Non-Competes for Computer Repair Independent Contractors in CA

[Pure]

I've owned a computer repair business for about 6 years now. I'm about to hire my first employees. I'm thinking of hiring 2 or 3 people as independent contractors. Compensation will be based upon the computer repair service they provide. My concern is that I'll bring someone on, train them how to repair computers, then have them leave and just advertise the service alone on Yelp, Craigslist, the community, and undercut me on pricing because they won't have the overhead to operate out of a store. I researched non-competes in CA and from what I've read they basically can't be enforced here. Is there anything I can have new employees sign that would protect me? Thanks.

[vangogh]

The best thing you can do to protect your business is to run a good business. Yes, it's always possible someone you hire will eventually leave and run a competing business. So what? That's a normal part of business that everyone has to deal with. A good way to prevent it is to treat your employees well and not give them any incentive to harm your business. If instead you concern yourself with how to prevent your employees from being successful if they choose to no longer work for you, odds are you won't have many employees and certainly not any good employees.

Spend less time focusing on what employees you haven't hired yet, might do down the road and spend more time offering a good service to your customers. Sure, it's always possible someone you train uses your training to later compete with you. That's business.

[Pure]

I agree with your response. It's always best to build a good company then to be fixated on what others are doing. However, if you had the chance to shut down one of your current competitors right now would you do it? I know I would. Why not nip it in the bud before it's had the chance to bloom? If I can cover myself before heading down this path I'd like to do so.

[Freelancier]

However, if you had the chance to shut down one of your current competitors right now would you do it?

It's unlikely I'd ever be able to or want to shut down a competitor. My competition makes me better, doesn't drag down my business at all. My low-priced competitors are a boon for my business, because none of them provide the quality I provide. My higher-priced competitors (and there are those as well) are also good for my business because they often price themselves out of really good clients who end up coming to me instead.

What you want isn't a "non-compete", but definitely a "non-solicitation" agreement, so that they cannot take customers or other employees from you. That should be enough if you provide a good service.

If you're really that scared, then you shouldn't be hiring anyone, because you're going to suck as a boss, always worrying about the downside to having hired your employees.

[vangogh]

First I agree with everything Freelancier said above.


if you had the chance to shut down one of your current competitors right now would you do it?

No I wouldn't. I don't think my success is dependent on other people's failure. In fact the best marketing I do for my business is teach future competition how to do exactly what I do. I'm not afraid of competition. If anything I like it, because it drives me to do better.

I also think the more I focus on my competitors the less successful I'll be. People spend far too much time worrying about what everyone else is doing instead of worrying about what they're doing. That's not to say you shouldn't pay attention to your competition. Sometimes you have to react because of what the competition does. For the most part though my success is wholly dependent on what I can do to help my clients. If I can offer people something of value I can make a living regardless of what my competitors are doing.

If your business might suffer because someone you train starts competing with you, then your business has a lot of problems. Your employees are not going to remain your employees for the rest of their lives or the rest of your business' life. The longer they remain one of your employees, the more likely they will compete with you when they leave. To be honest, I would hope anyone I hire wants to eventually compete with me, because it means they actually care about the work and would want to get better. If I hire someone, train them for a few months, and then they go out on their own, I'm not worried. If I can't do a better job than someone I train for a few months, then I must not be that good at my job.

Think about it this way. The time you spend worrying about this could be spent marketing your business, improving your skills, finding a way to give your customers more value for their money and plenty of other positive things that would make your business stronger. Any of those things will put your business in a better position than a non-compete.

[Wozcreative]

:rolleyes: Sorry but my competition (local graphic designers in Toronto) totally suck and are too lazy to work as hard as I do. I don't bother worrying about taking them down, instead I focus on what I'm doing to show the value that I can offer to my clients.

I went to school with my competition, most of them figured getting work was too hard (getting hired by a firm), some found it difficult dealing with their own clients, some didn't want to even invest in getting a quality website up or invest in the software, others didn't know how to market themselves, others never made enough money so they went and got a full time job. Me? I work from 8 am to 8pm, but before I had my own business I busted my ass day in and day out to get here. If this person you hire ends up doing better than you, then you're not working hard enough.

[Harold Mansfield]

You can't stop anyone from competing with you. You can ask them to or make it a clause in a contract. But who in their right mind would sign that for an hourly wage job, with no benefits and no severance package? That's the kind of thing you ask for when you are paying people a large salary of guaranteed income. And even then it usually doesn't work.

I've had people try to get me to sign non-competes that prevent me from building another website for any similar business. Yeah, right. It's a ridiculous request.

The only thing you can do is protect yourself from them using proprietary information or technology. Nothing proprietary about repairing computers or running a small business.
Now if you invented your own diagnostic software and someone left and took a copy with them to work for a competitor or start their own business, AND they were using your software to do it...then you'd have something to complain about in court. And would probably win if you could prove it.

[vangogh]

Funny three of us here in this thread are technically competitors. I know I wouldn't hesitate a single moment to send clients to either of you. Being friendly with competitors can be a good thing. You can each send each other clients when you're unable to take on the work. You make the client happy and still likely to recommend you and you make your competitor happy with the possibility of returning the favor.

[Paul]

:rolleyes: .... If this person you hire ends up doing better than you, then you're not working hard enough.

I love that statement!

The whole post was right on. Many who are good employees can't get out of their own way when working on their own. They may be great at their particular supervised job, but as Woz says there are many other disciplines and obstacles, besides the core skill or service, that have to be learned or overcome to run a business.

Computer repair may be one of the easiest for an employee to compete against, but they probably will not be able to capture the more sophisticated professional business. They will only get the clients looking for discounted work.

[vangogh]

Many who are good employees can't get out of their own way when working on their own.

So true. It's harder than a lot of people think to be the boss and run the business. There's a ton they never see as employees. Most people are fine working for someone else and collecting a paycheck. I think the best employees are those that do want to learn from you and take what they learn one day and go into business for themselves. They're the ones who are the most motivated to do a good job. They may not be with you forever, but they'll be valuable to your business when they are.

I don't have employees, but I think about it at times and whenever I think about who I might hire it's always someone who I can teach how to do what I do. I expect they'll want to go into business for themselves at some point, but it's never a concern. If I really want to keep that person, I'd think about ways I can entice them to stay like giving them part of the business so they can share in the profit. Like I said above, I don't think my success requires other people fail. I'm happy to help other people succeed even if it means they might compete with me at some point. I'm confident enough in my own abilities not to worry about it.