The inherent unfairness of employee non-compete agreements

Judge rules former Microsoft executive can't take new Salesforce job


Odds are that most people reading this have at one time or another in their professional lives been asked to sign a "non-compete" agreement as a condition of employment.

(Also see: Gates casts vote of confidence in Ballmer by selling 90 million shares of Microsoft)

If you're one of those people, and you refused to sign the non-compete, thereby not getting the job you wanted (and perhaps needed), I want to hear from you.

Odds are I'll be waiting a long time, for it's the unique person who would blow their chances at a new job by refusing to sign the document, or even by balking at it.

And that's because the hiring organization almost always has the upper hand over the potential employee. People need to eat and pay the bills, but a company usually will survive if it doesn't hire someone (especially a difficult person who doesn't want to sign a non-compete agreement and clearly isn't a team player!).

A non-compete, if you're unfamiliar with the term, is an agreement prohibiting an employee from leaving a company to work for a direct competitor. It's a formal contract, and if you spend just a little time thinking about contracts, one thing is clear: Nearly all contracts are written to favor the party writing the contract, and often to the extreme.

Which is why non-competes often are hard to uphold in some courts. They're outlawed in only three states -- California, North Dakota and Oklahoma -- but most states that allow non-competes apply narrow standards so they can't be abused by employers.

All of which means that non-competes are a tool of intimidation that, in reality, are a huge pain for both sides. Thus, companies often are reluctant to press the issue in court.

Sometimes, though, the non-compete thing gets ugly. From TechFlash (Seattle's Technology News Source!):

A former Microsoft general manager's new job as a senior vice president at "appears to be a direct violation of his non-compete agreement" with the Redmond company, a King County Superior Court judge said from the bench (Wednesday) morning -- indicating that she believes Microsoft is within its rights under the contract to prevent him from fulfilling the role at Salesforce for the one-year term of the agreement.

However, that doesn't necessarily prevent the executive, Matt Miszewski, from finding another job inside Salesforce that doesn't put him in competition with his former Microsoft role, said the judge, Kimberly Prochnau, after hearing arguments from lawyers for Miszewski and Microsoft. The judge agreed to extend a temporary restraining order against Miszewski pending a preliminary injunction.

Here's why that's ridiculous: Microsoft argues that Miszewski is "privy to confidential strategies as a result of his former employment there," TechFlash. If he takes "another" job at Salesforce -- like running the cafeteria or something -- what's to stop him from walking into the office of the person doing the job he was supposed to be hired for (SVP of Salesforce's global public business sector) and spilling his guts on Microsoft's "confidential strategies" regarding cloud computing and CRM software?

Businesses love to complain about being hamstrung by government regulations and laws because they allegedly inhibit their ability to compete. OK, let's apply that thinking here. Instead of relying on "non-competes," maybe companies should compete for employees being offered better jobs elsewhere. Microsoft doesn't like Miszewski leaving for Salesforce? Then keep him! Do what you have to do to keep him in Redmond!

Besides, what's the alternative? That Miszewski return to Redmond? That'd work out just great. Another option would be for Microsoft to continue paying his full salary until he finds a job that doesn't blow the company's big secret that it's interested in the cloud computing and CRM software markets and will try to sell their services and software to enterprises.

Or, crazy as this sounds, Microsoft could just let the guy go. Because people should be allowed to pursue other jobs if they get a better offer elsewhere.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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