Techie types --- Confidentiality agreements

[RogerT]

Recently our company .. a regional grocery chain .. decided they
needed Confidentiality Agreements from all of upper management. Not
an overall bad idea .. but it raises several concerns for me because
of the wording. I run the I.T. Dept and wrote or conceived virtually
all of the software used to run the company. I started the I.T. Dept
from nothing and developed it.

It requires that we essentially assign all of our rights to any ideas,
innovations, methods, etc during our time of employment for zero
compensation. Since all of the methods, etc are common programming methods used to write software to perform common retail data processing tasks my interpretation is that should they decide to fire me I would in effect
not be able to work in retail I.T. While we had talked about Confidentiality
Agreements, the extent of this and the assignment of all Intellectual
Property rights caught me way off guard.

Of all the people they wouldn't want loose in the competitive environment,
it would be me since I've been with the company for a very long time,
know every little detail about how it's ran, sit on the Executive Committee,
and have 42 years of industry experience including store management and
ownership to draw on. I know it inside and out.

What are the legal implications of this? Is it enforceable? Is it legal? Can
they force a surrender of intellectual property rights going back 22 yrs?


RT

 

[AuntPeggy]

Back in the days when I worked for a major financial institution (maybe you carry their credit card) they started with such an agreement which I would not sign. They continued to "enhance" the agreement until it was over 59 pages long and eventually required a signature from every employee.

Notice, I am a former employee. They couldn't fire me for cause, just let me go. I say let them lay you off. You'll probably get a very nice termination package.

My new employer asked for a similar agreement signature on my first day of employment and I wrote a letter clearly stating that I own my own thoughts and ideas and any work product produced on my own time on my own equipment. I provided examples of work product that included coding and quilting.

- Aunt Peggy

 

[TMetzinger]

The enforceable part of an agreement like this is that if you develop custom code and techniques for the employer, the employer owns them and you can't take them with you.

It does NOT mean that if you write code in C++ for one employer you can never write code in C++ again. You could even solve the same problem for a different employer if you did it in a different way.

What these agreements are supposed to do for the company is to protect any competitive advantages they have as a result of work paid for by company dollars. As Peggy noted, there's a trend by companies to really try and protect all their intellectual propery, and many have gone overboard.

What's more common (and more effective since it is more enforceable in most states) is to require you to sign a non-compete clause, which says that for a certain period of time after you quit or are fired for cause, you cannot work for a competitor in the industry.

If you're really worried about this, consult with a labor lawyer in your own state, as state law on this kind of stuff varies widely. Here in Virginia, non-compete provisions have to have very specific wording to be upheld, and work done on personal time and on personal equipment is the property of the worker, period.

 

[wsuffa]

Roger,

Such a clause is pretty common these days. As others noted, the goal is to protect the intellectual property developed and paid-for by the employer. Looking at it from the employer view, you developed code on their time, in their workplace, and paid for (through your salary) by them. This is to clarify their ownership of that code.

It's also a pretty common clause in contract programming and similar ventures.

However, it should not limit you on future employment nor personal development. Yes, I've seen clauses that attempt to reach that far. However, if it limits future employment, it becomes - effectively - a non-compete clause. Non-compete clauses are restricted in many States and if overly broad are uninforcible. Limitations on personal development of software, where you are developing on-contract for a competitor while still employed by your current employer, are generally acceptable.

BTW, some employers attempt to force these kinds of changes by installing them in the Employee Handbook or similar document, and then forcing you to comply with such policies. At least in this case your employer is being straightforward.

It's worth a consultation with an attorney versed in employment contracts to make sure that the language is comfortable and sufficiently limited.

My bet is that you'd be faced with the same thing at another employer.

Oh, one other note: typically a contract requires some kind of "consideration" be paid, depending on the State.

 

[AuntPeggy]

What these agreements are supposed to do for the company is to protect any competitive advantages they have as a result of work paid for by company dollars. As Peggy noted, there's a trend by companies to really try and protect all their intellectual propery, and many have gone overboard.

Right. And in this case, they wanted to make sure that I could be prosecuted for providing any incriminating evidence against them.

What's more common (and more effective since it is more enforceable in most states) is to require you to sign a non-compete clause, which says that for a certain period of time after you quit or are fired for cause, you cannot work for a competitor in the industry.

Two years is the usual period of time.

If you're really worried about this, consult with a labor lawyer in your own state.

Agreed.
- Aunt Peggy

 

[wsuffa]

What's more common (and more effective since it is more enforceable in most states) is to require you to sign a non-compete clause, which says that for a certain period of time after you quit or are fired for cause, you cannot work for a competitor in the industry.

Firing 'for cause' should not trigger the non-compete, unless the 'cause' is directly related to provisions of non-compete (e.g. if you get fired for moonlighting with a comptitor, the non-compete should stay; if you get fired for allegedly harrassing a co-worker, the non-compete should not be effective), unless a severance is paid. Again, this stuff varies by state - and by what you negotiate.

The general rule in most States is that neither a non-compete agreement nor an employer can deny you from future gainful employment.

 

[AdamZ]

Rodger I'd advise you to consult with an employment attorney in your state, Nebraska, I recall. Every state has differing laws regarding such matters. Good luck

 

[gkainz]

Two year non-compete clause is quite common. With that said, I've never had a company that has employed me not agree to modifying that to six months. For any contract work I've done, the clause gets striken.

Re: intellectual property rights, I agree with the above posters. I did see this written once upon a time such that, while assigning rights and ownership of what was produced during working hours on company time and equipment to the employer, it further defined what might be considered patentable work, inventions, solutions, etc. Commonly accepted, industry standard software solutions are just that. You wrote it once for them, you are free to write it again somewhere else.

Just make sure you clean out the company names and change the routine names when you restore your backups at any new employer!

 

[gismo]

My present company has such an agreement, but it was written to be as fair to both the employer and employees as possible. For instance, it specifically excludes any ideas or work product that an employee creates on their own time that doesn't directly compete with the company's products. It's also pretty specific rather than vague about what the company considers it's IP.

At a former employer they tried something like what you described. I took a copy to a good attorney who said it was the most one sided example of such an agreement he'd seen in 30 years of contract and employment law practice. When I refused to sign that one, the company was willing to modify the document so that it was acceptable. So it appears that there's quite a wide range of these agreements, and sometimes you can get the employer to bend a little.

 

[RogerT]

Rodger I'd advise you to consult with an employment attorney in your state, Nebraska, I recall. Every state has differing laws regarding such matters. Good luck

I'm refraining from doing that at this point since I really can't afford it.
However .. my position might change if they actually did something
that might be lawsuit material.

I'll know more when this actually goes before the Executive Commitee
(I'm on it) for review before it's implemented. At this point it's written
by the HR director and with wording that you sign as a condition
of continued employment, it is essentially extortion. I have no problem
with a reasonable poicy. This is EXTREMELY one sided.

On my side ... they have absolutely no comprehension of the complexity
of our I.T. infrastructure. I'm the one that wrote it, designed it,
administers it and keeps things running smooth. I oversee things 24 x 7. The day I'm not here they're totally screwed.

And that's not even taking into consideration my long time high level
management participation in virtually every decision made. The last
thing I'd think they'd want would be me, with no Confidentiality Agreement,
available to the competition.

RT

 

[wsuffa]

I'm refraining from doing that at this point since I really can't afford it.
However .. my position might change if they actually did something
that might be lawsuit material.

Just my $0.02. It's not about lawsuit material, it's about making sure you're protected up front. I'd venture a guess that for a couple hundred bucks you can get a good read on what's permitted and what's not - especially since an HR person wrote it. You'd be paying for a review, not a rewrite.

Last time I had a severance agreement reviewed, it was around $200, and I came away with the knowledge of where I could and could not push.

Like a prenup or any other form of contract - it's much better to get the language ironed out in advance, while you still have leverage, than be forced into something that harms your rights.

At this point it's written
by the HR director and with wording that you sign as a condition
of continued employment, it is essentially extortion. I have no problem
with a reasonable poicy. This is EXTREMELY one sided.

On my side ... they have absolutely no comprehension of the complexity
of our I.T. infrastructure. I'm the one that wrote it, designed it,
administers it and keeps things running smooth. I oversee things 24 x 7. The day I'm not here they're totally screwed.

I hope they're not like a former employer of mine - who considered everyone replaceable, regardless of cost.

And that's not even taking into consideration my long time high level
management participation in virtually every decision made. The last
thing I'd think they'd want would be me, with no Confidentiality Agreement,
available to the competition.

RT

And that is your leverage for getting better language. The advice to talk to a lawyer is to make sure you're proposing things that are within the scope of the law (and vice versa, you're not wasting time on language that they propose that would be struck down later).

 

[RogerT]

And that is your leverage for getting better language.

Not at all .. just an observation and hardly something I would
threaten my employer with. When I see a final form of this
if I feel it's needed I'll let an attorney read it.

 

[TMetzinger]

I'm refraining from doing that at this point since I really can't afford it.
However .. my position might change if they actually did something
that might be lawsuit material.

I'll know more when this actually goes before the Executive Commitee
(I'm on it) for review before it's implemented. At this point it's written
by the HR director and with wording that you sign as a condition
of continued employment, it is essentially extortion. I have no problem
with a reasonable poicy. This is EXTREMELY one sided.

On my side ... they have absolutely no comprehension of the complexity
of our I.T. infrastructure. I'm the one that wrote it, designed it,
administers it and keeps things running smooth. I oversee things 24 x 7. The day I'm not here they're totally screwed.

And that's not even taking into consideration my long time high level
management participation in virtually every decision made. The last
thing I'd think they'd want would be me, with no Confidentiality Agreement,
available to the competition.

RT

Oh, if you're on the committee that reviews this, than I suggest you recommend that the company have the document reviewed by an independent labor lawyer, since the agreement may not be enforceable, and may serve as a bar to recruiting good candidates.

If it hasn't been reviewed by company counsel yet, just drafted by an HR type, you can almost guarantee that there will be objectionable language in it that will have to be removed before your company counsel signs off on it.

 

[SCCutler]

Speaking (writing) as a lawyer who does some of this sort of stuff, from time to time, I strongly urge that you use such influence as you have to get the document reviewed for (1) enforceability, and (2) reasonable-ness.

Even for the elements which are enforceable (which also will vary state by state, if you have operations and/or employees in multimple states), if the document is a harsh and offensive one, it will chill your ability to hire top-notch talent.

If an employer refuses to negotiate terms resonably (most will), I counsel a prospective employee who hires me to review and advise that they should carefully consider what sort of company wants over-reaching restrictions on its employees.

 

[jesse]

The day I'm not here they're totally screwed.

That is the wrong attitude to have. I generally consider myself valuable but replaceable. The procedures can be figured out again. The world will keep on spinning and the company won't explode. The larger the orginization the less you matter and the easier it is to replace you.

I'd be careful about writing that kind of thing on a public forum. You'd be surprised how many lurkers there are. If I were to have an employee with that attitude I'd be trying to make the day they are no longer here come very soon.

Nothing personal meant towards you. But be careful with those words.

IMO the days of working for one company your entire life are limited. There are very few companies around that even provide such an opportunity. Historically companies looked within for expansion. Now they'd rather just higher some new guy versus honoring senority. If there are any companies left that actually respect senority I haven't found it.