Competition between Microsoft and other tech companies over new technology markets such as cloud computing has led the Washington-based company to include non-competition clauses in its standard employee contract. A non-competition clause generally prevents an employee from taking advantage of confidential information at a similar position at another company for a specific amount of time.
This year Microsoft's non-compete clause was tested in Washington's Superior Court when Matt Miszewski, a former general manager of Worldwide Government for Microsoft, left to become a senior vice president at Salesforce.com, a California company. Salesforce.com is a customer relations management company that also uses a cloud computing platform.
State law governs non-competition agreements, and enforcement varies. Washington allows reasonable and narrow non-compete clauses in employee contracts. Whether a non-compete clause is reasonable depends on individual circumstances. Common factors state courts look to include:
- The scope of the non-compete agreement. The broader the language - e.g. preventing an employee from ever working in the same industry - the more likely a court will find it invalid
- The length of time it prevents the employee from working again
- Whether the employee had access to trade secrets
- How big of a geographical area it covers
- If the employee received any benefit for signing the agreement
Courts generally do not like restrictions on trade. However, narrowly focused non-compete agreements can be enforced. In this case, Miszewski argued his new position was not relevant to his old job, he did not work in the same geographical area, and that he did not hold any new confidential information.
The judge disagreed, holding that Miszewski was indeed violating his non-competition agreement. He cannot work for Salesforce for one year from the date of his resignation, per the terms of the agreement.
Non-compete Clauses Are Only Enforceable in California Under Certain Conditions
The California Supreme Court ruled that non-competition and non-solicitation agreements were not enforceable in a 2008 ruling. However, there are a few statutory exceptions to this rule, such as if you own your own limited liability company or partnership. In addition, a California company is able to protect trade secrets, and confidentiality agreements are legal.
If you have questions regarding a non-competition or confidentiality agreement, contact an experienced business litigation attorney.
