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Tuesday, July 1, 2014

Amazon Sues Former Employee for Going to Work at Google

Posted by on Tue, Jul 1, 2014 at 4:46 PM

Todd Bishop at Geekwire writes:

Amazon is suing a former Amazon Web Services strategic partnerships manager, Zoltan Szabadi, alleging that his new job at Google Cloud Platform violates the terms of a non-compete agreement that he signed when he originally joined Amazon.

The suit will be closely watched in the tech industry as a new test of the standard employment agreements that Amazon and some other large tech companies require employees to sign when they’re hired, restricting their activities if they leave.

I'm fascinated by non-compete deals. They can't be legal, right? They seem to simultaneously violate both labor laws and the idea of the free market that Silicon Valley claims to adore. Lately, I've seen more and more anecdotal suggestions that they're not legally enforceable, but Amazon must be fairly confident in their noncompete clause to take on this case. I can't wait to see how this one shakes out.


Comments (25) RSS

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Chef Thunder 1
I wonder if the do win if it would be the death of the non compete... I would imagine it would make recruitment rather difficult
Posted by Chef Thunder on July 1, 2014 at 4:54 PM · Report this
This is standard in the tech industry. Usually it has a time limit, ;like 6 months. So this dude could have just had a nice vacation before going to Google and he would have been fine.

What's not cool is what Apple & Google did:…

where Apple and Google made agreements not to poach employees.

Did this get coverage on SLOG from Mr. Constant? No? Why not? Oh right, because neither of these companies are Amazon.
Posted by somethingsomethingusername on July 1, 2014 at 4:59 PM · Report this
Non-compete's are generally upheld if they're reasonable in terms of the length of time you have to wait before signing up with a competitor. It's not a lifetime bar. In the UK, those waiting periods are referred to as "gardening leave." Common in radio and TV as well.
Posted by Toe Tag on July 1, 2014 at 5:05 PM · Report this
Usually an employer seeking to enforce a non-compete will sue the ex-employee and his new employer. By not doing that in this case, Amazon is trying to keep this case in state court - since Google is a California company, it could have moved the whole shebang to federal court, which recently refused fully to enforce Amazon's non-compete in a similar case.

Non-competes are nearly always unenforceable in California - @2, that's one of the reasons that Apple & Google had to collude to keep their employees from moving between companies and ultimately increasing their salaries.
Posted by Luckier on July 1, 2014 at 5:12 PM · Report this
Some courts have upheld them, some have overturned them, but the form the basis of reality since capitalism is about non-competition, monopolies purposely evolving into super-monopolies.

Say, a private equity firm/leveraged buyout company (Carlyle Group or Blackstone Group) has just purchased your company, your employer of record, and is involved in asset stripping, and will be shorting offshoring your job to keep "expenses" down.

Meanwhile, a subsidiary of that PE firm (private equity firm) or a company it is invested in, is likewise doing a leveraged buyout of sorts on your apartment building (similar to what Marti Jonjak wrote about sometime back, involving the Ethos Property Group and its affiliate, Pacific Living Properties), using highly leveraged loans coupled with RE depreciation to purchase your building, and under the guise of cosmetic improvements cuts services and jacks up the rents incredibly!

So too that anti-competitive telecom you use has added all those unordered, hidden costs to your monthly bill, and the HMO you are with is double-billing your wife or partner accordingly.

And then there's that non-compete stuff . . .
Posted by sgt_doom on July 1, 2014 at 5:15 PM · Report this
@2: That got coverage on slog.
Posted by Hanoumatoi on July 1, 2014 at 5:33 PM · Report this
sperifera 8
Good luck enforcing a NCA in WA, Amazon. This lawsuit is a bluff to keep all their other employees (with NCAs) "in-line".
Posted by sperifera on July 1, 2014 at 5:39 PM · Report this
They're legal and they've been enforced in Washington.
Posted by sarah70 on July 1, 2014 at 6:02 PM · Report this
I had to sign one for my job, which I started on April. It in the apparel industry and not tech. It says I can't work for a competitor for a year unless I get signed permission from my manager, u know, cuz were still in high school. But they didnt define who their competitors were, so I think that's a gray area...
Posted by PistolAnnie on July 1, 2014 at 6:15 PM · Report this
Assuming you're being paid for giving up the option to work at a competitor, paid extra and in an amount that corresponds somewhat to the degree and extent of your sacrifice, I can see how it would be fair. But for a low-wage worker, as I imagine #10 was in high school?
Posted by Warren Terra on July 1, 2014 at 6:20 PM · Report this
I'm not a fan of non-compete clauses and there are some jurisdictions (most notably CA) in which they are explicitly disallowed. But I have no idea what universal "labor law" Paul imagines they must violate. Nor do I see how they are inimical to free market ideals, which are all about being able to sell what you own under whatever conditions you agree to and having that contract enforced.

I suspect most developers enter into them based on risk/reward calculation: if you are small fry (say making less than $200K/year), they are very unlikely to be enforced against you; if you turn into a big deal, you will be able to afford the non-compete period; if you turn into a really big deal, your new employer will pay you to do nothing during the non-compete period.
Posted by David Wright on July 1, 2014 at 6:21 PM · Report this
Geocrackr 13
Agree w/ sperifera@8 - it doesn't matter if they're "legal" or "enforceable"; this is a SLAPP suit. Amazon doesn't actually care if they win, they're sending a message to their employees that they will bankrupt you w/ legal bills if you try to get a job anywhere else.
Posted by Geocrackr on July 1, 2014 at 6:41 PM · Report this
Oh I was joking about the high school thing-- bc they require signed permission from your manager :) I'm a professional in my 20's now
Posted by PistolAnnie on July 1, 2014 at 7:08 PM · Report this
If you work in the tech industry, and you are high enough profile that your non-compete will actually get enforced, you are doing very well for yourself already. The time period is not usually onerous. Long enough that you can't learn about the Next Big Thing at one job and then trot across the street and cash in on it.

I've known a LOT of people who left Microsoft and started at Amazon two weeks later.
Posted by unpaid reader on July 1, 2014 at 7:50 PM · Report this
@15 - but those people from Microsoft were bringing insider information, not taking it away. Perhaps Microsoft was more confident. Or perhaps Amazon is just a putz of a company.
Posted by Calpete on July 1, 2014 at 8:32 PM · Report this
2 Years? I won't sign it. Still want me? 1 Year? I won't sign that. Still want me? 6 months? I won't sign that. Still want me? 2 weeks? I can sign that.

This is standard negotiating practice in the tech industry. I have no idea why, since in the end they always still want me.
Posted by derpyderpington on July 1, 2014 at 9:11 PM · Report this
Non-compete clauses didn't start and won't end with the tech industry. Obviously TV and radio have had them for years. Unless they're specifically banned in your state they are quite legal and enforceable. And they can make perfect sense: If you're developing a new, groundbreaking widget that Google is paying you big bucks to develop they don't want you Facebook paying you bigger bucks to develop the exact same widget two weeks later.

It really depends on just how valuable you are. But to suggest this is an Amazon thing is another example of the hard-on Constant has for that company.
Posted by bigyaz on July 1, 2014 at 9:58 PM · Report this
kk in seattle 19
I love the Stranger, where "I've seen more and more anecdotal suggestions" = reporting. Because, you know, picking up the phone to call someone with actual knowledge of the topic is so old school.
Posted by kk in seattle on July 1, 2014 at 10:45 PM · Report this
I've signed one and complied with it (one year) and also successfully enforced two as a manager. I've also seen a friends company crippled by not having them in place when an employee left to start a competing company. So they (non competes) have their place.
Posted by whatevercathy on July 1, 2014 at 10:56 PM · Report this
I think the non-compete is usually more about preventing poaching than leakage of proprietary info. Most employees at big companies don't know anything all that sensitive, but they are hard to replace when they quit. It seems like a dumb move by Amazon to try to enforce the non-compete, though. If they want to attract and retain skilled workers in a seller's market, the legal bullying is not going to help them.
Posted by yuiop on July 2, 2014 at 12:56 AM · Report this
ferret 22
Non competitive clauses have been used for years. GM won a huge settlement against Volkswagen for poaching one of their GM Europe Executives, who set up VW's operations in Spain...

The key to a non competitive clause is the company pays out a compensation to the executive or tech specialist who is leaving. They company with the grievance is suing to get that money back, plus damages...
Posted by ferret http://!/okojo hide on July 2, 2014 at 5:54 AM · Report this
This is not a Silicon Valley thing. These clauses are not legal in California, so the big tech companies down there do not use them, even for their employees in Washington. Google does fake care to honor them though, if they know about them. Because they encountered some difficulties with Microsoft suing in the mid 2000's when they opened up shop in Kirkland.
Posted by senor chris on July 2, 2014 at 8:42 AM · Report this
Fuck non-competes. There are already laws against stealing proprietary information, so use those avenues to deal with employees taking data/clients from one firm to another.

If you can't keep your employees from moving to different firms, then you suck as an employer. Yes, you, "job-creator", you suck and no one cries for your failures. Either learn how to be a better employer or learn to deal with your disappointment.
Posted by Solk512 on July 2, 2014 at 8:50 AM · Report this
JonnoN 26
I don't think any of you actually read the article.
Posted by JonnoN on July 2, 2014 at 9:44 AM · Report this
watchout5 27
Maybe there's a middle group where non-competes can come with compensation that's like minimum wage. Yeah you can't compete but if you can't find a job in the 6 months or a year where it matters to the company that company should be liable for them in some way. Or we could just get rid of it because it's a stupid idea.
Posted by watchout5 on July 2, 2014 at 6:11 PM · Report this

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