Employees of 16 newspapers recently acquired by Halifax Group Media celebrated last week when Halifax was forced to back down from its demand that they sign non-competes as a condition of continued employment.
Halifax, which purchased the regional newspapers from the New York Times Co. in December, faced a near-insurrection from its new employees and also received absolutely withering media criticism about the non-competes. (To get a flavor of the coverage, see “A Newspaper Company’s Atrociously Exploitative Noncompete” and “A Troubling Approach to Employee Relations“). Indeed, Twitter continues to reverberate over this story (just type in the search words “non-compete” and you will see dozens of Tweets on this story).
Like all past public relations disasters, Halifax made several critical missteps. The first and most obvious was the very decision to use non-competes.
Many businesses and industries have cultures that are antithetical to non-competes. The fact that the previous employer, the New York Times, did not require them should have served as a clue that the employees would react unfavorably. Although some have argued that non-competes are used for high-profile broadcast talent, it appears that print journalists and editors are seldom asked to sign them. As a result, this firestorm should have been expected, especially in the context of the present economy and the increasing dislocation within the newspaper industry, which has been devastated from competition by Internet news sites and cable news.
Halifax’s second mistake was failing to recognize the existing dynamics that would make actually imposing the non-competes difficult, if not possible. No one likes non-competes. However, in most negotiations, the employer has the leverage to impose a non-compete on an individual employee, whether at the outset of a hire or during the course of employment.
Here, however, Halifax should have recognized that it lacked that leverage because it was negotiating with all of its employees. Those employees, by virtue of their numbers, had the ability to band together and push back. In addition, Halifax should have recognized that its position was even weaker because these employees were inherently vocal and media-savvy and likely try to use their skillls to marshall public opinion in their favor.
Finally, the broad scope of the non-competes added fuel to the fire. As the non-competes covered all of Halifax’s operations — which would include the 16 different newspapers all over the country — the employees argued that they would be unfairly limited from finding other work. Moreover, the non-competes, at least as drafted, survived even if the employee was terminated or laid-off, which was seen as rubbing salt in the wounds of the employees. For these reasons, going in with a broad non-compete ensured that a difficult task would be even more so.
The takeaway? As an employer, make sure that non-competes are necessary and that you have the bargaining power to get them signed. In this case, if Halifax believed that they were critical, perhaps insisting that the non-competes be executed as part of the acquisition might have solved this problem.
As an employee, if you are faced with a non-compete or agreement that you feel is unfair, the lesson here is that there is strength in numbers. Also, rallying industry pressure, particularly where these agreements are frowned upon or perceived as unnecessary, could make the difference.