When an employee signs a non-compete agreement, they generally are not allowed to work for a competitor of their current employer for a set number of months after leaving said employer. A violation of a non-compete agreement is considered a breach of contract and can mean penalties for the breaching party.
Amazon Web Services recently filed a lawsuit against a former executive of enterprise applications who allegedly violated his non-compete agreement when he started working for rival company, Smartsheet, before the 18-month waiting period mentioned in the agreement ran out. The man signed on to be the business software company’s vice president of product. The employee says that Smartsheet is not a rival to Amazon, but rather a partner.
Smartsheet is a business software company that sells group collaboration software. Smartsheet uses AWS infrastructure to run some of their software. The company insists that their attorneys made sure that their actions were legal before hiring the executive and believes that this will likely make it more difficult for former Amazon employees to find work in the tech industry.
While many people support the use of non-compete agreements in the tech industry to protect the companies who invest in their employees by training them, some say that they prevent individual career advancement and hurt the economy. In fact, these disputes are a big reason why top graduates move to states like California, where non-competes are unenforced.
It is unclear why this particular executive was targeted, considering it is nearly impossible to stop employees from working in an Amazon-related business area, due to how broad the business is. However, it will be interesting to see what this means for non-compete agreements in the future.
Source: Fortune, “Amazon Sues Former Exec Claiming He Violated Non-Compete Agreement,” Barb Darrow, June 12, 2017