, no matter the facility or location. Other agencies say it
is a specific facility or location for the client, but the other
facilities/locations are open for me to pursue.

o Also, specify if your friend would have rights to your services if
they are in areas other than those specified in the original contract.
For example, if you were contracted through her to be a TW, but the
client wanted you to do some programming, can you negotiate and contract
that yourself? or must you go through your friend?

o Check with the laws of your state. Some states, such as Colorado
and California, are considered "right to work" states and will support
fewer such clauses. Other states will inforce all contractual clauses,
even if they are unjust, unfair, and prevent you from working in the
state with anyone. (Caveat here - *always* read the contract, and
if there is *anything* you are not comfortable with, request clarification
or change to be done to the original contract. Verbal commitments
are only worth the paper they're written on if it went to court.)

o Check the rates and standard practices for agencies in your area.
This allows you to determine if your friend is in line with standard
practices, or is asking for exceptional requirements. For example,
before an agency sends my resume to a client, they ask me if I am interested.
If I say yes, then they fax me a representation contract that would
give them exclusive rights to represent me at the client for specified
period (usually 30 to 60 days). That way, if the client does not pick
me through one agency, after the time period, I can have another agency
represent me with the client.

o Personally, I will not sign a contract that has a year for non-competition.
I feel this excessive. My current agency only requires 6 months,
which I felt was fair. I've spoken with several agencies that do not
have any. One representative said that if they cannot keep me happy
enough to stay with their agency, they aren't doing their work. This
may sound trusting, but I pretty much agree.

o Most clients have their own non-compete policies in place. For example,
I work at MCI as a contractor. Even though my agency only required
6 months, MCI would refuse me for a year after termination if I tried
to come back with another agency.

o Most agencies provide a process to allow a contractor to return
to a client through another source within the non-compete time period.
This requires the agency to release the contractor from the non-compete
contract clause in writing. I would not recommend trying to bypass
this process, since if the agency got huffy, they would sue you. However,
most agencies that I talked to said that if the original contract term
were completed, they would just sign me over to the client using a
release form. They would have already made their money on me during
the contract term.

o I would ask your friend to specify what would be required if the
client decides to hire you and you agree. This should be specified
in your contract.

o Check on-line on the STC site in your area. Usually, there is a
income survey available that will show the standard rates for your
area. For example, a co-worker of mine found out that she was being
paid about $8 less an hour than the rest of us. When her contract
was up for renewal, she asked for a raise, based on this information
and on the fact that she has learned a lot of very marketable skills
in the last year (primarily HTML). One of the facts she quoted was
the median income for contractors in our area, as posted by the Rocky
Mountain chapter of the STC. She got a 10% raise.

Basically, even though you are being 1099'd, you are acting as contractor
and she is acting as an agency. I feel it is reasonable for her to
request a non-compete clause in your contract, especially since you
may become a competitor to her. I feel a year is excessive, but if
the agencies in your area have a year as the standard, then it is in
line with the current market.

Being a novice contractor, be very careful. Speaking with co-contractors,
I have heard that agencies told them dishonest and illegal things,
but since this was their first contract, they didn't know enough to
argue. Several of my co-workers were unhappy with their contracts
and agencies after they discovered this, but unless they want to quit,
they are tied into the contract that they signed.

Having had a successful professional relationship with a friend in
exactly the same circumstances, I believe that you and your friend
can do the same. Just make sure that you are comfortable with any
clauses in the contract, so that finding out later that you are not
happy with these clauses won't cause resentment or frustration later
that may affect your relationship.

Good luck
Alisa Dean
Sr. Technical Writer
alisa -dot- dean -at- mci -dot- com


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