Laws@SRI-AI.ARPA (04/09/84)
From: Ken Laws <Laws@SRI-AI.ARPA>
This is the first I've heard of the post-employment restrictions
Scott Fahlman mentioned, although I've heard of noncompetition agreements
in other industries. (I believe Nolan Bushnell, for instance, started
Pizza Time Theaters because he couldn't compete with his own creations
at Atari. I've also heard of cases in the giant-screen TV and
restaurant businesses, always part of a buy-out agreement.) The
intention is obviously to stop someone from spinning off his own
company to market an idea developed for the first employer.
Although the clause in question is a strong constraint, I don't see
that it would necessarily bind you to the company for life. Think of
it as a three-year paid sabatical or other grant. It has a built-in
disincentive for taking a job in any other field, but is a real
bonanza for someone who wants to spend time taking courses and
catching up on the literature in the AI field.
As a practical matter, I doubt that the employer would exercise his
option unless you intended to compete directly in the same product
you were working on. It wouldn't make sense to buy you off if you
intended shifting to even a moderately different AI application.
-- Ken LawsTyson@SRI-AI.ARPA (04/12/84)
From: Mabry Tyson <Tyson@SRI-AI.ARPA> Ken, I think you missed one problem with the noncompetition agreement. I guess you looked at it like I did that your salary would be in the same range if you could change jobs so it doesn't hurt too much if you just continued on at the old salary but took the time off. Suppose you started to work for company A at salary X. The next year (or so) you get a much better offer (say as a manager) from company B at salary 2*X. Now you are prevented from taking that job (assuming B is in competition with A). Another way of looking at that is to suppose that you do something good in your first few years after school but that your company doesn't want to give you the raise in salary that is commensurate with your proven abilities. Now you can't just say that company B will pay you twice your current salary. They'd just laugh at you and say you couldn't go. It might be worth 3 years of your old salary to keep you from company B even if you don't do any work for them. I see the clause as cutting down on wage wars between companies. It also cuts down on the mobility available to employees of that company. Finally it probably prevents an employee from starting his own company in that field. I also feel that the restriction may have a negative effect on the company requiring it. Would you go to a black hole from which no one ever could get away? I suppose companies requiring that clause are just going to have to settle for employees that can't find a better offer. Would you want to work with second class people?
chen%lsu.csnet@csnet-relay.arpa (04/13/84)
From: Peter Chen <chen%lsu.csnet@csnet-relay.arpa>
I think that there are quite a few companies putting on restrictions on
post-employment activities, although most of these companies are usually not as
restrictive as the company mentioned by Scott Fahlman. I think it
is fair for an employer to ask its employees to avoid future
involvement in direct competition with the company
within a short period of time (say, one year instead
of three years) and in a more narrow subject area (i.e., in the area/topics
the individual is working on, rather than a broad definition of the AI field or
the whole computer field).
If I remembered correctly, when I worked for a large computer manufacturer ten
years ago, I was required to sign an agreement that whatever
ideas or products I might develop in my spare time would belong to the company
even though the ideas/products were not related to computers. Do you think it
is fair? Do you think your computer employer has the right of the novel you
write during weekends? I think this case is much more unfair than asking
the employee not to compete with the company after he/she leaves the company
for more than a year.
As far as I understand, all these agreements/contracts are legally binding if
the contracts are signed under free will. Therefore, they can be enforced if
the companies choose to do so. However, most of time the companies just use
them as a possible protection for their interest.
Peter Chen
Computer Science Dept., LSU
<chen%lsu@csnet-relay>