I met with a high profile exec search firm based in Boston today. We talked a lot about non-compete clauses and their impact on Massachusetts business.
This person didn’t want me to mention their name because they have a lot of clients locally that are public companies and their CEOs want to stick to the status quo of the non-compete clause.
But he did tell me two things of note about this issue
1. Almost all execs that he places will ultimately end up signing whatever non-compete language their employer gives them in their offer letter. Sometimes they don’t even see the language because it’s tucked into the NDA (blech). In the cases where the employee flags it (usually someone moving from California to MA), the employee ultimately gives up because either a) they need the job & money and/or b) they don’t believe that it will be enforced.
2. He also told me that they have often found very good candidates for open positions but one of the first questions they ask the candidate is “Have you signed a non-compete clause with your previous/curruent employer that would prohibbit you from taking this job?” Since they are a Boston office for a national firm, they almost always hear the response “Yes but it’s not enforceable, right?”.
And do you know what this exec search firm says in response: “maybe yes, maybe not, but we don’t want to risk it” and they pass on the candidate for that job. Period. End of story.
So what does all this tell me?
-It tells me that if these things aren’t enforced than why do we have them?
-It tells me that if people sign these things because they won’t be enforced or have negative impact….they should reconsider.
-It also tells me that if people sign these because they need the money & job security more than they care about long term consequences….. than the little guy needs additional help against “the man”. Now more than ever.
The legal risk/threat outweighs any possible actual legal outcome. The legal risk/threat is the ultimate enforcer of this clause. It could discourage your future employer from hiring you. It could discourage a future investor from backing you.
This impacts anyone/everyone looking for a new job or wanting to start a new company one day. You may want a new job because your current company is doing poorly, treating you poorly or simply because you have a substantially better opportunity somewhere else…In my view, it shouldn’t matter.
You should have the same rights as employees in California.
ps: yes, yes, I firmly believe in NDAs and confidentiality and maintaining trade secrets. This post is about the non-compete clause only