Non-Competes in a Down Economy

This article will take approx 2 minutes to read.

I keep inching and inching into the beat of my colleague, Ray Capece of Venture Files, but I think it’s pretty important and weighty times for web professionals and small business owners alike. Unlike anytime in our history, the uncertainty of the future of our world and country are great.

Everyone is speculating about what the economic downturn bodes. Some Evangelicals I’ve talked to think that the investment of the Federal government into banks represents something akin to the fulfillment of end-time prophecy regarding the mark of the beast.

Others more focused on geo-political analysis believe we are seeing the end of the American Empire.

All of this is speculation and may or may not have merit. We simply don’t know. However, what we do know is that people are losing jobs, including in the web industry. We do know it’s hard for people to sell their homes without walking away still owing a mortgage. We do know that the impending baby boomer retirement wave just got pushed back.

A lot of companies, particularly smaller ones, like to use non-compete clauses to ensure that good help doesn’t go to a competitor when that help leaves. But what does that employee do when they are laid off and still have a non-compete?

While I will give my disclaimer that I am not a lawyer, I will say that anecdotal evidence suggests that non-competes are mostly unenforceable. Most laws are drafted in such a way that non-compete only have grounds when trade secrets are in play but countermanding court rulings suggest that no company can restrict someone from making a living.

Talk to your lawyer if you are unclear. At the end of the day, I suggest staying in a stable job if you can at least for a year or so until we put some distance between now and then. If you absolutely must leave, you probably don’t have to worry about non-competes with the economy the way it is. Take the job you can. Just don’t go sharing the information specific to the company you left with the company you are joining. That would be competitive and would probably be enforceable.

Also, if you can, honor your non-competes because it will speak better to your character. Sometimes it’s not possible. I get that. But all things being equal, if you can honor your non-compete, do so. When I left b5media, I was under a non-compete. In fact, I still am for another month or so. After my announcement, I had a number of blog networks approach me asking me to come work with them and I turned every one of them down because I made an agreement that I very well could stand by. So I did.