Practical Implications of Non Compete / Non Solication Clauses

Question

I have just recieved an offer for a job I am very interested in, but looking through the documents I would have to sign, I noticed that they are also expecting me to sign a Non Compete / Non Solication agreement, something which I have never signed for any of my other jobs. The condtions are 6 months of Non Compete with any direct / indirect competitors and 12 months of Non Solication.

How normal are agreements like this when signing full time contracts? If I do want to switch jobs later on, how would I know if a company is considered a indirect / direct competitor? Is there a legal definition or is more of a question of opinion? How often do companies actually pursue legal action because of Non Compete clauses?

My location is Ontario, Canada.

Answer 1

I've had to sign a non-compete/non-solicitation for every job I've had (also located in Ontario, Canada). In general, they are very restrictive in terms of what is defined by "competition" and "solicitation".

The way most of the terms I've seen have been written is that "competition" means that you are prohibited from doing the same job for a company that is in direct competition with the company you are working for, in the same department as you were working, with similar responsibilities as to what you were working on. For example, if you worked for Amazon in their big data department, then you would be able to work for Shopify as a frontend developer, even though Amazon and Shopify are direct competitors; the knowledge and information you would have gained regarding Amazon's IP as a big data developer would not be applicable to your work at Shopify.

The way "solicitation" is usually defined is that you would be unable to use any industry contacts you made as a result of being customer-facing at one organization to help another, competing organization. For example, if you were a customer success associate at Amazon, working with some clients to get their Amazon-hosted stores up and running, and then you went and became a customer success associate at Shopify (ignoring for a moment the above concerning non-compete which would likely make this illegal), you couldn't then call that customer and be like "hey, I work at Shopify now, how about you come work with us instead of Amazon?".

Of course, your case may differ and you should read the contents of the contract carefully, and if you have any questions you should ask a lawyer, or you should get clarification from the company in particular about what you can/can't do. But at least in my experience, the definitions of the terms in those kinds of clauses tend to be very restrictive in favor of the employee.

Answer 2

You haven't told us what type of job you're referring to. But that "direct/indirect competitors" wording is very suspicious.

In my own field, which is Android mobile software programming, having such a clause would be a deal-breaker for me (unless they were paying me a significant percentage of my regular salary to sit on my ass and do nothing during those 6 months).

If I were you, I would email them and ask them:

What did you mean when you said "direct/indirect competitors"? Can you provide a list of examples you're talking about.

If they say "Don't worry about it, we won't enforce that." Then, strike that clause off from the contract and ask them to initial the change. Don't ask them for permission. Simply do it and email them the new contract, asking them to initial the change.

Or if they give you a perfectly reasonable interpretation of that clause, then do the same thing. Insert the reasonable interpretation they gave you into the contract, email the contract back to them, and ask them that they initial the change you've just made. But again, don't tell them that you're going to modify the contract, just modify it, and then ask them to review and initial the change (before you sign it).

How normal are agreements like this when signing full time contracts?

Unfortunately, these kind of clauses are very common, even for minimum wage workers such as waiters or supermarket cashiers.

But does that really change anything? Some toxic workplaces are very common. That doesn't mean you should accept such unreasonable and overly broad clauses.

If I do want to switch jobs later on, how would I know if a company is considered a indirect / direct competitor?

You wouldn't. That's the entire point of this clause. It tries to give them power over you (whether it's legally enforceable or not).

It's like they expect you to ask them for permission before you apply to any company.

Is there a legal definition or is more of a question of opinion? How often do companies actually pursue legal action because of Non Compete clauses?

The rest of these questions are for an employment lawyer in your specific jurisdiction.

But again, even if the company doesn't sue you, does that really matter? At the very minimum, signing such an overly broad clause would give them the idea that they should be able to harass you and harass your new employer.

And even if they don't know where you're going, they may still find out through the grapevine, or when the new company calls to double-check your employment history.