Currently a quant at a smallish hedge fund in NYC. Decided that I want to switch field, so got an offer at a tech company. When joining the hedge fund, I signed an offer agreement which stipulates that they have the right to enforce 1 year garden leave. Will they do that and if so is this enforceable, given that I am moving to a completely industry?
My current firm is fairly small and I carry a lot of responsibilities so my leaving would definitely be a very unexpected and negative impact. Hence I am worried that they will react very negatively to my resignation and stick me with the garden leave.
It should not affect your prospects in tech at all. Many people used to work in tech while sitting a non-compete period from Citadels of the world.
As a quant myself, why are you switching to tech?
Also, keep in mind that garden leave is unenforceable in California, so if you have concerns you should concentrate your job hunt there.
unfortunately existing offer is for NY office
Use common sense. Non-competes are meant to keep you from using what you learned/developed at your currrent employer for the immediate benefit of a direct competitor. Since tech is not a competitor, the non-compete shouldn't apply.
To be 100% sure, call up an employment lawyer to interpret the contract for you, will run you only a few hundred $ and give you peace of mind.
Not legally trained, but if you look carefully at your non-compete clause it should state that the garden leave is only relevant when you work for a competitor/relevant business. In many countries/state, the non compete is deemed unreasonable and void if they do not specify the scope for competitors/relevant businesses. Obviously it would be a stretch to consider a "tech company" as one.
Are you seriously asking or is there more than you are letting on?
No, the non-compete is not enforceable if you're switching to the tech industry. No court would uphold that. I also have to assume that because your firm is small, they don't want to bother with the cost and time of arbitration.
To derisk the situation, you could:
I've seen this exact playbook work multiple times for analysts choosing to switch industries. In short, don't give the firm a reason to be petty.
Agree. Try to be flexible about facilitating the transition. Maybe stay for a month or so to ensure things are in order after you're gone. That will go a long way in earning you goodwill too, as surprising as your departure might be to them.
Exactly right -- I forgot to mention that in my original post. The OP likely has a notice period in his contract. Either way, he should proactively mention he's happy to help transition his responsibilities.
Curious if anyone can speak from experience / anecdote on being comped during your non-compete period if you switch industries? Generally from my experience, you're paid your base (or a predetermined % of your base) during the time you have to sit out your non-compete.
So, is it possible to work for a different industry in that period (so not in violation of your non-compete), while still collecting the pre-determined non-compete comp from your prior firm? Meaning you end up collecting a double base salary during that period
No, you can't double-dip. The firm enforcing garden leave will usually pay the difference between what you're making in your new job, if it's less than your original base, and your garden leave payout.
You will only get paid for "non-competing" if you are sitting at home not working at all because they decided to enforce the non-compete.
If you are working in some other industry, why in the world would they owe you anything?
May be misguided in my thinking, but it’s still precluding you from working in a comparable role / industry. So, I was just interpreting it as a “tax” the enforcing company has to pay to ensure you’re not working for a competitor, regardless of whatever else you do in that time.
The compensation holds even if you are not heading to a competitor. Reason being that your non-compete period itself is a liability/factor in getting hired at a competitor.
Imagine this. Both candidates A and B, perceived to be of comparable calibre apply for a seat at a leading fund. A can only join the fund 12 months later due to his nc, whereas B has served out his nc and can start work immediately. Do you think their nc has no bearing on their chances at all?
If they enforced the garden leave, they would:
(a) have to pay you (assuming its paid like most are), which is a waste of money if you aren't doing anything competitive. If it is a small firm, unlikely they would be willing to pay unless there was real concern of IP infringement.
(b) spoil relations with you and hurt their reputation. It is a small world, there is no reason to take this risk, as long as there is no real concern of IP infringement.
Doesn't seem likely for them to do something like this just out of spite.
There are a few firms that are notorious for pursuing non competes even if you are going to a different type of job. They may not have any case but can still create stress and take up your time. Most firms, especially smaller ones, are less likely to bother though.
cough: squarepoint, bridgewater, citadel, p72
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