Warning: Your Internship May Come with a Non-Compete Agreement

by Evil HR Lady on July 5, 2019

How many times have you signed documents without looking at every word? We figure that because we’re good and honest people, everyone else is and no one would try to trick us.

But, according to the Wall Street Journal companies are now getting their interns to sign non-compete and non-disclosure agreements. I don’t have much of a problem with the latter, as long as they are reasonably crafted, but I have a huge problem with intern non-competes.

The very nature of an internship is to help a student gain experience so that she can go out and get a real job after graduation. If you are limiting that student’s ability to get a job after graduation, you’re not sponsoring an internship; you’re offering a crappy summer job.

The Chief Executive of CastleBranch, Brett Martin, who heads one of these companies said, in response to a question about a specific student who received a follow-up letter reminding her about the non-compete:

To keep reading, click here: Warning: Your Internship May Come with a Non-Compete Agreement

{ 4 comments… read them below or add one }

grannybunny July 5, 2019 at 1:50 pm

I oppose non-competes, period. If the concern is to protect a company’s intellectual property or customer list, etc., a narrower agreement can be tailored. All this being said, non-competes are — generally — not enforceable unless supported by legal consideration provided by the employer, making non-competes in the context of unpaid internships particularly suspect.

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PJH July 5, 2019 at 2:14 pm

Some non-competes have been found to be enforceable – one recent one in the UK:

https://www.peoplemanagement.co.uk/news/articles/landmark-supreme-court-ruling-finds-non-compete-cause-not-wide-enforced

Granted, this is a higher-level position, not an internship, but still…

“This morning, judges overturned a previous Court of Appeal decision and formally reinstated an injunction against a former employee of recruitment firm Egon Zehnder, Mary-Caroline Tillman, which would have prevented her from taking up employment with a competitor had the contractual period of restraint not since expired.”

[…]

“In 2017, Tillman announced she was leaving to join a direct competitor, Russell Reynolds Associates. She argued the non-compete clause was an unreasonable restraint of trade and was therefore void.

Egon Zehnder was initially granted an injunction preventing Tillman from starting her new role, however the Court of Appeal set aside the injunction. It ruled the words “interested in” made the clause an unreasonable restraint of trade and refused to remove them from the contract as it would change the meaning of the clause.

However, the Supreme Court overturned the Court of Appeal’s ruling, deciding the words were capable of being removed without the need to add to or modify the wording of the rest of the clause, and that doing so would not generate any major change in the overall effect of the restraints. “

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Jim Grey July 5, 2019 at 4:10 pm

I’m a software developer in Indianapolis. I always have to sign a non-compete, but it’s always limited to companies that actually compete — i.e., if I’m developing a learning management system I can’t go to work for a competing learning management system company for 12 or 18 months or whatever the term is. But I’ve never seen a non-compete that prevents me from being a software developer at a software company that does *not* compete in the same field.

That said, there are always non-competes and other legal docs to sign. I now always ask to see them before I accept a job offer. Took me 20 years to figure out to do that. Surprisingly, some companies will not share those documents until after you’ve accepted their offer. Once or twice I didn’t see those documents until my first day on the new job. Not fair and I won’t allow that again.

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MariaRose July 5, 2019 at 5:55 pm

Non-competes don’t benefit the employee, period, only the employers. It is bad enough that there are rules in place that control actions while employed but non-compete affects future employment by controlling/limiting. I can see this used only for information that a top level like a CEO or COO would need to know but not for all employees, who don’t have all the options available to them like the higher level management. HR should know this.

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