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To compete or non-compete: That is the question


I received an e-mail from a reader who had a genuine concern about a non-compete contract her employer was forcing her to sign after six years of employment. She wondered how she could be an independent contractor working under such an agreement.

Being both an employer and a salesperson, I tried to look at this from both perspectives. As an employer, would I ask my employees to do this? As a salesperson, would I want to sign this?

I replied that non-compete agreements are totally legal; they’re just not moral or ethical. Paranoid bosses make employees sign those agreements because they are afraid they will lose workers to a competitor, or worse, they believe their employees already are job-hopping. Most courts will uphold non-competes if the restrictions are low. The higher the restrictions (the more it prevents employees from doing work and earning money), the less likely the court will find in favor of the employer. However, potential employers tend to stay away from workers who have signed non-competes out of fear of litigation. If it were me, I would tell the employer to “stuff it,” Others, however, may not be in a financial position to take that risk or they may love their jobs and want to stay.

I could not have predicted what followed: e-mails from employers rattling their sabers about disloyal salespeople and small business protection; salespeople raising their beer glasses and screaming “don’t sign it”; and even several lawyers sending me legal advice that ranged anywhere from saying I was right to saying I was wrong to saying I shouldn’t practice law without a license.

So, I think it’s proper that I respond with a more-thought-out solution for both employers and employees that I will call, The Gitomer Fairness Doctrine.

Here’s the employment situation: After salespeople are employed, their employers will share internal strategies and methods with them in order to win accounts. They will also, to some degree, train and support the salespeople. In short, they will invest in their salespeople and their sales efforts. They will also invest in lawyers who will write contracts, often called employment contracts, that contain a clause of non-competition. This single clause so alienates and threatens every salesperson that they begin their term of employment with a negative feeling toward the employer. This feeling of animosity deepens when some form of employment termination occurs. Other lawyers begin huddling about the enforceability of the non-compete clause, and business once again reduces itself to the low life: “My lawyer can beat up your lawyer.”

In case you can’t draw a clear picture from my philosophy, let me take you back to New Jersey, where I saw a billboard erected by a man whose farm was being taken by the government against his will. He had erected his own billboard on his land and had hand-painted the title “Definition of a Lawyer.” Depicted was a cow that two farmers were fighting over. One farmer was pulling on the head, one farmer was pulling on the tail, and the lawyer was underneath the cow, milking it.

Here’s a solution that I believe is fair for all: The employer should require if salespeople leave for any reason, they will not discuss internal trade secrets or divulge company strategies; leave all documentation, computer databases and anything pertaining to the company, its product or its customers behind; and regard as untouchable any of the company’s existing customers or those in the current pipeline (especially those being worked on by the salesperson).     With my solution, the salesperson can go seek gainful employment in any field of endeavor, even direct competition. Former employers are confident trade secrets won’t be revealed and customers won’t be stolen.

I would ask both employers and salespeople to seek out a way that both are protected, and that there is mutual respect at the beginning of the relationship so that the end result matches initial expectations. If the first thing a salesperson has to sign is the “I don’t trust you” clause, then the last thing the employer is going to get is the undying loyalty they are hoping for.      Free GitBit: Ethics and fairness begin with your philosophy. Do you have one? Go to www.gitomer.com, register if you’re a first-time user and enter the word PHILOSOPHY in the GitBit box.

Jeffrey Gitomer, president of Charlotte, N.C.-based Buy Gitomer, gives seminars, runs annual sales meetings, and conducts Internet training programs on selling and customer service. He can be reached at (704) 333-1112 or by e-mail at salesman@gitomer.com

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