2

I work for a contracting company -- that is, I am a regular employee of the company, it does contract design work for others. One of our customers is requesting that employees working on their project sign a separate contract with them (the customer). In other words, there would be a contract between the customer and the company, and separate agreements between the customer and every individual employee working on the project. The separate agreement is a confidentiality agreement that includes a non-compete, which I have a problem with.

Is this at all normal? -- I have never seen it before, but until recently I've always been the customer and never made any such requests.

A few notes: While I am located in California, where non-competes are pretty much unenforceable the contract is written to be interpreted under the laws of Taiwan (which has protections against non-compete too, but not as strong). Future work that my company or I do will likely involve Taiwanese companies as they are very large players in our industry. While it may be that the non-compete would not be upheld in court I would like protection for the costs of any defense.

The customer contract appears to be written by non-fluent English speakers (many grammatical and spelling errors. I have tried correcting and removing the objectionable parts, but the customer rejected my changes out of hand saying this is the contract they use and "everyone else signs it without problem." Given the size and reputation of the company it is likely that any review of contract changes would not happen, or would take an irrationally long time (which is why I am thinking it is easier to just be indemnified by my employer).

How can I voice my concerns with my employer about signing this agreement?

  • 2
    This is really weird. The normal operation is for the client to sign a contract with your employer and put whatever terms they want in there. You should probably talk to your lawyer about this contract. – Erik Sep 6 '17 at 19:21
  • If their English isn't that good have you considered writing at the end "I the undersigned hereby repudiate the veracity of this contract?" – DJClayworth Sep 6 '17 at 19:38
  • 3
    Is refusing to work with this particular customer an option for you? Seems like the easiest solution. If they only want employees "working on their project" to sign this extra contract, could you speak to your boss and excuse yourself from working on this project at all? Find other work within your own company with different customers? Or is that impossible/undesirable for some reason? – Steve-O Sep 6 '17 at 20:28
  • 1
    The first question would be how much the customer wants to pay you for signing? – gnasher729 Sep 7 '17 at 18:35
  • 1
    In answer to some of the questions above, the noncompete portion of the contract is a single line that says "employee will not work on development of products that compete with -customer- materials or products" Other parts of the contract have specific terms (either for duration of the contract or in perpetuity) but this clause has none. If it were for the duration of the contract I'd have no problem with that, and I suggested the change to the customer but they refused. – Joe Sep 7 '17 at 23:12
3

Don't sign.

This is a total overreach on the part of the customer.

If and when you go looking for a new job, you will have to disclose to your new employer any NDAs you're subject to and this could be a big problem for them. Nobody's going to want to research Tiawanese contract law, regardless of apparent enforceability.

2

Is this at all normal?

Usually no, but from my experience, there were a few cases that I had to for customer that was located in niche markets. What I understand is if the customer do not make you sign their papers, they have to get a lawyer to read your employer non-compete clause. So if they hire multiple firms, their lawyer would need to read all non-compete clause of all firms, which it will become a burden depending of the size of the company and could be expensive.

From my perspective, if the non-compete contract is not blocking you for future job because and the project is great on your resume, it may be something you can accept.

In the past, as an employee of a consultant firm, me and my co-worker that were assigned to a on-site customer project, had to sign a non-compete clause by the customer because we could hear or see how their manufacturing their products, know their private partnership with other companies, etc. We did not really care because the customers where located in niche markets, so the possibility of conflicting with a future job was low.

  • 1
    They normal procedure I experienced is that your employer confirms to the customer that all of the employees he will put on the project are subjected to the standards requested by the customer. The employer then makes sure that his employees sign an additional non-compete, if need be. So the employer normally is the legal buffer for the customer. – Daniel Sep 7 '17 at 12:53
  • @Daniel I agree what you describe it is the normal procedure, but like I described, there is some case where the customer that have some trade secrets that give them a competitive advantage, would like to be more cautious. – Sebastien DErrico Sep 7 '17 at 13:48
  • @Daniel I understand the customer, they hired top notch guys, they invest a lot of money in R&D, they develop something with value after some years. For critical process, the customer cannot trust the employer to have the same clause as his contract by not reading the employee contract, which mean that some lawyer guy check if the clause are equivalent, which is an hassle. It is more easier for the customer that their lawyer give a contract to each department and say: if you hire somebody to do some job, just make sign them this before. – Sebastien DErrico Sep 7 '17 at 13:49
  • No it´s exactly not a big hassle: You just require your contractor to protect your trade secrets and to guarantee that all his employees are bound to protect them just the same, by fine of say $1M, no problem. If your contractor (or his employees) fails, you can sue them and, as they will have insurance, collect the damages. Now if you have hundreds of individual, non-enforceable agreements with non-solvent individuals overseas ... that´s a big hassle. – Daniel Sep 7 '17 at 13:56
  • @Daniel do you think both approach are valid depending of the situation and the customer needs/beliefs? – Sebastien DErrico Sep 7 '17 at 15:02
0

Id don´t think it´s normal and also not very practical. If the customer singes a contract with you employer, it is b-to-b and they can agree to all kinds of terms and ramifications which will be enforceable. It is then the problem of your employer to make sure everything is ok. If they sign such contracts with the individuals, as you already pointed out, they may not even be able to enforce them.

Now let´s look at your situation: Nobody can make you sign those contracts (or they would be void anyway). Nobody can force the customer to let you work on their project. The customer did not hire you for legal advice, so talking sense into them is not a realistic option. So if you don´t sign, you employer might not have a choice other than not assigning you to said customers project. So you could easily force them to recognize you concerns. Of course, if this means you employer is not able to make use of you anymore, you may have to look for another job.

As I see it, you have two options:

  1. Voice your concerns formally and in writing to your management (keep a copy). If they react like "oh don´t make a fuss, just sign this bs..." keep a copy also and sign.
  2. Don´t sign, be ready to look for another job.
-2

If it is normal that people jump off of a bridge does that mean you should do it too? So even if this is normal that does not mean you are wrong to object.

But a confidentiality agreement is not a contract to do work. It just limits you to not talking to other companies about what you did for this company and you agree not to do that work for the competition. If you have reservations about signing the document you should talk to your manager about those concerns. Chances are it is just a boilerplate agreement, and while at first glance may look far reaching, the scope of the entire document is just to the specific work you are performing. Your manager should be able to either allay your concerns or find someone who can.

If your company is wanting you to sign the agreement then they probably have had an attorney review the agreement to protect themselves. After all, they will be liable if you break the agreement. If they have not then maybe they should.

  • That last part about the company being liable is not quite accurate. If OP signs a noncompete or NDA, the parties on the face of either document will be the Taiwanese company and OP. If OP breaches, he can be personally sued and the employer is not required to indemnify. – Xavier J Sep 6 '17 at 21:48
  • @Xavier J: Kind of complicated for the customer. First he has to find out and proof which employee was the culprit, then he has to enforce individually, then - as those cases are usually about monetary compensation - he´ll find out that the individuals can´t pay such damages ... – Daniel Sep 7 '17 at 12:55
  • A non disclosure agreement is one thing, this contract has a non-compete agreement too though which I'd be much, much less willing to sign – Glen Pierce Sep 7 '17 at 14:16
  • @GlenPierce - It is not a contract. A contract has compensation and workproduct. It is an agreement that may be mandated as part of a contract but the agreement itself is not a contract. – IDrinkandIKnowThings Sep 7 '17 at 15:17

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.