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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 j

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.
    - DannyBee 11y ago
      This is an interesting, but completely incorrect view :) "However, the awareness of a legal obligation is established, not through each party's subjective understanding of the terms, but on "objective indicators," based on what each party said and did" Your T&C examples are adhesion contracts, subject to a different set of rules. Here, you have an opportunity to bargain like any other party.
- stretchwithme 11y ago
  There is a disincentive, at least when employees recognize what they are signing and how it limits their options. Informed workers that think ahead would see it as a more restrictive job. Of course, its usually slapped in front of them AFTER they've accepted a job. Having accepted a straightforward offer in good faith, the terms are then altered, slightly. Perhaps it should be more clearly stated in a written offer that must be considered before accepting. And perhaps that's why its better to not allow these. It makes it easier for employer and employees to deal with each other. And it makes companies compete more on merit, rather than manipulation. It doesn't hurt the companies ability to compete with each other, as long as they all live under the same rules.
  - mdpopescu 11y ago
    Having accepted me as an employee, the company also has invested some resources and is reluctant to lose me. As such, I never had problems removing any annoying clauses in contracts. (True, being from a former communist country my tolerance to restrictive clauses is much higher than that of US citizens, so maybe that accounts for the difference.)
- stuaxo 11y ago
  Though of course a non compete is lessening the freeness of the market. Of course the market runs because of rules we set in the first place.
dietrichepp 11y ago
You say "free market" but the only reason other states work that way is because the courts enforce non-compete agreements. The state has a monopoly on court judgments, after all. In the same way we can say that the 19th century US didn't "restrict" freedoms, it merely "allowed people to own slaves". I'm not saying the comparison is apt, but it's easy to flip around words and say that "California prevents companies from preventing you from working for competitors" instead of "California does not enforce private non-compete contracts".
- Spooky23 11y ago
  People said that in the 19th century. Some apologists even asserted that hapless slaves were too feeble to function an independent free men. End of the day, it's "freedom fighters" vs "insurgents".
nitwit005 11y ago
Enforcement of contracts is always government intervention. It's a regulation of business, forcing people to stick to their word on certain issues, despite obvious economic reasons not to. Not enforcing some contracts is less intervention, not more.
- dietrichepp 11y ago
  Right, and in most contracts you would sue for damages if the contract were broken. But with non-compete agreements, it's common to seek injunctive relief, which is a kind of terrifying and powerful tool that the court has. Liquidated damages seem like a more reasonable, free-market friendly alternative, although I'd rather see courts stay out of this even more.
- _delirium 11y ago
  True, I agree that contract law's existence in the first place depends on government enforcement. The same could be said for property ownership, at least state-enforced legal forms of property rather than direct possession (e.g. absentee land ownership proved via deeds and land registries, and enforced via trespassing law). Within the context of the U.S.'s current economic/legal system, I think it's more in accordance with common usage to think of the existence of private property and contract law as being the basic substrate on which everything else happens, including more specific government action. For example, to continue with the property analogy, we typically think of eminent domain as a state "taking" property, even in cases where a person's "ownership" of a property depends on the government in the first place (someone owns a deed to land they don't actively reside on or use, but since it's legally recognized as property, the government choosing to build something on it is legally recognized as a taking of property). But point taken that this whole contract/property system is itself created and enforced by the state, not some kind of naturally occurring phenomenon.
  - oautholaf 11y ago
    > Within the context of the U.S.'s current economic/legal system, I think it's more in accordance with common usage to think of the existence of private property and contract law as being the basic substrate on which everything else happens This may have been common usage through the 1920s, and it may be common usage for people who wish the New Deal never happened. But even then it would be a stretch. This country's legal history is a lot more nuanced than that. What you articulate is probably best described as a minority vision today.
timroy 11y ago
Contract enforcement is a government activity, though. To enforce a contract, you ask the government (via the courts) to force the other party to give you assets, or not to work somewhere, etc. By the same reasoning, if I sue you for defamation for calling me a lamebrained chucklehead, courts refuse to entertain the suit because the government won't restrict free speech. You're entitled to express your opinion, and the government won't assist me in suppressing your speech. In many states, the government is happy to assist employers in restricting job-hopping. I take your point that this government activity has its immediate catalyst in private actions in the free market, and that's different in important ways from other government activity. But still.
- oconnor663 11y ago
  Consent on both sides is an important difference. It's not everything, but maybe important enough that it's misleading to talk around it.
  - x5n1 11y ago
    Consent under coercion which most work contracts are implicitly, else how are you going to pay for your living expenses, by necessity require government intervention.
    - icebraining 11y ago
      Under that point of view, seems like the government should instead prohibit work contracts themselves, therefore eliminating such coercion.
      - x5n1 11y ago
        You can not eliminate this source of coercion without for instance giving people free living wage. Eliminating such contracts would not eliminate the coercion but make it worse. Maybe not as bad a contract, because people can still walk away, but still could end badly.
x5n1 11y ago
Job hopping, or as normal people call it staying employed. Governments do need to legislate this because scummy corporations and their management have made it a necessity to do so.
Spooky23 11y ago
Adam Smith's invisible hand can rest, replaced by the lawyer's suit.
WalterBright 11y ago
I'm a free market guy, and I also agree with certain notions of contract law - like you cannot sign away your inalienable rights. You have those rights regardless. Also, in order for a contract to be enforceable, there must be an exchange of value. I would agree with the validity of a non-compete clause if there was specific compensation tied to that. For example, "we'll give you $50,000 after you leave the company if you don't compete with us for a year." But tacking it onto an employment agreement, no.
- dredmorbius 11y ago
  Inalienable doesn't mean what you seem to think it does.
  - michaelt 11y ago
    inalienable: incapable of being alienated, surrendered, or transferred <inalienable rights> [1] What the parent said sounds like pretty much the dictionary definition of inalienable to me? [1] http://www.merriam-webster.com/dictionary/inalienable http://www.merriam-webster.com/dictionary/inalienable
    - dredmorbius 11y ago
      The original inalienable rights -- life, liberty, and happiness -- aren't inalienable because their transfer is prohibited by law, but because they're impossible by fact. You can be denied of your life, your liberty, and/or your happiness. They cannot however be transferred to another person. Your material possessions -- real estate, chattel property, intellectual property -- can be. Again: the nature of inalienable rights is intrinsic, not protected by law. You'll find that meaning supported in the definition you've provided. (There's a whole 'nother discussion of rights-based arguments generally I won't get into, though I find the question somewhat problematic.)
      - anonymousDan 11y ago
        Sure you can. There are plenty of examples in history of people voluntarily becoming a slave to other people because they have fallen into debt.

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.
  - DannyBee 11y ago
    This is an interesting, but completely incorrect view :) "However, the awareness of a legal obligation is established, not through each party's subjective understanding of the terms, but on "objective indicators," based on what each party said and did" Your T&C examples are adhesion contracts, subject to a different set of rules. Here, you have an opportunity to bargain like any other party.
stretchwithme 11y ago
There is a disincentive, at least when employees recognize what they are signing and how it limits their options. Informed workers that think ahead would see it as a more restrictive job. Of course, its usually slapped in front of them AFTER they've accepted a job. Having accepted a straightforward offer in good faith, the terms are then altered, slightly. Perhaps it should be more clearly stated in a written offer that must be considered before accepting. And perhaps that's why its better to not allow these. It makes it easier for employer and employees to deal with each other. And it makes companies compete more on merit, rather than manipulation. It doesn't hurt the companies ability to compete with each other, as long as they all live under the same rules.
- mdpopescu 11y ago
  Having accepted me as an employee, the company also has invested some resources and is reluctant to lose me. As such, I never had problems removing any annoying clauses in contracts. (True, being from a former communist country my tolerance to restrictive clauses is much higher than that of US citizens, so maybe that accounts for the difference.)
stuaxo 11y ago
Though of course a non compete is lessening the freeness of the market. Of course the market runs because of rules we set in the first place.

dietrichepp 11y ago

You say "free market" but the only reason other states work that way is because the courts enforce non-compete agreements. The state has a monopoly on court judgments, after all. In the same way we can say that the 19th century US didn't "restrict" freedoms, it merely "allowed people to own slaves". I'm not saying the comparison is apt, but it's easy to flip around words and say that "California prevents companies from preventing you from working for competitors" instead of "California does not enforce private non-compete contracts".

Spooky23 11y ago
People said that in the 19th century. Some apologists even asserted that hapless slaves were too feeble to function an independent free men. End of the day, it's "freedom fighters" vs "insurgents".

nitwit005 11y ago

Enforcement of contracts is always government intervention. It's a regulation of business, forcing people to stick to their word on certain issues, despite obvious economic reasons not to. Not enforcing some contracts is less intervention, not more.

dietrichepp 11y ago
Right, and in most contracts you would sue for damages if the contract were broken. But with non-compete agreements, it's common to seek injunctive relief, which is a kind of terrifying and powerful tool that the court has. Liquidated damages seem like a more reasonable, free-market friendly alternative, although I'd rather see courts stay out of this even more.
_delirium 11y ago
True, I agree that contract law's existence in the first place depends on government enforcement. The same could be said for property ownership, at least state-enforced legal forms of property rather than direct possession (e.g. absentee land ownership proved via deeds and land registries, and enforced via trespassing law). Within the context of the U.S.'s current economic/legal system, I think it's more in accordance with common usage to think of the existence of private property and contract law as being the basic substrate on which everything else happens, including more specific government action. For example, to continue with the property analogy, we typically think of eminent domain as a state "taking" property, even in cases where a person's "ownership" of a property depends on the government in the first place (someone owns a deed to land they don't actively reside on or use, but since it's legally recognized as property, the government choosing to build something on it is legally recognized as a taking of property). But point taken that this whole contract/property system is itself created and enforced by the state, not some kind of naturally occurring phenomenon.
- oautholaf 11y ago
  > Within the context of the U.S.'s current economic/legal system, I think it's more in accordance with common usage to think of the existence of private property and contract law as being the basic substrate on which everything else happens This may have been common usage through the 1920s, and it may be common usage for people who wish the New Deal never happened. But even then it would be a stretch. This country's legal history is a lot more nuanced than that. What you articulate is probably best described as a minority vision today.

timroy 11y ago

Contract enforcement is a government activity, though. To enforce a contract, you ask the government (via the courts) to force the other party to give you assets, or not to work somewhere, etc. By the same reasoning, if I sue you for defamation for calling me a lamebrained chucklehead, courts refuse to entertain the suit because the government won't restrict free speech. You're entitled to express your opinion, and the government won't assist me in suppressing your speech. In many states, the government is happy to assist employers in restricting job-hopping. I take your point that this government activity has its immediate catalyst in private actions in the free market, and that's different in important ways from other government activity. But still.

oconnor663 11y ago
Consent on both sides is an important difference. It's not everything, but maybe important enough that it's misleading to talk around it.
- x5n1 11y ago
  Consent under coercion which most work contracts are implicitly, else how are you going to pay for your living expenses, by necessity require government intervention.
  - icebraining 11y ago
    Under that point of view, seems like the government should instead prohibit work contracts themselves, therefore eliminating such coercion.
    - x5n1 11y ago
      You can not eliminate this source of coercion without for instance giving people free living wage. Eliminating such contracts would not eliminate the coercion but make it worse. Maybe not as bad a contract, because people can still walk away, but still could end badly.

x5n1 11y ago

Job hopping, or as normal people call it staying employed. Governments do need to legislate this because scummy corporations and their management have made it a necessity to do so.

Spooky23 11y ago

Adam Smith's invisible hand can rest, replaced by the lawyer's suit.

WalterBright 11y ago

I'm a free market guy, and I also agree with certain notions of contract law - like you cannot sign away your inalienable rights. You have those rights regardless. Also, in order for a contract to be enforceable, there must be an exchange of value. I would agree with the validity of a non-compete clause if there was specific compensation tied to that. For example, "we'll give you $50,000 after you leave the company if you don't compete with us for a year." But tacking it onto an employment agreement, no.

dredmorbius 11y ago
Inalienable doesn't mean what you seem to think it does.
- michaelt 11y ago
  inalienable: incapable of being alienated, surrendered, or transferred <inalienable rights> [1] What the parent said sounds like pretty much the dictionary definition of inalienable to me? [1] http://www.merriam-webster.com/dictionary/inalienable http://www.merriam-webster.com/dictionary/inalienable
  - dredmorbius 11y ago
    The original inalienable rights -- life, liberty, and happiness -- aren't inalienable because their transfer is prohibited by law, but because they're impossible by fact. You can be denied of your life, your liberty, and/or your happiness. They cannot however be transferred to another person. Your material possessions -- real estate, chattel property, intellectual property -- can be. Again: the nature of inalienable rights is intrinsic, not protected by law. You'll find that meaning supported in the definition you've provided. (There's a whole 'nother discussion of rights-based arguments generally I won't get into, though I find the question somewhat problematic.)
    - anonymousDan 11y ago
      Sure you can. There are plenty of examples in history of people voluntarily becoming a slave to other people because they have fallen into debt.