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Assume the company is in Delaware and been taken over by a larger corporation: If one already has the job, is it possible to for the larger corporation to compel existing employees to sign non-compete agreements?

Assume subject is in DE and is a W2 employee (no contract or 'term')

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    In my particular area of the world, being a permanent employee already comes with obligations of non-competing by law in the same industry. Often signing one is just a formality (it depends on the terms, obviously). – Rui F Ribeiro Oct 6 at 15:36
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    @RuiFRibeiro FYI, to an American, the phrase "non-compete agreement" implies competition after you leave a position, not during your employment. – James Moore Oct 6 at 16:40
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    @JamesMoore I also have seen here a 6 month non-compete after leaving, from more shady employers. If a regular employee, I will tell them to get lost. If you want me to sign a non-compete after leaving, you are both paying me EXCEPTIONALLY WELL, and also paying me 2 years of salary for the privilege. I have heard of less experienced people signing those clauses for 300 euros "compensation".. just the bare minimum for it to whistand the clause in a court of law. Bottom line, I would not sign that garbage after the fact, and much less without any quid pro quo. – Rui F Ribeiro Oct 6 at 16:45
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    At the very least, if faced with this situation, you should consult a lawyer about your options. You may be able to negotiate terms that guarantee pay for the duration of the non-compete. – R.. Oct 7 at 0:16
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    What @R.. said! If you refuse to sign and are fired, you may be able to sue them. Consult your local bar association for a good corporate lawyer first. – Mike Waters Oct 7 at 1:26
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A company generally cannot compel an employee to agree to a non-compete, but they have a wide variety of alternatives for inducing employees to do so. Most obviously, they may threaten to fire employees who refuse, whether immediately or at the end of their current term, as another answer observes. Indeed, if Big Company makes an NC a condition of employment then they are likely to insist on the same for employees they obtain from Original Employer.

Firing employees for refusing to sign does, of course, put them in the job market as potential competitors, but the company may well find it acceptable to do that on their own terms. In particular, Big Company can ensure that those who won't sign go out the door with minimal knowledge of Big Company's clients, trade secrets, etc. other than those obtained from Original Employer.

And that leads into other forms of inducement. Big Company can do some or all of the following things, depending on the particular employment situation:

  • offer bonus compensation for signing
  • promote those who sign and / or demote / reassign those who don't
  • change job duties for those who refuse to sign
  • do all manner of nastier things to be unfriendly to employees who refuse to sign

Some of those fit directly into Big Company's perceived interest in avoiding employees using Big Company internal information to jump ship and compete with them, and others could fit into Big Company policy about which jobs require an NC. Some are just pressure tactics, but that does not necessarily make them unlawful (nor are all variations on the others necessarily lawful).

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I assume you are working in the US outside Montana (corporate headquarters is not so important). It depends on how long they are presently required to keep you on. If you have an at-will contract (most likely), they can present you with a "sign or be terminated" ultimatum. In case you have a term employment contract, you can be forced to sign at the end of the term.

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    And I assume you are not located in CA. Non-competes are very limited by law in CA. – George White Oct 6 at 1:21
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    What they will do at the end of the term, fire you? At the end of the term, you simply refuse. – Rui F Ribeiro Oct 6 at 16:48
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    This answer would be a lot better if it mentioned how this interacts with unemployment benefits. I would think being fired for refusing a substantial, unlateral change in contract terms would be the employer's fault and would leave you eligible, but I'm not sure. – R.. Oct 7 at 0:14
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    @RuiFRibeiro "what will they do at the end of the term, fire you?" generally, yes, that's exactly what they'll do. – phoog Oct 7 at 5:36
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    @RuiFRibeiro Well, if you don't sign you wouldn't get offered another term. At the end of the day, the company's going to either have a signed non-compete or an open position. – Delioth Oct 7 at 14:35
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Can they? Well, they'd sure like it if you signed. I'll guarantee you that their agreement is entirely to their benefit, and not to yours. This happened to me once, back in the halcyon days of the 1990's. The company I worked for (a small-to-middling size contracting firm in the wilds of northern Ohio) was being sold to a large-ish national contracting firm who wanted us all to sign their non-compete. I liked the agreement I had with the local firm and wanted to keep it, but knew that if I said anything like that I'd be told "Nope, you gotta sign the new company's agreement". So I did what anyone does in a situation like this - I punted. "Gee", said I, "I'll be happy to sign this...just as soon as I have my attorney take a look at it". I wasn't refusing - I was just saying I wanted my legal adviser to look at a legal document prior to signing it, which is entirely within my rights to do. The harried administrative guy didn't even bat an eye - he just said, "Fine, sure, sign it and get it back to the office as soon as you can, OK?". I assured him I would, we shook hands, and neither of us ever saw the other again. I did actually take the agreement to my attorney, whose comment on it was, "Well, it's interesting to see they've re-legalized slavery...". I asked him whether or not I should sign it, and he asked, "Will they fire you if you don't sign?". I told him I didn't figure they were likely to do so, as it'd mean they'd get no revenue from having me work for them, so he said, "Don't sign it, don't say anything, and see what happens". I never signed it. Nobody ever asked me about it in the eight to ten years I remained with that company. Nobody knew, and nobody cared.

IANAL, and this is not legal advice. But you might consider telling them that your attorney has to look it over, and then...do whatever your attorney tells you to do, based on the document in front of you and your situation.

:-)

  • I'm not sure why this was downvoted. Yes, the worst case scenario is that they fire you without warning for failing to execute the agreement, but it is far more likely that they would follow up before doing so, giving you a chance to reconsider, and there is always the chance that they will just let it slide, as your experience shows. – phoog Oct 7 at 14:32
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    @phoog probably because it doesn't answer or attempt to answer the question of "is it possible to for the larger corporation to compel existing employees to sign non-compete agreements?" If the question was the other way (My company's trying to force me to sign [document], can I get out of doing that?) then this is an answer, but as it stands it's just a somewhat-related anecdote. – Delioth Oct 7 at 14:38
  • @Delioth on the contrary, it provides a practical method of (at least potentially) avoiding signing the agreement. This depends on the large company's processes, of course. I was involved in a similar acquisition 12 years ago, and it played out differently: they gave everyone the agreement to take home and read and show to a lawyer of they wanted, then hounded them until they returned it. But the agreement wasn't particularly unfair in this case, so I didn't fret too much about it. – phoog Oct 7 at 14:42
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    @phoog - While your statement is correct, avoiding signing the agreement is not the question. The question is asking if an employer can compel an employee to sign. This answer would be a decent answer if the question was "My employer was just acquired by LargeCo, who is trying to make me sign a no-compete; how can I get out of signing this agreement?" But this question is not that question, and answers to that question are not answers to this question. – Delioth Oct 7 at 15:59
  • As the author of this question, I am OK wit this response. – gatorback Oct 7 at 19:21

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