No-Compete Clauses Become Prevalent

Two Fayetteville brothers in separate industries recently found themselves in trouble with former employers.

Colorado natives Justin and Jon Williams were issued “cease and desist requests” because of no-compete clauses they were required to sign.

Both said they expected “no-competes” to become increasingly prevalent, especially in local high-tech fields in which proprietary skills and information are premiums.

Justin Williams, 25, received a certified letter Nov. 1 from attorney Janet P. Gallman, who represents the computer and Internet solutions firm Interface Computer Center LLC in Fayetteville. The letter demanded that Justin Williams “cease and desist the direct solicitation of” ICC’s clients.

He signed a no-compete clause with ICC while employed there from Dec. 2, 1998, to Feb. 12, 1999. In the event he left the firm, the clause required that he not operate a competing business within a 50-mile radius for at least two years.

His capacity at ICC was as a Web page designer, and he acknowledged being given limited specialized training in HTML programming.

But Justin Williams is now an art director and salesman with NWA Business Online Inc. of Rogers, which, among its services, offers Web page design. He said, however, that he doesn’t even use the training for Web-site building he received at ICC. He is more involved with sales and the design aspects of NWA Business’ services.

“What happened was one of ICC’s clients was contacted as part of an e-mail message that was sent out to probably 90 prospective clients,” Justin Williams said. “There was nothing malicious. It was not a targeted attack. I meant no harm to [ICC].”

He has agreed to avoid ICC’s clients through Feb. 13, 2001. Interface’s Web division serves more than 800 clients. NWA Business Online has 25-30.

Jon Williams, 29, co-host of the morning drive-time “The Jon & Zach Show” on KJEM, 93.3 FM, “The Eagle,” was slapped with a cease-and-desist order in February 1998 when he jumped ship from KKEG, 92.1 FM, “The Keg.”

KKEG, which filed its motion at 8:01 a.m. at the Washington County Courthouse on Jon Williams’ first day with its rival, had required the disc jockey to sign a no-compete contract when joining its staff in 1994. It stated that if Jon Williams left the station, he couldn’t work for any competitor within a 50-mile radius for one year.

A loophole allowed him to work for a local competitor only if he would be part of a national broadcast. That eventually forced KKEG to agree to a quiet, out-of-court settlement.

Since then, “The Jon & Zach Show” has dominated the market’s morning Arbitron ratings while being distributed in four markets by way of an elaborate computer network.

Webb Untangles No-Compete Saga

Interface Computer Center co-owner and engineer Jeremy Webb said his company didn’t intend to pursue further action against Justin Williams. Webb just wanted to protect his company’s interests.

“We don’t have any problem with Justin making a living,” Webb said. “Does he have proprietary secrets? I don’t know for sure, but he had access while he was here. The only thing we’re asking, though, is that he doesn’t solicit our clients and use the fact he worked here to recruit them.

“All we’re asking is for him to uphold 10 percent of what his contract said he’d do.”

Webb said his company’s no-compete clause would continue to be evaluated and enforced case by case. He said he would be more concerned if Williams had worked for Interface for a number of years and established relationships with its clients. And, Webb said, in the future, he would consider it a red flag if prospective employees didn’t want to sign a no-compete.

Justin Williams said that NWA Business Online was considering its own no-compete policy but that it would probably be administered only for sensitive positions.

“If you help build a company from the ground up and then want to leave, I can see where it’s necessary,” Justin Williams said.

But he insists that it’s unnecessary for new employees who unintentionally wind up with a better job opportunity or leave for unexpected reasons.