Covenant or non-compete?

I know a non-compete is something hard to get over in a court of law. But I remembered reading “Trump the art of the deal” years ago. I got the book out and sure enough it was in there. Trump went into his first deal for a hotel with Hyatt. He had them sign a covenant where as they could NEVER put up another hotel in NYC or the surrounding boroughs without him saying yes or no. So I got to thinking that this might be something to look into. According to the law covenants are still very binding and one of the first forms of a contract in the old days. Not many people use them anymore as they just put what they want in the contract. The only person who can break the covenant is the one who wrote it. So I figured this would make for an interesting topic as you can tell your potential employee, they can set up shop all they want. Any location they want. But they have to get the yes or no from you first. I figure if it’s holding up for Trump, should hold up for us. The covenant he made is so strong, that he feels this is the best deal he ever made in his life (at least at the time of that book). He even has set up in his will that in case one of his kids is not so bright. The covenant will still stand, regardless of what his kids want. The covenant can only be broken though a ton of paperwork and BS. With a non-compete you have a hard time cause it’s gear directly to someone working or not working. The covenant is not that way. It allows them to work but only if you say yes.
Just thought it would be in interesting topic.

It is a very interesting topic.

As a matter of fact as soon as my attorney saw my non compete agreement… he immediately had me change it to a covenant not to compete.

thanks, I learned something

This is gold, Jugg. Thanks for the info!

Now someone write one up and put if in the Document section.

Really interesting.

This is a pretty good read on the subject. The guy is talking about Ohio but I would figure it’s good for most states. It’s pretty strong stuff and very much a good read. I’m still looking for an example. One thing I have found out though is you can put in ANYTHING you want in the document. As long as it’s reasonable an can show you are only trying to protect your business. One thing I thought was really really interesting is in the case of training. You can place in the covenant that the employee CAN NOT use the skills aquired due to your training to work for another company. Another thing I am finding out about them, is they are used more in conjuction with contracts for big business. Instead of having sub sections of a contract some of the sub sections are turned into convenants so they can be binding even after the contract runs out or is terminated.

What other types of companies use non-competes? Besides Trump. I have become aware of them in W/C so far. When I started w/c back in 2001, I did sign one for the company I worked for, he had a 50 mile radius and a time frame that I can’t recall, if we were to part ways. I worked for him till I moved out of state in 2007. I asked him (we are still very good friends) about it when I started with a company here. My friend told me to never sign one ever. I agreed with him looking at the paper work. He felt they were joke and also a pita. The non-compete that I did not sign here was a bit on the insane side. A 200 mile radius, for Dallas that is Oklahoma to Austin and who knows how far to the east and west, then I think a 5 year time frame after we parted ways. This has been my source of income for 7 years and something that I will not give up. I would not, knowingly go after some ones client list or seek out their employees. That is it though. I know their are some shady people out there and you need to protect yourself a bit.
My wife is an architect, do you think an architect firm would say well after you leave us you can not be an architect with a local firm for x-amount of years or move x-amount of miles away if you want to continue your career. She has never been approached with a non-compete in her field of work. I am in the process of getting my company together and do not work for any w/c companies, but was wondering if I am missing something about the use of non-competes.

Just my thoughts!
Alberto E.:rolleyes:

There are many companies who use them. Not sure about calling them convenants though. But they do use them. Many times while at jobs you are bound by what they place in the contract. Example: Work for an advertising company and any art work you design is owned by that company. Regardless of how great the art work was. Still owned by the company. It makes no difference what the feild is. I am willing to bet that if she worked for a very large firm someplace in her employeement agreement would be something in regards to her restrictions. Here’s an example of just that very feild. Trump in designing his first hotel had a firm signed to design it. He became very friendly with the architect who was doing the design for the firm. The architect had a falling out with the company and left the team. Trump was ****ed off cause now he was stuck with a firm that did not have the vision for how he wanted the building to look. He contacted the guy who left the firm. The guy told Trump he was not permitted to work on the project because of a conflict of interest document he signed with the company. Trump, being Trump was able to get the guy a job at another firm. Worked his magic to have the last firms contract voided and hired on the new firm. Once that was done the guy left the firm and started his own firm. Sure there are ways around these agreements, but not everyone or every company is slick enough to get around them. Some companies can write one so air tight there is nothing you can do.
It’s pretty simple. If a company requires to you sign it and you don’t then you don’t work. Sure a non-compete can be broken as I stated before. They are geared towards a persons livelyhood. But a convenant is not. Sure the person can work. But once again, only if you say yes or no.
Example: Guys works for me after he signs. 1 year later leaves the business and starts his own. He works in my town. He is open for legal problems.
Guy opens business an calls me, asking if he can work in my town. I say no. You can work in this town over here. Guys says, but that town does not have many houses in it. Oh well, thats business. I’m not stopping him from working. I’m just saying you can’t work where I work.

I thought everyone used non-competes.

I was in the cellular recycling industry before I stumbled across window cleaning. To my knowledge, which is quite limited, every industry where employees have access to customer client lists and or direct interaction with customers in a specialized field - has a non-compete in place.

I have personally seen non-competes thrown out in court. Based on the constitution.

As an American we have the “Right to Pursue Happiness” How does the covenant get around that?
[CENTER][B]Because it is a contract? Once you sign the contract do you give up that right? [/B][/CENTER]

Yup. Look at it like this. Anytime you sign your name on a contract you are bound by it. Simple as that. If not then maybe I should not pay my mortgage or truck payments. I mean I only signed stating I would, but what’s a signature? Right? There is a difference here. We are once again, NOT SAYING A PERSON CANNOT WORK. THE COVENANT STATES THEY CAN ONLY WORK IN THE AREA YOU SAY THEY CAN. Let’s test this. I will set up shop in your area. You can sign on as my employee and sign a covenant that I write up. Then quit and go start your own window cleaning business. Then I will sue you for doing it. Who do you think is going to win? You or me? Once again a non-compete is very hard to hold up in court. But a covenant is not. You are correct in that you can’t take away someones ability to make living. But once again, with a covenant you are not doing that. You are just saying they can not work in certain areas. You can search this board an find that I for one am not a fan of non-competes they are not so binding as everyone thinks, just for the very reason you are stating. You can’t take away a persons right to make a living. But once again with a covenant that is not what you are doing.

Good topic and info. It underscores the importance of getting friendly with an attorney as your business grows. It also got me to wondering. We share a lot of docs on this board, but who on this board copyrights their printed material? Your ex-employee honoring a covenant may work decide to open shop way over there. Then he/she borrows all the nice things you showed them while they were working for you. Can this be covered in a covenant?

Eric

I agree that speaking to an attorney is the way to go. I just thought this was interesting. I don’t copy-write any of my docs. That’s a real hard one to control on the internet. Unless it’s something perminant like a photo in which you have 100% proof you made it, it’s very hard to control. I think you mention the #1 issue “employee honoring a covenant”. That’s the really hard part to control. Even if they don’t, the employee can set up shop and be running for a couple of years before you even know they opened shop.

I do not have any employees nor do I want one (unless I found the right person) this may or may not happen in the future (somewhat of an oxymoron), I am solo and not an employee to any company, (except my dear ol’ wife). I think if I did have an employee I would not feel right telling someone where or when etc. they could work, even with a contract. The non-compete contracts I have seen (maybe 3 or so). They were clear in stating that I as an employee, then an ex employee I could not seek employment with another w/c company,start my own company etc. with in a certain time frame 6 months to 5 years (min-max)/and with in a certain radius 50 miles to 200 miles. Say you own a coffee shop someplace Joe’s coffee shop and Jim’s coffee opens up a block away, (or Starbucks), it may p@*s you off, you may lose some customers, but if you walked down to Jim’s and said “Jim this is my turf/area whatever” Jim would laugh at you, maybe blow coffee out of his nose and say "Joe p@*s off and get out of my store. I know there is no contract between Joe and Jim, a contract seems like a dictatorship to me, things that it should clearly state are:

  1. Ex-employee will not go after my current customer list.
  2. Ex-employee will not seek out to employ my current employees.
    (anti-raiding)
  3. Ex-employee will not slander my company.

There are some other things that you could state, but nothing else comes to mind. The honest handshake is a thing of the past, and there are both jerks for employees and jerks for employers.

As a lot of members here have posted "w/c is not rocket science"
you could go down to the local zoo and pick up some chimps and train them to w/c sometimes better then you could train a human.
The concept of I want every piece of glass in my town, this is my area and you can’t clean here is not reality. There will always be other cleaners and hopefully more glass than any one person or company can clean. I am thankful for what I have and am able to clean, but if there is a job I can not do or do not want to do. I am sure some else would not mind doing it.

Sorry for this long a@* post, run on sentences etc. ,and I know n/c contract work for some people, the n/c contracts I have seen just seems a bit over the top for me.

Thanks
Alberto E.:eek:

Diffenantly worth reading into for your own state. For example. In California it won’t matter. The California Supreme Court has already ruled that all contracts signed by an employee restricting them in any way shape of form from making a living is void. Regardless of who, when and why.
My state how ever has traditionally held up non-compete contracts without excessive restrictions. Even in cases where there where excessive restrictions, the state still upheld the contract but enforced changes to it. IE If you told someone they could not work in the window cleaning industry for 20 years. The state might knock that down to 6 months or 1 year.
In some states it’s unlawful for a person to work in the industry period. In other states they just can’t work in their respective feild but still can remain in the industry. IE Maybe not be a window cleaner, but could be brought on as a consultant for marketing a window cleaning company.
It’s really interesting to read up on. I am learning a lot thats for sure. Funny I was just watching TV and they are talking about the GM ballout. They (media) are now pointing their fingers at the CEO. One of the broadcasters asked if the guy left the company what type of package does he have in his contract. Is it a billion bucks? Interesting thing, was they (GM) stated the guy as a standard GM employee package combined with standard CEO packages lol. I guess that means he gets a boat load of cash. But they did say, he has a non-compete in his contract. It’s more common place then we think. One other interesting thing I read on one website that was recently posted. 09-08. Was the guy questioned if the courts will uphold many of the non-competes now being employeement is getting more and more harder to come by or over turn them so people can work.
But once again it’s totally differant in every state. If the time comes where I have one, maybe I will make it so the person just can’t use a squeegee, ever!. lol. They can clean but only with a rag lol.

[CENTER][SIZE=“3”]I laughed so hard I think I pooped a little:D[/SIZE][/CENTER]

The question we do not ask ourselves… “Should we live in fear of what could be, but has not happened?”

Why waste futile hours on what hasn’t happened. Why live in fear of losing something you don’t have or not getting.

Why not live in gratitude. Be thankful for what you have and know that you can’t get all the glass. Accept it for what it is and you will live a happy life. I do.

Not too long ago I had some guys that helped me branch off and start there own gig. They are no longer. It worked itself out.

I like the covenent idea becuase it protects your intellectual property. Plus it seems to be more of a scare tactic than anything.

Just my two cents.