Negotiating the Non-Sense in your Non-Compete

June 23, 2011 at 10:32 am 5 comments



Matt Barcus
President, Precision Executive Search, Inc
Managing Partner, CivilEngineeringCentral.com
View Matt’s profile & connect with him on LinkedIn

Finally, after months of suffering under a new regime as a result of a reorganization, or after months of being laid off due to a Reduction-In-Force, or after months of pounding your head on the proverbial “glass ceiling,” you have uncovered the perfect opportunity for the next step in your civil engineering career.  After going through three or four rounds of interviews and conducting your own due diligence you find a company that is a good fit professionally, technically, culturally; and the path to your professional goal is crystal clear, assuming of course that you live up to your end of the bargain.  But you are confident in your ability and there is no question in your mind that you’ve got what it takes to climb your way to the top.  The offer comes through, the money is right, the benefits are on target, the performance metrics, though challenging, are attainable, and everything is on the “up-and-up.”  And then you get to the non-compete/non-solicit/non-disclosure employment agreement.  These agreements are no longer just limited to C-Level Executives or Partners, but now they are surfacing for Vice Presidents, Division Managers, and even Project Managers.

Suddenly some of that wind has been taken out of your sail.

Terminology and phrasing limiting you to go to work for ANY competitor within a 100 mile radius of any existing office, or limiting you from contacting any clients or prospective clients (prospective clients, well,  that’s pretty much ANYONE), all while applying to not only to the company you are looking to join, but it all carries over in the event of an acquisition, which would further limit your geography, especially if acquired by a big civil engineering consulting firm with offices throughout the United States.  Oh, and by the way, there is nothing indicating that you would be protected from any of this even in the event that you are laid off, your office shuts down, or if you were given the ultimatum to relocate.  Sounds a little one sided, right?  If left un-negotiated, you would have to switch careers altogether should you separate from the firm.

Putting into effect a non-compete for company executives or partners makes sense.  After all, if they don’t have an ownership stake, they do at least have access to company financials and the intellectual property that has brought the company much success.  They will also have access to clients that they might not have otherwise with other companies.  I am personally not convinced that Non-Compete Agreements are necessary for Project Managers and others who do not have an executive role or who do not have “skin in the game,”  but this is a trending policy in the civil engineering consulting industry.

Whatever the case may be, more often than not there are some areas that you should consider negotiating before accepting “as is” if you are not fully comfortable (please keep in mind I am not an attorney nor do I pretend to be – only in my own home when negotiating with my wife and kids):

-> If you are a company executive or partner, you may want negotiate some sort of severance package to help protect you and your family should you separate from the company as it will buy time for you to secure a new position within the other constraints of the agreement.

->If your non-compete contains geographic restrictions, make sure you would still have the ability to work for a “client” or client side company.  In other words, make sure it is limited solely to competitors, not clients.

->Make sure that the agreement applies only to the company you are working for at the commencement of your employment, not any future acquisitions.  For example – if your employer has 5 or 6 offices, but then is acquired by a national consulting civil engineering firm with offices in every major city across the United States, your options become extremely limited should you not negotiate this ahead of time.

->The non-solicitation of clients is an understandable clause – but if the agreement includes not only existing clients, but potential clients, then again you are limiting your options should you separate as pretty much everyone is a potential client.  Try negotiating to only existing clients or those potential clients that have been proposed to over the past 12, 18, or 24 month period.

->Make sure that the non-compete portion of the agreement is null and void in the event of a lay off, a closing of the office, or an ultimatum to relocate with the company.

I am not an attorney, and neither are you.

No matter how dire your current work situation is, you should always go through a non-compete/non-soliticitation/non-disclosure agreement with a fine tooth comb, or even better, shell out some cash to have an attorney review the document – your wallet may become a little light, but that decision could easily save you thousands of dollars in the end… and much stress as well. You may even find that your non-compete agreement will not hold up in a court of law in your state.

Every agreement is different, and these are just a few thoughts based upon my experience in placing civil engineering professionals with consulting engineering firms.  Any further advice you can give to the civil engineering community on this topic would be greatly appreciated!

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Entry filed under: Career Development, Civil Engineering, civil engineering blog, Civil Engineering Jobs, Interviewing, Mergers & Acquisitions, The Workplace. Tags: , , .

The Civil Engineering Boss Who “Knows It All.” A La Carte, All-Inclusive or Somewhere In-Between?

5 Comments Add your own

  • 1. Top 10 Blog Posts of 2011 from CivilEngineeringCentral.com «  |  December 27, 2011 at 10:12 am

    […] 9.      Negotiating the Non-Sense in Your Non-Compete […]

    Reply
  • 2. Antonio Pietrangeli - dam engineer  |  September 16, 2011 at 6:23 pm

    My opinion comes from the opposite side of the fence, since I am an entrepreneur in dam engineering. We hired several young untrained engineers and we spent a huge amount of time and efforts in training, both on-the-job and with seminars. Everybody was happy but suddenly one of our competitors gained a huge work and, since they are based in a country where taxes are much lower, they contacted all our junior staff offering higher salaries and chance to work on a larger project. We lost several of our engineers in few months, since we had no ‘no-compete’ agreement. We where in troubles since replacing several people on an ongoing project is not at all an easy task.
    Today I think that a company who has a good ‘no-compete’ agreement is a safer place not only for the employer but also for everyone else working in it.

    Reply
  • 3. Dave Doe  |  July 1, 2011 at 3:59 pm

    I agree with Mac. In most states, they will not be enforced by a court unless they involve a managing partner (equity owner) or person who has significant IP.

    Always good to consult an attorney, but these are often proferred in employment agreements as scare tactics against employees by firms who have often not consulted attorney’s themselves.

    Good discussion topic.

    Reply
  • 4. John Morast  |  July 1, 2011 at 11:16 am

    I liked it. From the perspective of a 20-year public works/engineering public employee (with a few years of director-level consulting engineering experiences throw in for good measure) it provides some useful reminders and information to keep in mind as I look to re-enter the consulting engineering realm, even in Colorado, where I will be heading next week for interviews.

    Reply
  • 5. Mac Hampson  |  July 1, 2011 at 9:09 am

    Don’t Know ho it works in other states but unless there is intellectual property or Trade secrets involved(And this must be proven by the employer) in the state of Colorado Non-Competes aren’t worth the paper they are written on. There isn’t much rocket science going on in storm water. Beyond that unless you are trying to take a new process or product with you to your next employer there isn’t anything a former employer can do. Non-Compete law is not intended to keep people from working it is intended to protect Trade secrets and intellectual property. They cannot force you to move to make a living. They cannot prevent you from making a living. These are part of your constitutional right to Life, Liberty and Happiness. This has always included your right to have a Job. As an employer the best tool I have had in preventing sales staff from taking clients is to give them company phones, and to demand their return at the moment of notification of termination. Beyond that Non-Compete or not I cannot prevent them from working for anyone they want to. So check your own state’s laws regarding the matter and remember that Federal law usurps state law and NO-ONE can keep you from working or force you to move in order to do so. And that regardless of what a document reads if it does not comply with state and federal law it is unenforceable in court.

    Reply

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