In the context of venture financed technology companies, a one year post employment noncompete is standard stuff, at least here in Massachusetts. California, famously, passed a statute making employment related noncompete agreements illegal in that state. That statute has led to a few sticky issues for companies that start out in other states, such as Massachusetts, and then open operations in California. For example, what do you do when you have a long standing Massachusetts employee and you relo him or her to California? Or, what about requiring some employees to sign noncompetes and not others? By the way, California permits nonsolicitation agreements, nonhire agreements, confidentiality agreements and the like. So, how significant is it really that you can’t have a traditional noncompete? Acutally, I am heading down the wrong path California noncompetes, blue sky laws and etc. are going to be the topic for another day.

I recently met with the first employee of a start up client (located here in Massachusetts) who told me, quite sincerely, that he was unwilling to sign a noncompete because he objected to them on philosophical grounds. While I can imagine a lively debate on this subject, it would be completely impractical. Professional investors will require all employees (especially key technical people) to sign them or they wont invest. Savvy founders know this and, whatever their private thoughts may be, will insist that their employees sign standard forms of noncompete (ditto invention agreements and confidentiality agreements). If you are of the philosophical persuasion that noncompetes are a bad idea, that is fine; don’t let it get in the way of your signing one.