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Employment contracts.
You either love ‘em or hate ‘em.
Sure, in some sense they are a lot like a security blanket. With a contract, you know you’ll be employed for the duration - that is until you really screw up and get fired.
And then there’s what’s written inside the contract : salary figures, vacation and sick time, non-compete clauses.
In the case of EMC’s ex-excutive VP David Donatelli - the latter came back to bite him. For weeks now, the storage industry has been buzzing about Donatelli’s sudden departure from EMC to join his once arch rival Hewlett Packard as executive vice president in charge of HP servers, storage and networking.
This theft (and it was a theft) from EMC was quite a coup for HP, however there’s one hitch: That pesky non-compete clause in Donatelli’s EMC contract.
On May 5, a state judge in Massachusetts granted a preliminary injunction barring Donatelli from take the post at HP. The court said Donatelli can’t start his new job until both companies resolve the legal dispute over the terms of the non-complete clause which- by the way - states the he cannot work for a competitor for 12 months after leaving EMC.
Unlike Massachusetts, California doesn’t recognize non-complete cause.
EMC is in Massachusetts, HP is in California.
Therein lies the rub.
“The doctrine raises the question of whether it is possible for someone in Donatelli’s position, a high-level EMC executive with access to his company’s trade secrets, to work in a similar position for a competitor and not give away those trade secrets,” said Randy Kahnke, a specialist in intellectual property law in the IT industry with the law firm of Faegre & Benson LLP in Minneapolis.
On the flipside blogger Robin Harris makes a compelling case against non-competes. He says the problem with non-competes is twofold:
First, they interfere with the free movement of labor to the highest and best use. Shouldn’t Mr. Donatelli be free to take his talents to the highest bidder for the maximum benefit of the free enterprise system?
Second, non-competes are bad for the US economy. Unlike Massachusetts California does not honor them. Yet California has managed to create many more jobs and much more wealth than Massachusetts in the postwar period - despite the Bay state’s early lead in computers and telecommunications as well as DoD and DARPA funding.
So what do I think?
I think Donatelli has a pretty good fight on his hands. I come from a background (journalism) where non-compete clauses are mandated and upheld. Violate them and you may never find work again. Everyone is scared their employee will spill trade secrets - and with good reason. These secrets are a company’s bread-and-butter. Why risk it?
Do I agree with Harris’ push to support Massachusetts House Bill 1794 - which would outlaw non-competes in the Bay State?
No.
Doing away with non-competes is just bad for business.
However, if it weren’t for Donatelli’s non-compete - we wouldn’t be watching this spectacle unfold.
And what fun would that be?
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