I didn't realize what I was signing at the time, as those documents were buried among a bunch of other papers. I left the company because they lied to me about bonuses, how they structured pay, and also about their code of ethics.
It turns out I'm pretty good at working in this industry, and I enjoy it. I was offered a job at a company owned by a disabled veteran – and I am a disabled veteran myself – but I now realize that I cannot accept the job offer from the new company because I signed a non-compete agreement with the old company.
Here's what bothered me: The company I left was okay with getting paid monthly for services even if it had no ability or intention to continue those services. They also bill customers for these services and try to upsell customers to pay for the “overtime.”
During my time there, I discovered a lot of shady business practices, which I would like to expose, but I also signed a confidentiality agreement. I'm curious to know, if I blow the whistle, what kind of repercussions will I face?
unknown
“Many NDAs are illegal when they are used to prevent current or former employees from reporting illegal activities.”
Market watch illustration
Dear anonymous,
I'll go over your non-disclosure agreement first, and your non-compete agreement second. Breaching a nondisclosure agreement can result in legal and financial consequences, including criminal charges if the case is particularly egregious — for example, a case involving highly sensitive material. If you are the CEO of a major company, most reasonable observers will understand why you have a non-disclosure agreement that prevents you from jumping ship and revealing trade secrets at another company in the same industry.
However, nondisclosure agreements cannot be used to prevent current or former employees from reporting illegal activities. Such activities may be related to sexual harassment, safety issues that may jeopardize the safety of employees, customers, or the public, or financial impropriety. Reporting such illegal practices is generally protected by the Equal Employment Opportunity Commission, the Securities and Exchange Commission or other state anti-discrimination agencies.
Non-compete clauses are probably more common than most people think, and as you may have noticed, they are often buried inside reams of paperwork. Not everyone who signed one knows they did so. In fact, studies have found that up to 47% of private sector workers are committed to non-competition. Furthermore, 38% of employees say they have agreed to at least one non-compete clause in the past, according to this study conducted by researchers from the University of Michigan and the University of Maryland and published in the Journal of Law and Economics.
You may find yourself at a disadvantage when it comes to getting a new job in your field, at least for the duration of your non-compete agreement.
“Noncompetes are more likely to exist in high-skill, high-wage jobs, but they are also common in low-skill, low-wage jobs and in states where non-competes cannot be enforced,” the Michigan and Maryland researchers said. books. “Only 10% of employees negotiate a non-compete, and about a third of employees are not offered a non-compete until after they have already accepted their job offer.”
Such agreements are designed to protect intellectual property and customers and prevent employees from using what they learned at one company and transferring that information to another company, or from setting themselves up to steal customers and business relationships from their former employer. However, California, Colorado, Oklahoma, North Dakota and Minnesota have all banned anti-competitive activities, which critics say unfairly penalizes workers and prevents them from earning a living.
Such an agreement should not harm workers – for example, fast food workers should not be subject to such provisions – and should only be in effect for a reasonable period. What is considered an unreasonable length of time varies by industry. “In general, the time period in a non-compete tracks whether an employee's skills, or the activity the employee is prohibited from doing, will become obsolete at the end of the restricted time period,” according to Gardner Employment Law, a Texas-based firm. firm.
“In the IT industry, for example, a five-year non-compete is likely unenforceable because computer technology changes daily, if not hourly,” the law firm notes. “If a computer technician is banned from working in IT for five years, for example, that employee may not be able to get any job in the field after the five years are up.” The Federal Trade Commission last year proposed a rule to ban such terms and has sued several companies.
You should review your non-compete agreement with an employment attorney to make sure it is fair and reasonable. Also review your claims against your former company with the help of your lawyer, and make sure you have evidence to support them. You don't want to add a defamation lawsuit to your list of problems, especially since a successful case against you could result in financial penalties. This, my friend, is where your lawyer can help you.
Working for a bad boss or in a toxic work environment can be very traumatic. Sociologists have likened it to living in an abusive or bad marriage. You may need time to recover before making any hasty and potentially life-changing decisions regarding your NDA and non-compete agreement. What happens at your former company may or may not rise to an actionable level, so you'll need to tread carefully.
In the meantime, thank you for your service, and I hope you find the right career opportunity at the right time.
More from Quentin Futrell:
My father has dementia and he “forgave” my brother's $200,000 loan. The notary at the nursing home said he was of sound mind. What can we do?
My husband bought our house by inheritance. I signed a demand to resign. He said I could live there after he died, but he changed his mind. What now?
Low-paying jobs are economics' way of saying you should get a better job: You've decided to stop tipping, except in restaurants. Am I wrong?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets that he cannot respond to questions individually.
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