Ask HN: Company got acquired, new contract seems oppressive

[ExhibitAClause2]

The company I work for (software engineer, advertising industry) was recently acquired by a larger company.

The new employment contract stipulates the usual oppressive confidential information and IP assignment things, detailing how the company owns anything I come up with. The state I'm in specifically protects my rights to things I create entirely independently (outside company time and equipment) but the contract also has a clause that says I must disclose any existing inventions or ideas to the company now and that anything not enumerated belongs to them and that by not listing I am acknowledging that the invention idea was not developed or conceived before the commencement of employment.

Assuming I were to sign and return without enumerating any specifics they would own the IP to anything I've done previous to this?

I'd love any advice anyone here has, but perhaps a better question would be-- Are there any "uber for lawyers" services online where I can pay to have someone with bonafides read through this for me?

[Animats]

As others pointed out, you need an hour with a labor lawyer.

Fish and Richardson, the law firm, says "Employees: Non compete agreements - don't sign them.[1]

It's often effective to take the contract, cross out and initial sections you and your lawyer consider overreaching, sign that, and turn it in. Then the company has to argue with you paragraph by paragraph, tying up their legal counsel, if they really want those terms. Also, there are special legal provisions about requiring a new employment contract from existing employees.

I went through this years ago with a very big company, refused certain clauses, and after some huffing and puffing, they gave in. This was important, because I did work for a startup on the side and got stock.

[1] http://www.fr.com/files/Uploads/Documents/Dos-and-Don%27ts-o...

[tptacek]

I've seen the crossing-out-and-initialing thing work.

I've never heard of it causing a problem, but I've definitely heard of it not working.

[blazespin]

Lol, be advised this may cost you your job if you are serious and not bluffing. Get a good competing job offer before trying this. Or be willing to go unemployed (most engineers can risk this)

If you are serious, talk to your lawyer. Don't guess or negotiate randomly. In some states this boilerplate language is meaningless, in others not so much.

You could be a critical part of the acquisition, in which they bend. Or you could be a part of the product that was going to be redundant anyways and they will be glad of the excuse to let you go.

[DennisP]

I was faced with this last year. I'd been at the acquired company for sixteen years, so most of my ideas on the side came about after I started employment. There were too many to practically list anyway.

I met with a business attorney for an hour. He said the terms were enforceable in my state; in fact, they'd taken it as far as they could without making it unenforceable. There were significant and potentially very expensive downsides for me.

In my state, employers can fire employees for any reason, so there was nothing stopping them from firing me for not signing.

I tried to negotiate, but they were inflexible. Fortunately the job market here is good, I had significant savings, and I had been thinking about taking a sabbatical anyway to develop some of those ideas. I refused to sign, they asked me for my resignation effective three months later, and I gave them a letter.

All this stuff varies by state, so meeting with an attorney in your state would be a really good idea. Mine cost $300.

[irishloop]

Sounds like $300 well spent. Too often, I think, we take legal matters into our own hands when a small investment up front could save you so much later. If we accept how many others are inexpert at technology, what makes us think we're suddenly legal experts?

[rmc]

> In my state, employers can fire employees for any reason, so there was nothing stopping them from firing me for not signing.

At will employment screws over us white collar, high end, knowledge worker. Here in many states in Europe, there's no at will, and if your employer is bought, then they have to give you a job on the same, or better, conditions.

At will is bad for tech workers.

[liopleurodon]

What state is this in?

[functional_test]

Find an employment attorney. Pay that person for an hour or two to read the contract for you. They will be able to offer much better advice than HN.

[dopamean]

This is the correct answer.

I worked at a company that was acquired earlier this year and I didn't care for the new employment contract. Unfortunately, the sale was contingent on a certain percentage of the team signing the new employment contract. I had a lawyer look at the whole thing and he told me that because of the way the deal was worded I could sign and quit without affecting things.

I looked at the contracts a ton myself and basically made no sense of it. The lawyer spent a couple hours and it was a big help.

[moron4hire]

Had a friend mention he was going to do this on a job interview and the company he was talking to almost immediately cut him a settlement check to keep him from doing it and to just make him go away.

Don't ever assume something a company is doing is on the up-and-up.

[ExhibitAClause2]

Whats the best way to go about finding one on short notice in a generic major city?

[jt2190]

There's some very good discussion about IP rights in this thread: https://news.ycombinator.com/item?id=2208056

[carterschonwald]

yes. talk with a lawyer.

[pvg]

This paperwork is standard. The company wants to protect itself against a scenario in which you, after being steeped in its business, come up with some way to do it better/more efficiently/cheaper but claim the idea came to you while you were at home in the shower and thus they have no rights to it. Your out is the form that lists the 'inventions' you might have that you want excluded from this clause. You can always add to it later, too, should you come up with something that is unrelated to your employer's business that you want to work on yourself as long as you and the employer can agree it doesn't interfere with your full-time duties as an employee. Usually, all of this is a formality - just keep the paperwork up to date when needed. I don't think your new employer is trying to screw you.

[Silhouette]

This paperwork is standard.

I strongly disagree. It's not unusual for a new employer to try to pull a fast one here, but IME the actual standard among reasonable employers and employees involves wording like "in the course of your employment" or the local equivalent. In short, what you do on company time, with company resources, or in connection with your work at the company is theirs, but anything else is yours by default. This sort of arrangement protects their interests just fine without granting them unnecessary and unreasonable control over their employees' lives outside work, at which point whether the employer is trying to screw the employee on this or not is academic because they have no contractual ability to do so.

[ChuckMcM]

I agree with this, mostly its about avoiding in interesting litigation hassle where you 'submarine' your invention into a company and then sue the company for stealing it.

That said, it is always a good idea to keep really good records of what you're doing on your time, and the things you have "baking" when you join a company. That will help you in two ways, one it makes this paperwork trivial to fill out [1] I know of one case where it started a discussion with some IP people at the hiring company who then offered a lump sum to purchase the disclosed IP.

It is pretty standard language these days. Given the hiring challenges you have the option of working with a lawyer to create an agreement that is more agreeable to you, however failing to come to terms on that agreement is a perfectly reasonable reason for someone not to hire you, even if they had previously said they would.

Last tip, if its something that keeps you up at night you're probably not going to be happy, long term, working for anyone but yourself.

[1] One tip, you don't have to have list details here just a reference identifier, so for example if you're working on "Studmuffin: The Game" just mention "all rights related to the game: Studmuffin: The Game" on your disclosure form, and later if the question comes up (like they try to say you some how worked on it on their time) you can refer back to your dated notes from before your employment and your records that you kept on time spent that wasn't company time or company equipment.

[learnstats2]

Disagree.

We haven't seen the paperwork, but a deliberate change in employment contract is not something that's done just for fun or on a standard basis.

It doesn't seem to benefit the original poster to sign the contract as it stands. Contracts are supposed to be an equitable agreement between two parties - there is no "standard". Standards which benefit only the employer can and should be questioned.

OP should speak to an employment lawyer about the contract as a whole and any clause they are concerned about.

[jacquesm]

It's not a matter of whether or not the paperwork is standard, the problem is that an acquisition does not normally require existing employees to sign new contracts and 'harmonizing' the relationships the company has with its employees is something they would only do if they feel their own contracts give them a more solid position on something they care about.

So this is a non-negotiable reduction in the legal position of the employees at best.

[mikeash]

I really hate this idea that there is anything you can put your signature to which is "standard" or "a formality."

I can absolutely 100% guarantee you that if there ends up being a legal dispute here, anything and everything signed by the employee will be used against them to the extent possible. Nothing is going to be "a formality" in that case, which is the only case where it really matters.

"Standard" is just another way of saying, "we hope you don't try to negotiate anything, because that would be inconvenient."

Both are ways of trying to make an already lopsided transaction even more unfair.

My response to "standard" would be, it may be standard for you but it's not standard for me, so I'm going to check it out, and if I want changes I'll suggest them. If you're inflexible on making changes, then I guess we won't sign. My response to "formality" would be, if it's important then it matters, and if it's not important let's just take it out.

It's really funny how these things suddenly change if you challenge them. Stuff that's "just a formality" suddenly becomes super important if you try to remove it. Stuff that's "standard and cannot be changed" is suddenly completely negotiable if you tell them you'll walk if it's not changed.

[nemmonszz]

I'm very uninformed on these matters, but just out of curiosity, what about the cases where you come up with some way to do it better but your employer isn't interested? Is getting them to sign a waiver saying that you can develop something on your own time on your own equipment the only way to legally create something that falls into the same category as what your employer is doing? So if they refuse to do that, you're effectively barred from writing a certain category of software unless you quit the company and wait X years?

[patio11]

Are there any "uber for lawyers" services online

c.f. Lawdingo (YC 13), which is Uber for lawyers. No relation; never pulled the trigger on actually using it.

Incidentally, my last employment contract had a similar clause in it. After consulting with my bosses, who thought it was the usual boilerplate and didn't really expect a young engineer to have meaningful IP, we came up with a list which looked like:

1) Bingo Card Creator [the only IP I was really worried about] 2) Various contributions to the OSS projects listed in Appendix A [these days I'd literally just print a listing of all repos in Github] 3) Miscellaneous computer programs, inventions, and documents which exist on physical or electronic media as of $DATE and are impractical to list -- $COMPANY acknowledges this disclosure is adequately specific for its purposes

[lostdog]

I tried #3. Company lawyers requested that I change it as it was holding up an acquisition.

[hinkley]

Do not, under any circumstances, go to your bosses looking for advice on this.

In many cases the C-level employees of the old company have bonuses tied up in retaining a certain fraction of the original employee team for the term of their incentive package, and they lose out on part of their payout if they don't.

Not to say your bosses are going to steer you wrong, but it's very likely that it's now a conflict of interests for them to weigh in.

[mnw21cam]

That sounds like a really big opportunity to me. Those bosses are going to want to give you some leeway in order to retain you, which gives you some bargaining leverage.

[nirmel]

I'm the founder of Lawdingo.com (YC W13). We get people lawyers in minutes, just as you're looking for. If you just want some cursory advice, we'll get you an advice consultation with an employment lawyer who routinely looks at startup employment contracts for $50. If you'd like the full contract reviewed, that will cost more, but as others are suggesting, would be well worth it. Feel free to email me at [email protected] and I'll help get you connected to a great attorney.

[jacquesm]

Talk to a lawyer. On top of that: the company being acquired does not technically (normally) force you to sign a new contract, they should honour the terms of your old one. But depending on where you're employed they might easily find some grounds to throw you out if you don't sign it so a lawyer should be your first stop. And not a lawyer in any way shape or form associated with the company, make sure they are really on your side (with very large companies especially in smaller towns it can be quite hard to find a lawyer that has not been in some way employed by the company before or that is not in a partnership that has dealings with the company).

The real question is how much do you need this job? What is the state of mind of your co-workers about this subject?

Good luck!

[olefoo]

Remember that this contract is a negotiable agreement.

You can strike clauses and file an amended agreement, they can refuse to accept such things; but you are not obligated to sign unless they are compensating you adequately for what you are giving up. Approach this as an equal; decide what _you_ are willing to put up with. Nobody on this forum can tell you what you can and cannot live with.

Do figure out your BATNA at this time.

[log_n]

The compensation part is actually really interesting. My particular industry is notorious for using really strongly worded non-competes. Those don't fly at all in California but they do fly in a fair number of other states. In Illinois there was a court ruling that stated that non-compete agreements are not enforceable unless a specific bonus is paid for signing the agreement. Continued employment (in that case of just under 2 years, after an acquisition) was not enough compensation.

So, if you are asked to sign one of these things either ask for some cash up front or hold in your back pocket that it's probably not enforceable (though it can certainly end in litigation which can be terrible for everyone involved).

[hga]

but you are not obligated to sign unless they are compensating you adequately for what you are giving up

In the US, at least in general, this is a contract, and without the employee getting "consideration" it's not valid. And mere continued employment doesn't count, they'd have to give you something extra such as a raise or bonus.

[grabeh]

When you say acquisition, I'm assuming you mean an asset acquisition rather than share purchase? I only say, because technically if it's the latter, the contracting entity won't have changed and depending on the State/country laws, there is no change in the employment relationship.

It's a different matter for an asset acquisition but generally, if you're performing the same role, in certain jurisdictions your existing contract terms have to be respected (this is the case in Europe at least, I would assume that in the US, the position is more flexible though).

You'd like to think your new employer is reasonable and would at least consider feedback/amendments from you in the first instance. At worst they can reject the proposed amendments and then you will have to decide to accept or look elsewhere, but at least you would have given it a go.

Contracts obviously seek to impose clarity on a relationship and so I have some sympathy with a company attempting to create a completely black and white position (if it's not carved out, it's ours). If you are concerned about this approach and want more flexibility then you could revise so any work in your private time unrelated to anything work-related is yours. This comes with its own pitfalls in some ways - it's difficult to nail down with clarity where the dividing line is, which in part explains the company's desire for a black and white approach.

In terms of ownership of previous IP, it would depend on the wording of the agreement, they might just be looking for an assignment of future IP developed whilst working for them, or they might want an assignment of past IP not expressly referenced in the agreement. The latter would be rather draconian but that's not to say the company wouldn't request it!

I'd be glad to give a read of the contract on an informal basis, if you want.

[jacquesm]

And if it is an asset acquisition then you're technically still employed by your old company and you'd need to formally apply for a job at the new one.

These kind of details are exactly why you should hire a labour lawyer. Also, your 100% that if it is a share purchase (even if only a majority stake) that the old contract is simply still valid.

Acquisitions of any kind don't magically invalidate all the contracts the company has entered in over its lifespan.

[retrogradeorbit]

Strike the clause. You are in a negotiation. They are going to structure the contract to be filled with things they'd love to have. Most people just sign. But there a clauses that are love-to-haves, but not must-haves. Maybe this is one of them. If it's one of the must-haves, they'll let you know by saying they cant accept the contract with that clause struck.

[vacri]

And talk to your colleagues - the more of you that strike a clause, the more political weight you'll have. Others may also not realise the issue in that clause.

I struck two clauses in my catch-all generic contract when I signed on here: no installing software on my own machine; and no installing free software. As a sysadmin hired to admin linux, these had to be struck or I couldn't do my job :)

[borski]

This is standard practice in most default employment contracts, including literally every single one I've signed as an employee. It's in our employer contract too, and we've all signed it.

I usually include, as one of the disclosed items, something along the lines of "other open source or business ideas I may come up with or have come up with on personal time and while using personal, non-company, property."

One of our employees did this too, and I took no issue with it. My guess is if you have an employer suing you for infringement based on work you did there, you have burned a bridge and have much bigger problems than just this lawsuit.

Edit: IANAL, this is not legal advice, etc.

[Silhouette]

This is standard practice in most default employment contracts

Where I come from, it is also fairly standard practice for anyone who is any good at all to seek to amend such loaded terms before signing the contract. Just because it's in the default contract that the company lawyers wrote, that doesn't mean you have to actually accept it unchallenged.

[Silhouette]

Standard disclaimer applies: You need a lawyer qualified in your jurisdiction to check your contract. Personally I always recommend this for any employment contract. The cost of one decent lawyer for an hour vs. the potential risk that an employer sneaked something irrevocable and completely disproportionate in? It's not even close.

That said, I once had exactly the described problem: post-acquisition, new company wants to adjust a lot of contractual wording on things like IP heavily in their favour, at a software business where many of the staff are also creative outside work in one way or another. Most of my colleagues didn't realise the implications of the proposed IP clauses and in particular the potential impact on their time outside office hours until these dangers were pointed out, but many strongly disliked the new terms once awareness was raised.

Without getting into details I possibly shouldn't, let's just say that what the acquiring company's lawyers or HR people would like to happen will probably be outweighed by a significant proportion of staff from the acquired company refusing to sign the oppressive deal and threatening to walk. If you can reach critical mass, management is likely to step in and do what they have to so they can protect the new investment and CTA. In the end, the wording of the relevant sections in our new contracts was identical to the corresponding sections in our old contracts.

Incidentally, probably one of the biggest mistakes of my professional career was sticking around for too long after I already knew what kind of business the new employer was from their initial behaviour. With hindsight, I should have given them a fair chance once they'd backed down -- a few months, perhaps -- but then having confirmed that the new corporate culture was similarly unwelcome in many other respects I should have started looking long before I actually did. YMMV.

[chrisbennet]

If an employer wants you to sign a new employment contract, wouldn't that imply they were re-negotiating your employment?

"I assume from this new employment contract that we're renegotiating my employment. Let's discuss my new salary..."

[smileysteve]

As most states are At-Will, both the employer and employee can do this whenever they please.

[geophile]

Talk to a lawyer.

FWIW: While this clause may be oppressive, it is not uncommon. It has been in (almost?) every employee agreement I've signed. I always filled in the addendum to exclude ideas I had previous to the job, that I wanted to pursue on my own.

[throwaway549328]

This isn't legal advice. As a practical matter let me tell you exactly what I, personally, would do in your exact situation, as an employee. I am very open and approachable, and have never gotten into legal trouble with anything. I personally would feel completely comfortable following the steps below and would not personally consult a lawyer. I am telling you precisely what I would do if I place myself in your shoes.

First, in the contract, you state that the section you mention talks about past, and about present IP. I would, on the appropriate page, prominently cross out the section on past IP (completely) and date and sign (full signature) the margin. (i.e. indicating that IP created before employment isn't covered or referred to at all).

In the same section, regarding the present and future inventions, I would write by hand in the margin "Except on my own time and outside company resources" in the margin of that section, and date and sign (full signature) it.

So there are two changes: completely cross out the entirety on past inventions; add an explicit "Except on my own time and outside company resources" regarding present and future inventions. (I would retain the language, i.e. not cross it out completely.)

I would then sign the last page of the contract (i.e. wherever your signature belongs) with a note saying "except past IP, p.6" (or whatever page it appears on) and date and sign that.

This to me makes it completely clear exactly what I agreed to, anyone glancing at the signature would be told to look at page 6, where they would see a totally reasonable crossing out of past IP assignment, and a totally reasonable statement that I own IP created on my own time. No reasonable human could possibly be anything less than satisfied with that. I would also be satisfied with it if an employee gave me that back.

It's a lot better than underhandedly trying to change the contract without calling attention to the change. It's precisely what I would do. Anyone who said, "we're really going to need your own IP" would look really silly. I don't think I've met anyone who would have the gall to say that. You've also signed and returned the contract.

[13hours]

I'd go even further, and actually discuss it with them before making these changes, not just hand in the signed contract with the clear changes. Tell them : "I'm uncomfortable with this. What would make me comfortable is ..." and then detail what you are describing.

[chvid]

Talk to a labor union.

[chvid]

:-)

Why the down votes?

This is a serious suggestion; I don't know the exact situation in America but in Europe all trade unions have trained advisers looking at stuff like this every day.

Going to an union is a much more effective and cheaper solution than every employee talking to an employment lawyer on their own.

[burgreblast]

Super simple: enumerate your inventions and projects and ideas.

If that's not easy to do there's a good chance they're ideas still germinating in your head. Fine, write those down too. Be general and land-grabby if you like.

I'll bet you can come up with 100 "projects" in about an hour, and that will well protect your legitimate interests/claims.

You can still spend an hour with an attorney telling you a) you don't have to sign it, but b) you might not get the job.

But if you have a sweet list, then you're covered.

[rebootthesystem]

Well, if they are paying you to develop things and you do that at work, then they own it. That's what they pay you for.

On the other hand, whatever you do outside of work is another story. If you work on advertising and develop a pair of sunglasses for dogs --in other words, something completely unrelated-- it is unlikely there will be an issue.

However, if you develop something that is a derivative work of what you were paid to develop at work. You took a technology you were paid to develop and developed it further on your own time. Well, you better talk to an attorney.

On these matters I always ask engineers to place themselves in the shoes of the one paying the bills and the salaries. How would you like to pay a group of engineers really good salaries to develop something for you over, say, two years, and then have those engineers take that, evolve it on their own time and launch a competing business? You paid them for two years to both learn and develop a foundation they would not have had had they not worked for you.

Forget legal issues here. What are the moral and ethical issues related to taking something you got paid to develop for someone else, making it your own and then using it to compete against your former employer?

Talk to an attorney.

[Nelson69]

Just out of curiosity, are your ideas and inventions at all related to the industry your employer is in?

I went down the road of lawyering up while I was at IBM, I was young and it was effectively a waste of money as IBM simply had no interest at all in just about any of the ideas I ever had. My manager at the time even said as much, "if you're not competing with us, we really don't care and won't steal your ideas." Worse, they knew the drill, more than one time they simply said, "these are our terms, list off your inventions, we're not going to rewrite this document.."

If your ideas are in the same realm, it seems like a larger ethical question, personally, I don't moonlight doing what I get paid to do during the day, it's just messy and I do personally believe it is not honoring the employment contract, but that's just my opinion. If they aren't related to their industry, then what's the downside of claiming the ideas? It's a two way street, they will know about the ideas but you will have told them with some degree of confidentiality being understood.