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What is reasonable in an employment contract?
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jducoeur
I was just reading this column from the Economist last month, on the topic (partly) of employment contracts, and it has me curious about how people feel about them.

I'm pretty passionate about this topic: my past couple of jobs have involved carefully-written riders exempting my various major ideas from company ownership. My contract with Memento specifically said that the company had no rights whatsoever to Querki (yes, I've been planning this project for a *long* time), and I spent a solid month negotiating with them about the details. (And that's with a company whose base contract was better than average.) My current plan is that Querki's standard employment contract won't include anything that I wouldn't be willing to sign. I figure that what I lose in handcuffs on the employees, I gain in making the company more interesting to the really smart folks I'm going to want to hire, and that matters more.

I am curious about whether anybody else gives a damn about this stuff, though. What sorts of rights have you signed away to your employers? Have you minded? Have you ever demanded negotiation of an employment contract's IP provisions? What do you think is reasonable and appropriate in such a contract, and what isn't? I have strong opinions here, but I have no clue how much of an outlier I really am...
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So when I went to work at both Prime and M.I.T., I ended up playing chicken over the employment contracts, and winning both times. Basically, neither place wanted me to do similar work for a competitor in my next job; as I was a compiler writer in the first place, and a gadget maker in the second, that just didn't seem reasonable to me. So yes, I think it's a big deal. For what it's worth, I think you don't want your employees taking trade secrets to your direct competitors, but they ought to be able to take their expertise in the field, particularly if its a specialization.

Yes, just so. I do think the company is justified in asserting *some* IP rights -- trade secrets, and work performed on company hours/equipment, quite reasonably belongs to the company. But the trend of asserting rights over what you do at home, or trying to lock you out of your field, is fairly slimy IMO...

$EMPLOYER has a standard IP exemption form: anything that you list on it when you come aboard is yours, not theirs. Anything that you don't list that is related to $EMPLOYER's field, but develop while working here, belongs to them; things that you don't develop while working here don't.

$EMPLOYER has, several times, relinquished rights to projects and let them go open source.

As for noncompetes, I have only twice been asked to sign something that bound after my actual term of employment; in both cases I refused, and in both cases it became a non-issue. I am willing to sign a post-employment non-compete, but only in return for a payment similar to the salary I was previously receiving.

I'm in a similar situation WRT IP exemptions, though the "related to $EMPLOYER's field" category got much larger 1000 days ago (yes, exactly); it used to be limited to one market vertical.

The last thing I wanted to release was a short patch to a FreeBSD port makefile; I got the okay from the relevant office within minutes.

I have negotiated both rights to content I've created and non-compete rights, since as a freelancer they've potentially caused significant problems. Sometimes I care more than others, depending on what the content is for.

There is what is _reasonable_ and then there is what is _standard_.

(WHY IS THERE A CHARACTER LIMIT ON COMMENTS? Stupid LJ)

Things that I've had in contracts (directly, or by the contract binding me to another document):

  • No personal phones (or iPods) at the office/on the job. (Uh, yeah.)
  • No logging in remotely. (Do not conect via unsecure networks, yet VPN use was encouraged)
  • Not using the internet on my work-owned machines. (not connecting to insecure networks ... customer email?)
  • No eating at my desk. (There were 250+ employees and 8 chairs in the lunch room)
  • Not using the office as a package-delivery location. (...)
  • Not working more than 40 hours a week. (Uh, Yay!)
  • Working all the hours required to finish a task. (Same contract as previous. Wait, what?)
    1 week notice before using sick leave. (...)
  • Needing to sign the contract before I could see a copy of the Employee Manual of Conduct (when required to follow it in the contract.)
  • The wrong job description.
  • Confidentiality clauses that end up making my offer letter, my contract, employee manual, and almost everything else as 'company confidential'.

(wow--Most of these were one employer. I suspect no one had read the manual/contract closely in YEARS. Why did i work there again?)

There is the standard assignment of IP rights. (I've heard from Google friends that their contract bans them from developing apps for iOS devices unless there is also an Android version).

...

What I consider reasonable -

Assignment of IP rights directly related to the employee's field of work (and if that field changes over time, also assignment of rights for their previous fields of work, with a reasonable sunset clause). If my job is all about designing software, it shouldn't matter that somewhere in the company there is a furniture manufacturing division. If I never work with that section, if I design a better rocking chair, I shouldn't have to assign rights.

A right of first-refusal to purchase IP Rights to tangentially related fields of work. This one is reciprocal; if my company take scrap iron and makes steel gears from them, and I find a better way to extract iron ore on my own time, they have a right of first refusal to buy that. Likewise, if I come up with that idea as a side-effect of my work on company time, and they aren't developing it, I should be able to buy the IP off of them and go it on my own.

Limited scope non-compete clauses -- they need to have short sunset clauses (6 months, maybe a year) and be specific to the work I am doing, not what the company does. Similarly, non-recruit clauses need to be limited to the same timespan.

Provisions preventing Mandatory Overtime. If my contract specifies 40 hours a week, and reality requires 50-60 hours, there better be compensation. If Crunch Time is really only every few months, I don't mind doing a 60 hour week here-or-there, but if Crunch Time is every week? There is a problem.

A right for the employee to review the actual contract provisions between the company and any insurer or service agent. (New one for me, but given that it has been 3 years and I still haven't seen a dime from my Long Term Disability policy through my former employer, I have formed some new opinions.)

Compensation for any prohibited off-hours activities. If, because I work at a financial services company, I am banned from trading individual stocks and derivatives, you should provide the option of a company subsidised blind trust. If i have to develop this app for android as well as iOS, you should provide me with an appropriate device to test upon, reduced cost listings in the app store, and free development support.

Right to sue for grievances in a mutually compatible Court. If my office is in Boston, all my coworkers are in Boston, CXO and director-level employees are in Boston, why do I have to bring grievance suits in New York? I should be able to bring the suit in my State of Employment, the state of the Corporate HQ, or if dealing with an issue that occurred at another corporate office, the location of the incident.


I probably have other opinions, and probably could have put those together more coherently. I blame my Plague, Winter 2013-2014, Ver 3.x .

Re: There is what is _reasonable_ and then there is what is _standard_.

... interesting, and a useful corrective to my assumptions.

The thing is, I finally really internalized (about ten years ago, shortly after the Nuclear Winter began to thaw) that I am Very, Very Good at what I do, and I'm in a field that is chronically short on top-notch folks.

The implication of that is that I have a *lot* of power in situations like this. Specifically, I have The Power of "No". If a company tried to pull nonsense like the business about agreeing to the Employee Handbook without being able to see it, I would basically just say, "Dude -- do you want to hire me, or not?" When push comes to shove, most *competent* companies care more about hiring me than following a dumb policy. And if they're not competent, I'm better off not working there.

(Of course, truly large companies wind up without any power to make exceptions from their own idiotic rules, even if the division is competent. This is part of why I don't work for truly large companies: the Stupid steadily accumulates.)

Not working more than 40 hours a week. (Uh, Yay!)

This one I agree with, although I suspect that in your case it was there to prevent hourly employees from drawing more than a 40-hour paycheck. But the best company I ever worked for, Buzzpad, actually had a more or less firm rule about this, and we mostly stuck to it. One of the precepts of Extreme Programming is that a 40-hour work week isn't there just for the employee's benefit -- it's been well-demonstrated that, in the long run, you get optimal efficiency from your people with those hours. So it is actually in the company's best interest to have that limit in place, *and* enforce it.

This actually was another one that came up while interviewing at Memento. BC (the founder and CEO) gave me the usual rah-rah, "We're a startup, and we expect everyone to give 120%!" So when I interviewed with the VP of Engineering, I laid it out flat: I work a 40-hour week, period. Sure, I'll do a few long days here and there if a looming deadline needs it, but if that happens more than occasionally, it's a sign of Egregious Management Failure, and I will *not* tolerate that.

Again, The Power of No worked well -- I largely stuck to my guns, and the company didn't argue about it. Of course, to take a position like that, you have to be productive enough to silence any complaints. But again, this is the advantage of having the skills, and the confidence in them.

(And of course, now that I say all this, I am reminded of the fact that I'm probably averaging 60-hour weeks on Querki. I'm going to have to force myself to tone that down, both for my sanity and to set the right tone for the company.)

Continued...

Re: There is what is _reasonable_ and then there is what is _standard_.

(The thing is, I finally really internalized (about ten years ago, shortly after the Nuclear Winter began to thaw) that I am Very, Very Good at what I do, and I'm in a field that is chronically short on top-notch folks.

See, that's what pretty much every technical manager I've had has told me. I seem to drive any non-technical manager completely batshit, though. Alas.)

The Power of "No".

Yeah; after being unemployed (and looking) for 3 years, I lost confidence in my power of No. Also, I never really wanted to stay at the most recent place for more than 6 months. The plan was to start looking again 3 months after I got hired. Which happened to be when my most recent relapse started. =/

his one I agree with, although I suspect that in your case it was there to prevent hourly employees from drawing more than a 40-hour paycheck

FWIW, I've not had an hourly pay-check since my Sophmore year of college. Never got into the contracting side of development (I'm not mercenary enough), so its been 'exemnpt, salary' for me ever since. I assume that was in the employee handbook so that the administration could point to it and say 'see, we're not overworking people.' (Okay, I may be a little bitter.)

Realistically, I've seen something like that in almost every employee manual I've had. If a company admits that full time is more than a 40 hour week, there are a lot of potential complications beyond overtime. Vacation and sick time accrual schedules get off, and I suspect that OSHA rules start going into effect.



Re: There is what is _reasonable_ and then there is what is _standard_.

Anyway, the result is that my *preferred* approach to the sorts of abuses you describe is a company culture where the employees really do have the power to say, "Sorry -- this is bullshit, and I'm not putting up with it". That's the most effective way to keep the company in check. You can get that if you hire really good people, and promulgate a general understanding that employment is a contractual, preferably collegial, but most importantly *equal* relationship between company and employee. Too many employers (and employees) view work as just barely short of indentured servitude.

All that said, this does remind me that that probably can't last forever. Not every employee is going to be in a critically-in-demand field, so they won't all intrinsically have The Power of No. And even among the ones who do, not all will understand how to use it properly -- even among the really talented programmers, an awful lot don't know how much power they have, or aren't comfortable using it. (From what I've read, I would bet that there's a non-trivial gender gap in the comfort level here. Since I'd really like to encourage a decently diverse team, I may have to pay particular attention to this.)

So I'll have to chew on this. I don't personally think that all of the above belong in the Employee Agreement per se, but this probably does need to inform the contracts more generally, and some of it belongs in the Employee Handbook. (In the mystical future where the company actually has, y'know, revenue and employees.)

Thanks for the perspective...

Re: There is what is _reasonable_ and then there is what is _standard_.

The place in question hired over 80% of the employees below the director level as direct hires out of college, and many of the rest were not more than a few years older. I was one of the first 2 senior engineers hired from outside the company is over 2 years. (Almost everyone in engineering had been promoted to their position over time.)

Corporate culture was severely flawed. Management had managed to convince almost everyone that 60 hour weeks were the industry norm, and the inherent superiority of the local corporate culture. (It was, for a tech company, close-to-average in benefits, but I've rarely felt less welcome at an office.) Some of that may be the founders were from a different industry, with different cultural standards, but it was weird.

(For instance, the company had set up a 501c charity, and got the employees to donate to it and fund it. Except, the charity had an ambiguous mission statement, and the employees had no voice on how the money was used. Charity events and event planning sometimes started during work hours, but you were expected to make up those hours later. Come to think of it, I did request more information/financial disclosure on the charity, and I never got anything.)

Re: There is what is _reasonable_ and then there is what is _standard_.

The place in question hired over 80% of the employees below the director level as direct hires out of college, and many of the rest were not more than a few years older.

Yeah, not surprising. The thing is, while hiring a lot of bright young things is not a bad thing (I'd love to do something similar myself), it is *very* dangerous from a cultural standpoint, because it absolutely *begs* for power imbalances from the beginning. I suspect it can be done well, but only if the people at the top are *deeply* committed to teaching the employees from the get-go that they have a voice, and putting their money where their mouth is.

I have a bunch of ideas about how to do that, many of which simply boil down to good engineering practices. For example, while it is important to have senior engineers do code reviews on the junior ones, it is *much* more important to go the other way around -- that drives home that it isn't about power games, it's about everybody learning from each other. (I confuse the *hell* out of junior engineers the first few times I tell them to come review my code, but I've found that it works wonders for instilling a sense of equality among the programmers.) But mostly, it's about building a strong culture of listening sincerely to everyone: if they were worth hiring, they're worth paying attention to.

(Sudden realization that I want to build a company around the Silverwing philosophy. I don't know whether that's brilliant, or utterly daft.)

It's interesting to reflect that Intermetrics (my first real job after college) actually did a decent job on that. We weren't anything like a majority, but they brought in a big tranche of graduates in the span of a few years around when I joined. In that example, I think they were helped by the fact that it was very much a company by, for and of old-fashioned good programmers, with a fairly meritocratic attitude and relatively little power-game mentality. The rest of the engineers treated us as peers (less experienced and knowledgeable, but basically peers nonetheless), and that made for a pretty healthy and pleasant environment...

Once quit after 2 days ...

In the 90's I started at a company that had a non-compete; they did not show this to me on day 1, but day 2 or 3, said "oh just sign this paperwork". Now, for sales folks I see some basis for that -- they have customer lists after all. But for engineers -- no way. I actually had a session with the company lawyer where I said, "Look, you have trade secrets, and I am signing over all IP created -- how can it possibly be you also need a non-compete?"

His answer? "When a bell is rung you can't unring it."

I thanked him for the 2 days or whatever, left and did not come back.

My net is: I sign over all IP related to my work. For example, I work on business software -- if I developed a game on my own time, my employer should not own that.

Re: Once quit after 2 days ...

Ouch. I suspect my reaction would be rather more intemperate than that...

If I developed something patentable in my field, my employer would own it. I notified them about sockcalc, they said good luck and that was that. If I get arrested for anything, I have to notify my management. There are some restrictions on my and my husband's portfolios. Some of the Code of Conduct provisions have 'go to jail' as a violation consequence not just 'get fired and possibly sued.'

I have had to provide an egregious amount of personal information for detailed background check. It hasn't come up, but while I would list online identities, I draw the line at turning over passwords which I have heard of being required by interviewers.

Actually, I just don't know what to do about it.
Case 1. Google, I worked like crazy on my keyboard; filed a patent (belonging to Google, of course); what have I got out of all it? A piece of plastic congratulating me; the rest was acquired by those people that were fighting me while I was fighting for including the keyboard in various google apps. I feel like I was robbed.

Case 2. Say, in some company, I was developing and maintaining a certain tool; and for this tool I've been gradually developing a library, with functionality that could otherwise be found in opensource, but mine was better. So, when I left, and the company went down, I felt like this is my library. More, I tried to promote the library, while there - nobody ever needed it (and I was referred to as a "weird qa".

Case 3. In another company I was asked to solve a certain problem; I found a pretty cool solution; but it was a company of idiots, and one idiot said my solution was "overengineered" (sure, it had some guaranteed eventual consistency, while his had none whatsoever); so they got rid of me and of my solution. Now I feel like, when needed, I'll reproduce this solution wherever needed, not owing that company anything.

All this may sound like a typical Russian anarchist extremism. Well. That's how I feel.

On the other hand, your Querki example, in my view, is a perfect case of the job done perfectly, from the legal point of view.

Case 1: sympathies. I've written a goodly number of patents over the years, and have nothing but bragging rights to show for it. (And occasional come-ons from companies that want to sell me plaques.) In at least one important case, the company went under before the patent was fully filed -- I pretty much raced to get permission to anti-patent it, because in retrospect I didn't want anybody patenting it. (That was the patent on view-based partial sharding, my approach to making online flash mobs manageable. One of these days, I might actually try to do something with it.)

Case 2: same company. While I had a lot of problems with how the place was run, they did prove themselves decently classy in the end by agreeing to let me open-source the company's entire codebase. Not that I think they ever followed through and got full Board signoff on that, but I at least felt like I had the moral high ground to use the code as a reference point. That was actually where I really nailed down my take on the Ecology Pattern, so it was damned useful.

Case 3: (again related to Ecology, actually) Tom Leonard, from whom I got that pattern, handled this in a way that I thought was particularly clever. In between jobs, he took the problem and coded the whole library from the ground up, so that *he* owned the IP. At later employers, he basically arranged for *them* to license the library from *him*. (In perpetuity, at no cost, I believe.) This allowed him to use the mature and solid code he liked, without giving up the rights to it.

(And occasional come-ons from companies that want to sell me plaques.)
The way I learned my most recent patent had been issued was that I got a letter from some bottom feeder offering to help me monetize it. (Er, did you not notice the Assignee field?)

Never gotten one of those. But yeah, the plaque offers are how I usually find out that a patent has been issued...

That's how I learned my trademark had been approved. I got a letter from some "International registry" requesting large sums of money.

My last major job, there were IP restrictions in the employment contract. I altered the contract with what seemed fair / acceptable to me, signed it, and sent it back to them with the changes pointed out. They said they'd take it, though their policy was that everyone had to sign it as-is with no changes. (???)

I can't find my copy right this instant, but basically, what I did was change the usual "the company gets all IP for everything I make while employed there" to

The company gets the IP for anything I make which is done on company time, which uses the company's resources[*], or falls within the company's bailiwick (mortgage sales).

(Or maybe it was anything that met 2 of those 3 criteria. I'm pretty sure it wasn't all 3, because it seemed sketchy for me to be able to make something related to the company's business using their resources and have it be mine just because I'd done it after-hours.)

[*] = I phrased this differently; - one case I specifically wanted to avoid being a problem was "After the working day is done, I telnet into a remote machine from the office and work on personal projects for a little while". Technically that uses company resources - I'm typing on a company computer, and using some miniscule amount of bandwidth.

My last major job, there were IP restrictions in the employment contract. I altered the contract with what seemed fair / acceptable to me, signed it, and sent it back to them with the changes pointed out. They said they'd take it, though their policy was that everyone had to sign it as-is with no changes.

Pretty close to how things went with Memento, although I don't think they had a formal policy against it -- they just seemed kind of startled by the request, and it took a couple of weeks for them to figure out what to do with it.

And yes, my changes were along broadly similar lines to yours...

I haven't had this issue with employment contracts (yet), but I have had similar ones with publishing contracts for academic journal articles. I kept the rights to be able to publish on my own personal webpage.

I haven't had this issue with employment contracts (yet), but I have had similar ones with publishing contracts for academic journal articles. I kept the rights to be able to publish on my own personal webpage.

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