The US Justice Department is investigating Google, Yahoo!, Apple and Genentech to see if their employment practices break US competition laws. The investigation is believed to be industry-wide. Tech firms are infamous for tying senior staff to contracts that preclude them from working for competitors for set periods of time. …
Well someone needs to look at it
they are wrong, you cannot operate like this, if you want a no compete you need to give them a share of the company and make them directors, and even then that's a toughie if they leave.
Contracts are not all binding, there are rights which trump them, if you want someone how about treating them well enough so they don't leave, just an idea, might just work.
I think it just means they are thinking, something which seems to have been forbidden under bush.
The general loophole used here in the UK seems to be as follows:
You work for CompanyA.
A clause in your contract dictates that you cannot work for CompanyB withing a set time period of leaving CompanyA.
When you leave CompanyA, you set up a small company, let's call it CompanyC with only one employee (yourself).
CompanyC can quite legitimately take work from CompanyB. At no point are you working for CompanyB, you're always working for CompanyC.
What's to stop this in the US?
guess that loophole is quite easy to close : contract dictates that you cannot be an employee of, or conduct business with, or share information relating to company A with, company B.
does this really happen in the UK?
That would be a pretty piss poor anti-compete clause, probably not written by a lawyer.
IANAL but I am responsible for the employee contracts here and I believe that the UK courts take the view that it is reasonable for a company to protect its business interests but that it is also unreasonable to prevent someone from working by virtue of a contract clause.
So if you are a hairdresser, no-one could stop you getting a job just up the road from your current employer, but the courts may well side with your ex-employer if you take the customer database with you.
Restraint of trade
I believe its called. Basically such a contractual clause under UK law cannot be enforced because it seeks to restrict an individuals right to earn a living by plying his trade.
A basic principle of contract law is that terms which are unlawful cannot be enforced.
I may be wrong though
This is the easy stuff, overstuffed adn over paid executives fighting to overpay an overstuffed executive with other overpaid and overstuffed executives.
When this is done Obama or whomever should look into the real problems.
Things like excessive executive compensation at the expense of stockholders and by the way board cronyism that allows the same. Another would be abuse of the US VISA system where head shops apply for and get different work VISAs without candidates.
Bill G because he can't seem to stay away from the VISA issue in Congress. Guess he's never heard of a fair wage for a good job.
An easy way to prevent this is to say you can't work for "Any competitor or client". That's the way they do it at CGI in Canada. That clause is clearly illegal, but is often used to scare unhappy employees from trying to find work elsewhere.
What really needs to be done is move the money back where should be, to employees who do actual work instead of managing others. When you get payed less then half the salary of your boss doing 100% of the work while all he does is hand out biased bad reviews of the employees who aren't his friends, it doesn't help make you want to stay; The gap between management pay and actual worker pay needs to be looked at, because it's clearlty ridiculous.
@AC 17:19 re: Non-compete clause
But dont CGI have their fingers in sooo many pies here in Canada that pretty much any IT related job could be classed as being for a competitor or client... would love to see them try...
restraint of trade
Alister: you're mostly right. In fact, the courts will uphold a restraint of trade clause in an employment contract but only if it is reasonable and provides "no more than adequate" protection for the employer. If the contract is too oppressive in any way, then the whole clause is nuked.
Also, it is not true that only senior employees or people with access to customer databases can be covered by non-compete clauses. Funnily enough, considering the AC's comment, mechanics and hairdressers have both been the subject of test cases on this issue.
But what seems to be consensus is that most anti-compete clauses are so poorly written that they are either valueless or actually counterproductive for the employer. One that says " you can't work for anyone within five miles for the next six months " is much more likely to be enforced than "you may not work for anyone within 300 miles for the next ten years" - but non-lawyers *coughHRPEOPLEcough* will think the second one is stronger.
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