Confidentiality & Non-compete Agreement

TeresaBlank

Our small Oklahoma company is wanting everyone to sign a Confidentiality & Non-Compete Agreement. I have asked our President to have an attorney review the agreement he has come up with (by having someone NOT in HR combine two from somewhere else and not Oklahoma specific) and have also asked that he also ask the reviewing attorney about including an arbitration clause in case of legal action. Not only is he not going to have this agreement reviewed legally (we also have salespeople in Florida and California) but he told me that arbitration is mandatory by law. Now what do I do?

Margaret Morford

Teresa,

If he's the kind of CEO that you can come back to discuss items without irritating him, I'd go back and advise him that non-competes are enforced differently in different states and must be drafted differently if they are to be enforceable in the company's favor. You need state specific employment advice. In addition, the timing of when you ask an employee to sign the agreement and what the employee receives in return for his/her signature will determine whether it is enforceable. Again, you need some state specific advice. It shouldn't be too costly if you send the agreement you want to use and ask the employment attorney to review it and make changes rather than draft a whole new one. HRhero site can direct you to excellent attorneys in all states if you go back to the home page.

The Supreme Court has issued a decision on mandetory arbitration just recently that was not particularly employer friendly. You might want to review that decision with the CEO so he knows that it is not the solution it once was for employers.

Now if he is the kind of CEO that gets irritated if you try to discuss issues again, I'd "lift" (consider this my written permission to copy and use as your own) the wording in this message explaining the law in an e-mail back to your CEO that says something like "I plan to begin the process of getting everyone to sign the non-competee agreements as you requested. I am concerned that when we need them, they may not be enforceable in our company's favor because non-compete agreements are very state specific, etc." Keep a copy of your written memo to the CEO (This is your CYA for when the company sues and is unable to enforce the non-compete). Then do what your CEO tells you to do. Good luck! Call me if I can help you further.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

Carol CA

Non-competes are illegal in the state of California. You would not be able to enforce one here, so why get the employees riled up over something that isn't enforceable anyway? You need to get more information and go back to you CEO armed with court decisions, etc. so he can see in writing that he was incorrect in his beliefs. By showing him your research it's not just your word over his. You just need to be careful how you present so he doesn't get defensive.

TeresaBlank

Update: I went to the President armed with facts on this "Agreement" and it has been "put on hold" until further notice. Thanks to everyone!!