The case of Amazon’s suit against Arthur Valdez and his employment in Target provides valuable insight into non-compete clauses and the importance of human resources for the company’s competitive advantages. In order to solve the problems in the supply chain, Target reached out to Valdez, who provided significant input into the development of Amazon’s effective supply chain. Amazon initially filed a non-compete clause of Valdez’s contract with Target as the company suggested that Valdez will implement the strategies developed through his experience at Amazon to resolve issues in Target’s online platform.
The first stage of the case’s close examination requires applying the case’s details to Washington state’s policy of non-compete agreement enforcement. The three-factor test policy used in Washington state could determine whether the non-compete agreement is reasonable in this case. The first factor defines whether the restraint is business or goodwill of the employer. The details of Amazon’s case suggest that the company’s non-compete clause was a part of a strategy focused on protecting the company’s trade secrets. In addition, the company’s non-compete agreement with Valdez prohibited him from working with direct rivals of Amazon. Even though Valdez’s function area in Target primarily focused on online distribution, Target is a retail company, while Amazon is an online retailer. The difference implies various aspects of supply chain structure and management and distinct sales channels. Therefore, the first part of the state’s three-factor test defines that the non-compete clause is unreasonable and has little to do with the threat to the functioning of Amazon’s business.
Next, the second factor determines whether the non-compete agreement imposes restraints on an employee reasonably necessary for the protection of the employer’s business. The case’s details suggest that Amazon prohibited Valdez from using his professional experience acquired during his work at Amazon. Therefore, Amazon intended to unreasonably reduce Valdez’s competence by prohibiting him from using the accumulated experience in related fields. Lastly, the third factor examines the degree of the damage caused by the loss of the employee’s services and skills. In this context, Amazon will not suffer significant losses from Valdez’s leave as the company already utilizes effective supply chain management strategies. Therefore, following the state’s three-factor test of non-compete clauses, Amazon’s non-compete agreement with Valdez was unreasonable.
Amazon’s decision to settle with Valdez’s case under the terms of a confidential agreement was forced, as the court’s decision would agree with Targets’ statement that Amazon’s suit was without merit. However, fair settlement terms for both Amazon in Valdez’s would state that Amazon’s non-compete agreement with Valadez is unreasonable. On the other hand, fair settlement terms for Target would let Valdez work for Target without the 18-month waiting period.
In conclusion, non-compete clauses in employment present a significant obstacle on the route to business innovations. The case of Amazon and Valdez demonstrates how non-compete agreements discourage business innovations. The exchange of experience between companies in the form of labor market movements provides the foundation for developing new management strategies and business resolutions. Amazon enforces non-compete agreements against many employees, which harms workers in reducing their competence and “stifles” business innovations (Dickey). Therefore, by enforcing non-competence agreements and prohibiting employees from working for a long time after a leave, Amazon predominantly focuses on preventing employees from leaving rather than protecting the developed business and trade strategies. Lastly, businesses need to acknowledge that enforcing non-compete agreements slows down the development of business innovations.
Work Cited
Dickey, Megan Rose. “Amazon’s Non-compete Agreement ‘Unfairly Handcuffed’ Her: How One Senior Manager is Pushing Back.” Protocol, Web.