There is a lot argument going on right now especially in the US State of Massachusetts as to the legitimacy of non compete agreements. Non compete employment agreements are currently allowed in most EU countries, all Canadian provinces, and 49 of 50 US States. The 50th US State that prohibits non competes happens to be California, the largest US State.
Canadian courts will enforce non-competition and non-solicitation agreements, however, the agreement must be limited in time frame, business scope, and geographic scope to what is reasonably required to protect the company’s proprietary rights, such as confidential marketing information or client relations and the scope of the agreement must be unambiguously defined. The 2009 Supreme Court of Canada case Shafron v. KRG Insurance Brokers (Western) Inc. held a non-compete agreement to be invalid due to the term “Metropolitan City of Vancouver” not being legally defined.
The 2000 Ontario Court of Appeals case Lyons v. Multary established a general preference towards non-solicitation over non-competition agreements, regarding the latter as “much more drastic weapons” and held a non-competition agreement to be invalid when a non-solicitation agreement would have been sufficient to protect the company’s interests.
No, CBT. Is more like the “Matrix”
You might want to read Victoria’s latest post at Flophouse which I considered as inspiration.
I’m much more averse to non-compete agreements than I am to CBT because it is my non-compete agreement, in practice, that keeps me tied to one place far more so than does CBT. CBT simply means that there would be some hoops to jump through if I decided it was time to leave the USA permanently and give up my citizenship. But my non-compete agreement could forbid me from doing so entirely–at least to any country where my employer has an office.
That said, there are two sides to the non-compete story (just as there are two sides to the CBT story). I’ve never done well financially in California but have done well in every other US state I’ve lived in. Because non-competes are illegal there, I believe that employers there fear that I’ll jump ship and start a competing company at the first opportunity. That makes it hard to be trusted enough to get a steady job that pays the bills–and sometimes you need a steady job that pays the bills.
Of course, what that means is that in any of the other 49 states, I’m giving up some freedom in exchange for a steady paycheque–but I’ve felt even less free in California because I always end up broke there. Like I say–there’s two sides to the story.
The OECD is the rich counties’ attempt at making a grand non-competion agreement for taxation between member states.
CBT is America’s special version of a non-competition agreement for taxation between the citizen (subject) and the state.
Governments don’t like competition, particularly when it comes to stealing.
Interesting story about the US billionaire selling his stake in the Bank of Ireland suddenly.
Could 1 July 2014, FATCA’s upcoming effective date have anything to do with it? Did the other investors request him to sell his stake because they don’t want involvement with the IRS?
If American billionaires are being pushed out of investments, what chance does the middle class have?
Conrad Black went to prison in the United States for non-compete payments that he received, which were completely legal in Canada. This is a very real example of US tyranny and arrogance in economic affairs.
@Tim / @Petros
I think you guys may be using “non compete” to mean slightly different things. The usage by Tim–the more common usage–refers to an ordinary employee who signs an agreement not to compete with their employer–either by working for a competitor or by starting a competing company of their own. No money changes hands for the non-compete agreement itself, but it is a part of the employment agreement with the employer and the person won’t be hired or paid without it. It is legal in most jurisdictions in Western countries except California. It is purely a civil matter, and its violation would result in a civil lawsuit, not a criminal prosecution. Nevertheless it can be a very significant, and controversial, constraint on an employee’s freedom as competing employers will generally not extend an offer if they know of the existence of the non-compete.
The issue regarding Lord Black–as I understand it–was a criminal matter. It involved payments for a non-compete agreement allegedly between companies–as opposed to between a company and its employees. The non-compete agreements themselves were completely legal. However, Lord Black was accused of accepting these payments on his company’s behalf and then diverting those funds for personal gain–in other words he was accused of stealing or embezzling from his company.
I don’t know enough about Lord Black’s case to have an opinion as to whether he was guilty or whether he was set up by the prosecution. For all I know he could well be innocent and unjustly convicted. But I would certainly hope that the crimes of which he was accused would not be considered legal in Canada. Like I say–the question wasn’t about the legality of the non-compete payments, the question was whether he personally took funds that belonged to his company.
What charges did Black face in Canada, eh? None. When he came back to Canada, how much time did he serve? And what percentage of the activity that caused Black to go to prison took place in Canada? Most of it actually, including the so-called obstruction of justice where he removed boxes from his Ontario office. No, I don’t think you’ve understood what happened to Black properly. It is similar to FBAR and citizenship based taxation: it is the United States claiming universal jurisdiction on everyone and everything, provided that they can assert that jurisdiction based up such trumped up charges as “mail fraud” or “obstruction of justice”. In the USA, bankster commit fraud and stay out of jail, and the government goes after the little guys like Charlie Engel and foreigners like Conrad Black. You can’t put the actual cronies in jail in a crony system, now can you?
What you say is true but it isn’t relevant to my point. My point was simply that you were using “non compete” in a different context than Tim was.
Lord Black’s case involves the direct abuse of US power. Tim’s point–if I understood it correctly–is that non-competes by employers are analogous to US CBT–regardless of where the employer is located. The employer–as Tim described it–is acting like the US government–not that the employer actually IS the US government. Tim–did I misunderstand you?
I do think that people who are not subject to US jurisdiction need to stop accepting US jurisdiction. I gather that you, Petros, have refused to accept US jurisdiction by not jumping through the hoops the US wants you to. I think more people need to follow your lead.