Author: Wolf Gugler

Non-compete agreements or restrictive covenants is more appropriately named seemed to be the bane of many an employee and employer. Jock Climie, former CFL standout and  a partner in the firm of Ottawa-based Emond Harnden is a well-versed and highly respected restrictive covenant trial lawyer who has worked on behalf of many notable corporations.  He only represents employers, but his clients’ employees are also able to seek him out for advice.  He’s conducted many trials throughout Ontario and Québec including the courts of appeal. Jock was kind enough to offer his take on this topic.

Restrictive covenants are quite enforceable when worded correctly, and sometimes individuals receive incorrect advice that they are not.  The courts are often very prone to interfere as they don’t want to see competition damaged or an individual’s chances of employment lessened.  In his experience, usually employers are within their rights to protect their legitimate proprietary interests.  But, a retailer can’t hire someone to sell shoes, and then tell that employee they can ever sell shoes again should they leave their employ.  The differentiator is if the sales person develops relationships that could result in repeat sales.  This area is rarely overturned.

Also from the retailer’s perspective, issues could arise if an employee for instance is a buyer with existing supplier relations and knows certain proprietary information about costs and capacity. If in an outside sales role, it could be a sales rep with an existing customer base.  As mentioned, if the sales rep has repeat sales customers, you can usually continue your relationships with these people if you switch companies.  But if there’s a non-solicitation clause on customers that you specifically developed while the in the employ of your company it’s a roll of the dice; if the company invested in developing that specific relationship, for instance, allowing the sales rep to treat their customer to dinner or golf that the company paid for, they may do well in court.  It’s a very gray area Jock says, and courts can use their built-in flexibility with regards to interpretation.

An employee without a non-compete clause can’t be forced to sign one after they join their company unless the company gives them a raise.  But they probably better get legal advice at this point, as the company may be trying to enforce something that truly isn’t enforceable.  When looking at your employment agreement, Jock suggests that you look at the restrictive covenant clause and if you feel you can live with the specific terms than sign it… but if your feeling is that it might impact your ability to make a living outside your current employer, don’t sign it or have the clause narrowed down after seeking legal advice.

Many times salespeople move for what appears to be a lucrative opportunity and its well worth the fight to do so.

That being said, Jock suggests you ensure you don’t poke your finger in your former employer’s eye so to speak.  The example he provided was Dentist 1 who buys Dentist 2’s practice and employs dentist 1 and makes him sign a non-compete clause that covers a new practice within 15 km from the current practice.  Dentist 1 later goes out and sets up a practice 16 km away (he believes), but simply drove from one office to the other to establish that distance.  Dentist 1 then spends hundreds of thousands of dollars to set up his new practice…and no surprise was sued by dentist 2 who determined that the practice was in fact 14 km apart as the crow flies.  The point is, Dentist 1 was still hoping his old customers would return to him, which the courts saw as unfair as dentist 2 bought his business and even offered to employ Dentist 1.

Jock is not suggesting that candidates walk away from situations that appear could get messy down the road, but that they simply seek out advice that will help them make an informed decision.  He says that employers are always entitled to protect their legitimate business…but that in many cases, courts are worried about the “little guy” being able to earn a living, and will side with them despite what appears to be an open and shut case.

It’s all as clear as mud, but that’s why experts like Jock Climie do what they can despite a gray area in the legal system.

In last month’s HM, we discussed integrity…or the lack thereof…in the workplace.  It’s all too easy to cite examples of how bosses and co-workers can skirt the truth in favor of advancing their careers. But wait, all is not lost!  There are people who lead by example and manage their career and that of others by using the Golden Rule.  Consider the following examples:

Ask anyone who’s worked with Tom LaSorde, the new CEO of Daimler Chrysler’s Chrysler Group, and they’ll tell you he got to where he is because he’s clean…and integrity is at the top of his list.  He’s a grassroots person who climbed the Chrysler ladder of success quicker than anyone else in its history, and primarily due to this fact. Aside from the CEO level, how about some “real-world” examples?

A business colleague well-known to us (let’s call him Joe) relocated to a different city and searched out a new position.  He found what he thought was the ideal role, but as a condition of employment had to sign a non-compete contract.  Joe’s new employer said it was merely a formality, but soon after Joe found it wasn’t a good fit and resigned.

Shortly afterwards, he interviewed with another prospective employer and was quickly short listed for a second interview.  At this point, he decided he’d better “come clean” about the existence of a non-compete agreement, even though acquaintances suggested he simply omit that information in the hopes it would never surface. However, as Joe had a strong moral fiber and integrity about him, he decided to be upfront and suffer the consequences, if any. The good news is that Joe’s new prospective employer appreciated his candor and honesty, and chose to hire him on a contract trial basis until his non-complete went away.  A win-win for employer and employee in this case.

Recently, we approached a candidate about a prospective position with a good Client of ours. We had a good discussion, and it became apparent that she was well-suited for the role, and would see both an elevation in responsibility, career advancement and compensation if she were the successful candidate.  However, she came back to us the very next day and said, “I’m sorry, but just last week, I accepted a position with another company. Although this sounds exactly like what I’ve been looking for, I have to be fair to them and decline to go further on this search…but I have the perfect person in mind, and they’re interested.”

She may be in our database of inactive candidates, but if she ever comes back to us, we obviously have a very high opinion of her.  We wished her well, because her new employer is hiring the type of person we’re all looking for.

Citing a personal example, when I first began in the executive recruitment business, my new employer started to train me on their success tactics.  I was told that, when I interviewed a candidate, I should ask them where else they had been interviewing. Then, I was to call these companies with openings and see if I could also submit candidates in the hopes of making a placement. I refused, as it went against my integrity…and I was summarily dismissed and told I didn’t have the right makeup to make it in this business. That was in 1985, so I beg to differ.

At the end of the day, remember that you need to be able to look in the mirror and feel good about the principles you stand for and that others know you uphold. It may not always appear as the shortest way to success, but guaranteed it’s the one you want others to know you for, and a mold for your employees to follow.

Integrity is defined as “steadfast adherence to a strict moral or ethical code”, according to www.dictionary.com. Synonyms: candor, forthrightness, goodness, honesty, honorableness, incorruptibility, incorruption, principle, probity, purity, rectitude, righteousness, sincerity, straightforwardness, uprightness, virtue.

So, what happened to people’s level of integrity in the job-seeking market and in the day-to-day workplace?

Is the competition for new careers that fierce? Are we, as employers so critical of candidates that we make them believe they need to “bend the truth” in order to have a better chance of securing that ideal role than candidate number two? Take a recent example in a search we conducted. At the final step of the search, we conducted a thorough reference check, including educational credentials. Lo and behold, the university in question told us, “sorry, but they have a number of credits earned towards their Bachelors degree, but it is incomplete”.

When we reported this back to the hiring company, they in turn rescinded their offer of employment to the candidate. Why? As the hiring manager said, “It’s not because they didn’t complete their degree, because that’s not a finite requirement here. The fact that they lied about it speaks to their integrity, or lack thereof. We don’t want that type of person working for us.”

Here’s an interesting observation as well. I sat in on a meeting last week with a team of managers and their Director. The Director has over 110 indirect reports. On three different occasions, she prefaced a comment with “I wouldn’t tell my employee this, but”… and proceeded to tell us about one employee’s habitual lateness, another’s propensity for using foul language in the office, and another of her employees that had confidentially shared with her boss that she had once had a nervous breakdown. Does this type of manager think others will respect her for passing on comments like these?

In another case, an HR professional told of a situation where he had a new HR Manager join his company. Feeling comfortable with this new colleague, he confidentially shared information regarding an employee discipline situation with her in the hopes of receiving the benefit of their opinion as to action to take. The next thing he knew, he was called into the President’s office asking why he shared this information with someone else, when it was his responsibility to sort things out.  Needless to say, there was a breach of trust that probably won’t ever be resolved between these two managers, let alone the company President’s feelings about this situation.

We also read about integrity in many company mission statements and annual reports. Didn’t Worldcom, Enron and others shake up this myth too?

The bottom line is, take the word integrity seriously; otherwise, others won’t take you at your word. This one reverts back to an old saying, “Do unto others as you would have others do unto you.”