Thoughts on non-compete clauses for employees – DSP 128

Float centers require a lot of upfront capital to get started up, and because of that it can feel like float centers should operate like big business, or perhaps bigger businesses than they actually are. Some centers may consider, at some point, having their employees sign non-compete clauses to prevent them from sharing trade secrets with competitors. Graham and Ashkahn have been at this for a while and express their opinions as to why this probably isn’t the most practical approach for your float center.

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Graham: Today’s question, “What’s your opinion on non-competes being mandatory for your employees?”

Ashkahn: Is that a thing? People at float centers or …

Graham: Well it’s a business thing. I don’t know if it’s necessarily a float center thing.

It’s the idea of non-competes is if you stop working at this float center, you can’t just go share all of their float secrets with the float center across town-

Ashkahn: Yeah.

Graham: … when you get hired on, you know.

Ashkahn: Yeah, I guess I feel like maybe people have a bigger concern over right now, because float centers are so new in some areas.

Graham: Right,  if you’re a barista at a coffee shop-

Ashkahn: Right, right.

Graham: … You don’t sign a non-compete saying you’re not gonna work at any coffee shops for a year if you get fired from this one, you know?

Ashkahn: And I guess that’s kinda how I’m thinking about it. To me it feels a little bit silly, because it feels more like the barista in the coffee shop example. Like, if you sign non-competes when you’re a high level consultant or working for some sort of real technical something or another, you know, when you could actually … You have some sort of proprietary information, that will allow you to go start … or you have a group of … a relationship with a bunch of customers or your clients or something, that you can take with you to theoretically start your own firm, whatever sort of business, right? Those are the areas are I feel like that non-competes have some significance, but non-competes just for like your employee or staff, like working in a shop feels …

Graham: A little extreme?

Ashkahn: It feels a little extreme to me, I guess.

Graham: So here’s … I’ve noticed that there’s a tendency, this is getting a little beyond the scope of this question specifically. But getting into running a business, especially something that costs as much money as a float tank center and you spend as much time setting up beforehand. I think there’s this instinct to try to act like a big business or try to do things like you’ve seen bigger businesses do and I’m not sure that’s the right way to kinda approach a lot of the decisions that have to be made at a float tank center level. So you hear about things, like non-competes or even when you’re talking to other people about your idea of setting up a float tank center, having them sign a non disclosure or something like that in order for them to kinda hear your float tank center in so-and-so city pitch. I don’t know, I don’t think that those are as necessary. Like Ashkahn was saying, these things are important for bigger businesses, because they’re trying to go public or they have investors, they actually have to take-

Ashkahn: Like bigger positions in a much more significant …

Graham: So yeah, maybe if you’re talking about a manager of your franchise. Like you have a float franchise and you’re hiring on-

Ashkahn: Kinda like your business partner you’re trying to bring on or something. That’s the scale I would start considering this is … I just feel like if you were to hire someone on off Craigslist for, you know, 12 bucks an hour and have them sign a non-compete thing, it’d be a little silly.

Graham: Also, our industry is so open in sharing anyway. It’s not like the float center across town is relying on the information from someone who worked at your float center. They can just kinda go on Float Collective and get information about a bunch of float centers open and a bunch of proprietary information. And it’s never really kinda been in the spirit of float tanks, I think to have a really tight control on that.

Ashkahn: I mean if you even consider the proprietary information that we’re talking about here. Because they’re not gonna randomly take all your customers with them to go open another float center.

Graham: Nor are they probably gonna open another float center themselves, I mean that’s a really long humongous process-

Ashkahn: That’s unlikely to begin with. So, what we’re talking about is you protecting yourself from someone opening up another float center where they already have construction knowledge and sanitation knowledge, I guess those are the most kinda technical things that they’d be taking with them. And if they were to open another float center, wouldn’t you want them to have construction knowledge and sanitation knowledge? It’s gonna be worse if another float center is next to you doing a horrible job running floats, and nothing is soundproof, and the sanitation’s all gross. So I gotta know, I don’t know, I guess I don’t know exactly what you’re protecting, other than just trying to stop someone who might be interested in opening a float center from opening one near you. But I don’t know, it just feels like such a slim situation.

Graham: Yeah, so there’s our opinion, don’t protect yourself at all, just kinda pull people on willy nilly.

Ashkahn: Yeah, that’s fine.

Graham: And honestly, I just think putting it in the context of, if someone’s working another retail job, they’re working at Macy’s and are you gonna have them sign a non-compete for not working at other retail places? Or anything like that. I don’t think that at that level, when you’re the one behind the counter checking people in that a non-compete is really appropriate.

Ashkahn: Yeah.

Graham: And this comes from … We’ve had lots of employees leave our center and eventually find jobs at other float centers, sometimes nearby, either because they’re moving for school or whatever the reason. I mean, some we’ve fired and they’ve gotten jobs at other float tank centers and that’s still been fine, we’ve never seen any problems arise from it. So this is something we’ve actively been through and coming out the other side totally unscathed. I can say I’ve never felt the need for a non-compete.

Ashkahn: Yeah, I would agree with that.

Graham: So for further questions, go to floattanksolutions.com/podcast and send them our way.

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