I remember the time a potential media partner tried to get me to sign a noncompete clause. It was funny. He read it, I read it, he thought I was laughing about something I just thought of that was funny.
I was not. I, politely, quoted a 3X salary figure over what was on the table that would even get me to even consider signing such a thing, and went about my at-will business. Noncompete clauses are legitimate when they are used to protect trade secrets. They are a valid protection against industrial espionage. They are even a fair show of “good faith” between an employer and a high-profile, poachable employee. If NBC gave me my own show, it’d be reasonable to ask me to sign a non-compete to prevent me from quitting and immediately starting up another show on TBS.
Except, I’m not Conan O’Brien, I’m just some guy who writes about law on the internet. I’m in the same boat as Stephanie Russell-Kraft, a former Law360 writer who left, got a job at Thomson Reuters, and was fired from that job after Law360 informed Reuters that Russell-Kraft had signed a noncompete clause with their organization.
Russell-Kraft’s story is whizzing around the internet today, because New York Attorney General Eric Schneiderman is investigating the arrangement to see if it violates New York labor laws.
It’s a much larger issue than Russell-Kraft though. Noncompetes are supposed to protect employers from losing high-level people with proprietary information to other competing businesses. Instead, employers are trying to use them to lock up “rookie talent” employers invest time and money training. They artificially depress salaries of that talent, because they prevent that talent from getting better offers at other organizations.
Noncompetes were not intended as a backdoor salary-cap on wages. This isn’t the NFL.
I avoided my tangle with the noncompete, in large part because I went to law school and when I see somebody asking me to sign over my right to write thoughts, online, for money... I know what I’m looking at and I react with the appropriate level of “bite me.” Russell-Kraft did not have that advantage. Above the Law reached out to Russell-Kraft:
As far as I know, all editorial employees sign the agreement on their first day. A lot of them, like me, had no idea what they were signing and pretty much everyone was just as shocked as I was when I got fired.
See... when you make people sign something on their first day, they think they’re signing a standard employment contract. Slipping in a noncompete (and a non-solicit, for what it’s worth) while a person is filling out a W9 and direct deposit slips is just dirty. Part of the story here is that Russell-Kraft didn’t even know she had signed it until she had one foot out the door at Law360.
And the noncompete Russell-Kraft signed seems particularly overbroad. Russell-Kraft is a legal news reporter and it says that she can’t report legal news for a direct competitor. Law360 is trying to apply it to Thomson Reuters, but as written they could also try to apply it to everything from the Associated Press to TMZ to SCOTUSblog. This doesn’t just inhibit her ability to work for a competitor to Law360s core business, it inhibits her ability to work, full stop.
Russell-Kraft also says that the noncompete claims proprietary ownership over her sources. If you are not a reporter, you probably don’t know how LUDICROUS that is, but I’d sooner consent to my publisher’s proprietary ownership of my testicles than my sources. Cutting my balls off, professionally, is a bigger deal than cutting my literal balls off.
Which brings us to the question of why, in God’s name, would Law360 even THINK something like this was enforceable. Even if you read this thing, understood what it meant, and signed it anyway (which is exactly what would happen if you were a powerless new journalist excited to start a job), the expectation would be that this clause would never be enforced.
Russell-Kraft reports that she’s heard of Law360 doing this to other people too:
I didn’t know the noncompete was an issue at that time. I’ve since found out that Law360 has threatened some former employees who went to Bloomberg and Reuters.
It seems like Law360 is getting into some kind of pissing match with Bloomberg and Reuters, and Russell-Kraft got caught in the middle.
For their part, Law360 gave this comment to the Wall Street Journal:
Law360 said in a statement that the newswire “is aware of an investigation into certain media-company employment practices and has received inquiries in connection with that investigation. As is our standard practice, we do not comment on ongoing investigations and intend to give our full cooperation to investigators to the greatest extent possible.”
I don’t want to beat up on Law360 too much, because, again, this isn’t a problem with that organization so much as it’s a problem with employers. They are exploiting their workers — their non-unionized workers, because in a world where unions still existed, this is exactly the kind of crap that wouldn’t happen.
And it takes somebody like the NYAG to do something about this, because the people being hurt by these noncompetes have a limited ability to defend themselves. Thomson Reuters has no interest running up its legal bills defending a new hire who “failed to disclose” that she was subject to a prior agreement (that she was not aware of). If you are a young person looking for work you don’t exactly have David Boies’s email address.
I do. Come at me, bro. You’ll have better luck getting me to swallow a salad than and noncompete. But that’s really the other point here: a noncompete should be negotiated between people with equal power and transparency.
It is a thing that can be bargained for. It’s not something that should be slipped, like a mickey, into your first day on the job.