Non-Competes and Non-Solicitation Agreements: You're a Sucker If You Don't Think They Apply To HR

So you locked down your sales team and the techies who drive the value of your intellectual property (IP) with a solid, enforcable non-compete and non-solicitation executed at the time of hire.  Sure they balk and complain, but you get most of those signed.  Congrads, smart move.

What's that?  You're glad you don't have to do the same with your HR team?  Really?  You don't have your HR Managers, Director and VPs and all your recruiters locked in to anon-compete and non-solicitation? Trust-but-verify

You're either a sucker or rationalizing to avoid the conflict.  Of course, your top HR talent and anyone who recruits should have to sign a fair non-compete.

Think about it - we're talking a narrowly drawn non-compete and non-solicitation.  Your top HR team members (I say manager and up) and anyone who recruits should have to sign one.  We're not preventing them from working by signing the non-complete, we're simply agreeing that they won't take all the training, contacts, employees and candidates that they've cultivated during their time with you to your most direct competitors.

A narrowly drawn non-compete and non-solicitation doesn't mean HR pros can't find work.  If fact, the HR game is one of the best in terms of its talent being able to cross industries and work.  That "career portability" means your HR team can sign a non-complete that's properly drawn (example - we're a software company and you can't go to work for another software company in our city/industry or that recruits developers proficent in the same programming language as our company) and find work pretty easily if they're talented in the HR game.

Why wouldn't you ask them to sign a fair non-compete and non-solicitation?  Because you either don't think they're talented enough to get the same job with your top industry competitor, or you don't want the drama of walking them through it and requiring it.

Either scenario sounds dicey to me.  

Draft the non-compete and non-solicitation and put it in front of them.  Explain the narrow parameters and require them to sign it.  You'll be happy you did somewhere down the line.


All the Best Uber Drivers I've Had Want to be Contractors, Not Employees...

If you follow Uber at all (ride-sharing instead of taxis for the uninitiated), you probably saw this week that a court in California declared an Uber driver an employee instead of a contractor.

Earlier today, I saw this piece by the LinkedIn Editorial team - Chariot is Decidely Not the Uber of Employers. Uber

Which is to say that a lot of liberal sources think it's a travesty that Uber can manage its company on the back of contractors.  These folks think that's unfair - that all Uber drivers should be employees.

It's easy to agree with that, but here's the dirty little secret - the best Uber drives don't want to be employees - they want to be contractors.

Case in point - I'm about 40 rides into my experience as a Uber customer.  Here's a rundown of the best drivers I've had:

--The commercial real estate agent who was going through a messy divorce and needed money.  He not only did the ride, but gave me his card for all my ride needs moving forward in that city.

--The Middle Eastern guy who was finishing up college and told me about the software idea he and his brother we're working on the side.

--The middle manager in Corporate America who needed money for a trip his son was taking and was doing rides on the side.

Translation - the thing they loved about Uber was the flexibility - they could drive when they wanted to, and all of them had an end goal in mind.  They weren't looking to be employees, they were looking to be opportunistic and use the service towards their goals.  

Oh, and 2 of the 3?  Offered me bottled water that came out of their own pocket. Hmmm...

They were attempting to be entrepreneurial.  You gotta love that.  America, etc.

Making Uber drivers employees will end up in the "museum of unintended consequences"... We'll sue a firm like Uber into oblivion to force what we think is right, and as a result, Uber will staff up with employees during regular business hours - normal 8 hour shifts, etc.

And the entrepreneurial people I described using Uber for their own goals - they'll be dead to Uber because they can't be employees.

I get the laws.  But sometimes we kill the spirit of the best labor with laws.

Drivers who want to be employees or at least drive a car someone else owns?  They should go to a more formal place called taxi companies (although if the libbies dug in, they'd find not everything is kosher there).  And everything you experience at taxi companies is how we got to Uber in the first place.


Is It Insensitive When You Say a Certain Ethnicity Owns an Industry?

The business world is becoming increasingly politically correct.  Discrimination we all get – it’s bad.   Any employment act or comment that speaks to a Title 7 protected group can and will be used against you in a court of law. 

So we start to be trained to say nothing.  And the politically correct people around us love to remind us when we show ourselves as biased - even when we're referring to a positive trait of a certain group of people. 

“I’d watch saying something like that.”

 “Other races do the same thing.”

The more we hear, the less we say. That’s just how we get trained as things evolved around us related to discrimination in the workplace.

But the question I have is this – why is it bad to say that a certain ethnicity seems to own a positive trait, discipline or industry - especially compared to other ethnicities?

Example - At my son’s school, kids of Indian descent (continent of India) absolutely own math.  They just own it.  Everyone knows it, and I think it’s cool.  My son was on a college bowl team at one point in middle school and when a math problem came up, the white kids, the black kids and everything in between would just look at the Indian kid.

“Go get it, Pritesh.”

So is it bad to say that a certain ethnicity seems to owns something positive?  Because I’ve got another one for you, half related to nationality and half related to family name:

The Patels own the hotel industry.

Travel for a living and stay at a business class hotel – think Holiday Inn Express and similar properties that franchise out, and you’ll see an endless parade of Patels as owners, operators and managers.

The Patels absolutely own the business class and below hotel industry.  So I decided to look it up, hoping the politically correct police don't come after me for being so brash.  Here's what I found - More from The Chicago Reader:

After a while it all makes sense. You've just entered the Patel Zone.

And you're not alone. "Patel," mutters a salesman in David Mamet's Glengarry Glen Ross. "They keep coming up....They got a grapevine."

Do they ever.

"People always ask me, 'Where do you guys come from?'" Jayshree says. "What's with all these Patels?" Anthropologists have been trying to figure that out for decades. So have the Patels.

"Well, I'll tell you," Jayshree says. "My mother and father were both named Patel, and so were my grandparents." She pauses briefly and counts on her fingers, then holds up seven of them. "It goes back seven generations! I guess it does seem funny, but it never struck me as odd. I like to think my daughter will marry a Patel, but I won't force her to do anything she doesn't want to."

Three thousand people named Patel recently descended on Miami for a convention weekend that surely would have perplexed every hotel clerk in the city if not for the fact that many of those clerks and their bosses are also named Patel. So are nearly 30 percent of all hotel owners in America, as well as at least half of all the convenience store owners in England and a growing number of Dunkin' Donuts franchisees.

"It's a common last name," says Bobby Patel, a former hotel manager in Chicago. "It's like Smith."

Except people named Smith don't go out of their way to marry other people named Smith, and the name Patel isn't nearly as common as you'd think.

The simple answer is that they're members of an Indian caste that emigrated here en masse. The complicated question is where do they come from originally, and how did they get all these hotels?

All Patels trace their ancestry to the Kansas-sized Indian state of Gujarat, but their declared homeland is the southern district of Kheda, which is smaller in area than the city of Chicago. Although one of the largest castes in Gujarat, they're far from being the largest caste in India. Still, just try finding a more common Indian last name in American telephone books. Not only are they plentiful here, they're prosperous. "Most Indians are lazy," says Nilam's grandfather, Somabhai Patel, whose Indian grocery store on North Kedzie was one of the first in Chicago back in 1977. "You go to India, and you see people sitting on the ground making little piles of stones when they should be building houses." He's only half joking.

The Patels own the hotel industry.  It doesn't mean they're limited to that.  They originate from India, and they've got a more focused identity they rally around. I think it’s cool.

More importantly, they're proud of it. 

Does it make you insensitive if you talk about an entire people related to what they're historically good at?  I hope not, because when you get out in America, that’s the way people talk.


Is Anyone Else Fascinated by the Abercrombie and Fitch Supreme Court Case?

Surely you're in professional awe of some of the issues in play in the current Abercrombie and Fitch Supreme Court case focused on Religious Discrimination, right?

Need a reset?  Here you go:

An Abercrombie and Fitch manager declined to hire Samantha Elauf, then 17 years old, at a Tulsa, Okla., store because the head scarf she wore to a job interview violated the company’s “look policy,” a dress code requiring staff to wear attire similar to what the store sells.

While managers correctly believed Ms. Elauf was a Muslim, she didn’t tell them her religion and its requirements, so the company's position is that it shouldn’t be liable for discrimination. To do so, A&F lawyers claim, “is asking employers to treat applicants differently based on stereotypes or assumption about whether something is likely a religious practice.”

Ugh.  Look policies and a connection to religious beliefs.  How you feel about this probably depends on whether you think candidates should always identify any personal appearance markers (head scarf, beards, etc) as being representative of religious beliefs.

If they identify, there's no question.  But it they don't identify, should you have the right as an employer to dismiss as a candidate based on something as nebulous as "look policy"?

Double ugh.

Here's a couple of Supreme Court Justices weighing in over the last week:

JUSTICE ALITO: "All right. Let's say four people show up for a job interview at Abercrombie. And this is going to sound like a joke, but, you know, it's not. (Laughter.) So the first is a Sikh man wearing a turban; the second is a Hasidic man wearing a hat; the third is a Muslim woman wearing a hijab; the fourth is a Catholic nun in a habit. Now, do you think ... that those people have to say, 'We just want to tell you, we're dressed this way for a religious reason. We’re not just trying to make a fashion statement.'?"

JUSTICE KAGAN: "But you're essentially saying that the problem with the rule is that it requires Abercrombie to engage in what might be thought of as an awkward conversation, to ask some questions. Now, people can disagree about whether one can ask those questions in a way that's awkward at all, but you’re saying we should structure the whole legal system to make sure that there is no possibility of that awkward conversation ever taking place. But the alternative to that rule is a rule where Abercrombie just gets to say, 'We're going to stereotype people and prevent them from getting jobs. We'll never have the awkward conversation because we're just going to cut these people out and make sure that they never become Abercrombie employees.' Now, between those two options, the option of using a stereotype to make sure that somebody never gets a job and using a stereotype to have an awkward conversation, which does this statute seem to think is the worst problem?"

It will be interesting to see how this one comes back.

BTW, Elauf if now employed at an Urban Outfitters location.  No joke.  They hired her, and it would seem their look policy is a little different that A&Fs - which is probably apparent to EVERYONE.


The Art of Breaking Non-Solicitations to Recruit: Lessons from Mastercard vs Nike...

I see you.

You think you're cute when you change companies.  But I know the truth.  

It's like one of my favorite scenes from Fight Club, where Ed Norton (known as the Narrator) meets Tyler Durden for the first time, and Tyler reacts to Norton talking about his single-serving friends on the road: Clever

Narrator: Tyler, you are by far the most interesting single-serving friend I've ever met... see I have this thing: everything on a plane is single-serving... 
Tyler Durden: Oh I get it, it's very clever. 
Narrator: Thank you. 
Tyler Durden: How's that working out for you? 
Narrator: What? 
Tyler Durden: Being clever. 
Narrator: Great. 
Tyler Durden: Keep it up then... Right up.  

You think you're clever when you change companies and in order to not violate your signed non-solicitation agreement, you tell someone else in your new company who the best people are that they should recruit.  Hell, if those people just elect to apply, how could you be held accountable, right?

Well, my friends, it's all just a mirage.  The only protection you have in that circumstance related to non-solicitation agreements you signed is avoiding pissing someone off. 

Recently, Nike pissed Mastercard off, and it undoubtedly will have some ramifications in big companies you work for.  More from Venture Beat:

"MasterCard’s decision to go to federal court last week and sue Nike for $5 million because it hired away several IT security people may force the courts to remap the boundaries of corporate recruiting.

At issue are so-called non-solicitation agreements, which are routinely included today in hiring letters. These agreements try to prohibit someone from recruiting fellow employees when they leave the company.

In the MasterCard case, some former employees left to join Nike and help improve its security operations. The rub involves what constitutes “recruiting” and, most critically, how one defines “indirect recruiting,” which is what the MasterCard letter banned.

The topic gets complicated when it’s not an issue of the executive calling former colleagues and asking them to join, nor when it involves instructing someone else to make such calls on his behalf. (Those are clearly banned under non-solicitation agreements.) The issue is when the action is limited to telling a new boss about who some of the best security talent in the industry is — and offering general ranges of salary needed to attract such talent.

Does such behavior constitute indirect recruiting? And if so, is it practical to try and prohibit such behavior?

One thing I learned a long time ago related to non-competes and non-solicitations is that you can think they don't apply all you want, but at the end of the day, if a big company with money to spend wants to go after you, they can make your life hell and at some point, the adults in the company come in and say, "what the hell went on here?"

More from the MasterCard/Nike rumble:

"The lawsuit that MasterCard filed (.pdf) was vague as to exactly how the former MasterCard executives were supposed to have recruited their former colleagues. (Nike has yet to respond in court, but it told the Wall Street Journal yesterday that it regards the lawsuit as “without merit.”) Those execs — William E. Dennings, former MasterCard Chief Information Security Officer (CISO), and Ryan Fusselman, former senior business leader at the payment card company’s IS department, “in charge of security engineering” — apparently recruited at least one employee through LinkedIn, the filing said, but it’s unclear if it was a generic message sent to all of the execs’ LinkedIn followers or something much more specific.

The lawsuit said that Nike hired “at least seven additional” MasterCard managers or employees, beyond Dennings and Fusselman, within six months, all to build out Nike’s security IT department.

In an apparent attempt to suggest that the two former execs knew they were doing something wrong, the filing said that employees were asked to lie to MasterCard about why they were quitting.

An example of the lies told to MasterCard, according to MasterCard? One employee “claimed that she was resigning to relax and to focus on her family and health.” Fusselman himself said, according to the lawsuit, “that he was accepting a job with an aerospace company in California.”-solicitation agreements altogether."

So go ahead and say that those non-competes and non-solicitation agreements aren't worth the paper they're printed on.

You're right, until you try to get clever and you piss someone off with power and budget to do something about it.

At which point someone in your company will ask you: "How's that working out for you?"  (what?)  "Being Clever.


When The Talent That Works for You Has Their Own Side Projects...

It's complicated.  End of story.  I don't have a solution.  Sometimes people who work for you are going to have side businesses they're trying to build.  Who owns the product if they work on it during the day?  How much of that do you allow if you're getting great results from the person and you don't want to chase them away?

Better buckle up cowboy.  If you don't address it, you're heading for a train wreck.  If you do get in front of it and start some dialog around it, you're causing a train wreck.  

Which is to ask the following related to side projects outside your business your employees work on:  When would you like the train wreck to happen?

On my mind related to to the following snippet from a Business Insider profile of Kevin Rose, founder of Digg:

"Bored with Digg, he began working on a number of side projects—some of which gained some serious traction. The members of Digg's board, who wanted the savvy Rose around to help run the company he cofounded, were livid.

In summer 2007, Rose began working on a "secret" startup that would go on to become Pownce, a file-sharing application that presaged Dropbox. Digg's board insisted that Digg shareholders should have a piece of Pownce, given that Digg's founder and a top designer, Daniel Burka, were working on the project.

This was not helping morale at Digg, and that led the board to tell Rose he wasn't allowed to have any more side projects. Rose's design abilities were obviously a key asset to Digg. But if he was going to be this distracted, Digg would be better off finding someone else.

Rose took even more money off the table when Digg raised $29 million in its third round of funding in 2008, according to one colleague—with Adelson's approval.  "Adelson counseled us, saying, if you are offered those kinds of deals, you should take them because it's a great way to mitigate your risk," a colleague said.

But if Rose started another side gig, the board threatened to fire him, according to one colleague.  That didn't stick. Rose decided to begin work on WeFollow, a Twitter directory, in early 2009 without telling anyone. He unveiled WeFollow at the South By Southwest conference in 2009.

Once again, Digg's board was pissed, and asked Adelson to fire Rose, but Rose and Adelson had negotiated a mutual protective clause. Neither could be fired without the other's consent."

When do you want to the train wreck to happen?  Go read the whole article, lots of talent lessons in there....


SLIDESHOW: The 5 Hiring Biases Most Managers Display - And They're All Legal...

It's official - your hiring managers are the worst you've ever seen.  Full of bias, they make hiring decisions for all the wrong reasons.

Don't believe me? Methinks you've just settled into complacency, then.  You've got your big protected classes that are covered by Title 7, then you've got all the polluted biases your managers bring the table that aren't covered by anything.

Check out the slide below from a webinar Tim Sackett and I did a year or so ago.

I posted yesterday about CEOs of startups hiring young, blonde females for HR leadership roles.  It wasn't my ideal, but I had enough email coming back at me that I wanted to share the slides below again.  Whether it's attractiveness, height, weight, alma matter or likeability, bias (and legal bias at that) is in play at your company.

The real question - do attractive, tall, thin, likeable people really get more done because of those factors, or do they represent hiring misses when the knowledge, skills and abilities aren't there to back those factors up?

The answer to that question is more complex than most of us would like to believe.

(email subscribers click through for slideshow)


Our New Employee Handbook: THE KINETIX CODE...

My last post was a link to "The CYA Report", my podcast where I usually bring in my trusted friend and resident HR ****-stirrer Tim Sackett to help me wax poetic about an issue of note and interview someone from the wide world of HR.  Good times.

On the last podcast, we interviewed Tom O’Dea, co-founder of Rocket Whale and the employee handbook platform called Blissbook.  

If you want to see the latest version of our employee handbook at Kinetix, click on this link to see the handbook we call "The Kinetix Code".  It's an interesting take and while I wrote a good bit of the copy, we had a pretty good team of 3-4 people at Kinetix that really drove the look and the feel of the project.  I think they did a great job.

Click here to see "The Kinetix Code"... (picture appears below, but it doesn't do it justice since the handbook is interactive in nature)

Screen Shot 2013-12-16 at 12.47.44 PM


The Common Sense Solution to Unpaid Internships...

So common sense it will never happen, mind you.

Cue the big budget movie voice-over voice: "In a world where the FLSA has deemed that the only unpaid internship that can exist is one where the intern in question can't actually be exposed to real work, a challenge has risen in the Southeast..."

Here's your common sense solution to unpaid internships.  Rather than write bad guidance (only Interns internships that don't include real work can be unpaid) and keep people guessing on whether they're going to get sued or not, write into law the following regulations on interns, which are pro-business and pro labor:

1. There will be such a thing as unpaid internships.

2. Create a classification similar to non-exempt and exempt for interns.

3. Create a schedule based on company size (either revenue or number of employees) that shows exactly how many unpaid internships a company can have.  Example - a company can have 1 unpaid internship a year lasting for 12 weeks for every 500 employees in the company.  Make the number less than the estimated number of unpaid internships that go on now, but still pro-business.

4. Establish a hefty fine that will be charged to a company for every unpaid internship uncovered beyond what is legally allowed - something like 20K.

5. End crazy ### language that says a company can have unpaid internships as long as they don't perform real work, which is the type of guidance you get when you don't solve the problem.  The only unpaid internships that can exist fall under the guidance above - no other exceptions.

5. Let all the other labor law guide everything else from an employment perspective.

Want to know why that would work?  Because you are legally defining what's acceptable from an unpaid internship perspective, and you're allowing the unpaid interns who fall under this guidance to actually do real work and get real benefit from it.  You're also protecting the labor side by attempting to close loopholes that create gray areas that don't make sense.

Let's make a certain number of unpaid internships legal and attractive.  Watch the competition for these spots if you went this route - it would be unbelievable, and it's actually something the government could do that would be incredibly career-development focused.

Imagine if you allowed every small business to have a 12 week internship that provided real work experience to college grads or people looking for experience in an industry.  

Why are we bullsh**ing about unpaid internships by talking vaguely about the type of work they can do?  Let's just limit the number that can exist and make it totally visible.


Chivas USA: When Your HR Manager Sues For Discrimination, You Might Want to Strap In...

When your HR Manager files discrimination charges after credible employees do, you know:

1. There was probably some validity to the orginal charges, 

2. You likely have a renegade executive doing whatever the hell they want, and 

3. FYI: You are hosed. H-O-S-E-D, I say.

Backstory- Chivas USA is a major league soccer franchise located in Los Angeles.  You've heard of the LA Galaxy with Beckham, right?  Chivas USA is in the same league.  They play in LA too.

Jorge Vergara, a former part owner, gained full control of the team in November 2012 and allegedly began harassing non-Latino employees. Vergara also owns a Mexican team called Chivas de Guadalajara, which is famous in part because it will not sign non-Mexican players.  The recent charges and a bunch of other coverage claims he wanted to bring his 100% Mexican playbook to Chivas USA, including youth feeder programs in addition to the professional club.  

Problem is, Chivas USA is located in...well, the USA.  Thus the name.  So a policy including 100% Mexican players is a bit of a problem.  

First, 2 coaches filed discrimination charges.  Read something I did over at Fistful of Talent for that rundown.  Ugly.

Then, the HR Manager files similar charges.  Oops. Ugly times 2.  More from the Daily Breeze with a h/t to Deadspin

"The suit charges that, starting in January, Chivas hired four coaches from Mexico even though they were not authorized to work in the United States. According to the suit, HR Manager Cynthia Craig was told to add the coaches to the payroll but she refused, and team executives instead routed them money through other means. (The complaint states the coaches received visas in April.)

Craig, who is black, said in court papers that she was harassed by team owner Jorge Vergara and team President Jose David because she was not Latino and could not speak Spanish. Craig left the team in July after a period of prolonged harassment, the complaint states.

Her suit also charges that, starting in January, Chivas hired four coaches from Mexico even though they were not authorized to work in the United States. According to the suit, Craig was told to add the coaches to the payroll but she refused, and team executives instead routed them money through other means. (The complaint states the coaches received visas in April.)

In her suit, Craig said Vergara began one of his first staff meetings speaking in Spanish and then said, in English, “If you didn’t understand what I just said, then it is time for you to get a job down the hall.” (Chivas shares the StubHub Center in Carson with the Los Angeles Galaxy, another professional soccer team.)"

When the HR Leader is filing charges against you, you probably need to put on your helmet and seatbelt.