24 ms·

Noncompete Clauses: Signing Away the Right to Get a New Job

662 points by mikeh1010 9y ago

dboreham 9y ago
Since this should be illegal, or at least illegal absent some reasonable compensation for giving up the right to freely seek alternative employment (e.g. a big retention bonus), presumably our politicians offering "regulatory relief" are to blame?
- valuearb 9y ago
  There are plenty of Republicans who are against this type of mercantilist behavior.
  - flamedoge 9y ago
    there are republicans who arent? they are suppose to defend free market
    - deleted 9y ago
      [deleted]
    - MrMorden 9y ago
      The article provides one example of Republicans defending the free market, but usually that's the last thing on their minds. (See e.g. how the phrase "everything is bigger in Texas" applies most of all to government.)
    - __derek__ 9y ago
      Voluntarily agreeing not to compete with a company for some period of time is completely fine as a contract in a free market system. Not interfering in those agreements not only doesn't contradict a commitment to free markets but is actually a logical extension of it: individuals engaging in the system ought to be free to conduct whatever transactions they see fit. Free markets and well-functioning markets aren't coextensive, though, and that's the rub with non-competes.
- monksy 9y ago
  If the employee was terminated the non-compete should be terminated as well.
  - hammock 9y ago
    That creates the incentive for someone who wants to switch to a competitor to underperform - so she gets fired and can switch. Noncompetes, viewed in a vacuum, are lopsided towards the employer by design. Which is why they are (ideally) counterbalanced by increased pay or other concessions to the employee.
  - ben1040 9y ago
    I had a friend who got RIF'd from a software company, and their offboarding paperwork included a 1 year noncompete that tied their severance as the consideration. Essentially, "we don't want you working here, but we also don't want you working anywhere else, either."
    - stupidhn 9y ago
      If the severance falls outside of the mandatory amount by law, then this is reasonable. They are paying you not to work for a competitor for a time.
      - ben1040 9y ago
        It's reasonable if the severance is equal to the pay you'd get over the term of the non-compete. They don't want you working for a competitor for a year? That's fine, if they pay you a year's salary. However, in my friend's case, she was given the 1-year noncompete in exchange for 4 weeks' pay.
        bb611 9y ago
        Presumably she turned it down?
        9y ago
valuearb 9y ago
"California law prohibits noncompete clauses, contributing to the inveterate poaching with which the state’s technology industry was founded. It can be brutal for employers, but it helps raise wages and has created a situation where any company looking to hire a bunch of engineers in a hurry, be it an established giant or a start-up, feels it should locate there."
- vmarsy 9y ago
  Some states are starting to move in that direction too,like Washington state but this isn't as strong as California : https://www.geekwire.com/2017/scaled-back-bill-aimed-providing-clarity-non-compete-deals-passes-washington-house-97-0/ https://www.geekwire.com/2017/scaled-back-bill-aimed-providi... Apparently Google and labor unions supported the original bill, but the article says that's not the case for Amazon and Microsoft The scaled back bill removed those points: > Make noncompetition agreements void if the employee is a temporary or seasonal employee, or is terminated without just cause or laid off. > Create a rebuttable presumption that agreements restricting competition for more than one year after termination of employment or for employees who are not executives are unreasonable. > Make noncompetition agreements with independent contractors void
  - seaknoll 9y ago
    > or is terminated without just cause or laid off. Wait, seriously? One can be laid off but still barred from working for a competitor? Grateful to live in CA but that makes me ill on behalf of the rest of the country.
- ScottBurson 9y ago
  Noncompete enforceability is, to me, a very interesting example of how individuals pursuing their own self-interest leads to a bad outcome for everyone -- a classic Tragedy of the Commons. In a state that allows noncompetes, it's in pretty much every employer's interest to use them and enforce them as much as they can; and yet over the long run, their doing that strangles the economy -- not fatally, but enough so that the Boston area, for example, barely competes with Silicon Valley as a startup hub, despite having an equally impressive local talent base. Any state that wants to attract more technology companies should start by copying California policy on noncompetes. Yes, existing businesses will fight it tooth and nail, but it will make for a stronger economy.
vostok 9y ago
The really annoying thing about noncompetes is that they're usually at the discretion of the employer. You might be in a situation where you have a 12 month noncompete and nobody wants to hire you 12 months in advance, but then your former employer terminates your noncompete within a month and stops paying you.
- delinka 9y ago
  If they terminated the noncompete, that's excellent! I'm thinking you've made a typo. ;-)
  - vostok 9y ago
    It's not excellent because they stop paying you if they terminate the noncompete, but you also can't look for a new job until the very end of your noncompete period.
    - delinka 9y ago
      Perhaps you're right if they terminate your employment and the noncompete remains in force. But if they've terminated the noncompete, it's no longer in force and you can find work with a competitor.
      - phamilton 9y ago
        Sure, but this is equivalent to being let go without severence. You have no buffer to get you through thr job finding process.
        delinka 9y ago
        Severance is a wholly different matter. It's completely unrelated to a noncompete clause.
        phamilton 9y ago
RcouF1uZ4gsC 9y ago
Using "poaching" to describe a company hiring someone from another company, needs to die. Companies do not own people. It is strictly a business relationship. I think that the US as a whole should follow California in outlawing non-competes. It definitely has been shown to be workable.
- flamedoge 9y ago
  I think it's fine. Dirtier the connotation, the greater the company must feel to fight against it to keep you.
  - watwut 9y ago
    They fight by making mutual agreement that they wont hire each other employees.
    - flamedoge 9y ago
      Probably should work for neither of them then. Like a workers' strike except on free market level.
  - Dickie_Sticks 9y ago
    The connotation is that hiring employees away from other companies is a bad thing. It's only a bad thing if you're an employer. It's great for labor.
- _red 9y ago
  Agreed with the silly use of the name 'poaching'. But how exactly is the state preventing two people voluntarily entering into a contract a good thing? Its pointless anyway, a first year law student will just rewrite as non-circumvent + no-solicit + NDA agreements.
  - acdha 9y ago
    The problem comes from the market disparity: most employees need the job and have limited bargaining power or legal representation while the company has a whole legal team representing their interests. Similarly, the company has a lot more data points on terms and compensation than the prospective worker. As a simple example, the Jimmy John's sandwich chain had a no-compete for their employees. Do you think the average person making subs is as comfortable walking away from a job as the company is telling them the terms aren't negotiable? My favorite fix would simply to be requiring full compensation for the entire term. Intel would pay an architect to sit on the beach rather than work for AMD but nobody would think of trying that for the average developer.
etjossem 9y ago
Worth remembering, especially for those just entering the software field: by the time a potential employer gives you an employment agreement to sign, they've already decided they want you. At that point, it's on them to give you a palatable offer. They may include a noncompete clause for one of two reasons: 1) to prevent you from working somewhere else at the same time, which can create all sorts of conflicts of interest, or 2) because it'll keep you from looking for a new job, and they think you're too naive to argue. Here's my suggestion. When you receive the document, read it and see if there's a noncompete clause. If so, you're going to want to send a redlined version back to them, changing the noncompete duration from "during and for 2 years following employment at the company" (or whatever they gave you) to "for the duration of employment at the company." By doing so, you show your willingness not to do any kind of work for a competitor while employed, while very clearly pointing out that you do have the right to get a new job. It may be important not to offend the person who wrote up the agreement and included something so ridiculous, so the minor nature of your modification will allow them to save face. In the end, most employers won't bother to argue the second point, and the ones that do are probably shadily taking advantage of you in other ways. Additional note: in California and several other states, these clauses are not legally enforceable anyway, and you should mention that when you give them the "fixed" agreement.
- mikeash 9y ago
  I've never been presented with one (and hope I never will) so this is hypothetical, but I have a hard time imagining even doing that. A company is paying me to work for them, they're not paying to own me. When I'm off the clock, my time is my own, up to and including doing paid work for anyone else I want. I'd make an exception if they increased my pay accordingly. But considering that they're asking for 4.2x more of my time than usual, they'd better be paying me at least 4.2x a normal full-time salary. I do have a little experience with making changes to contracts that the other party doesn't want to change, and to that end I'd like to add two more things. First, it's likely they'll use the phrase "standard contract" and say that it just can't be changed. Second, if you've gotten that far, it's quite likely they'll change your minds if you stick to your guns. It's tempting to cave in when they say "sorry, we can't accept changes," but don't.
watertom 9y ago
Health insurance is also part of the rigged labor market. The only reason big companies offer health insurance is because it limits employees's freedom. It would be easy for the Fortune 100 or 200 in unison agree to eliminate health care and provide a higher salaries. It would make the companies more competitive globally and it would free them from a whole lot of other nonsense, but they don't drop healthcare. The reason they don't droop healthcare is because healthcare and pre-existing conditions limit employee options and it suppresses wages. Also if there was universal healthcare it would be easier to start small companies and attract employees, those small business would be competing for employees against big companies on equal footing. Healthcare is a racket limiting not just healthcare but freedom.
- SimbaOnSteroids 9y ago
  The other thing is, and i don't disagree it limits freedom btw, but if you're not in a pool of other people shopping for healthcare you have no bargaining power.
  - matt4077 9y ago
    10 tries at an answer, and you got closest to reality: Employment creates a 'risk pool', specifically one that people are unlikely to join just to get insurance. It is one of very few ways to mitigate the "adverse selection" problem, i. e. only old and/or sick people getting insurance, thereby raising prices, and repeat. The other way is an insurance mandate, or, if you want to cut the chase, single-payer tax-funded healthcare for all.
    - SimbaOnSteroids 9y ago
      Single payer needs to be what happens, it's like infrastructure projects/militaries if it's privately owned it can be well above the quality or well below quality that a publicly owned entities but being privately owned for profit kinda defeats the purpose of these institutions.
- amorphid 9y ago
bunderbunder 9y ago
My last company's noncompete had a really nice twist: Instead of banning me from seeking employment at a competitor altogether, it instead granted my employer the right, to, at their discretion, compel me to delay starting at a competitor for a certain amount of time. However, in order to do so they would also have to pay my salary over that period.
- advael 9y ago
  Seems like a bare minimum for such a contract term to be equitable, but seeking work while you have a job is so obviously encouraged by the current labor market that a non-compete clause strikes me as unpalatable unless it comes with guarantees against termination altogether for the same term.
- lsllc 9y ago
  That's known as "garden leave". Very fair way to implement a non-compete.
brightball 9y ago
Fwiw, my understanding is that in right to work states a noncompete CANNOT prevent you from earning a living in your field. The clauses have to be defined as very specific, time limited and reasonable otherwise they don't hold up under legal scrutiny. Stuff like, not being able to take current customers to a competing business within a mile for a period of 1 year is considered reasonable.
- howard941 9y ago
  Insofar as Florida (Floriduh), a "right to work" state is concerned, this is sadly not correct. Most non-competes are enforceable here :( IAAL but IANYL.
  - brightball 9y ago
    Not a lawyer, but the ones I have spoken to here in SC have told me that's how it worked.
    - siegel 9y ago
      Sadly, "right to work" laws have absolutely nothing to do with non-compete enforceability.
- wikibob 9y ago
  Right to work is very often misunderstood. Right to work has nothing to do with noncompete contracts. It means that you cannot be forced to join a union. https://en.m.wikipedia.org/wiki/Right-to-work_law https://en.m.wikipedia.org/wiki/Right-to-work_law
- danny_taco 9y ago
  I think you are confusing right to work with at will employment.
  - brightball 9y ago
    That might be it.
algesten 9y ago
I had a previous employer trying to stop me from working directly for a client. Only, I had brought in the client, I was the only one working for that client and that client didn't want anything to do with the rest of my employer. I felt morally OK with the situation... Only, my contract did have a noncompete. But then, this is Sweden, and noncompete clauses are almost not enforceable by Swedish law. An employer can't stop an employee to take another position. To be a valid clause, an employer must offer the same payment the new position would have had whilst riding out the non-work period, and no one does that. A strongly worded letter from my lawyer sorted it. Never heard from them again.
- anarazel 9y ago
  Don't know about Sweden, but in several countries / states non-competes and non-poaching/solicitation (clients, colleagues) clauses are treated quite differently.
  - freehunter 9y ago
    Yeah that doesn't sound like non-compete, that sounds like poaching.
- nraynaud 9y ago
  In France, the clause has to have a salary included in the non-compete. The former employer pays you for all the time they prevented you from working at your new job. I have never heard of any company asserting a non-compete.
  - eloisant 9y ago
    Yes, the only case where I've heard it's done is for fields where a lot of research happen in the private sector. In this case it may make sense to pay a former employee to do nothing for one year until his knowledge of internal tech is no longer confidential because published or released.
- edanm 9y ago
  For what it's worth, this is exactly the reason non-competes do make sense to enforce. (or in this specific instance non-solicitation agreements). Not to say you necessarily did anything wrong, since I don't know anything about your situation except for your comment. But take a "typical" case similar to yours, and look at if from the employer's point of view. They give you access to stability (a salary), office/equipment, potentially training, potentially their reputation. All of which helps you get a client and focus solely on the client. If, after all their investment, you can walk off with the client, depriving them of the income that they would've earned, then that makes it less likely for future employers to make these kinds of investments in people. (Again, this is the generic case for non-solicitation/non-compete, your particular case could be totally different in all the ways that matter).
goatherders 9y ago
I've been sued twice over non compete language. The good news is they are reasonably hard to enforce because most judges will ultimately agree that people have a right to change employers. The bad news is it can cost a lot of money to get to the point where the judge says that.
- djeikyb 9y ago
  if you don't mind, what state / country?
  - goatherders 9y ago
    Twice in Texas for me. In both cases I made paying my legal fees part of my comp with the new employer. The first time I thought a suit might happen. The second time I was sure it would.
- rhapsodic 9y ago
  > The good news is they are reasonably hard to enforce because most judges will ultimately agree that people have a right to change employers. The bad news is it can cost a lot of money to get to the point where the judge says that. Yes, and that's the rub. I've had several recruiters respond with, "oh don't worry, that's not enforceable" when I objected to an onerous NCC in a contract they presented me with. My response was "perhaps, but you could use it to drag me through the courts and make my life hell, so remove it altogether, or we're done here." In each case, it was after I had verbally accepted a verbal offer. And in each case, they removed the NCC.
- krisoft 9y ago
  So you signed a second non-compete after being burned once?
  - goatherders 9y ago
    I didn't get burned either time. See: I had an agreement for someone else to pay my legal bills.
- 9y ago
CalChris 9y ago
In the US, California, North Dakota and Oklahoma are the exceptions. NCCs are legal elsewhere. http://www.beckreedriden.com/wp-content/uploads/2017/03/noncompetes-50-state-survey-chart-20170204.pdf http://www.beckreedriden.com/wp-content/uploads/2017/03/nonc... Even in CA, trade secrets have an exception. http://www.weil.com/articles/the-trade-secrets-exception-to-californias-ban-on-employee-noncompetition2_12-06-2013 http://www.weil.com/articles/the-trade-secrets-exception-to-...
solidsnack9000 9y ago
This is a kind of feudalism, where the peasants need to rely on the strength of lords and their knights (lawyers) to enjoy basic freedoms.
- rhapsodic 9y ago
  >This is a kind of feudalism, where the peasants need to rely on the strength of lords and their knights (lawyers) to enjoy basic freedoms. Actually, I think it's a hallmark of a free society where consenting adults are able to enter into, or not, any agreements they choose. The problem is that some people make bad choices in the agreements they commit to, or they enter them in bad faith, not intending to honor them, and when the chickens come to roost, we're instructed to feel sorry for them by writers at the New York Times.
  - solidsnack9000 9y ago
    Why do you think noncompetes are the hallmark of a free society?
    - rhapsodic 9y ago
      >Why do you think noncompetes are the hallmark of a free society? You parsed it wrong. I meant to say that consenting adults freely entering (or not) into agreements with other consenting adults is a (not the) hallmark of a free society. Why do you think that consenting adults freely entering into contracts are analogous to peasants and lords?
      - solidsnack9000 9y ago
        The issue is whether people exercise their rights "under the protection" of more powerful (but private) entities. For example, in some of the cases cited in the New York Times, courts acknowledged that non-competes were not to be enforced -- but only after the hiring company went to bat for their new staffer. If someone enters into an unenforceable agreement, they should be freed of it speedily and inexpensively. Maybe the terms of the agreement are such that its' unenforceability is non-obvious; but it is ultimately the one bringing suit who should bear the cost of wasting everyone's time in that case.
quizotic 9y ago
In the early 1990s, I'd co-founded an object database company, with a standard "east-coast-style" non-compete, which among other things, granted us injunctive releif. Our top developer left to work for our main competitor. We sued, and the courts ruled basically that there is no slavery in the US and our developer had every right to earn a living doing what he knew how to do. Maybe laws have changed, and maybe it varies by industry, but my experience is that noncompetes are meaningless. BTW, I don't particularly wish they had teeth, and my company was probably not significantly harmed by the outcome. Just saying I wouldn't sweat too much about signing a noncompete.
- AlexCoventry 9y ago
  They're enforceable in MA. http://www.shpclaw.com/Schwartz-Resources/massachusetts-court-enforces-non-competition-agreement-in-california?p=11399 http://www.shpclaw.com/Schwartz-Resources/massachusetts-cour...
- ScottBurson 9y ago
  I don't know that this is good advice. Attitudes toward noncompetes vary from state to state and probably even from judge to judge; I don't think it's a good idea to put one's career at risk from what amounts to a coin toss, even if the odds are 50/50 or even somewhat better.
- yitchelle 9y ago
  If you are saying that a noncompete is meaningless, why did you put it into your contract in the first place? I am just curious.
rdiddly 9y ago
This prompted me to look at my employee agreement. Sure enough, there it is. I signed it because I needed the job and wasn't asking too many questions. But this is interesting, I work in an area of the company that isn't really part of their core competency. Meaning that the kinds of firms that would hire me are literally in another sector and wouldn't be considered competitors. So this fact, that normally manifests as complaints that "management has no idea what we do here" and/or that they "have no business claiming they're in this business," ends up helping me out.
postfacto 9y ago
If you're going to violate a noncompete, don't tell anyone you're going to work for a competitor. Keep yourself as small of a target as possible for your former competitor's legal team. - When you quit, tell your now former employer that you're quitting to pursue something other than what was your established industry. Your (made up) lifelong dream of starting your own microbrew brand, Macrome supply business, winery, whatever. Or looking after a sick relative, or going back to school full time, etc. - Cut off ties with all your former coworkers, at least for the noncompete duration. If you bump into them at the grocery store and you can't get away from them, tell them about how wonderful the beer business is or how your relative is doing. - Don't put on Facebook or Linkedin that you work for the new employer. - For the duration of the non-compete, only those closest to you who critically need to know about your new employer, spouse, etc will know. - Avoid publicly-facing industry related activities that tie you to your new employer for the duration of the noncompete. Giving speeches, presentations, writing article, etc. None of these are foolproof but they are all common sense. Remember the Monty Python sketch about How To Not Be Seen.
- lmkg 9y ago
  Your suggestion is that if your employer tries to pull this unethical behavior against you, is that you should lie, run, hide, and sacrifice your own personal relationships? There are better ways of dealing with this than acting like what you did was criminal and laying low for a year until it blows over.
  - emodendroket 9y ago
    Such as what? Going to court?
- afterburner 9y ago
  You live in fear.
- stale2002 9y ago
  Ok, so you don't have to go this far. The only thing you have to do, is when people ask you where you work, just say "I'm under NDA. Can't talk about it.". Or keep it vague. "I am a web developer". Something like that. No need to get rid of your friends, or hide, or anything like that. Just simply don't talk about work, and I can assure you that nobody is going to come after you.
tomohawk 9y ago
Last time I was given one of these to sign, it was in a group setting. So, I just didn't turn it in. They never did make a stink about it. Just because someone gives you a piece of paper to sign, doesn't mean you have to. Wait until it's unavoidable.
ThomPete 9y ago
I am not a lawyer but my advice is generally to ignore it. Most wont care and those who do mostly can't enforce it unless they paid you extra for it.
- lemonsqueeze 9y ago
  And that's why you're not a lawyer. It does matter
Mathnerd314 9y ago
Related comic: http://www.angryflower.com/1131.html http://www.angryflower.com/1131.html
punnerud 9y ago
In Norway we added a law now from 2017 that the employer have to pay you the same salary for the period the non-compete is in operation. Maximum 1 year. It have you be in you contract up front, and they have to explicitly list customers and competitors.
bbcbasic 9y ago
Interested to see how this plays in my jurisdiction. Seems they have quite a sane approach in NSW: http://www.fglaw.com.au/non-compete-employment/ http://www.fglaw.com.au/non-compete-employment/
pducks32 9y ago
It's important for software developers and in demand job applicants to push the trends. I refused the noncompete clause at my startup (still got job) and made a point of how I'm principled against them for hurting people like the man in this article. We may be disconnected from the rest of America but maybe my little requirement can put the thought in people's heads that it's wrong.
dimva 9y ago
In finance, companies will pay you your salary to not work if they decide to enforce a non-compete. It's written into the contract. I have friends who get to take year-long paid vacations when they switch jobs just because they work in HFT. I'm surprised that this isn't law. I guess financial companies care about their employees more and/or their employees are more astute about contracts. Companies shouldn't be allowed to prevent their ex-employees from earning a living. If it's that important for them to prevent the transfer of their proprietary information, they should be happy to pay for it.
rch 9y ago
Keep in mind that sometimes a company will hire you into an unrelated job role (evangelist, account manager, etc) until your lockup runs out.
throwaway23421 9y ago
this shit should be illegal. even small businesses are doing this now. programmers are a dime a dozen and everyone is using open source. fuck all these tech companies they don't have jack shit TO steal and force you to sign away everything anyway
thinkloop 9y ago
I've almost always been presented one, and I've always had it removed. It is a certainty I will compete, especially the more I become an "expert" in an industry, it's not a fair expectation. I work for startups, probably tougher at big corps.
mirimir 9y ago
If you're working in a small industry where specialized skills are required, and firms commonly collaborate, you may encounter unacknowledged/secret non-compete policies. Basically, nobody else will hire you, and they won't tell you why. If you've made some friends, they may tell you what's going on. But there's little recourse.
- bcjordan 9y ago
  Can't you sue the companies in question if there is any evidence they're doing that?
  - mirimir 9y ago
    Sure, if you have the resources. In my case, it was far more feasible to change careers. Edit: I did speak with a few attorneys. But they all wanted cash up front. And told me that I had little chance of success.
    - dsacco 9y ago
      Can you give an example of an industry like this?
      - mirimir 9y ago
        Saying more about my case would reveal too much about my identity. Sorry. Perhaps others can share.
      - trowawee 9y ago
        Software engineering? Like, two years ago? How are you on HN, but missed this? https://www.cnet.com/news/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/news/apple-google-others-settle-anti-po...
        dsacco 9y ago
        I'm aware of that. I was asking about a smaller industry with more specialized skills where that would be commonplace.
teddyh 9y ago
See also the classic NDAs and Contracts That You Should Never Sign, March 28, 2000 by Joel Spolsky: https://www.joelonsoftware.com/2000/03/28/ndas-and-contracts-that-you-should-never-sign/ https://www.joelonsoftware.com/2000/03/28/ndas-and-contracts...
carvalho 9y ago
My first (and last) non-compete was when I was starting out as a web developer in a small company. By the time I fully realized what I had signed I had contractually given up my right to work for any other webdev company for 1.5 years, and even worse, the company owner stated that he believed the non-compete also extended to all our clients (and the clients of a major client) too. This meant nearly all banks, Heineken, Google, and consultancy agencies (we ran a job board). Needless to say I am not a web developer anymore.
EarthMephit 9y ago
In Sweden the during the non-compete period you have to pay the employee their full wage, which seems like a fair balance. If it is that important to the company the employee should be remunerated
burntrelish1273 9y ago
General rules-of-thumb (IANAL): - Sign the minimum of documents - Don't provide full, personally-identifying information unless it's absolutely required - Negotiate terms of boilerplate agreements if they're too unreasonable / don't apply - Don't sign a binding arbitration agreement, BA is a worthless/corrupt system that nearly always favors the employer. [0] - For CA-headquartered companies, refuse to sign NCAs because it creates legal liabilities (ie, could they involuntarily transfer an employee to another state and then fire them to make an NCA apply?) 0. https://www.nytimes.com/2015/11/01/business/dealbook/arbitration-everywhere-stacking-the-deck-of-justice.html https://www.nytimes.com/2015/11/01/business/dealbook/arbitra...
satai 9y ago
Just for comparison: In Czech republic this clauses are legal, but their duration is limited by law and the ex-employer is required to provide you a compensation to the time that you are limited in the job market.
anothercomment 9y ago
I think in Germany at least, employers have to pay people for the damages induced by non-compete (the loss of salary/earning potential). Ianal, though.
edanm 9y ago
I'd just like to point out that there is a case to be made for noncompetes, they're not just a terrible thing that companies do because they can. I recommend reading "The Case for Non-Competes" by David Henderson (http://econlog.econlib.org/archives/2016/11/the_case_for_no.html http://econlog.econlib.org/archives/2016/11/the_case_for_no....). Here's a relevant quote (in which the author is actually quoting Aaron McNay): " Both employers and employees would like to be able to train the employees if the cost of doing so is less than the gains in productivity. However, there is a potential collective action problem here. What happens if the employer provides the training, but the employee then moves onto another job? The employer bears the burden of the training costs, but does not receive any of the benefits. As a result, the employer does not provide the training, and a mutually beneficial trade is not made. By preventing the employee from being able to move, a non-compete agreement eliminates the collective action problem." I'm not saying that non-competes are necessarily good, or necessarily bad. It depends on the circumstances. But I do think that a lot of other commenters in this thread do think that non-competes are necessarily bad, and I think that's incorrect.
- Macha 9y ago
  In the example you gave, you could make an argument like that but it'd still only feel any way fair iff: * It started from the start of the contract/end of the initial training. * It was for a period much shorter than 2 years * It was voided if the employer terminated the contract
  - edanm 9y ago
    Why would it only feel fair based on some "arbitrary" rules you intuitively feel are right? Why not let people negotiate based on their personal situations, and let the market eventually sort out what combination works best? After all, for high enough salaries, I'd probably agree to very onerous terms. Specfically about your list, I think the reason the period doesn't usually start from the end of training, but rather the end of employment, is that it is assumed you continue to have access to more training / more confidential information, even if you work for a company for longer than the few months of training. And I certainly hope most people work in a job in which they continue to grow/learn. As for voiding if the contract if the employee is fired, why make that a condition? Wouldn't that just mean the bar for hiring new employees would be even higher, because if they don't work out, you're both wasting lots of investment, and also running the risk of them taking your methods to a new company?
kenshi 9y ago
An alternative point of view, even for those entering the industry: just don't sign a contract with a non-compete clause. At some point in your career you are going to have to negotiate over terms in your contract. Best to get practice in as soon as the opportunity presents itself.
lemonsqueeze 9y ago
Also don't sign away all the IP you create off hours. Those clauses read like the even own your love letters and emails.
ericssmith 9y ago
Speaking from personal experience ... At the time of signing you can see the upside (the offer), but you can't know the downside, which can be quite significant. It's a poor trade-off. Avoid these unless you get some kind of severance for the period of the agreement. Mere employment as "consideration" is a bad deal.
danny_taco 9y ago
As someone that was made to sign a confidentiality agreement under duress and unfair pressure months after joining the company, with stipulations that basically say ANY work I do, regardless of industry or during the weekend, belong to the company. Even after I no longer work there up to one year, and ONLY if I bother to sign the attached clause that says I no longer work there. I'm so glad that tomorrow I'll be handing in my two weeks notice especially at a critical time for the company. I'm also the most senior developer that everyone else comes to with questions regarding how the system works and how it can be improved. The original developers left for similar reasons. What I'm trying to say is, if you think, as a business owner or employer that you can act against the best interests of your employees then you'll end up paying dearly for it one way or another.
michalu 9y ago
In Europe these clauses are not enforceable. Whether you sign a contract with such clause or not is irrelevant since it's not a qualified subject of a contract. You can write in your contract whatever you want but only the qualified subjects are binding.
- waldfee 9y ago
  I've signed all the non-compete clauses that where present in my contracts because those clauses are simply null and void.
pluma 9y ago
I'm not entirely sure how this compares to the situation under German (EU?) law: Generally noncompetes are fairly widespread to varying extents. The default seems to be that you can't compete with your employer while you are employed (whether it's by freelancing on the side, poaching their customers or directly working for another competitor) though in practice employers will generally grant you permission to have a side-job as long as there's no conflict of interest and it doesn't impact your job performance. However noncompetes terminate once the employment ends. The only way to extend the duration of the noncompete is by having the contract also reimburse you for the duration of that extended noncompete. Both sides can agree to lift that extension but if it's in the contract, the employer will likely have to pay for a certain amount of time whether they want to enforce the noncompete or not. So in other words, while there may be scenarios where noncompetes impact your ability to find another job while still employed, the second your employment terminates, you're either free or continually being paid an appropriate sum of money. As a freelancer I had clients that insisted on some form of noncompete, but these were generally only protecting them from me "skipping the middleman" and working for their customers directly -- which even without noncompetes would have created some dodgy situations. I've actually seen multiple major consulting companies (often international ones or subsidiaries of international ones) that explicitly required a noncompete so vague that it would have practically prevented me from working for any company in the industry while also working for them -- because there would have been just no easy way for me to tell whether I was accidentally working for one of their customers or not. I never signed those but considering that certain companies like to just put into contracts whatever they would love to be able to do without any concern for validity or enforceability, I wonder what the legal situation around those would have looked like.
bungie4 9y ago
I had an employer attempt to have me sign an NDA, NCC and, forfeit any rights to software I'd written in the previous 20 years, to them! Pound sand. So I was back on the street 2 weeks later.

662 points by mikeh1010 9y ago

Since this should be illegal, or at least illegal absent some reasonable compensation for giving up the right to freely seek alternative employment (e.g. a big retention bonus), presumably our politicians offering "regulatory relief" are to blame?

valuearb 9y ago
There are plenty of Republicans who are against this type of mercantilist behavior.
- flamedoge 9y ago
  there are republicans who arent? they are suppose to defend free market
  - deleted 9y ago
    [deleted]
  - MrMorden 9y ago
    The article provides one example of Republicans defending the free market, but usually that's the last thing on their minds. (See e.g. how the phrase "everything is bigger in Texas" applies most of all to government.)
  - __derek__ 9y ago
    Voluntarily agreeing not to compete with a company for some period of time is completely fine as a contract in a free market system. Not interfering in those agreements not only doesn't contradict a commitment to free markets but is actually a logical extension of it: individuals engaging in the system ought to be free to conduct whatever transactions they see fit. Free markets and well-functioning markets aren't coextensive, though, and that's the rub with non-competes.
monksy 9y ago
If the employee was terminated the non-compete should be terminated as well.
- hammock 9y ago
  That creates the incentive for someone who wants to switch to a competitor to underperform - so she gets fired and can switch. Noncompetes, viewed in a vacuum, are lopsided towards the employer by design. Which is why they are (ideally) counterbalanced by increased pay or other concessions to the employee.
- ben1040 9y ago
  I had a friend who got RIF'd from a software company, and their offboarding paperwork included a 1 year noncompete that tied their severance as the consideration. Essentially, "we don't want you working here, but we also don't want you working anywhere else, either."
  - stupidhn 9y ago
    If the severance falls outside of the mandatory amount by law, then this is reasonable. They are paying you not to work for a competitor for a time.
    - ben1040 9y ago
      It's reasonable if the severance is equal to the pay you'd get over the term of the non-compete. They don't want you working for a competitor for a year? That's fine, if they pay you a year's salary. However, in my friend's case, she was given the 1-year noncompete in exchange for 4 weeks' pay.
      - bb611 9y ago
        Presumably she turned it down?
        9y ago

valuearb 9y ago

"California law prohibits noncompete clauses, contributing to the inveterate poaching with which the state’s technology industry was founded. It can be brutal for employers, but it helps raise wages and has created a situation where any company looking to hire a bunch of engineers in a hurry, be it an established giant or a start-up, feels it should locate there."

vmarsy 9y ago
Some states are starting to move in that direction too,like Washington state but this isn't as strong as California : https://www.geekwire.com/2017/scaled-back-bill-aimed-providing-clarity-non-compete-deals-passes-washington-house-97-0/ https://www.geekwire.com/2017/scaled-back-bill-aimed-providi... Apparently Google and labor unions supported the original bill, but the article says that's not the case for Amazon and Microsoft The scaled back bill removed those points: > Make noncompetition agreements void if the employee is a temporary or seasonal employee, or is terminated without just cause or laid off. > Create a rebuttable presumption that agreements restricting competition for more than one year after termination of employment or for employees who are not executives are unreasonable. > Make noncompetition agreements with independent contractors void
- seaknoll 9y ago
  > or is terminated without just cause or laid off. Wait, seriously? One can be laid off but still barred from working for a competitor? Grateful to live in CA but that makes me ill on behalf of the rest of the country.
ScottBurson 9y ago
Noncompete enforceability is, to me, a very interesting example of how individuals pursuing their own self-interest leads to a bad outcome for everyone -- a classic Tragedy of the Commons. In a state that allows noncompetes, it's in pretty much every employer's interest to use them and enforce them as much as they can; and yet over the long run, their doing that strangles the economy -- not fatally, but enough so that the Boston area, for example, barely competes with Silicon Valley as a startup hub, despite having an equally impressive local talent base. Any state that wants to attract more technology companies should start by copying California policy on noncompetes. Yes, existing businesses will fight it tooth and nail, but it will make for a stronger economy.

vostok 9y ago

The really annoying thing about noncompetes is that they're usually at the discretion of the employer. You might be in a situation where you have a 12 month noncompete and nobody wants to hire you 12 months in advance, but then your former employer terminates your noncompete within a month and stops paying you.

delinka 9y ago
If they terminated the noncompete, that's excellent! I'm thinking you've made a typo. ;-)
- vostok 9y ago
  It's not excellent because they stop paying you if they terminate the noncompete, but you also can't look for a new job until the very end of your noncompete period.
  - delinka 9y ago
    Perhaps you're right if they terminate your employment and the noncompete remains in force. But if they've terminated the noncompete, it's no longer in force and you can find work with a competitor.
    - phamilton 9y ago
      Sure, but this is equivalent to being let go without severence. You have no buffer to get you through thr job finding process.
      - delinka 9y ago
        Severance is a wholly different matter. It's completely unrelated to a noncompete clause.
        phamilton 9y ago

RcouF1uZ4gsC 9y ago

Using "poaching" to describe a company hiring someone from another company, needs to die. Companies do not own people. It is strictly a business relationship. I think that the US as a whole should follow California in outlawing non-competes. It definitely has been shown to be workable.

flamedoge 9y ago
I think it's fine. Dirtier the connotation, the greater the company must feel to fight against it to keep you.
- watwut 9y ago
  They fight by making mutual agreement that they wont hire each other employees.
  - flamedoge 9y ago
    Probably should work for neither of them then. Like a workers' strike except on free market level.
- Dickie_Sticks 9y ago
  The connotation is that hiring employees away from other companies is a bad thing. It's only a bad thing if you're an employer. It's great for labor.
_red 9y ago
Agreed with the silly use of the name 'poaching'. But how exactly is the state preventing two people voluntarily entering into a contract a good thing? Its pointless anyway, a first year law student will just rewrite as non-circumvent + no-solicit + NDA agreements.
- acdha 9y ago
  The problem comes from the market disparity: most employees need the job and have limited bargaining power or legal representation while the company has a whole legal team representing their interests. Similarly, the company has a lot more data points on terms and compensation than the prospective worker. As a simple example, the Jimmy John's sandwich chain had a no-compete for their employees. Do you think the average person making subs is as comfortable walking away from a job as the company is telling them the terms aren't negotiable? My favorite fix would simply to be requiring full compensation for the entire term. Intel would pay an architect to sit on the beach rather than work for AMD but nobody would think of trying that for the average developer.

etjossem 9y ago

Worth remembering, especially for those just entering the software field: by the time a potential employer gives you an employment agreement to sign, they've already decided they want you. At that point, it's on them to give you a palatable offer. They may include a noncompete clause for one of two reasons: 1) to prevent you from working somewhere else at the same time, which can create all sorts of conflicts of interest, or 2) because it'll keep you from looking for a new job, and they think you're too naive to argue. Here's my suggestion. When you receive the document, read it and see if there's a noncompete clause. If so, you're going to want to send a redlined version back to them, changing the noncompete duration from "during and for 2 years following employment at the company" (or whatever they gave you) to "for the duration of employment at the company." By doing so, you show your willingness not to do any kind of work for a competitor while employed, while very clearly pointing out that you do have the right to get a new job. It may be important not to offend the person who wrote up the agreement and included something so ridiculous, so the minor nature of your modification will allow them to save face. In the end, most employers won't bother to argue the second point, and the ones that do are probably shadily taking advantage of you in other ways. Additional note: in California and several other states, these clauses are not legally enforceable anyway, and you should mention that when you give them the "fixed" agreement.

mikeash 9y ago
I've never been presented with one (and hope I never will) so this is hypothetical, but I have a hard time imagining even doing that. A company is paying me to work for them, they're not paying to own me. When I'm off the clock, my time is my own, up to and including doing paid work for anyone else I want. I'd make an exception if they increased my pay accordingly. But considering that they're asking for 4.2x more of my time than usual, they'd better be paying me at least 4.2x a normal full-time salary. I do have a little experience with making changes to contracts that the other party doesn't want to change, and to that end I'd like to add two more things. First, it's likely they'll use the phrase "standard contract" and say that it just can't be changed. Second, if you've gotten that far, it's quite likely they'll change your minds if you stick to your guns. It's tempting to cave in when they say "sorry, we can't accept changes," but don't.

watertom 9y ago

Health insurance is also part of the rigged labor market. The only reason big companies offer health insurance is because it limits employees's freedom. It would be easy for the Fortune 100 or 200 in unison agree to eliminate health care and provide a higher salaries. It would make the companies more competitive globally and it would free them from a whole lot of other nonsense, but they don't drop healthcare. The reason they don't droop healthcare is because healthcare and pre-existing conditions limit employee options and it suppresses wages. Also if there was universal healthcare it would be easier to start small companies and attract employees, those small business would be competing for employees against big companies on equal footing. Healthcare is a racket limiting not just healthcare but freedom.

SimbaOnSteroids 9y ago
The other thing is, and i don't disagree it limits freedom btw, but if you're not in a pool of other people shopping for healthcare you have no bargaining power.
- matt4077 9y ago
  10 tries at an answer, and you got closest to reality: Employment creates a 'risk pool', specifically one that people are unlikely to join just to get insurance. It is one of very few ways to mitigate the "adverse selection" problem, i. e. only old and/or sick people getting insurance, thereby raising prices, and repeat. The other way is an insurance mandate, or, if you want to cut the chase, single-payer tax-funded healthcare for all.
  - SimbaOnSteroids 9y ago
    Single payer needs to be what happens, it's like infrastructure projects/militaries if it's privately owned it can be well above the quality or well below quality that a publicly owned entities but being privately owned for profit kinda defeats the purpose of these institutions.
amorphid 9y ago

bunderbunder 9y ago

My last company's noncompete had a really nice twist: Instead of banning me from seeking employment at a competitor altogether, it instead granted my employer the right, to, at their discretion, compel me to delay starting at a competitor for a certain amount of time. However, in order to do so they would also have to pay my salary over that period.

advael 9y ago
Seems like a bare minimum for such a contract term to be equitable, but seeking work while you have a job is so obviously encouraged by the current labor market that a non-compete clause strikes me as unpalatable unless it comes with guarantees against termination altogether for the same term.
lsllc 9y ago
That's known as "garden leave". Very fair way to implement a non-compete.

brightball 9y ago

Fwiw, my understanding is that in right to work states a noncompete CANNOT prevent you from earning a living in your field. The clauses have to be defined as very specific, time limited and reasonable otherwise they don't hold up under legal scrutiny. Stuff like, not being able to take current customers to a competing business within a mile for a period of 1 year is considered reasonable.

howard941 9y ago
Insofar as Florida (Floriduh), a "right to work" state is concerned, this is sadly not correct. Most non-competes are enforceable here :( IAAL but IANYL.
- brightball 9y ago
  Not a lawyer, but the ones I have spoken to here in SC have told me that's how it worked.
  - siegel 9y ago
    Sadly, "right to work" laws have absolutely nothing to do with non-compete enforceability.
wikibob 9y ago
Right to work is very often misunderstood. Right to work has nothing to do with noncompete contracts. It means that you cannot be forced to join a union. https://en.m.wikipedia.org/wiki/Right-to-work_law https://en.m.wikipedia.org/wiki/Right-to-work_law
danny_taco 9y ago
I think you are confusing right to work with at will employment.
- brightball 9y ago
  That might be it.

algesten 9y ago

I had a previous employer trying to stop me from working directly for a client. Only, I had brought in the client, I was the only one working for that client and that client didn't want anything to do with the rest of my employer. I felt morally OK with the situation... Only, my contract did have a noncompete. But then, this is Sweden, and noncompete clauses are almost not enforceable by Swedish law. An employer can't stop an employee to take another position. To be a valid clause, an employer must offer the same payment the new position would have had whilst riding out the non-work period, and no one does that. A strongly worded letter from my lawyer sorted it. Never heard from them again.

anarazel 9y ago
Don't know about Sweden, but in several countries / states non-competes and non-poaching/solicitation (clients, colleagues) clauses are treated quite differently.
- freehunter 9y ago
  Yeah that doesn't sound like non-compete, that sounds like poaching.
nraynaud 9y ago
In France, the clause has to have a salary included in the non-compete. The former employer pays you for all the time they prevented you from working at your new job. I have never heard of any company asserting a non-compete.
- eloisant 9y ago
  Yes, the only case where I've heard it's done is for fields where a lot of research happen in the private sector. In this case it may make sense to pay a former employee to do nothing for one year until his knowledge of internal tech is no longer confidential because published or released.
edanm 9y ago
For what it's worth, this is exactly the reason non-competes do make sense to enforce. (or in this specific instance non-solicitation agreements). Not to say you necessarily did anything wrong, since I don't know anything about your situation except for your comment. But take a "typical" case similar to yours, and look at if from the employer's point of view. They give you access to stability (a salary), office/equipment, potentially training, potentially their reputation. All of which helps you get a client and focus solely on the client. If, after all their investment, you can walk off with the client, depriving them of the income that they would've earned, then that makes it less likely for future employers to make these kinds of investments in people. (Again, this is the generic case for non-solicitation/non-compete, your particular case could be totally different in all the ways that matter).

goatherders 9y ago

I've been sued twice over non compete language. The good news is they are reasonably hard to enforce because most judges will ultimately agree that people have a right to change employers. The bad news is it can cost a lot of money to get to the point where the judge says that.

djeikyb 9y ago
if you don't mind, what state / country?
- goatherders 9y ago
  Twice in Texas for me. In both cases I made paying my legal fees part of my comp with the new employer. The first time I thought a suit might happen. The second time I was sure it would.
rhapsodic 9y ago
> The good news is they are reasonably hard to enforce because most judges will ultimately agree that people have a right to change employers. The bad news is it can cost a lot of money to get to the point where the judge says that. Yes, and that's the rub. I've had several recruiters respond with, "oh don't worry, that's not enforceable" when I objected to an onerous NCC in a contract they presented me with. My response was "perhaps, but you could use it to drag me through the courts and make my life hell, so remove it altogether, or we're done here." In each case, it was after I had verbally accepted a verbal offer. And in each case, they removed the NCC.
krisoft 9y ago
So you signed a second non-compete after being burned once?
- goatherders 9y ago
  I didn't get burned either time. See: I had an agreement for someone else to pay my legal bills.
9y ago

CalChris 9y ago

In the US, California, North Dakota and Oklahoma are the exceptions. NCCs are legal elsewhere. http://www.beckreedriden.com/wp-content/uploads/2017/03/noncompetes-50-state-survey-chart-20170204.pdf http://www.beckreedriden.com/wp-content/uploads/2017/03/nonc... Even in CA, trade secrets have an exception. http://www.weil.com/articles/the-trade-secrets-exception-to-californias-ban-on-employee-noncompetition2_12-06-2013 http://www.weil.com/articles/the-trade-secrets-exception-to-...

solidsnack9000 9y ago

This is a kind of feudalism, where the peasants need to rely on the strength of lords and their knights (lawyers) to enjoy basic freedoms.

rhapsodic 9y ago
>This is a kind of feudalism, where the peasants need to rely on the strength of lords and their knights (lawyers) to enjoy basic freedoms. Actually, I think it's a hallmark of a free society where consenting adults are able to enter into, or not, any agreements they choose. The problem is that some people make bad choices in the agreements they commit to, or they enter them in bad faith, not intending to honor them, and when the chickens come to roost, we're instructed to feel sorry for them by writers at the New York Times.
- solidsnack9000 9y ago
  Why do you think noncompetes are the hallmark of a free society?
  - rhapsodic 9y ago
    >Why do you think noncompetes are the hallmark of a free society? You parsed it wrong. I meant to say that consenting adults freely entering (or not) into agreements with other consenting adults is a (not the) hallmark of a free society. Why do you think that consenting adults freely entering into contracts are analogous to peasants and lords?
    - solidsnack9000 9y ago
      The issue is whether people exercise their rights "under the protection" of more powerful (but private) entities. For example, in some of the cases cited in the New York Times, courts acknowledged that non-competes were not to be enforced -- but only after the hiring company went to bat for their new staffer. If someone enters into an unenforceable agreement, they should be freed of it speedily and inexpensively. Maybe the terms of the agreement are such that its' unenforceability is non-obvious; but it is ultimately the one bringing suit who should bear the cost of wasting everyone's time in that case.

quizotic 9y ago

In the early 1990s, I'd co-founded an object database company, with a standard "east-coast-style" non-compete, which among other things, granted us injunctive releif. Our top developer left to work for our main competitor. We sued, and the courts ruled basically that there is no slavery in the US and our developer had every right to earn a living doing what he knew how to do. Maybe laws have changed, and maybe it varies by industry, but my experience is that noncompetes are meaningless. BTW, I don't particularly wish they had teeth, and my company was probably not significantly harmed by the outcome. Just saying I wouldn't sweat too much about signing a noncompete.

AlexCoventry 9y ago
They're enforceable in MA. http://www.shpclaw.com/Schwartz-Resources/massachusetts-court-enforces-non-competition-agreement-in-california?p=11399 http://www.shpclaw.com/Schwartz-Resources/massachusetts-cour...
ScottBurson 9y ago
I don't know that this is good advice. Attitudes toward noncompetes vary from state to state and probably even from judge to judge; I don't think it's a good idea to put one's career at risk from what amounts to a coin toss, even if the odds are 50/50 or even somewhat better.
yitchelle 9y ago
If you are saying that a noncompete is meaningless, why did you put it into your contract in the first place? I am just curious.

rdiddly 9y ago

This prompted me to look at my employee agreement. Sure enough, there it is. I signed it because I needed the job and wasn't asking too many questions. But this is interesting, I work in an area of the company that isn't really part of their core competency. Meaning that the kinds of firms that would hire me are literally in another sector and wouldn't be considered competitors. So this fact, that normally manifests as complaints that "management has no idea what we do here" and/or that they "have no business claiming they're in this business," ends up helping me out.

postfacto 9y ago

If you're going to violate a noncompete, don't tell anyone you're going to work for a competitor. Keep yourself as small of a target as possible for your former competitor's legal team. - When you quit, tell your now former employer that you're quitting to pursue something other than what was your established industry. Your (made up) lifelong dream of starting your own microbrew brand, Macrome supply business, winery, whatever. Or looking after a sick relative, or going back to school full time, etc. - Cut off ties with all your former coworkers, at least for the noncompete duration. If you bump into them at the grocery store and you can't get away from them, tell them about how wonderful the beer business is or how your relative is doing. - Don't put on Facebook or Linkedin that you work for the new employer. - For the duration of the non-compete, only those closest to you who critically need to know about your new employer, spouse, etc will know. - Avoid publicly-facing industry related activities that tie you to your new employer for the duration of the noncompete. Giving speeches, presentations, writing article, etc. None of these are foolproof but they are all common sense. Remember the Monty Python sketch about How To Not Be Seen.

lmkg 9y ago
Your suggestion is that if your employer tries to pull this unethical behavior against you, is that you should lie, run, hide, and sacrifice your own personal relationships? There are better ways of dealing with this than acting like what you did was criminal and laying low for a year until it blows over.
- emodendroket 9y ago
  Such as what? Going to court?
afterburner 9y ago
You live in fear.
stale2002 9y ago
Ok, so you don't have to go this far. The only thing you have to do, is when people ask you where you work, just say "I'm under NDA. Can't talk about it.". Or keep it vague. "I am a web developer". Something like that. No need to get rid of your friends, or hide, or anything like that. Just simply don't talk about work, and I can assure you that nobody is going to come after you.

tomohawk 9y ago

Last time I was given one of these to sign, it was in a group setting. So, I just didn't turn it in. They never did make a stink about it. Just because someone gives you a piece of paper to sign, doesn't mean you have to. Wait until it's unavoidable.

ThomPete 9y ago

I am not a lawyer but my advice is generally to ignore it. Most wont care and those who do mostly can't enforce it unless they paid you extra for it.

lemonsqueeze 9y ago
And that's why you're not a lawyer. It does matter

Mathnerd314 9y ago

Related comic: http://www.angryflower.com/1131.html http://www.angryflower.com/1131.html

punnerud 9y ago

In Norway we added a law now from 2017 that the employer have to pay you the same salary for the period the non-compete is in operation. Maximum 1 year. It have you be in you contract up front, and they have to explicitly list customers and competitors.

bbcbasic 9y ago

Interested to see how this plays in my jurisdiction. Seems they have quite a sane approach in NSW: http://www.fglaw.com.au/non-compete-employment/ http://www.fglaw.com.au/non-compete-employment/

pducks32 9y ago

It's important for software developers and in demand job applicants to push the trends. I refused the noncompete clause at my startup (still got job) and made a point of how I'm principled against them for hurting people like the man in this article. We may be disconnected from the rest of America but maybe my little requirement can put the thought in people's heads that it's wrong.

dimva 9y ago

In finance, companies will pay you your salary to not work if they decide to enforce a non-compete. It's written into the contract. I have friends who get to take year-long paid vacations when they switch jobs just because they work in HFT. I'm surprised that this isn't law. I guess financial companies care about their employees more and/or their employees are more astute about contracts. Companies shouldn't be allowed to prevent their ex-employees from earning a living. If it's that important for them to prevent the transfer of their proprietary information, they should be happy to pay for it.

rch 9y ago

Keep in mind that sometimes a company will hire you into an unrelated job role (evangelist, account manager, etc) until your lockup runs out.

throwaway23421 9y ago

this shit should be illegal. even small businesses are doing this now. programmers are a dime a dozen and everyone is using open source. fuck all these tech companies they don't have jack shit TO steal and force you to sign away everything anyway

thinkloop 9y ago

I've almost always been presented one, and I've always had it removed. It is a certainty I will compete, especially the more I become an "expert" in an industry, it's not a fair expectation. I work for startups, probably tougher at big corps.

mirimir 9y ago

If you're working in a small industry where specialized skills are required, and firms commonly collaborate, you may encounter unacknowledged/secret non-compete policies. Basically, nobody else will hire you, and they won't tell you why. If you've made some friends, they may tell you what's going on. But there's little recourse.

bcjordan 9y ago
Can't you sue the companies in question if there is any evidence they're doing that?
- mirimir 9y ago
  Sure, if you have the resources. In my case, it was far more feasible to change careers. Edit: I did speak with a few attorneys. But they all wanted cash up front. And told me that I had little chance of success.
  - dsacco 9y ago
    Can you give an example of an industry like this?
    - mirimir 9y ago
      Saying more about my case would reveal too much about my identity. Sorry. Perhaps others can share.
    - trowawee 9y ago
      Software engineering? Like, two years ago? How are you on HN, but missed this? https://www.cnet.com/news/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/news/apple-google-others-settle-anti-po...
      - dsacco 9y ago
        I'm aware of that. I was asking about a smaller industry with more specialized skills where that would be commonplace.

teddyh 9y ago

See also the classic NDAs and Contracts That You Should Never Sign, March 28, 2000 by Joel Spolsky: https://www.joelonsoftware.com/2000/03/28/ndas-and-contracts-that-you-should-never-sign/ https://www.joelonsoftware.com/2000/03/28/ndas-and-contracts...

carvalho 9y ago

My first (and last) non-compete was when I was starting out as a web developer in a small company. By the time I fully realized what I had signed I had contractually given up my right to work for any other webdev company for 1.5 years, and even worse, the company owner stated that he believed the non-compete also extended to all our clients (and the clients of a major client) too. This meant nearly all banks, Heineken, Google, and consultancy agencies (we ran a job board). Needless to say I am not a web developer anymore.

EarthMephit 9y ago

In Sweden the during the non-compete period you have to pay the employee their full wage, which seems like a fair balance. If it is that important to the company the employee should be remunerated

burntrelish1273 9y ago

General rules-of-thumb (IANAL): - Sign the minimum of documents - Don't provide full, personally-identifying information unless it's absolutely required - Negotiate terms of boilerplate agreements if they're too unreasonable / don't apply - Don't sign a binding arbitration agreement, BA is a worthless/corrupt system that nearly always favors the employer. [0] - For CA-headquartered companies, refuse to sign NCAs because it creates legal liabilities (ie, could they involuntarily transfer an employee to another state and then fire them to make an NCA apply?) 0. https://www.nytimes.com/2015/11/01/business/dealbook/arbitration-everywhere-stacking-the-deck-of-justice.html https://www.nytimes.com/2015/11/01/business/dealbook/arbitra...

satai 9y ago

Just for comparison: In Czech republic this clauses are legal, but their duration is limited by law and the ex-employer is required to provide you a compensation to the time that you are limited in the job market.

anothercomment 9y ago

I think in Germany at least, employers have to pay people for the damages induced by non-compete (the loss of salary/earning potential). Ianal, though.

edanm 9y ago

I'd just like to point out that there is a case to be made for noncompetes, they're not just a terrible thing that companies do because they can. I recommend reading "The Case for Non-Competes" by David Henderson (http://econlog.econlib.org/archives/2016/11/the_case_for_no.html http://econlog.econlib.org/archives/2016/11/the_case_for_no....). Here's a relevant quote (in which the author is actually quoting Aaron McNay): " Both employers and employees would like to be able to train the employees if the cost of doing so is less than the gains in productivity. However, there is a potential collective action problem here. What happens if the employer provides the training, but the employee then moves onto another job? The employer bears the burden of the training costs, but does not receive any of the benefits. As a result, the employer does not provide the training, and a mutually beneficial trade is not made. By preventing the employee from being able to move, a non-compete agreement eliminates the collective action problem." I'm not saying that non-competes are necessarily good, or necessarily bad. It depends on the circumstances. But I do think that a lot of other commenters in this thread do think that non-competes are necessarily bad, and I think that's incorrect.

Macha 9y ago
In the example you gave, you could make an argument like that but it'd still only feel any way fair iff: * It started from the start of the contract/end of the initial training. * It was for a period much shorter than 2 years * It was voided if the employer terminated the contract
- edanm 9y ago
  Why would it only feel fair based on some "arbitrary" rules you intuitively feel are right? Why not let people negotiate based on their personal situations, and let the market eventually sort out what combination works best? After all, for high enough salaries, I'd probably agree to very onerous terms. Specfically about your list, I think the reason the period doesn't usually start from the end of training, but rather the end of employment, is that it is assumed you continue to have access to more training / more confidential information, even if you work for a company for longer than the few months of training. And I certainly hope most people work in a job in which they continue to grow/learn. As for voiding if the contract if the employee is fired, why make that a condition? Wouldn't that just mean the bar for hiring new employees would be even higher, because if they don't work out, you're both wasting lots of investment, and also running the risk of them taking your methods to a new company?

kenshi 9y ago

An alternative point of view, even for those entering the industry: just don't sign a contract with a non-compete clause. At some point in your career you are going to have to negotiate over terms in your contract. Best to get practice in as soon as the opportunity presents itself.

lemonsqueeze 9y ago

Also don't sign away all the IP you create off hours. Those clauses read like the even own your love letters and emails.

ericssmith 9y ago

Speaking from personal experience ... At the time of signing you can see the upside (the offer), but you can't know the downside, which can be quite significant. It's a poor trade-off. Avoid these unless you get some kind of severance for the period of the agreement. Mere employment as "consideration" is a bad deal.

danny_taco 9y ago

As someone that was made to sign a confidentiality agreement under duress and unfair pressure months after joining the company, with stipulations that basically say ANY work I do, regardless of industry or during the weekend, belong to the company. Even after I no longer work there up to one year, and ONLY if I bother to sign the attached clause that says I no longer work there. I'm so glad that tomorrow I'll be handing in my two weeks notice especially at a critical time for the company. I'm also the most senior developer that everyone else comes to with questions regarding how the system works and how it can be improved. The original developers left for similar reasons. What I'm trying to say is, if you think, as a business owner or employer that you can act against the best interests of your employees then you'll end up paying dearly for it one way or another.

michalu 9y ago

In Europe these clauses are not enforceable. Whether you sign a contract with such clause or not is irrelevant since it's not a qualified subject of a contract. You can write in your contract whatever you want but only the qualified subjects are binding.

waldfee 9y ago
I've signed all the non-compete clauses that where present in my contracts because those clauses are simply null and void.

pluma 9y ago

I'm not entirely sure how this compares to the situation under German (EU?) law: Generally noncompetes are fairly widespread to varying extents. The default seems to be that you can't compete with your employer while you are employed (whether it's by freelancing on the side, poaching their customers or directly working for another competitor) though in practice employers will generally grant you permission to have a side-job as long as there's no conflict of interest and it doesn't impact your job performance. However noncompetes terminate once the employment ends. The only way to extend the duration of the noncompete is by having the contract also reimburse you for the duration of that extended noncompete. Both sides can agree to lift that extension but if it's in the contract, the employer will likely have to pay for a certain amount of time whether they want to enforce the noncompete or not. So in other words, while there may be scenarios where noncompetes impact your ability to find another job while still employed, the second your employment terminates, you're either free or continually being paid an appropriate sum of money. As a freelancer I had clients that insisted on some form of noncompete, but these were generally only protecting them from me "skipping the middleman" and working for their customers directly -- which even without noncompetes would have created some dodgy situations. I've actually seen multiple major consulting companies (often international ones or subsidiaries of international ones) that explicitly required a noncompete so vague that it would have practically prevented me from working for any company in the industry while also working for them -- because there would have been just no easy way for me to tell whether I was accidentally working for one of their customers or not. I never signed those but considering that certain companies like to just put into contracts whatever they would love to be able to do without any concern for validity or enforceability, I wonder what the legal situation around those would have looked like.

bungie4 9y ago

I had an employer attempt to have me sign an NDA, NCC and, forfeit any rights to software I'd written in the previous 20 years, to them! Pound sand. So I was back on the street 2 weeks later.