The brief legal dispute between Dow Chemical Co. and GE Plastics over the latter's hiring away 14 midlevel managers from the former was not a total free-agency issue for rank-and-file employees. But it was nearly that.
Dow, which alleged that the workers were lured away so GE could steal the Midland, Mich., company's thermoplastics trade secrets, said April 9 it reached an "amicable'' agreement with GE after an exchange of information. Both companies said in a joint statement that no financial consideration was involved and GE Plastics restated its denial of Dow's initial allegations.
The competitive dispute centered on noncompete agreements, which nearly one of four companies require lower-level employees to sign, according to compensation experts. The tactic, designed to protect trade secrets and prevent critical talent from working for a competitor for a specified period of time, once applied only to senior executives and those possessing special skills or knowledge. In those cases, the covenants commonly are accompanied by special compensation plans that offset the work restrictions.
Similar considerations generally are not extended to lower-level employees. In some cases, people may find themselves unable to work in their field for the length of the noncompete agreement, as a result of corporate restructuring.
The issue has grown in significance during the past decade as a handful of companies have come to dominate industry markets, producing a Hobson's choice for workers; a job is offered in return for a noncompete agreement.
Dow's concern about protecting confidential information and its trade secrets is legitimate, though the question of what constitutes both is subject to debate. Likewise, GE has no interest in hiring people for a specialized plastics operation who know nothing about plastics.
The issue is not new for corporate recruiters or industry. Most companies have a corporate policy addressing it. What was noteworthy about this case was Dow's decision to sue first and ask questions later. The wisdom of that was immediately questioned within the industry. People generally want the right to decide where they will pursue their profession and for whom. Dow risked losing the services of not just the GE 14, but also future talent that believes in the right of self-determination.