Agreements in the Logistics Industry: What are they really?
Knowing that the logistics and transportation industry is massive and competitive, companies had to create methods and ways to protect themselves from former employees. There are three kinds of contracts, known as confidentiality agreements, non-solicitation agreements, and non-compete agreements. These documents restrict the post-employment activities of a worker when an employment relationship ends.
First, to understand these contracts, it is important to know the difference between them. According to the website CS Recruiting, a non-compete agreement forbids working for any competing company for a period, and the solicitation agreement says that you can’t take your customers, carriers, or employees from your previous company.
There are many types of agreements that we sign as employees without fully understanding what they are, how they work or what they mean. We are used to seeing non-compete agreements in logistics, but what are they really? and how are they different from NDAs and non-solicitation agreements? To find out, let’s first define each:
Non-Disclosure Agreements (or NDAs for short), are basically binding contracts between parties used to ensure that sensitive information is not shared with others. They are meant to protect data and information and tend to be very specific as to the information that cannot be shared and for how long they will last.
Non-Solicitation Agreements are contracts in which an employee agrees not to solicit a company’s clients or customers for his or her own benefit, or for the benefit of a competitor, after leaving the company. They are not very restrictive and signing one does not mean that you can’t work in the same industry after you leave a company, which is a fear some people have. You simply agree to not taking employees or customers with you if you decide to part ways with your current employer.
Non-Compete Agreements prohibit an employee from competing with the business directly or indirectly for a specific amount of time after their employment with them has ended. Depending on how restrictive your non-compete is, this can either mean that if you start working for another company in the same industry, you cannot use information that you learned in your previous employment to compete with them, or it could mean that you cannot work in the same industry as your previous company altogether.
It can be scary to think that if you sign a non-compete and leave the company, you will have to start all over again in a completely different industry. Which is why it is extremely important that you read your agreements very well before signing, and ask as many questions as you need to be sure you fully understand what you are agreeing to.
Let’s read what our leaders think about non-compete agreements in logistics:
Valentina Villa, People Experience Director: “Non-compete agreements can help a business retain valuable employees, protect its confidential information and customers, and prevent unfair competition, but they don’t always work 100%.
Well, the agreements only protect and benefit one party, which is us, the employers. For the employees not to feel that they are being forced into signing an agreement, we could think further and see what we could offer them for agreeing not to compete through another company. It could be more benefits and annual compensation, or something like that.
To think that your problems will be solved just because you have one is incorrect. Employees can always choose to defy a non-compete and risk the legal consequences. Business confidential information can still be secreted away by an employee in violation of a non-compete. Non-competes can make such actions more difficult, and the consequences more severe, but they rarely make such occurrences impossible. The reality is that retaining valuable employees and customers and protecting a business’ confidential information is a multi-faceted effort. As such, it is important not to think of a non-compete as a silver bullet or cure-all, but rather as one more tool in the toolbox. Such a tool, when used properly, can be of tremendous value to a business.
This non-compete agreement can be a double-edged sword for recruitment departments because, when a company is very specialized in an industry, it will always want to go for hiring people in the same field. But precisely because these people are in the same industry, they will probably end up having a non-competition agreement and this makes the market more complicated.”
Daniel Hellman, CSO: “Non-competes first started in the industry for primarily 2 reasons: to protect brokerages’ customers from being poached by former Sales Reps., which was needed because primarily the relationship with the customer is on the Rep level and not the company level. And second, protection for the brokerage as they invested a significant amount of time and money to train new hires on the industry. Now, non-competes are not needed. You know. they restrict the employee’s freedom to work and earn a living and really the knowledge and the training on the industry is readily available across the Internet. I would say I do believe that non-solicits should be in place and enforceable to protect the company’s customer base, rate information, and other confidential data, but not restricting the employee’s ability to work and earn a living.”
Ricardo Gonzalez, CEO: “I love the initiative of moving away from non-competes in brokerages and supply chain related companies. I feel non-compete provisions are out of fashion in a globalized world and with almost limitless knowledge resources, to lure and retain the best talent, you need a less restrictive approach to knowledge sharing and free job markets.
In a world where knowledge is an invaluable asset for an organization, and it has to be democratized and transferred to experience its benefit fully, the more people who know how to do things right in the organization, the faster it can grow and outperform competitors.
As you can’t undo what you’ve taught people, you have to acknowledge that some people will stay, some other majority will hopefully remain, but you can’t pretend people should forget what you taught them. They should be able to apply it to other companies.
As bold as I am at promoting a free job market, I also am about preventing solicitation and enforcing non-solicitation and confidentiality provisions. They are equally crucial for your business, as it protects your relationships with customers and your ability to service them with your ‘secret sauce’.”
We heard three different perspectives. Let us know what you think and what works for you or your company.
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