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"California law prohibits noncompete clauses, contributing to the inveterate poaching with which the state’s technology industry was founded. It can be brutal f

"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 10y 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 10y 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 10y 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.
- __derek__ 10y ago
  > 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 If I may nitpick, I'd argue that it only appears to be in employers' best interest to use/enforce them, in the same way that the butts-in-seats/time-in-office metrics are used to gauge performance. It makes sense in a first-pass estimation but breaks down when one considers the cultural impacts. People tend to dislike feeling powerless, which is exactly the effect of non-competes.
  - ScottBurson 10y ago
    I agree that it's short-sighted, not only in the way you describe, but also in a much more direct way. While noncompetes make it easier to retain existing employees, and pay them less, by the same token they make it harder to hire new ones. This ties into the psychology of loss aversion [0]: people pay much more attention to what they have and could lose, than what they don't have but could gain. One could argue that outlawing noncompetes is important to protect society from the effects of this almost instinctive irrationality in human psychology. [0] https://en.wikipedia.org/wiki/Loss_aversion https://en.wikipedia.org/wiki/Loss_aversion
- valuearb 10y ago
  If you are required to pay for a non-compete, then most employers won't find it in their best interests to pay extra for them. The problem is that some states allow non-competes without compensations and most employees sign everything in front of them. This week a startup asked me to interview for a contract gig. Before the interview they sent me a 3 year NDA. I responded that I'm not signing an NDA to interview for a job, I have no idea what they will tell me and I'm not going to limit my future clients/work options just because we had a conversation. They backed down and we had a high level discussion and I told them to get someone else. Another option is always to modify the agreement. In the case of the NDA I was prepared to x out the 3 year term and replace it with a one year term and initial it in that state before signing. If they didn't like it, fine.

vmarsy 10y 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 10y 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 10y 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.

__derek__ 10y ago
> 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 If I may nitpick, I'd argue that it only appears to be in employers' best interest to use/enforce them, in the same way that the butts-in-seats/time-in-office metrics are used to gauge performance. It makes sense in a first-pass estimation but breaks down when one considers the cultural impacts. People tend to dislike feeling powerless, which is exactly the effect of non-competes.
- ScottBurson 10y ago
  I agree that it's short-sighted, not only in the way you describe, but also in a much more direct way. While noncompetes make it easier to retain existing employees, and pay them less, by the same token they make it harder to hire new ones. This ties into the psychology of loss aversion [0]: people pay much more attention to what they have and could lose, than what they don't have but could gain. One could argue that outlawing noncompetes is important to protect society from the effects of this almost instinctive irrationality in human psychology. [0] https://en.wikipedia.org/wiki/Loss_aversion https://en.wikipedia.org/wiki/Loss_aversion
valuearb 10y ago
If you are required to pay for a non-compete, then most employers won't find it in their best interests to pay extra for them. The problem is that some states allow non-competes without compensations and most employees sign everything in front of them. This week a startup asked me to interview for a contract gig. Before the interview they sent me a 3 year NDA. I responded that I'm not signing an NDA to interview for a job, I have no idea what they will tell me and I'm not going to limit my future clients/work options just because we had a conversation. They backed down and we had a high level discussion and I told them to get someone else. Another option is always to modify the agreement. In the case of the NDA I was prepared to x out the 3 year term and replace it with a one year term and initial it in that state before signing. If they didn't like it, fine.