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Trapped by an Employment Contract

DILEMMA

After receiving an MBA, I wanted to move to the West Coast. I found the perfect position in the city where I wanted to live. The only problem was that in order to work there I had to sign an employee agreement with onerous restrictions on what I could do if I left the company. During my tenure there, which has been about five years, I have done well with multiple promotions. But a great opportunity has come up for me to be CEO of a much smaller company. When I went to my boss to announce what I wanted to do, he told me that this company was covered under my restricted agreement, since they sell into a small corner of our market.

I have sought legal council, and was informed that the employee agreement was well written — it would be hard to find a loophole to allow me to do what I want to do. On the other hand, he told me, it is unlikely the company would pursue me if I chose to take this position since the courts may not side with the company, the court fights are expensive, and they often result in bad publicity for the company. But I also want to do what is right (and fair), not just what I can get by with.

What options could I explore?

Trapped

RESPONSE

Dear “Trapped,”

As we have evolved into a knowledge-based economy, your situation is one that is becoming more common. Noncompete agreements have increased in number and in scope as companies seek to preserve their most valuable “assets.” Your desire to be fair to your current employer and not just take a path of escape based on legal leverage is highly admirable.

Not knowing the exact nature of your business or the scope of your potential employer’s market, it is difficult to offer a more certain opinion on your situation. Unless your current employer is interpreting the signed agreement too broadly in order to hold onto you, the ethical issues are clear.

In exchange for accepting the position, you did voluntarily sign the agreement. And, as you mention, it appears that your current employer has upheld his/her end of the deal. You have been promoted multiple times, so the situation has turned out well for your career. What your conscience may be telling you is correct. Keeping your word even when it may not be in your best financial and career interests to do so, may not be in your best interests from a broader perspective. Each chapter we end in life often lays the groundwork for the beginning of the next. Other than creatively thinking about a win-win solution for your current and potential employers and seeking a clean release from the agreement, I don’t see any other options left to explore.

Kenman Wong
Professor of Ethics, School of Business and Economics
Seattle Pacific University

If you have an ethical dilemma at your workplace,
email Ethics at Work (eaw@ethix.org).
We will publish some of these in
Ethix along with our diagnosis.

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