For FREELANCERS AND CONTRACTORS - A contract update.....

[Smokey Lynne L Bare <slbare -at- JUNO -dot- COM>]

Non-competes can be dangerous documents.  They are designed to protect
the interest of the client/customer and prevent an individual in their
employment, or outside consultants from using proprietary information for
the benefit of their competition.

Ohio is a right-to-work state, so non-competes are only valid if you are
"stealing" copywrited or critical company information, and use that when
working for a direct competitor, or if you cause a company to lose
revenue as a result of your actions.

A recruiting company here in Cincinnati required all it's staff to sign
non-competes, which were for one year and for a 100 mile radius and
included all previous, present and future potential clients -- in other
words they'd wrapped it up so tightly that you couldn't work for any
company they'd even as much as contacted in any kind of capacity -- it
was outrageous.  They even had their receptionist sign one.

As it turned out, they enforced it on many occasions.  An attorney
they hired to recruit attorneys for law offices in this area
essentially signed himself out of ever being able to work for any law
firm within 100 miles of this area -- it was ugly.  Another person who
wanted to work in a totally different capacity for a client was
prevented from doing so because they'd done business with that client
over 5 years ago.  The account wasn't active, but the non-compete
ensured she couldn't work for that particular company -- she's suing
them right now.  In these two instances, the non-compete was enforceable
simply because their leaving and joining a "client" had an impact on the
company's revenues.  They could prove that as they were no longer
working for them and were tyring to work for clients, they were
affecting the income of the company and the potential of continuing to
do business with those firms.

They tried to enforce it on a receptionist who left to work for a client.
But the client's corporate attorneys laughed at them because it's a
right-to-work state, and she had no proprietary information, nor was she
taking revenues away from them because she'd never generated revenue for
them to begin with.

Although many companies have non-competes, particularly for sales or
software development, production, any industry where information you
have access to could be used to help their competitor, I would be
extremely cautious about signing anything.  Have your own attorney look
over it.  Find out if your state is a right-to-work state. It could be
worded in such a way that it prevents you from doing contractor work for
2 years or prevents you from working with your own established client
base and could really hurt your earning potential. As in the case of the
lawyer, if he wants to practice law, he'd have to move 100 miles away in
order to do so -- even if he wasn't going to do recruiting for a law
firm, he still couldn't work there.  It's scary.

In lieu of a non-compete, a non-disclosure document would be better or
something along the lines of an agreement whereby anything you work on
as a contractor remains the property of the company and you will not use
that information to your advantage or the advantage of a competitor. If
you sign the non-compete you could effectively eliminate yourself from
being able to work for the best employers in your area -- be careful.

I hope this helps.  If you have questions, just send me an E-mail.

Laine A. Haupt
Technical Consultant

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