Re: Non-compete clause query

Subject: Re: Non-compete clause query
From: Jim Purcell <jimpur -at- MICROSOFT -dot- COM>
Date: Tue, 7 Oct 1997 11:19:27 -0700

An anonymous contractor wonders:

> I am a technical writer working for a contracting AGENCY that has
> contract agreements with various large EMPLOYERS in our area. The
> recently presented us (the employees of the agency) with a non-compete
> agreement. Anyone have any experience with this type of thing?
Noncompete agreements are pretty standard, but you usually sign one when
you take a job, not after you have it. At this point, signing a
noncompete agreement would be giving the agency something you have (the
right to work independently) in return for, apparently, nothing. If the
agency is offering some kind of inducement (better benefits, perhaps),
you can decide if it's worth it and act accordingly. Failing that, the
agency should just take its lumps and consider you grandfathered in.

> We are being asked to agree not to compete _as_a_contractor_ for a
> period of two years from the time we are no longer working for the
> AGENCY. I understand the logic, but the part that bothers me is the
> two-year clause. Is this typical? Is it legal? I'd appreciate any
> feedback or experience (espcially on the legality aspect).
I'm a little confused here. The agency is saying that you can't compete
as a contractor at this particular company, or in general? Noncompete
agreements are generally limited to companies where the agency has
actually found you work. If you go to a different company and negotiate
a contract job on your own, your agency has nothing to do with it. If
you go to another agency and land a contract with another company, your
current agency still has nothing to do with it. I've known lots of
writers who have worked through different agencies at the same time. The
agencies don't prefer this arrangement, and they may not work their
hardest for you if you're not exclusively theirs, but there's nothing
illegal or even unethical about working this way, as far as I can see.
Then again, I'm not a lawyer.

The noncompete agreements I have signed with agencies have also
stipulated that they apply only if the agency gets me the job. If I find
work and am basically using the agency as a billing and payroll service,
the noncompete agreement is null and void.

As to time, six months is more typical in my experience, both for
noncompete agreements and for finder's fees the employer pays if they
hire you away. My experience is also that agencies are pretty flexible
about enforcing these clauses if the employer is a good customer (and is
therefore giving the agency pots of money on a regular basis) or you
have been with the agency for a while (and have therefore already made
them pots of money). A lot of people I know do contract work for a
while, then take a permanent job, then go back to contracting. Agencies
know this, and they like to retain their best people--or get them back
when they get over the steady job thing. They aren't going to do that by
persecuting you over a noncompete agreement.

Jim Purcell
mailto:jimpur -at- microsoft -dot- com
My opinions, not Microsoft's

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