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I recently received an offer from a company that I'll call ACME. In the NDA that came with the offer this clause appears:

2.Non-Solicitation. I agree that so long as I am employed by ACME and for a period of two (2) years thereafter, I will not directly or indirectly solicit for other employment or work any employee, consultant or advisor of ACME, nor will I interfere with ACME's relationship with any such persons, or endeavor to entice them away from ACME, or aid any other person(s) in enticing them away from ACME.

Now, I've done my homework. In particular, Joel's excellent article NDAs and Contracts That You Should Never Sign has informed me that this clause is definitely not in my best interest to sign. I emailed the recruiter back and asked them to remove this clause; she responded saying it was non-negotiable.

Is this worth sticking to my guns on? I am very happy with the offer package otherwise, and this is very much a dream job for me, located in silicon valley, a place I've wanted to work in since I started college.

What are the chances this clause will hurt me? My nightmare scenario is that some of my coworkers will leave to start a really cool startup but will not be able to bring me on board; I do not like limiting my future career like this.

How often is this clause actually enforced? I've read that sometimes this clause and other 'non-compete/non-solicit' clauses like it are unenforceable in some jurisdictions anyway. I don't know about California, though.

Edit: A couple of these answers are slightly ridiculous in their accusations that I wish to 'poach' employees from this company before I even start working there. This is a bit much. My objective is to have a good job that I enjoy doing, and this company will very likely provide that. My simple concern is if this clause will interfere with my career a few years down the line, if I want to move on to a more senior position or to the possibility of starting my own business.

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closed as off topic by Yannis Rizos Mar 7 '12 at 5:43

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Why are you concerned that you are not allowed to poach employees from this company? Do you anticipate leaving and forming your own startup? –  Мסž Jun 7 '11 at 1:24
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Is such a clause even enforcable in CA? –  GrandmasterB Jun 7 '11 at 3:57
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For what it's worth, unless you're being hired for an executive role, and probably even then, 2 years is a ridiculous constraint. 1 year is annoying, but understandable. If it were 6 months, I wouldn't blink. As for the legality, contact your lawyer. Personally, 2 years would be a dealbreaker in my current situation (I'm an independent consultant and contractor) but I'd tolerate a 1 year restriction. There are workarounds for solicitation of employees, though, and they take the form of "Hey, Joe, do you know anyone who has skills [Joe's skills] and might be interested in working at company A?" –  JasonTrue Jun 7 '11 at 5:42
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Usually, consequences of this kind of clauses are handled by the new company that hires you. –  mouviciel Jun 7 '11 at 9:07
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@jhocking: In one of his books he actually condemns articles he wrote in 2000 because he "didn't know what I was talking about". amazon.com/Smart-Gets-Things-Done-Technical/dp/1590598385/… (seen in the take a peek). He condemns 1 specifically, but all by inference. –  Joel Etherton Jun 7 '11 at 14:46
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13 Answers 13

up vote 9 down vote accepted

Here's what Joel had to say about this in the article the OP linked to - emphasis mine:

There is, however, one clause I've seen in a lot of NDAs that I consider quite unacceptable. It is a clause which forbids you to hire anybody who works for the company that is making you sign the NDA... I recently signed this clause in a 3 page NDA...

While Joel thinks these anti-poaching clauses are "quite unacceptable" in theory, as a practical matter he's certainly willing to sign them.

I've reviewed hundreds of software development contracts, NDAs, and employment agreements in the last 26 years, and learned a lot about what I think is a mountain and what's a molehill. In the realm of "stupid restrictions you can find in contracts", somebody saying "you can't do side projects in your spare time" is a mountain I've turned down jobs over. An anti-poaching clause is a molehill which is easily complied with, and I happily sign them without a peep.

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and no doubt Joel has his own employees sign such things as well. He'd be irresponsible to his company if he didn't. –  jwenting Jun 7 '11 at 8:56
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I can't remember ever signing an employment contract which didn't include this clause, but I've never seen one with a 2 year exclusion, most have specified 6 months. This is in the UK though, so it would be interesting to know how this varies in other places. –  Mark Booth Jun 7 '11 at 9:50
    
I have to echo what Mark Booth says. I have never seen an employment contract that does not contain such a non-compete clause. I would be concerned if a company didn't put it in their employment contracts. And, frankly, I think Joel is Just Plain Wrong™ about this. I've signed contracts with clauses like that (usually 6–12 months IME) several times and it has never been an issue, even now I'm a development manager, rather than a real dev. This is another UK perspective, but I wouldn't give that clause a second thought. Ymmv :o) –  Owen Blacker Feb 29 '12 at 18:19
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I emailed the recruiter back and asked them to remove this clause

That was your first mistake. Recruiters don't want to do anything that would jeopardize their fee, so they'll tell you to sign anything, regardless of how bad the contract is for you. Talk to the hiring manager instead.

Is this worth sticking to my guns on?

You can only negotiate when you're willing to walk away. They aren't going to concede if they don't have to.

What are the chances this clause will hurt me?

...

How often is this clause actually enforced?

Talk to an attorney if this really bothers you. Asking anonymous people on the Internet for legal advice is a great way to put yourself in jeopardy.

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I should clarify. This is not a contracting position. The person I am in correspondence with is a recruiter with the company I will be working for, not a third party entity; As far as I know, she does not have a 'fee' to jeopardize, unlike third party headhunters who do. I have considered talking with an actual lawyer if I still don't feel good about signing this contract; the purpose of this question is to get anecdotes from others in the field who have undoubtedly signed such contracts. –  Aphex Jun 7 '11 at 2:57
    
And as far as negotiation goes, I have already successfully negotiated, to my satisfaction, an increase in base salary as part of the offer package and this was the final sticking point that I wanted to resolve before signing the NDA. –  Aphex Jun 7 '11 at 3:00
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Your job offer is a reality. Someone from the same company branching out on his own with a cool idea that you would want to be part of is speculation; it may or may not happen.
If you say no to the current offer, you will lose out on a real opportunity.
If you say yes, you might lose out on a potential opportunity.

As the old saying goes,

A bird in hand is worth two in the bush

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+1 for the reality check saying, but I actually think the asker should accept a more thorough answer –  jhocking Jun 7 '11 at 14:21
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Sure, you will lose out on a real opportunity if you pass up the chance. On the other hand, if you simply sign without expressing your objections to the hiring manager, then IMO your becoming part of the problem -- people who sign a contract knowing it contains bad clauses increase the overall general acceptance of those clauses, making it increasingly difficult for others to refuse or renegotiate. –  Jeff Welling Jun 7 '11 at 14:46
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This is a really unpleasant situation. The problem you're faced with is, if you stick to your guns and say, "I'm really not happy with this clause and I feel it disadvantages me unfairly", then there's every chance the company will simply say, "Cool. We'll hire our 2nd choice then. Bye!".

The question has to be "How important is your inability to work with former coworkers to this job"? If you really think you'll miss out on an opportunity and that such an opportunity is a very realistic possibility, then you might be better to take some other job and wait for that opportunity to materialise.

If however, you are only speculating and worried that you might miss out on some theoretical chance that a better opportunity might come up, then I'd suggest if your coworkers want you on board that badly, they should be prepared to wait until their NDA clause expires and hire you then. Two years isn't actually that long in the grand scheme of things.

My suspicion is that you'll want to sign this contract and get some good experience under your belt with a good company. Who knows - in two years you might have moved on to an even better position without any need to be concerned about non-solicitation.

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As an employer (formerly, not currently), you asking this question would be enough for me not to trust you and thus not hire you. This clause is fairly standard in contracts as you're mentioning. If you're already concerned about being able to take their clients with you when you leave before you've even accepted the job, then you aren't in the employer's best interests to hire.

As @chrisaycock said, your recruiter is the absolute worst resource to ask for assistance with this stuff. This puts the recruiter in a definite conflict of interest where it doesn't suit their purpose to act in your best interests at all.

Sticking to your guns only works if you are willing to answer the following question very honestly: Just who do you think are you? If you can answer this with something extremely unique or highly desirable to an employer, then by all means continue to wrangle with the potential employer. If your honest answer is like most of our answers -- "just another {lead|senior|whatever} developer in the crowd" then you don't have a leg to stand on. If you need the job, take the job. It can only hurt you if you try to screw your new employer.

I've only seen one enforced once personally (not a lot of people I know have been willing to violate a standing NDA). It wasn't pretty. In addition to losing the suit in the first place, he was also stuck with a ton of legal fees from fighting it.

If you plan to start up your own business, why wait? It's pretty underhanded to take a job going into it knowing your ultimate goal is to poach their clients.

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Of course my goal going into it isn't to poach their employees. My goal is to have a good, productive job with good opportunities for advancement in my career, both in and possibly outside the company. The entire concern here is that maybe in a few years me and a coworker would like to start a business, and be prevented from doing so. I'm uncomfortable closing future doors this early. –  Aphex Jun 7 '11 at 3:03
    
if that's your concern "in a few years you and a colleague may want to start a company together", most companies will not stop you from doing so unless maybe you're going to be a direct competitor to them. But that's then, this is now, and it's highly unlikely that "maybe" situation will ever come to pass. –  jwenting Jun 7 '11 at 8:54
    
@Aphex: Any future business model that requires poaching a current employer's clients and/or employees is not a sound one. –  Joel Etherton Jun 7 '11 at 10:26
    
If you are really worried that this will happen, get the advice of somebody who does contract law, and find out what will happen if you break this clause say 6 months after you leave. –  Ramhound Jun 7 '11 at 12:31
    
@Ramhound: He means he works at company X for a few years then quits to form a start up. The NDA disallows poaching for 2 years from that quit date. –  Joel Etherton Jun 7 '11 at 12:32
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I've never seen a contract that did NOT include such a clause, they're a part of life.
In fact usually they're far more restrictive, up to and including one I saw several years ago that would have me sign over ownership of everything I created professionally or otherwise for a period up to 5 years after leaving employment to the company. THAT clause I had struck because it was a) way too restrictive (as it essentially forced me into unemployment for 5 years even if they fired me), b) included everything I create as a hobby (including things that have nothing to do with software, like my photographs), c) is (therefore) unenforcable. Had my sister (who's an HT manager with the degrees to prove it) rewrite the whole thing and presented it to them with a "take it or leave it" message. Few hours later I had it back, signed and countersigned by their CEO and legal department.

But no, clauses barring you for a period after leaving employment from recruiting away your former colleagues and customers are quite normal and I don't mind them. If you don't like them, you're in the wrong line of business I'm afraid.

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The small company I worked for was bought out by a big company. They asked us all to sign papers. There was one part I objected to. So I scratched out the part I objected to and signed it and turned it in. Never heard anything since.

People have warned me that this is not legally binding. OF COURSE IT ISN'T. By altering it, and signing it, I have made them a counter-offer. If they don't accept it, it is not binding on them. Arguably, by filing it away, they accepted my counter-offer. But if not, that's OK, the original is still not binding on me because I did not sign the original.

As long as the big company got a signed form 1172K then they're happy. The fact that it was no longer a form 1172K passed by the brains of the paper pushers.

So scratch it out, sign it, and send it back to them. Don't ask them to take out that clause, take it out yourself and see if they will accept it.

IMHO

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Then he will end up without an employment contract... not very good advice IMHO. –  quant_dev Jun 7 '11 at 7:25
    
Undoing the above -1 for a perfectly valid answer to the question. –  Kieren Johnstone Jun 7 '11 at 7:53
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@quant_dev: What's wrong with no employment contract? I've rarely had one except when contracting, although I have signed papers for employers. I don't know about Europe, but this works fine in the US. –  David Thornley Jun 7 '11 at 13:53
    
In Europe it's a big deal. –  quant_dev Jun 7 '11 at 16:27
    
This is officially an NDA, but I suppose it's technically a contract because it's a binding document of rules both parties must adhere to for the duration of our business relationship. –  Aphex Jun 7 '11 at 18:18
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Stealing staff and clients is a dishonorable thing to do. Since they've already budged and you've 'won' on the salary aspect, you're going to come across as a pain in the ass, potentially looking to steal staff/clients.

In the software world, (good) developers are fickle and will often stay with a job for a short period of time before moving on. This kind of clause is necessary.

If you want to build professional relationships for starting your own company, don't do it on someone else's company's time.

(Might sound harsh, but jeez, they're giving you money to do a job. Asking for you to not screw things up in their company and you questioning that... sucks. If you're enterprising and want to start a company, don't steal someone else's staff or clients to do it :))

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It's only stealing if your employer owns it. Does your employer own you? Do your suppliers own you? Making someone a better offer may p*ss someone else off, but is not stealing. –  Jaap Jun 7 '11 at 11:24
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Do you normally sign offers or contracts without negotiation simply because they are 'giving you money'? –  Aphex Jun 7 '11 at 14:59
    
@Jaap, no they don't own you, but it is stealing. They own the relationships with customers that you are a part of, that were formed while at the company. They own the work you did for said customers while at that company. 'Stealing' also means to dishonestly pass something off as your own. This falls close to that definition IMO (or replace 'Steal' with 'Poach' - fine w/ me and clearly in line with my intended meaning) –  Kieren Johnstone Jun 7 '11 at 17:51
    
@Aphex, no I'm hardly saying that and while it's obvious you don't agree it's silly and insulting to make sweeping statements when intentionally twisting my words. Read again: you've negotiated already, and won, and are now (after you agreed to the offer, presumably) picking them up on a point which I believe is legit. –  Kieren Johnstone Jun 7 '11 at 17:54
    
My problem with your initial answer is that you were implying that because I negotiated a salary increase I should unquestioningly accept a clause in the contract that doesn't sit well with me, because I had already "won" on an unrelated part of the package. If this is wrong, then I apologize. –  Aphex Jun 7 '11 at 18:16
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First, talk to a lawyer. Find out if that sort of contract clause is binding in California, and what's likely to happen if you break it. I've signed contracts with illegal clauses before, and not worried about it. (Whether this was wise is something I can't really answer, not being a lawyer, but it caused me no problems.) Do NOT rely on any advice on the internet as to the legality of these clauses.

Second, it looks to me like it says you can't recruit anybody away from your former employer. It doesn't say you can't leave and work for a competitor. I can't see it mattering unless you form a startup, and I don't know how seriously you're thinking about it. It isn't clear to me that it would prevent you from starting up a business with a colleague; that's another thing to ask a lawyer about, along with the question of how hands-off you really have to be with ex-colleagues.

If I were looking at this, I'd probably accept, get to know people, and get out from under the clause when possible, either by renegotiating with the employer or switching jobs and being valuable enough to call that non-negotiable.

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There are ways to get out of pretty much any thing in contract law. like this.. i'd say go with your job, go with what's best for you right now.

If someone leaves for a start up. You can always quit, go work at a pizzeria for 2 weeks and join the start up a little later.

Or simply.. claim no enticement from them. Quit, and then offer your resume to them.. as long as they only tell you incidently about it or you hear through a secondary source about the new startup. etc.etc..

You could alternatively consult a lawyer about it now.. or later when it happens.

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Yep do that cos one thing judges really love is people who think they can laugh at the law like that. Courts have a very good sense of humor and love little pranks like this –  Martin Beckett Jun 7 '11 at 2:59
    
only way a judge may buy that is if you have no professional relationship with that customer of your former employer in any way (e.g. I work for a consultancy with dozens of clients, but have only worked for a few, noone would probably prevent me from being hired by one of those other customers who don't and can't know me nor I them). –  jwenting Jun 7 '11 at 8:57
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You have to work out how strong your negotiating position is. If the alternative to signing is to be unemployed, then I do not see you have any choice. You might find in this job that in a couple of years time your skills are in demand. Then you can lay down the law.

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Right now I'm working at my current job, the alternative would be to continue. I don't want to, as this new job is much better in every way - compensation, location, culture... I think that's pretty much my answer, I really don't want to pass on this offer and will likely just have to live with this clause. –  Aphex Jun 7 '11 at 14:25
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What is probably hard to know is how many people they interviewed for the job and whether there was much in it between you and them. The overall strength of your negotiating position really depends on supply and demand. If you have relevant skills that few people have, then that puts you in a strong position. It is a case of do they need you more than you need them, or vice versa. –  arame3333 Jun 7 '11 at 14:43
    
Your negotiating position is at its best between offer and acceptance, but if the company describes something as "non-negotiable" they may very well be telling the truth. –  David Thornley Jun 7 '11 at 15:15
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If it really bothers you, cross-out what you don't like/change the wording and sign it. Everything is negotiable. They may come back with a different draft. Get a lawyer if you're that worried about it.

Take the recruiter out of the equation. Don't ask for their input. Contact someone with the company directly. Play dumb and voice your concerns with the legal jargon and how you want to make sure you don't violate the contract. Ask for clarification.

Two years is nothing unless you think this type of requirement foreshadows other problems with this company. Otherwise, it sounds like a good opportunity.

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I'd say just sign it. Most contracts look a bit scary - all that clause says is that you cannot spend a couple of years there shmoozing all their contacts then immediately go off and set up on your own with a couple of the other guys. (If you did do that you'd probably want your employees to sign something saying the same thing.)

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