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Job hopping helped Silicon Valley thrive. Why do other states restrict it?

• entee 11y ago
  This is absolutely an underappreciated feature of SV, and prior to this article I had also heard it held up as one of the reasons SV has a relatively more active and larger startup environment than Boston. Given the nature of startups and the surprisingly high turnover I've seen of people coming and going at all sorts of companies, it seems impossible to me to create a vibrant, innovative economy with strong non-competes. This is particularly true because the most powerful non-competes are signed by the most senior management, so those with the most experience and best view of a sector are the least able to start something new after leaving their previous gig.
  • mattmanser 11y ago
    It's weird as well as in the early years of HN there were frequent questions about non-competes in contracts in ask HN (they might still, ask HN is less prominent now). It just shows how much it affects our thinking both as entrepreneurs and employees.
• banku_brougham 11y ago
  Repugnant policies like this are an ongoing evolution of the profit motive. It's such a simple mechanism: profit motive -> investment in policy support -> weakened economic standing for the weaker players. What is the corrective mechanism, the courts?
  • ianlevesque 11y ago
    Eligible voters actually voting would help.
    • cmdrfred 11y ago
      Vote for whom exactly? Obama has done very little for labor. Do you content Romney would of done a better job? Or that a 3rd party candidate is viable? That trend trickles down to the local level in my experience. The US is not a democracy anymore[0] more drastic action is required. [0] http://www.bbc.com/news/blogs-echochambers-27074746 http://www.bbc.com/news/blogs-echochambers-27074746
      • thaumasiotes 11y ago
        Politicians naturally drift to the issues that people will vote over. If the electorate cares about an issue, you'll see political action. In this sense, your parent comment is correct. Obama and hypothetical Romney aren't doing anything about this because it isn't a voting issue.
        • cmdrfred 11y ago
          > If the electorate cares about an issue, you'll see political action. Read the article I linked above and the study it references. That is empirically false.
          • thaumasiotes 11y ago
            It's also empirically true. It's very easy to observe votes moving politicians. Without some argument that this issue is governed by a particular special circumstance, your comment has no substance.
            • imtringued 11y ago
              This is quite an interesting argument because except funding nothing prevents us from eliminating crime and poverty. The government is simply not interested in doing these things. They'd rather cater to the needs of their 'sponsors'. I think it's kind of funny that politicans are not interested in their own country.
              • 11y ago
  • stvswn 11y ago
    I think it's obvious we have to abolish the profit motive. I mean, what has it done for us lately?
• baus 11y ago
  It wasn't about the PC vs the minicomputer. Ok Intel is based in Santa Clara, but the PC story was really about Microsoft. It was the internet. Sun among others were pushing open standards, TCP/IP, and the internet while DEC tried to go proprietary with DECNet. It might not have paid off for Sun in the long term, but the industry in Bay Area was definitely pointed in the right direction.
• ww520 11y ago
  CA Labor Code section 2870 (you don't give up IP rights to the work you did in your own time) is also vastly important.
  • skewart 11y ago
    This. It's really hard to imagine SV becoming what it is today without this section in the labor laws.
    • turnip1979 11y ago
      That section has a few exceptions to it. "... (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or ..." If you work for a large company in the valley, how does it affect you?I'm curious if anyone has first hand experience with it.
      • DannyBee 11y ago
        I can give you the cynical truth on it: Large employers will generally own whatever you do in your spare time. They will not mention this, and generally not care, but if you make a ton of money or do something really popular, they will start a fight. Note: "The employee bears the burden of establishing his invention comes within Labor Code section 2870. (Lab. Code, § 2872.) " See also cubic corp v. marty, which disassembles most typical arguments: "Marty argues under the Labor Code provision "the employer is not entitled to the invention unless it 'resulted from' work performed by the employee, even if the invention, in general, relates to the 'business of the employer'...."" Marty has misconstrued the Labor Code provision. <court proceeds to trash Marty's arguments> etc I have yet to see a case where an inventor wins.
        • skewart 11y ago
          That's interesting. Maybe the widespread misconception that it provides some protection emboldens people to work on projects in their spare time?
• stale2002 11y ago
  Here is the thing about non-competes. If you are smart about it, they can be basically impossible to enforce. If you've signed a non-compete and jump ship, you can simply NOT tell your old employer that you got a new job. What are they going to do? Sue you for working at a company they don't know about? There is nothing they can do if you are subtle.
  • GlideCleanser 11y ago
    > you can simply NOT tell your old employer that you got a new job. You also have to avoid: 1) Telling your old co-workers 2) Mentioning or updating anything on social media. Even if you're not "friends" with old co-workers on e.g. Facebook, that information could still be leaked. 3) Giving any sort of talk where your employment might be leaked 4) Being at an industry event where your employment might be leaked 5) Being named on the company site, and thus your name showing up on a simple google search. If your old employer is vindictive (which could be one reason you left), there are lots and lots of ways for them to find out where their former employee went to. Being subtle will probably only keep your employment status hidden with the sorts of employers who aren't really making broad non-compete clauses to begin with (i.e. employers who don't care).
    • stale2002 11y ago
      Whenever anyone at all asks you where you work, you just be evasive. It doesn't matter about any of those, if just as a policy, whenever anyone at all asks where you work, you don't tell them. Or you just talk in broad strokes/industry without specifically mentioning the name, and if your old employer "finds out" that you have another job, they still can't do anything because they don't know the specific employer.
      • GlideCleanser 11y ago
        > Whenever anyone at all asks you where you work, you just be evasive. That's a pretty mentally taxing adjustment for most people to make. It's also incredibly awkward when engaging in small talk with new people. Being evasive about answering where you work will lead to many presumptions (e.g. that you work for a 3 letter agency), few of which are very conducive to continuing a conversation. Similarly I could just lie about where I work, but I think you can probably see how that's similarly taxing to do continuously.
• sizzzzlerz 11y ago
  I've worked in SV my entire career and had never even envisioned other states allowed no-compete contracts in this day and age. Everybody I know and have worked with has had multiple jobs and wouldn't have it any other way. Yet one more way CA is far in front of every other state in basic worker rights.
  • fooey 11y ago
    The company I used to work for bullied most of the employees into signing a 5 year non-competes. And that was after they'd already been in business for 5 years. My department collectively said no, but it was a huge showdown, and they immediately started trying to figure out how to make the company less reliant on us. Every other person in the company except for us signed it. The lawyer we consulted said it was the most draconian thing he'd ever seen and that we should all quit on the spot.
    • ryandrake 11y ago
      Totally ridiculous. If you want me to non-compete for 5 years, you better compensate me full salary for those 5 years that I spend sitting around not working for your competition.
    • crdoconnor 11y ago
      We really need a public database to track this behavior on a company by company basis.
      • fooey 11y ago
        A couple years later the FTC blew them up so it ended up being moot.
• eru 11y ago
  > The best argument against noncompetes is about freedom > [...] there should be a presumption in favor of preserving people's freedom to join a new company or start one of their own. Alas, as nice as it is to cloth an issue we care about in the language of moral superiority, banning noncompete agreements does in fact impact the freedom of contract. (In the same way, but to a lesser extent, than the ban on being able to sell yourself into slavery.) Pragmatically this is the right thing to do. But there's no Freedom argument for it.
  • epistasis 11y ago
    Nonsense. "Freedom of contract" isn't some freedom that supersedes all other forms of freedom. In fact, freedom from economic coercion due to highly asymmetric power relationships rates quite a bit higher than some silly "freedom of contract" which is way the hell down the list after freedom of personal safety, etc.
    • usrusr 11y ago
      An asymmetric power relationship that is easily illustrated by how rare no-replacement-hire agreements are.
      • epistasis 11y ago
        That would be an interesting counter-offer when somebody proposes a non-compete...
  • modeless 11y ago
    If non-competes are invalid by law, you're still free to sign one. Your freedom is uninhibited. What's inhibited is contract enforcement, i.e. the use of force to coerce people against their will. Calling contract enforcement a "freedom" is simply wrong. That's absolutely not to say that contract enforcement isn't useful or desirable, but it clearly must be limited. If contract enforcement is unlimited then some people will end up singing contracts that put themselves into literal slavery and we prohibit that for a reason.
  • 11y ago
• _delirium 11y ago
  The headline kind of has the valence of government activity backwards, though I agree with its policy proposal. Other states don't restrict job-hopping, they just stand by and don't interfere as the free market ends up having the effect of restricting job-hopping. Employees end up signing restrictive employment contracts, and states don't prohibit them from doing so. California has made a conscious decision that the economy overall works better if some kinds of private-sector contracts are prohibited, so it's restricted what can go into an employment contract to a greater degree than other states have (every state has some restrictions, e.g. in the modern era you can't sell yourself into indentured servitude, but some states are more restrictive than others).
  • oautholaf 11y ago
    I think your lense of "free market" needs to be supplemented with a little game theory here. If you're an employer, what's your disincentive for tucking in a little non-compete in your contract? None at all[1], especially since many of your prospective employees won't read it or potentially (if you're a low-wage employee) understand it's implications. Then what's the disincentive for an entire industry to do this? None at all. And suddenly, there is no free market for job seekers anymore. There's a reason why in the US, overwhelmingly contracts are read against the one who drafts them for example. There's an inherent power imbalance here. That's where laws and courts come into balance things out. [1] To point, it's not uncommon for California-based tech companies to insert non-compete clauses into their contracts, even though they cannot possibly be enforced unless there is some special compensation.
    • DannyBee 11y ago
      " especially since many of your prospective employees won't read it" Why is this on the employers, exactly?
      • Gustomaximus 11y ago
        Both parties have to understand a contract for it to agreed upon. For example those massive T&C that go with a website sign-up largely mean nothing if the company hasn't ensured you read and understood them.
• trhway 11y ago
  non-competes also decrease overall employee productivity and efficiency as it makes employees into drones just keeping their jobs.
  • anon4 11y ago
    In fact, if you've signed a non-compete and later wish to leave the company, it's in your interest to do your absolute best to make the company fail, so you can't be sued after exiting.
• a3n 11y ago
  Non-competes, whether formal and legal, or shady and illegal like Google-Apple, are restraint of trade, suppression of competition. They drive wages down. Nothing to back that up, but why else would sandwich makers be subject to these?
• vasilipupkin 11y ago
  My understanding is, non competes that do not pay you to stay out of the job market are unenforceable in many states, for example, in Illinois.
  • dietrichepp 11y ago
    Since it's a contract, it's often unenforceable unless there is some kind of consideration. I believe in most states, if an employer asks you to sign a non-complete after you start work, it's unenforceable.
    • wolframarnold 11y ago
      Interesting. What's the rationale for this?
      • dietrichepp 11y ago
        The doctrine of "consideration" means that both sides have to be getting something out of a contract, or else it is not a contract at all. Lots of people have argued for or against it, and the main rationale is probably just the fact that it is traditionally defined that way. This is why you often see people selling things for nominal values like $1 or whatever.
    • Falkon1313 11y ago
      It's not a valid contract if they offer no consideration (they're demanding something of you but offering nothing in return). But they are a wealthy corporation with a powerful legal team and you are now unemployed, so they can count on you not being able to fight it. It's more like a threat than a contract - that they might be able to convince a court that it's a 'legal' agreement even if it's not a valid contract. Noncompetes should be allowed only if the company offers to pay a minimum of market-rate salary for the duration (either what they were paying you or the best offer you've received, whichever is higher, to keep up with changes in market rates after you leave). That would then at least make it a valid contract. But no company would want to do that, because then they'd have to pay everyone who quit or got fired for years afterward. And since the legal system is mostly controlled by corporations, that's unlikely.
• kelukelugames 11y ago
  Also bless California for not having the non compete clause.
• Jemaclus 11y ago
  What would happen if an employer in Massachusetts offered me a job and asked me to sign a non-compete clause, and I said I wouldn't take the job if I had to sign a non-compete? Do you think they would back down? Or do you think they would say "too bad" and withdraw the offer? My gut says that most of the time, they'll back down and take that off the table. But I guess it depends on whether you have a huge legal team backing you up... Personally, I'm not in the habit of signing my rights away in return for a paycheck. I'll look around for another job, thankyouverymuch.
  • Spooky23 11y ago
    For a bigger company, most of the time, they tell you to go away.
    • marssaxman 11y ago
      In that case I most likely want to go away.
      • Spooky23 11y ago
        As well you should. That's the evil of these sorts of unconscionable contracts. As a potential employee, it's easy to be in a predicament that would force you to suck it up and accept ridiculous terms of employment.
  • WalterBright 11y ago
    I've found companies to be very reasonable if you want to negotiate the terms up front, treating it like any other business deal (i.e. calmly and professionally).
• mankash666 11y ago
  In an era of outsourcing and globalization, gig-economy and minimum wages that don't guarantee a living above the poverty line, it is stunning what politicians will do for support from rich lobby groups ( read corporations). About time the federal government intervened and banned what amounts to a non-free market for job seekers.
• deleted 11y ago
  [deleted]
• trevor-e 11y ago
  I've always wondered why Boston doesn't have a larger tech scene, seeing as we're home to MIT and Harvard (and more great colleges). Seems like many of the big tech companies (Google, Facebook, Microsoft, Amazon, etc) have been opening offices here lately which is a good start.
• intrasight 11y ago
  What California used have was worse than non-competes. They had secret covenants between manor tech companies not to hire each others employees. I don't know if that has been completely eliminated. As for other states, you could ask why they have lots of stupid laws. As for California, you could ask why they have that stupid Proposition 13.
  • throwaway_xx9 11y ago
    The Apple/Google/Adobe/et al. non-hire collusion is probably on hold for now due to the govt. investigations. The only good thing I can say about that era was that Google had their ass handed to them by Facebook, which was one of the few non-participants in the collusion. Google employees had few options but to go to Facebook in droves. Proposition 13 has nothing to do with tech employment directly. It was created because politicians just couldn't help themselves from raising real estate taxes voluntarily.
  • dredmorbius 11y ago
    Those covenants, by Google, Apple, Intel, Cisco, and others, were manifestly illegal. The settlement terms were rejected by the court, as I understand. I also must credit Facebook for breaking the deal -- one of the few times I can support the company's stance.
• simula67 11y ago
  > He was thrilled when he got an offer for an $18-per-hour cleaning job in the Seattle area — a big step up from the $15-per-hour job he had taken a few months earlier > After Almeida switched jobs, a lawyer from his old employer, ServiceMaster, sent him a letter threatening a lawsuit > The company told the Seattle Times that the noncompete agreement was necessary because ServiceMaster had provided Almeida with valuable training So require that the employee stay with the company until they recoup the investment. If the employee leaves before the term is up, charge the employee the cost of training.
  • michaelt 11y ago
    Wouldn't that invite companies to claim internal training is very expensive? Get the employee to shadow another employee for two weeks, then claim they were trained for ten days at $1000/day.
    • icebraining 11y ago
      Not if they had to justify the cost, i.e., provide evidence that they actually spent $1000/day (even if in opportunity costs).
• sparky_ 11y ago
  Here's an honest question. Knowing that non-competes are bogus and unenforceable in California - why do most employers (including mine) feel the need to tack them onto offer letters? Is it a matter of intimidation?
  • jedberg 11y ago
    Pretty much. They are hoping you don't know the law. They are also hoping that by encumbering you with one that a future poacher would know that they might have to spend money on lawyers to fight for you in case you get sued, even though they know you will win.
    • sparky_ 11y ago
      Is this to imply that non-poaching agreements (e.g., "Great, you quit, don't talk to my employees") are equally void?
      • acjacobson 11y ago
        While IANAL, yes, non-solicitation clauses are also not enforceable in California.
• deleted 11y ago
  [deleted]
• jkot 11y ago
  Some countries in Europe allow non-compete clause. But employer has to pay full salary for duration of that clause.
• kempe 11y ago
  Wow, usa really is controlled by the companies instead of the people.
• wolframarnold 11y ago
  Unenforceability of noncompetes + hot tech job market == free career insurance
• bluedino 11y ago
  Here's what keeps me from job-hopping: The 6-12 month gap that's created when I can't participate in a new employers retirement or healthcare plan. These benefits should start immediately. Losing accrued vacation time also sucks.
• sgt101 11y ago
  Errm, anyone who thinks the Massachusetts hub didn't work hasn't been to Boston in the last three years. Wander round Kendall and Cambridge and look at the vast Biotech labs.