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Amazon Sues Target For Non-Compete: 3 Things We Can Learn (or Remember)...

Dilbert

Every once in awhile we get reminded of the issue of non-competes - this week is one of those weeks. Amazon vs Target this time around, here's your level set:

Amazon.com is suing to enforce a noncompete agreement involving former logistics executive Arthur Valdez, who recently was hired by Target, a key rival in the retail market.

In a lawsuit filed Monday in King County Superior Court, Amazon says it wants to keep Valdez, who until recently oversaw Amazon’s international supply-chain expansion operations, from using the “confidential strategic knowledge” he possesses at Target.

Amazon argues that Valdez, who is set to become Target’s chief supply chain and logistics officer starting March 28, is in breach of an agreement that binds him to an 18-month timeout in which he cannot compete against his former employer.

The lawsuit underscores Amazon’s competitive streak — and the oversight it exerts over its intellectual property as rivals encroach on fields it helped develop. In 2014, Amazon sued Zoltan Szabadi, who left a job with Amazon Web Services for Google’s cloud-computing unit. It’s not clear whether these legal broadsides always work: Szabadi’s LinkedIn profile shows he has worked at Google uninterrupted since May 2014.

You're either yawning at this point, or you're interested - so I'll make it quick. Dig deep into this article from the Seattle Times and you'll see some key things we all should remember (or learn if you don't have a lot of experience with these things).  Lessons include:

1. Non-Competes are there to DARE you to go to work for a competitor.  Who's a competitor? Hell, we're not going to tell you that. We're daring you, after all.  Better than you think we'll frame anyone under the sun as a competitor. That's enough to keep most of our talent from jumping ship, even for a better offer.

2. You can still hire a person under a non-compete, and there are ways to mitigate your risk. One of the best ways to protect your company after hiring someone under a non-compete is to put them in a role that won't use the IP under the agreement.  If you're hiring a sales person, it's to let the former company know that the sales pro in question won't be calling on former customers for the duration of the Non-Compete.  Target claims to have tried to do that:

Target spokeswoman Molly Snyder said in an email: “We have taken significant precautions to ensure that any proprietary information remains confidential and we believe this suit is without merit.

3. If both companies are hard-headed about their positions related to the Non-Compete, the company with a significantly bigger checkbook wins.  Always remember this kids. Amazon vs Target is a couple of heavyweights who will spend what they need to, and a judge will ultimately decide. But, if you're a small company and you decide to pick off key talent from a bigger company, get ready to get drained. The company with the bigger checkbook will win, because they'll just bleed you dry on legal fees. Eventually, your C-level folks in a smaller company are going to say, "enough", and you might even be in the position of terminating someone you hired that had a non-compete - which is probably the worst position you can be in.

Can you hire someone under a non-compete?  Yes!  If you think the company in question might balk at it, you need to be prepared. 

Optics related to the role they're going in at your company matter.  

So does the size of your checkbook.  Lawyers cost money. Film at 11.

Comments

Mesheal Fegor

One way or another, the person is going to use his experience to work in the next company. I've always found this provision in law to be ineffective, and "maybe" even unnecessary.

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