I wont muddle the issue with the personal circumstances regarding my question unless they are nescessary.
I am currently employed by an IT contracting company that has a paragraph in my contract that basicly states: I can not work at the same place and or perform similair job responsibilities, for 180 days after leaving my current contracting company. The contract states if I break the agreement I will be required to pay what basicly amounts to a year’s salary.
Its my, albeit non-legal, understanding that in general non compete clauses are in place to prevent employees from taking trade secrets with them and giving them over to the competition, upon gaining new employment. In my case my contractor provided me no training or job skills. I was hired based on the skills I possess which were acquired before hand.
Has this type of clause been held up in court? Would I be wise not to challenge this by changing contractors at my workplace?
The general rule is that you cannot leave a person without a way to make a living. If he’s a rocket scientist, you can’t restrict all rocket science competitors. But you can make it specific- He cannot work on a competing contract.
If you’re a contract employee – what we sometimes call “consultants” there may be another issue here. Your contracting company is counting on getting their percentage of your salary for the length of the contract. So CompanyX is paying an amount per day or per hour to the contractor, who takes a bit off the top and pays you the rest. Now if CompanyX were to take you on as a regular salaried employee, you might not get any more, but CompanyX would avoid the overhead of the contracting company’s commission. The contracting company would be unhappy about that. So they make you promise not to do so for 6 months or so after you cease to be theirs. If CompanyX really, really wants you as an employee badly enough, they may negotiate with your contractor to buy out the contract.
The contracting company is also trying to keep you from jumping to a competing contractor, as you said you might want to do. IANAL, but it seems to me that if you signed a contract, then you can be held to it. My WAG is that it has nothing to do with trade secrets or training received. It’s strictly business, nothing personal.
Such contractors usually have a schedule of compensation fees for those employees who get hired by their clients. If you hire a temp after less than, say, six months, you pay off the agency so that they won’t go after you in court.