Hiring an assistant inspector? Employment agreement with non-compete clause.

Nice timing Nick. There was a recent thread requesting this sort of agreement.

More documents: http://www.nachi.org/documents.htm

Your agreement is worthless in Missouri.

Non-compete agreements are very rarely enforced and those that are will be very specific as to a geographical boundary and the exact value of consideration.

Missouri courts will not protect you from allowing your competitor to do $100,000 worth of business in your business territory in exchange for training valued at $1,000, for instance. Nor will he allow you, the business owner, exclusive territory where he will not permit a new competitor where you already have others.

Non-compete agreements are good only to scare former employees from competing or joining with a competitor…but will rarely serve their intended purpose.

For example, I have successfully challenged three of them.

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Jim, you make the incorrect assumption that anything less than full enforceability in court makes a document useless.

99.9999% of all agreements never see a court room.

Also, your comments only refer to your experience in one state regarding one clause in www.nachi.org/employmentagreement.htm

Return of data clauses are always upheld in Missouri… intellectual property and customer lists are most certainly the Employer’s property and an Employee can’t keep/use them… even in MO.

Each state is different and anyone who is going to use any agreement that plans on it being enforceable should consult their attorney. This agreement is very similar to the one I used in VA. Non compete agreements in a specific industry have been enforced in VA.

Each judge is different too.

Each case is different too.

If you spend a ton of money training an assistant inspector and the day after he completes the training he opens up a competing company that he secretly began to set up DURING his training… the non-compete clause WILL stick… even in Missouri.

That is provided you have an agreement… and now you do: http://www.nachi.org/employmentagreement.htm

My point is…consideration provided to the employee in exchange for the agreement is key.

That being said, you might value your training much more than a court does.

Intellectual property is yours…but what you provide your trainee has to be above and beyond what he already had when he came to you, and above and beyond what he obtained on his own (or could have).

This means an incredibly detailed account of every unique form of training provided and a reasonable dollar value assigned to it.

Let me give you an example…

As an employer, I hire you and pay $289 for your membership to NACHI and, as part of your training, require that you successfully complete 100% of all NACHI’s free training.

What did I, as an employer, provide? $289 worth of training.

Can I stop him from competing against me for the $290th dollar? No. He will be able to quash the agreement by refunding my $289.

That’s how these agreements are applied.

Courts do not like to put people out of work.

… and the courts are more sympathetic (generally) to an employee who quits and finds another job (as an employee) at another EXISTING inspection company… than they are to employees who quit and start their own competing company.

I have to agree with Nick on this one. There are some cases I know of in my area where the no compete clause was used and enforced in a court of law. There have been some denied in court but mainly because the clause was very unreasonable, such as not being allowed to operate a similar business in the whole state of Missouri rather than in a service area (Central Missouri).

It depends on the state. In this state for a non-compete to be enforced the employee must be paid more than 62,000 dollars a year. Or the median income for a 4family house. if not the non compete is invalid and if the employer fires the employee than he must pay two years severance pay at 31,000 dollars a year. And a notice of a non compete must be sent to the prospective employee 3 weeks before being hired. And if the employee starts working for the employer more than three days and than the non compete is signed it will not be valid. So look into the state laws the control non competes. If you are training someone to be an inspector I think you have some right to the knowledge you are teaching them. But if they are already qualified than a non compete to me is wrong. Your trying to limit a persons right to work. America was built on competition not a monopoly. And anyone limiting free enterprise in my mind needs to leave this fine country we live in.

It depends on the state. In this state for a non-compete to be enforced the employee must be paid more than 62,000 dollars a year. Or the median income for a 4family house. if not the non compete is invalid and if the employer fires the employee than he must pay two years severance pay at 31,000 dollars a year. And a notice of a non compete must be sent to the prospective employee 3 weeks before being hired. And if the employee starts working for the employer more than three days and than the non compete is signed it will not be valid. So look into the state laws the control non competes. If you are training someone to be an inspector I think you have some right to the knowledge you are teaching them. But if they are already qualified than a non compete to me is wrong. Your trying to limit a persons right to work. America was built on competition not a monopoly. And anyone limiting free enterprise in my mind needs to leave this fine country we live in. Most of the non competes i have seen only benefit the employer and never the employee.

I have to agree with Nick, James Braun, etc on this.

If in doubt - Instead of Non-Compete, have them agree to a “Training Fee” for a certain amount of $$$$$$$ combined with a promissory note.

If they leave before … OR due to bailing and going into business against you, they owe $$$$$$$$$$$$$$$

These have been upheld.

Thanks Nick. Cahill

I have been on both sides of a non-compete agreement. That is, I have enforced them and squashed them.

Courts are generally hostile to non-competition agreements as a restraint of trade. Look outside. Are you in the United States? If so, we love competition and we are hostile to restraints on competition.

Notwithstanding that, we’re sensible. We understand that there can be compelling grounds where an entity - an employer, for instance - might want to limit a former employee’s right to bite the hand that fed him.

So . . . you can restrict a former employee from going into competition with you if the constriction is reasonable with respect to geographic limitation and temporal limitation.

Thus, you can’t prevent someone from competing with you outside of your market. Nor can you prevent someone from competing with you beyond one year.

Unforthunately - for those seeking to impose such draconian limitations - those restrictions will not be enforced.

For an enforceable restriction, you need to say you can’t compete with me within 30 miles for a year. That one I can enforce. Anything beyond that will be ignored.

…and you will need to show where you paid for that right. The court will look for consideration provided by you in exchange for the promise.

Simply providing a man with a $289 NACHI membership…and requiring that he forego accepting employment with your competitor that would pay him $50,000 for that year…would not be considered a fair exchange.

Would you agree, Mr. Ferry?

How does this work if you are already establish in a area and are being offer a job with a larger inspecting firm with a 1 year no compete clause. I have paid for my training, marketed my business and already done inspections in the market, the larger company is coming Into. If I leave am i now with out my largest market? They do offer to provide all the new marketing for the area and to pay 75 percent of each job and take only 25 percent and I will still provide my own insurance and be a 1099 employee. Thanks for any advice.