I was asked to sign one at my last employer, and they were also very vague. We had to sit down with the lawyers to clarify what they were doing with this new document. They wanted to claim anything that we do creatively at any point as thiers (even stuff done after hours). The lawyer basically said that they wouldnt be coming after us, unless something was blatantly obvious. The main reason for concern was more with the computer programers taking code to another place than with our department. However, they write the document vague enough to cover everything, which to me seems lazy and a cause for problems later.
Here is a lawyers take on it:
Likely, all of their employees are “at-will” and they can be terminated with or without cause. So, yes, they can be terminated for not signing a non-compete. You cannot unilaterally change a contract. But you can change a contract with consent from both parties. Without seeing the non-compete it’s really hard to say whether it would constitute an unfair restriction on trade.
I just did a quick search and here is a little information….:
§3.5 During the litigation of a noncompetition agreement, a question may arise as to whether the agreement is supported by sufficient consideration or, conversely, whether it can be attacked on the ground that it lacks consideration. A noncompetition agreement made in connection with the sale of a business will seldom pose an issue as to consideration; such issues usually arise in connection with employer-employee agreements.
Most jurisdictions that have faced the question have held that, where an agreement is signed by a new employee in connection with his or her hiring, the fact of employment is sufficient consideration for the noncompetition commitment. But where the covenant is extracted from a current employee in exchange for nothing other than continued employment, there is a substantial split of authority on the agreement’s enforceability. See Annotation, Sufficiency of Consideration for Employee’s Covenant Not to Compete, Entered into After Inception of Employment, 51 ALR 3d 825 (1973 & Supp).
The Michigan Court of Appeals addressed this issue in the context of at-will employment in Camshaft Mach Co v Rose, No 114314 (Mich App Mar 7, 1990) (unpublished). Although an unpublished opinion has no precedential effect (see MCR 7.215(C)(1)), this case warrants discussion because it is the only appellate treatment of this key issue by Michigan state courts. In Camshaft, an at-will employee was required to sign a noncompetition agreement and received nothing other than continued employment in exchange for signing. One year later the employee resigned and joined a competitor.
The court noted that (1) MCL 445.774a does not state that consideration for a noncompetition agreement is required; and (2) the statute of frauds (as codified at MCL 566.1) provides that consideration is not required to change or modify a contract where the change or modification is in writing and signed by the party against whom enforcement is sought. Thus, “continued employment of an at-will employee is sufficient consideration for his signature on a noncompetition agreement.” Id.(citing Bullock v Automobile Club of Michigan, 432 Mich 472, 479, 444 NW2d 114 (1989) (“a right to amend employment policies is fully consistent with the presumption of employment at will”), cert denied, 493 US 1072 (1990)); see also Hayes-Albion v Kuberski, 108 Mich App 642, 311 NW2d 122 (1981), aff’d in part and rev’d in part on other grounds,421 Mich 170, 364 NW2d 609 (1984) (relying on statute frauds; rejecting defendant’s argument that nondisclosure agreement he signed one week after beginning employment was invalid for lack of consideration).
Shortly after Camshaft was decided, the United States District Court for the Eastern District of Michigan addressed the adequacy of consideration defense in Robert Half Int’l Inc v Van Steenis, 784 F Supp 1263, 1273 (ED Mich 1991). In Robert Half, defendant former employee signed a noncompetition agreement the day he started work for plaintiff, after he had accepted the employment offer. In upholding the noncompetition agreement, the Robert Half court recognized that “continued employment constitutes sufficient consideration for the Defendant’s execution of [a noncompetition agreement] … where … the Defendant’s employment is otherwise ‘at will.’” Id. at 1273. The court noted that it would have reached a different result if defendant had been employed for a specific term. Id. (distinguishing Insurance Agents Inc v Abel, 338 NW2d 531 (Iowa App 1983)) (employee already had right to employment for at least three years under previous written contract); see also Sherrod v Genzyme Corp, No 05-1217, 2006 US App LEXIS 5381 (6th Cir 2006) (MCL 408.478 and MCL 750.351 do not preclude enforcement of noncompete where employment at will was sole consideration); Lowry Computer Prods, Inc v Head, 984 F Supp 1111 (ED Mich 1997) (successor entity entitled to enforce noncompetition agreement because plaintiff was at-will employee); RAM Prods Co v Chauncey, 967 F Supp 1071 (ND Ind 1997) (applying Michigan law; holding that continued employment is sufficient consideration for employee’s execution of restrictive covenant).
The statute that now governs employer-employee covenants, MCL 445.774a, mandates reasonableness in four respects. The agreement must
- protect the employer’s reasonable competitive business interest,
- be reasonable as to its duration,
- be reasonable as to its geographical area, and
- be reasonable as to the type of employment or line of business covered by the prohibition.
A reasonable noncompetition agreement should interfere minimally with the employee’s ability to earn a living and should be no broader than necessary to protect the employer’s legitimate business interest. I don’t see anything about vagueness in the description of competitors. But I’m not really looking very hard.
You should consult your personal lawyer about this matter. This was just a quick 5 minute conversation, so there could be other considerations Also, if you email your corporate dept, Im sure they will gladly sit down with you and go over what you can and cannot do. Im guessing it is the same situation i was in where they used a more general document to cover several departments of workers.
At the end of the day though, Scott is right. Can you afford to bring this to litigation if it happens? Whirlpool has in house staff, so the cost is minimal to them compared to what you are going to have to shell out.