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CA Vs. MA In Battle Over Non-Compete Clause 248

Posted by kdawson
from the so-free-you-can-choose-bondage dept.
Lucas123 writes "A case was filed with superior courts in California and Massachusetts involving a former EMC top executive who is trying work for HP. The case is throwing into relief Massachusetts's and California's differing approaches to non-compete clauses in employment contracts. California courts have argued that non-competes hamper a person's ability to traverse the marketplace freely for work, while Massachusetts courts say the agreements actually afford freedom to develop technology without the fear of IP theft."
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CA Vs. MA In Battle Over Non-Compete Clause

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  • Hey (Score:5, Informative)

    by ta bu shi da yu (687699) on Tuesday May 05, 2009 @06:45PM (#27839229) Homepage

    In Australia, non-compete clauses are classed as restraint of trade, and thus illegal. Sucked in ex-EMC executive!

  • by rackserverdeals (1503561) on Tuesday May 05, 2009 @06:49PM (#27839269) Homepage Journal

    But which is more important? Or actually: which state really has jurisdiction in this case?

    Probably the State in which the contract was executed or otherwise specified in the contract.

  • by b4upoo (166390) on Tuesday May 05, 2009 @07:14PM (#27839545)

    Florida pretty much does what you state. Generally the non compete clauses only hold water as long as the person remains employed. I do not know how a large lay off payment would effect this practice.
                The general idea being that a contract must continue to benefit both parties. When the employee is no longer paid the no compete is dead.

  • Re:Why compete? (Score:3, Informative)

    by Grishnakh (216268) on Tuesday May 05, 2009 @07:33PM (#27839713)

    How on earth do schools have anything to do with socialism? Let me clue you in: schools are where people go to learn and get degrees. Companies are where people go to work after they get out of school. In the USA, in the tech sector, these places are rarely in the same places; instead, they're usually on opposite sides of the country. There's lots of great tech schools in places like Georgia, South Carolina, North Carolina, southwest Virginia, Cleveland Ohio, upstate NY, etc. How many big-name tech companies are located in these places? Approx. zero.

    I went to school at Virginia Tech. Good school, but there weren't exactly a lot of jobs nearby. Most engineering students left the state as soon as they graduated. The state and local governments complained about it all the time, even trying to set up and promote some stupid "Virginia Technology Corridor" in the southwest for a while. It was funny driving along some rural road and seeing a sign proclaiming "Now entering Virginia's Technology Corridor" and seeing falling-apart trailer homes scattered around. I believe they finally gave up, after they realized that making up a silly name wasn't going to magically attract tech companies to backwoods Virginia. (For those unfamiliar with Virginia geography, this was in the southwest, about 6 hours' drive from Northern Virginia where there actually are some tech companies, especially ones that work with the government.)

    Just because some place has great schools doesn't mean that students are going to stick around when they finish. They're going to go where the money and jobs are.

  • by acomj (20611) on Tuesday May 05, 2009 @07:37PM (#27839755) Homepage

    Lots of companies. Although since the PC beat the mainframe there are fewer computer companies.

    We have large offices for Raytheon, Parametrics, Solidworks, Comverse, Sigmatel, ..... uswusf.

    All the major "California" companies have large offices here in MA too:
    Sun/Oracle
    Microsoft
    Lotus/IBM
    Hp
    Symantec
    Akami

    In cambridge/boston its more Biotech (Amgen Novartus, pfizer )etc...

    google is your friend

  • by AK Marc (707885) on Tuesday May 05, 2009 @08:16PM (#27840161)
    No fair signing the contract, taking the money and then crying about it later when you are expected to live up to the contract.

    In CA, they put non competes in contracts all the time, even though they are essentially illegal (and anyone writing them in CA knows that). You can force "non compete" in that someone may not take something owned by the previous company, like a product or such, and use that at the new company for a competitive advantage. An illegal contract does not need to be honored. You can't sign yourself into indentured servitude. And a contract that specifies you can't work in the field you are most qualified in is not much different. That the companies like to have them to badger former employees with illegal contracts is all find and dandy. But in some areas, you aren't given a choice. You sign, or you starve (figuratively). So, you sign and expect the illegal contract to not be enforced.

    On the other hand, companies are so willing to throw employees under the bus today that it is ridiculous to think they can interfere with you taking another job by claiming "IP" issues.

    The company isn't claiming IP. MA is. MA claims that forced unemployment is ok because the risk that someone might accidentally share info with a competitor is too high. CA says that forced unemployment is illegal regardless of contract, just like indentured servitude is.
  • Re:Hey (Score:5, Informative)

    by HalfFlat (121672) on Tuesday May 05, 2009 @08:52PM (#27840441)

    In Australia, non-compete clauses are classed as restraint of trade, and thus illegal.

    This is, as far as I know, not true. Non-compete clauses are legal, but not universally regarded as valid — they are evaluated on a case-by-case basis. Here is an interview [bnetau.com.au] with Peter Townsend [townsendslaw.com.au], a lawyer specialising in business law, describing the state and enforceability of these clauses in Australia.

  • by Anonymous Coward on Tuesday May 05, 2009 @09:19PM (#27840631)

    I've worked in MA for years. The honest answer is that no tech company I've -ever- worked for in MA has made me sign a noncompete except for one Biotech firm- and it was explicitly written to ban me from moving from one "Diabetic Testing Medical Equipment" company to another. I consulted a lawyer, and made sure, and it didn't even apply if I went into a -related- field.

    It's not like most people are making it sound like- MA enforces noncompetes for one reason- Biotech demands them. No one else even uses them here.

  • by ishobo (160209) on Tuesday May 05, 2009 @10:01PM (#27840929)

    The government has limited business telling people what they can and cannot agree to in a contract.

    There are many statutory rights you cannot invalidate with a contract.

    Here are some examples in California:

    1) Your landlord cannot put a clause in your rental/lease agreement that they can enter the property at anytime to check its condition.

    2) An employer cannot place conditions on a severance in regards to suing for back wages or filing a complaint to the state.

    3) Because California is a no-fault divorce state, both pre and post nuptials cannot use faults of character or behavior as conditions.

  • by compro01 (777531) on Tuesday May 05, 2009 @11:39PM (#27841555)

    Huh? ATI was based in Markham, Ontario.

  • by afidel (530433) on Wednesday May 06, 2009 @12:00AM (#27841697)
    Yeah you make a VERY important distinction. I have no problems with a non-disclosure agreement and in most situations no problem with non-solicitation agreements, but I think almost ALL non-competes should be invalid. Unless you are selling your company and signing a non-compete with very specific criteria I really think the idea of a non-compete is unfair on its face. Unfortunately I learned the hard way that Ohio is very pro-employer when it comes to interpreting non-competes and because they almost put out on the street once I will NEVER sign another one. At my current employer I don't even have a formal non-disclosure agreement, just some vague language in the employee handbook that I have to sign each year.
  • by Anonymous Coward on Wednesday May 06, 2009 @02:17AM (#27842407)

    Indeed.

    Employer: You've spent all your life training in this field. Sign this or you won't be able to feed your family.

    Employee: OK

    A contract signed under duress is void.

  • by Ihlosi (895663) on Wednesday May 06, 2009 @03:18AM (#27842723)

    A part of me wonders if someone did sign it, and if a company states that signing it is a requirement for continued employment, if that's considered signing an agreement under duress?

    That depends on the appropriate labor laws. If they're "at-will employment", then no. Employees can quit or be terminated at any time, for pretty much any reason.

  • by Ihlosi (895663) on Wednesday May 06, 2009 @04:02AM (#27842937)
    A contract signed under duress is void.

    It's not duress this way. Duress would be "Sign this or we'll harm you/your family/your dog/etc". There are always options in the other case. You may not like them, but they exist.

  • by kalidasa (577403) on Wednesday May 06, 2009 @07:27AM (#27843641) Journal
    Yeah, because MITRE, Raytheon, Biogen, EMC, iRobot, Akamai, Analog Devices, Tyak, Varian, Millipore, Textron have all fled Boston for Silicon Valley.
  • by Dragoness Eclectic (244826) on Wednesday May 06, 2009 @02:45PM (#27849443)

    Several of them are defense contractors, so if you aren't in the defense industry, they're not going to be household names. Many of them produce foundational tech or infrastructure--you never heard if it because it's not a consumer brand name, but your house or car or computer would be so 19th century without it.

    It's not a great claim for MA, though--many of those companies have satellite offices all over the country and just keep the corporate HQ in MA. The work is done elsewhere.

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