Jeff Bezos’ Blue Origin faces employee backlash over non-compete clause

Following SpaceX’s blockbuster IPO, several employees at Elon Musk’s space company turned into millionaires overnight. This reportedly hit hard the staff working at rival Blue Origin, where they were said to have ‘broken morale’ as they’re sitting on effectively worthless stock options. To stem the frustration and stay competitive with SpaceX, Jeff Bezos‘ space venture reportedly rolled out a new stock incentive plan for its employees. Now a new report claims that there’s a catch: the plan comes bundled with an unusual 18-month non-compete clause, and it may not be sitting well with everyone.According to a copy of the agreement seen by Business Insider, any employee who leaves Blue Origin and joins a direct competitor within 18 months will immediately forfeit 100% of their accumulated stock option – leaving many feeling trapped. Employment attorneys and corporate wealth managers noted that using non-competes to gatekeep equity is highly irregular for fast-growing private startups in the US.“If someone is planning to stay with the startup through an acquisition or IPO, this may not be important. But startups are staying private much longer than they did in earlier eras, so it’s very likely that startup employees will leave before a companywide exit event,” Mary Russell, a startup equity attorney at Stock Option Counsel PC, told Business Insider. Because employees frequently jump between companies to advance their careers, the rule forces engineers to make a painful choice: stay out of the competitive job market for a year and a half, or walk away from their earned wealth. Former SpaceX employees who moved to Blue Origin noted that their prior contracts in the industry carried no such forfeiture penalties.

New Blue Origin stock clause not for all ‘employees’

Notably, the contract’s real-world implications do not affect all Blue Origin employees equally. As states like California and Washington enforce strict legal bans on non-compete agreements, workers located at Blue Origin’s key West Coast facilities are exempt from the clause. However, the legal protection does not extend to the vast majority of the company’s 12,600-person workforce. A significant portion of the rocket manufacturer’s labor pool is stationed in states with employer-friendly non-compete laws:

Engineers and factory floor workers in these Southern hubs face far greater restrictions on cashing in their equity compared to their colleagues on the West Coast.