16 ms·

Send Noncompete Agreements Back to the Middle Ages

443 points by adventured 8y ago

your-nanny 8y ago
non competes are incompatible with free Enterprise, and incompatible with social democracy. yeah send them back
- maxxxxx 8y ago
  A lot of people seem to think that "free enterprise" means that companies can do whatever they want and that that's somehow always good for employees. Same for "Right to Work".
  - cryptonector 8y ago
    So? Free enterprise is still a term of art.
  - your-nanny 8y ago
    well, what distinguishes capitalism from feudalism is the free movement of labor...
tristor 8y ago
In 2016, there was a White House initiative to ban non-compete agreements. The comment thread there from my parent is still the most active comment thread I've participated in on HN. It may be worth reading for a re-hashing of all the various sides of the debate. https://news.ycombinator.com/item?id=12795119 https://news.ycombinator.com/item?id=12795119
kryogen1c 8y ago
> But the history of these covenants suggests that there’s a strong economic case for banning them entirely This is an example of starting to make a good point and carrying to an extreme that makes it unreasonable. Non-competes exist for a reason, and saying they need to be deleted is a silly argument. "This common business practice could use modification" generates less clicks, I suppose. <Insert rant about journalism>
- ghaff 8y ago
  They're mostly bad but the paper referenced also isn't that convincing. There was something of a shifting of the tech center of gravity from the East to the West coast. But, as the paper even notes, there were a lot of differences in business practices between east and west (long-term employment vs. job-hopping) that were at most only somewhat correlated to non-compete law. (I worked for one of the big "Route 128" companies for many years and never had a non-compete until acquired by EMC.) There is a lot of research that suggests knowledge transfer among companies increases innovation but it's not clear how much non-competes retard that transfer in practice. As a sidenote, Massachusetts finally put significant restrictions on non-competes over the past year or so.
- LanguageGamer 8y ago
  What, to your mind, are good reasons for non-competes? To me it just looks like rent-seeking. Do you see any negative consequences in states that have banned them almost entirely, such as California?
  - ghaff 8y ago
    I'm not sure they're ever good in an absolute sense. I do think that individuals above a certain level can reach mutually beneficial agreements with potential employers when they sign an employment contract if it contains provisions for significant garden leave and the like. I'd mostly like to see minimum requirements embedded in law if non-competes aren't largely unenforceable (which is fine by me too).
  - TallGuyShort 8y ago
    In some cases an employee might be able to build up a base of loyal customers more easily with a larger firm than they could alone, leave and take much of that business with them, and enjoy the continued productivity with much higher margins. The resources of the larger firm then become a stepping stone to the loss of their own business. I know of one case (in which I am actually mostly sympathetic to the individual bound by the non-compete) in which that's actually exactly what happened.
dawhizkid 8y ago
If I work for an employer based outside of CA but work out of a CA-satellite office, am I still subject to any non-compete?
- deaddodo 8y ago
  It's complicated. Here you go: https://www.businessjustice.com/is-my-out-of-state-noncompete-agreement-enforceable-in-californi.html https://www.businessjustice.com/is-my-out-of-state-noncompet... But a satellite office would almost certainly be considered a California-business and be actionable against.
- simonbyrne 8y ago
  In general, no, but it's complicated (https://www.lexology.com/library/detail.aspx?g=60a2afec-34c8-4292-91ed-678c5c717307 https://www.lexology.com/library/detail.aspx?g=60a2afec-34c8...).
- gammateam 8y ago
  A california court would invalidate the contract IF : If (the venue was california in the contract) Else if (the contract was based on laws that were similar enough to what the california legislature expressely legislated against or califonias judiciary addressed in prior case law) Your employer may have standing in another states court and that court may find a way to establish jursidiction and sanction you according to the contract and its law
- munk-a 8y ago
  Also, if complying with the non-compete would introduce a hardship there is usually a way to just ignore it entirely. So, let's say you're a database specialist picked up to tune someone's DB, part of the contract you sign (probably unwisely) states that you can't work tuning DBs for the next 6 months after signing. If, after two weeks at the job, layoffs happen and you're let go then it's likely that a judge would dismiss any enforcement of the non-compete. But here's why this _is terrible_ either you need to secure a waiver of the non-compete from the company based on goodwill in advance (which the company has very little motivation of doing) or you could consult with a legal expert about the validity of the non-compete (for the cash monies) or you find a new job and hope no enforcement is attempted with the onus on you to defend your new employment if the company decides to pursue you (which they very rarely do) So it's basically like pirating music in the 90s, there's a thousandth of a percent chance that some company is going to try to ruin your life over it, and if they try there's another thousandth of a percent chance they'll succeed. But if they do, it is _terrible_.
munk-a 8y ago
One of the most insidious portions of non-competes IMO is that they are often non-enforceable. Depending on how wide or restricted the target of the non-compete is it can be ruled invalid. A lot of the more questioning people have probably discovered this but consider that there are probably janitors laid off by amazon who read their non-competes as the word of law and end up suffering hardships because of it. Also, as an aside, a non-compete is not required to prevent corporate espionage, it's just easier to prove violation of. A lot of the sales teams worried about losing leads when team members departed could have pursued them with law suits focusing on the theft of corporate resources, it's regrettable non-competes have even gotten this far.
- TallGuyShort 8y ago
  The problem with things being non-enforceable is that they're often enforced anyway, with intimidation and legal actions that are more relatively costly for the individual than the company. Non-competes are illegal for physicians in my state, but I know of a case in which the clinic dragged the case out so much with various technicalities that eventually the Dr. settled. Now, in a subsequent case with a different defendant, lawyers are refusing to take the case for that reason. So the doctor in question is waiting for the non-compete to expire before retrying opening a private practice anywhere near their home again. It's not enforceable legally, but they're doing so via other means.
- ghaff 8y ago
  And they have a chilling effect even when they're probably not going to be invoked or are unenforceable. I worked for a very small consulting firm for a number of years and we passed on pretty much anyone who had a non-compete. Management wasn't willing to take even a relatively small risk that we might get involved in a lawsuit.
- wpietri 8y ago
  From the perspective of any normal employee, "non-enforceable" doesn't matter. That I can eventually win in court doesn't matter if I can't afford the time, money, and stress to get that ruling. Exactly the goal, I'm sure, of the people writing up these agreements.
deogeo 8y ago
Odd that Right to Work laws don't ban non-competes. </sarcasm> Edit: Added tags, just in case.
- r00fus 8y ago
  Is it possible "Right to Work" is a euphemism?
  - kevin_b_er 8y ago
    Its a whitewashing term carefully chosen. It is a right-wing goal to destroy unions as they might benefit of the lower or middle classes. As the rich and powerful do not serve the people, but only themselves, they favor laws that help companies, not workers.
- cperciva 8y ago
  I don't see the connection. Right to Work laws say that workers can't be forced to join a union. They don't say that workers can't voluntarily join a union; so why should they say that workers can't voluntarily sign a non-compete?
  - deogeo 8y ago
    Why should laws say employers can't voluntarily sign a union security agreement [0]? There's no force involved in either case - workers can choose not to work at a union shop, just like they can choose* not to work under a non-compete. *Until it becomes impossible to find a place without a non-compete. [0] https://en.wikipedia.org/wiki/Right-to-work_law https://en.wikipedia.org/wiki/Right-to-work_law
    - cperciva 8y ago
      Why should laws say employers can't voluntarily sign a union security agreement? Because (at least pre-Hobby-Lobby) laws have historically prioritized the rights of individuals over the rights of corporations. An employer which compels their employees to join a union is signing away the rights of those employees, while an employee who signs a non-compete is only signing away their own rights.
rrggrr 8y ago
Q: I'm willing to pay you $100,000 to sign a non-compete to work on the project with my company. If I don't pay, the non-compete isn't valid. Okay? A: No. Q: $500,000? A: No. Q: $1m? A: No. Q: $10m? A: Yes. The point being... the problem is NOT non-competes. The problem is the exchange of value. They serve a useful purpose in support of business risk-taking and investment. Make them fair, not unenforceable.
- whatshisface 8y ago
  Terms become unenforceable when it's recognized by the courts that one party has so much negotiating power that true negotiations are impossible. A software engineer in the middle of SV might be able to demand $100k to sign a noncompete, but who else?
  - dunpeal 8y ago
    A candidate demanding another $100k on top of a fair offer, whether to sign a non-compete or for any other reason, is not going to get the offer. There's a myth that SV engineers can demand whatever they want and get it. No, they can't. If I get an offer for $200k, and that's actually my market value, and I demand another $100k for any reason whatsoever - I won't get them, period. NCAs aren't legal in California, but if they were, and some smartass decided to demand another $100k cash to sign them, I guarantee he'd just get a pass, and someone less smartass would get the job instead.
    - sidlls 8y ago
      It's interesting that you use the pejorative "smartass" and imply the demand is unreasonable. This couldn't be a clearer example of the low social status engineers have.
      - dunpeal 8y ago
        I'm actually an engineer :-) I used "smartass" because it's a move that superficially seems clever, but is actually completely futile when you look at the broad picture - as my comment shows. I don't know if us engineers have "low social status", but we certainly don't have as much negotiating power as some of us may fancy, certainly not against a huge mega-corporation.
chris_engel 8y ago
Thank god the german law requires a NC clause to have a compensation directly mentioned in the contract that is not allowed to be less than 60% the person earned in the company in the last year she worked there. If the compensation is missing or too low, the NC is against the law. In other words: if a company wants me to not compete, they need to pay me for the time the NC is active. Its also limited to a maximum of 1 year.
- BonesJustice 8y ago
  60%? Forget that. Why should anyone give up their right to work for a little over half of their market value? There is no excuse for allowing less than 100% compensation, and that should include not just salary, but projected bonuses.
  - chii 8y ago
    It's not like the specific job is the only thing you can do - there are other jobs that don't break the NC. 100% is too high, and 50% is too low. But the amount should be negotiable for each person.
    - walshemj 8y ago
      But many countries ban people being allowed to ply their trade which is why non competes to be enforceable have to be narrowly drawn.
    - luckydata 8y ago
      that's disingenuous, it's very hard to find a job that doesn't look exactly like the 5 last jobs you had. If you want to fix that you gotta fix the labor market and hiring practices first, which is wishful thinking. 60% is low.
      - adrianratnapala 8y ago
        > it's very hard to find a job that doesn't look exactly like the 5 last jobs you had That's funny, I've never had a job that was exactly like any of the other jobs I've had. Depending on how picky you are, I've never had a job that was even particularly similar to any of my previous ones.
samstave 8y ago
I would love to see a spoof where a middle age serf is going to move to a new farm, but his current lord forces him to sign a contract which precludes the serf from using his wheat farming skills for the new lord who is the current lords political competition.
- nraynaud 8y ago
  nice try but serves were attached to the land by nature.
  - elliottkember 8y ago
    This is correct but it's serfs not serves
    - nraynaud 8y ago
      English be hard, I tried to follow some kind of rule :(
  - samstave 8y ago
    Well, tying your labor force to the land should be no basis for a free economy! Imagine, just shackling your primary economic labor force to an arbitrary plot of land and demanding taxes and work of them?! How ghastly. Next thing you know, you'll be claiming right to their innovations in the advancement of farming technology. Ill have you know that I shall not be sharing MY designs for soil improvement through the addition of various rock powders and animal droppings for a greater yield in the annual barley production with this stingy, short-sighted lord. That's for sure. And don't get me started on Johnson's idea about switching out the types of crops grown between plots. There is no way I am going to share THAT idea with a lord who limits MY ability to migrate between estates!
    - nraynaud 8y ago
      Who cares, the lord will be gone at the next reversal of alliance.
tareqak 8y ago
I think you could sort of argue that non-compete agreements are a sort of price-control in favor of companies that write add them into their employment contracts. These companies are effectively trying to both lower the costs of their hiring, and make it cheaper for themselves to compete against their competitors.
grellas 8y ago
Non-competes under U.S. law are neither all good nor all bad. They have their legitimate uses but these are the narrow cases and not the norm. For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair. So too if you exit a professional practice and get bought out. Same principle. You get paid for the goodwill value and you should not be able to capitalize on the payment and simultaneously raid the goodwill of your former practice by competing against it. Fair and reasonable even though it restricts you in your livelihood. Thus, even states like California, which basically ban the use of non-competes in an employment context, will fully enforce them in the situations noted above. On the bad side, non-competes tend to operate unfairly and to burden ex-employees by preventing them from engaging in their normal livelihood even when they have been paid nothing for the privilege. Many jurisdictions do enforce them in that context and the only way to challenge them is to argue that they are unreasonably broad, which (if fought out) takes a tidy six-figure sum to prove in court. So, yeah, all jurisdictions should adopt the California rule that largely bans non-competes in an employment context. But I don't see this happening anytime soon. In the meantime, as an employee, you should try to avoid these if you can, negotiate to be paid for any non-compete if you have the leverage, or, if you have no choice, live with them as best you can until the law comes to a better place. As long as the law enforces them, you are sometimes just stuck.
- munk-a 8y ago
  > For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair. During the sale the customer information and contacts can be (and by default usually are IIRC) considered an asset of the company, as such the seller reusing contacts can be considered a form of corporate espionage and can be prosecuted in that manner. This holds just as clearly for departing employees, making unauthorized use of a company's assets after leaving a company is illegal whether it's sneaking in and using your old office or continuing to use contacts, just because in one of those cases the data might be in your phone doesn't change the legality. But! This sort of corporate espionage is rather common and hard to prove. This brings us back to the commonly known point that sales people have a habit of ruining it for everyone else /s
tamersalama 8y ago
Anyone know what the state of NC in Canada is?
hellbanner 8y ago
Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made. I pointed out that a couple of the phrases in the contract, when combined, indicated they would have IP rights to EVERYTHING I did not just work they paid me for. They moved on to another candidate.
- rectang 8y ago
  Things like this motivate me to stay in California and work for small companies for the rest of my life, so that California Labor Code § 2870 applies and I get to keep the rights to independent inventions if I'm careful.
- masklinn 8y ago
  > Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made. IANAL but I really doubt that would be legal under german IR/IP laws.
londons_explore 8y ago
> They also determined that patenting rates -- a useful proxy for innovation -- dropped after the change. In a place where non-compete agreements are not allowed, patenting ideas is a neat way to prevent your employees leaving and then doing the exact same thing for a competitor. Where non-competes are allowed, patenting things is far less important, since employees won't be able to jump ship with your ideas easily.
- swish_bob 8y ago
  This really isn't true. Generally patents are used to prevent your competitors deliberately reverse engineering your innovation and selling it (which isn't _generally_ all that hard), and (by very large companies) to have something to negotiate with when you inevitably discover you're violating a patent you were unaware of, since at this point you dig for the patent your competitor is accidentally violating and come to an agreement to license them back to each other in exchange for not suing.
baron816 8y ago
I’m not convinced NCs are always bad for workers. There are lots of junior SWEs out there who can’t get jobs because no company wants to hire them and pay to train them just to watch them leave for more money once they become productive. There was once a time when I would have happily signed an NC since the alternative was unemployment.
- perfunctory 8y ago
  There was once a time when I would have happily become a slave, since the alternative was starvation.
AtlasBarfed 8y ago
These aren't the free markets the ultrarich are interested in. Actually, America doesn't care much for free markets at all, which is why virtually all industries are monopolies or cartels.
ryandrake 8y ago
While we are at it, let’s also send anti-moonlighting clauses into the abyss and drastically scale back IP-assignment clauses too! One’s employer should have no control over what you do on your own time using your own brain and equipment at home. All large companies I’ve worked for include such garbage and they are never open to negotiate them out. These clauses stifle innovation and actively deter entrepreneurship.
yellowapple 8y ago
I feel like the proliferation of non-compete agreements is counterproductive even from a practical standpoint. Sure, you get to prevent your employees from jumping ship to your competitors, but your competitors are doing the same thing. Better to be against them even for short-term gains, let alone long-term.
goatherders 8y ago
I've had non competes at my last 3 jobs (all in web hosting) The first, a darling "startup" adored by investors and customers alike sued me twice, sent a process server to my door at 6am on a saturday and tried to call me in for a deposition the afternoon of Christmas eve. They regularly win company culture awards and receive undeserved praise for being a place people can grow. I had a chance to grow from IC to VP and they did everything they could legally do to stop me. The second, a publicly traded hosting company that has battled negative public perception for years had an EVP handle it wherein he basically said "sounds like you are leaving for a great opportunity. We wish you and your family well and you'll always be 'one of us.'" The third company voluntarily and without my asking remover the non compete from my separation paperwork. Non competes are a disaster and always will be. But how companies enforce them is the real culprit.
- georgeecollins 8y ago
  So ban them, at least in most cases. That's what we do in California.
- quickthrower2 8y ago
  What does the process server say? They are so glamorized in TV shows, lime Suits where they deliver a Chinese takeaway!
  - goatherders 8y ago
    He said "I'm sorry, I know this is disruptive" as my two small children cried behind me, unsure why someone had banged on the door so early in the morning.
  - dfxm12 8y ago
    As someone who did this for a few years, I can tell you it's all very ho hum, and not once did I need to pretend I was delivering Chinese food.
- kough 8y ago
  I'm glad that you had a good experience with GoDaddy; I also used to work there, I think they've done a really good job of turning the culture around and making the place better.
tanbog 8y ago
"In Great Britain, courts generally endorsed NCAs so long as they remained “reasonable” -- a quality that was very much in the eye of the beholder." Legally speaking, reasonable refers to "The man on the Clapham omnibus" and is a standard test in many jurisdictions. It is NOT the same thing as the general use of the term in the English language. AT least in Great Britain and most Commonwealth countries. https://en.wikipedia.org/wiki/Reasonable_person https://en.wikipedia.org/wiki/Reasonable_person
neilwilson 8y ago
The UK approach is as ever very reasonable. “To rely on a restrictive covenant in a contract of employment an employer needs to be able to show that it is designed to protect a legitimate business interest (e.g. goodwill or confidential information); and goes no further than is reasonably necessary to protect that interest.” Any more than that and it is unenforceable. Enforcement is in Employment Tribunals not courts where the burden of proof is largely on the employer.
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drawkbox 8y ago
Non-competes, the most anti-innovation, anti-skilled worker, anti-free market, anti-business and anti-American thing in working today. Non-competes are protectionism for larger businesses over small/medium businesses and try to own employees skills that they may have brought to the company or client themselves. As a freelancer, contractor and self-employed business owner/worker, please make these illegal, tired of these. The worst part about non-competes is they are blanket protectionism usually and up to 2+ years of non-compete, this sometimes happens on a job that is only 1-3 months. You have to laugh at those types of situations. Usually the client will push them aside or lower the time to the job plus some time, but both non-competes and arbitration agreements are horrible for workers in today's economy where people change jobs frequently and many are self-employed/freelancing/contracting. NDAs are plenty enough to protect companies from clients and work done specifically for the projects. After SCOTUS upheld arbitration agreements [1] I am worried if non-competes become fully legal which they are not in extreme cases except in California [2]. We need to move the way of California and make them null and illegal, it hasn't stopped innovation in CA and may be a big reason why so much innovation goes on in Cali. The non-compete should not exist. At the core, removing competition from skilled workers in our economy is bad all around, unless you are one of the current big fish. [1] https://www.nytimes.com/2018/05/21/business/supreme-court-upholds-workplace-arbitration-contracts.html https://www.nytimes.com/2018/05/21/business/supreme-court-up... [2] https://www.nytimes.com/2017/05/13/business/noncompete-clauses.html https://www.nytimes.com/2017/05/13/business/noncompete-claus...
mongodude 8y ago
NCs are a legacy management technique that needs to be replaced with continuous innovation, better work culture and a mentality to innovate or die!
dhbradshaw 8y ago
Have a friend who makes crowns etc. for dentists. He took a job here in town working for two dentists. They hired some junior folk and had him train them and then fired him. He tried to start his own business so they sued him with a noncompete. They claimed thousands of dentists as their territory and the judge became angry with them but in the end the noncompete crippled his ability to make a living for years.
- dhbradshaw 8y ago
  On the flip side, I have another friend who was brought into a small town for a small branch of a medical-related practice. After awhile, he joined with the other guys in town and they started their own thing. They actually did buy the business from the group who had brought them out, but it was a bit of a forced sale because there was no legal way for the group to stop them.
Nasrudith 8y ago
Really the problem is the laws themselves are basically embezzling. The government is paying to make society worse for the benefit of wealthy actors. In no world does that make sense - it is corruption plain and simple. Like other such laws the beneficiaries should be told to go fuck themselves as a matter of good management alone.
StillBored 8y ago
What surprised me most about a recent job offer I got from one of the big SV companies, was just how restrictive and limiting they were. Sure, they didn't have a traditional non-compete as such, but they had layers of code of conducts and the like which basically made it a firing offense to do anything that wasn't effectively invisible. I turned them down for a number of reasons. But the general "your our slave, and you will suffer and regret doing anything outside of work" sure didn't help much. The idea that I might have to take down my github account, or fill out piles of paperwork to continue helping a non-profit I am involved in was just too much (combined with the fact that basically nothing was negotiable other than RSU's).
xtat 8y ago
The idea this this is a silicon valley thing is funny to me since I didn't get asked to sign one until I came out here, and then when I refused the other party freaked out.
earn 8y ago
There's a new tactic non-supervisory coworkers can use to escape their non-compete BEFORE leaving their job, at noncompetes.org.
vivaamerica 8y ago
This is ironic for Bloomberg as it has a clause in its contract banning "influencing current employees to work for competitors" for a period of 3 years after an employee leaves the firm. Source: I am ex-Bloomberg employee.

443 points by adventured 8y ago

your-nanny 8y ago

non competes are incompatible with free Enterprise, and incompatible with social democracy. yeah send them back

maxxxxx 8y ago
A lot of people seem to think that "free enterprise" means that companies can do whatever they want and that that's somehow always good for employees. Same for "Right to Work".
- cryptonector 8y ago
  So? Free enterprise is still a term of art.
- your-nanny 8y ago
  well, what distinguishes capitalism from feudalism is the free movement of labor...

tristor 8y ago

In 2016, there was a White House initiative to ban non-compete agreements. The comment thread there from my parent is still the most active comment thread I've participated in on HN. It may be worth reading for a re-hashing of all the various sides of the debate. https://news.ycombinator.com/item?id=12795119 https://news.ycombinator.com/item?id=12795119

kryogen1c 8y ago

> But the history of these covenants suggests that there’s a strong economic case for banning them entirely This is an example of starting to make a good point and carrying to an extreme that makes it unreasonable. Non-competes exist for a reason, and saying they need to be deleted is a silly argument. "This common business practice could use modification" generates less clicks, I suppose. <Insert rant about journalism>

ghaff 8y ago
They're mostly bad but the paper referenced also isn't that convincing. There was something of a shifting of the tech center of gravity from the East to the West coast. But, as the paper even notes, there were a lot of differences in business practices between east and west (long-term employment vs. job-hopping) that were at most only somewhat correlated to non-compete law. (I worked for one of the big "Route 128" companies for many years and never had a non-compete until acquired by EMC.) There is a lot of research that suggests knowledge transfer among companies increases innovation but it's not clear how much non-competes retard that transfer in practice. As a sidenote, Massachusetts finally put significant restrictions on non-competes over the past year or so.
LanguageGamer 8y ago
What, to your mind, are good reasons for non-competes? To me it just looks like rent-seeking. Do you see any negative consequences in states that have banned them almost entirely, such as California?
- ghaff 8y ago
  I'm not sure they're ever good in an absolute sense. I do think that individuals above a certain level can reach mutually beneficial agreements with potential employers when they sign an employment contract if it contains provisions for significant garden leave and the like. I'd mostly like to see minimum requirements embedded in law if non-competes aren't largely unenforceable (which is fine by me too).
- TallGuyShort 8y ago
  In some cases an employee might be able to build up a base of loyal customers more easily with a larger firm than they could alone, leave and take much of that business with them, and enjoy the continued productivity with much higher margins. The resources of the larger firm then become a stepping stone to the loss of their own business. I know of one case (in which I am actually mostly sympathetic to the individual bound by the non-compete) in which that's actually exactly what happened.

dawhizkid 8y ago

If I work for an employer based outside of CA but work out of a CA-satellite office, am I still subject to any non-compete?

deaddodo 8y ago
It's complicated. Here you go: https://www.businessjustice.com/is-my-out-of-state-noncompete-agreement-enforceable-in-californi.html https://www.businessjustice.com/is-my-out-of-state-noncompet... But a satellite office would almost certainly be considered a California-business and be actionable against.
simonbyrne 8y ago
In general, no, but it's complicated (https://www.lexology.com/library/detail.aspx?g=60a2afec-34c8-4292-91ed-678c5c717307 https://www.lexology.com/library/detail.aspx?g=60a2afec-34c8...).
gammateam 8y ago
A california court would invalidate the contract IF : If (the venue was california in the contract) Else if (the contract was based on laws that were similar enough to what the california legislature expressely legislated against or califonias judiciary addressed in prior case law) Your employer may have standing in another states court and that court may find a way to establish jursidiction and sanction you according to the contract and its law
munk-a 8y ago
Also, if complying with the non-compete would introduce a hardship there is usually a way to just ignore it entirely. So, let's say you're a database specialist picked up to tune someone's DB, part of the contract you sign (probably unwisely) states that you can't work tuning DBs for the next 6 months after signing. If, after two weeks at the job, layoffs happen and you're let go then it's likely that a judge would dismiss any enforcement of the non-compete. But here's why this _is terrible_ either you need to secure a waiver of the non-compete from the company based on goodwill in advance (which the company has very little motivation of doing) or you could consult with a legal expert about the validity of the non-compete (for the cash monies) or you find a new job and hope no enforcement is attempted with the onus on you to defend your new employment if the company decides to pursue you (which they very rarely do) So it's basically like pirating music in the 90s, there's a thousandth of a percent chance that some company is going to try to ruin your life over it, and if they try there's another thousandth of a percent chance they'll succeed. But if they do, it is _terrible_.

munk-a 8y ago

One of the most insidious portions of non-competes IMO is that they are often non-enforceable. Depending on how wide or restricted the target of the non-compete is it can be ruled invalid. A lot of the more questioning people have probably discovered this but consider that there are probably janitors laid off by amazon who read their non-competes as the word of law and end up suffering hardships because of it. Also, as an aside, a non-compete is not required to prevent corporate espionage, it's just easier to prove violation of. A lot of the sales teams worried about losing leads when team members departed could have pursued them with law suits focusing on the theft of corporate resources, it's regrettable non-competes have even gotten this far.

TallGuyShort 8y ago
The problem with things being non-enforceable is that they're often enforced anyway, with intimidation and legal actions that are more relatively costly for the individual than the company. Non-competes are illegal for physicians in my state, but I know of a case in which the clinic dragged the case out so much with various technicalities that eventually the Dr. settled. Now, in a subsequent case with a different defendant, lawyers are refusing to take the case for that reason. So the doctor in question is waiting for the non-compete to expire before retrying opening a private practice anywhere near their home again. It's not enforceable legally, but they're doing so via other means.
ghaff 8y ago
And they have a chilling effect even when they're probably not going to be invoked or are unenforceable. I worked for a very small consulting firm for a number of years and we passed on pretty much anyone who had a non-compete. Management wasn't willing to take even a relatively small risk that we might get involved in a lawsuit.
wpietri 8y ago
From the perspective of any normal employee, "non-enforceable" doesn't matter. That I can eventually win in court doesn't matter if I can't afford the time, money, and stress to get that ruling. Exactly the goal, I'm sure, of the people writing up these agreements.

deogeo 8y ago

Odd that Right to Work laws don't ban non-competes. </sarcasm> Edit: Added tags, just in case.

r00fus 8y ago
Is it possible "Right to Work" is a euphemism?
- kevin_b_er 8y ago
  Its a whitewashing term carefully chosen. It is a right-wing goal to destroy unions as they might benefit of the lower or middle classes. As the rich and powerful do not serve the people, but only themselves, they favor laws that help companies, not workers.
cperciva 8y ago
I don't see the connection. Right to Work laws say that workers can't be forced to join a union. They don't say that workers can't voluntarily join a union; so why should they say that workers can't voluntarily sign a non-compete?
- deogeo 8y ago
  Why should laws say employers can't voluntarily sign a union security agreement [0]? There's no force involved in either case - workers can choose not to work at a union shop, just like they can choose* not to work under a non-compete. *Until it becomes impossible to find a place without a non-compete. [0] https://en.wikipedia.org/wiki/Right-to-work_law https://en.wikipedia.org/wiki/Right-to-work_law
  - cperciva 8y ago
    Why should laws say employers can't voluntarily sign a union security agreement? Because (at least pre-Hobby-Lobby) laws have historically prioritized the rights of individuals over the rights of corporations. An employer which compels their employees to join a union is signing away the rights of those employees, while an employee who signs a non-compete is only signing away their own rights.

rrggrr 8y ago

Q: I'm willing to pay you $100,000 to sign a non-compete to work on the project with my company. If I don't pay, the non-compete isn't valid. Okay? A: No. Q: $500,000? A: No. Q: $1m? A: No. Q: $10m? A: Yes. The point being... the problem is NOT non-competes. The problem is the exchange of value. They serve a useful purpose in support of business risk-taking and investment. Make them fair, not unenforceable.

whatshisface 8y ago
Terms become unenforceable when it's recognized by the courts that one party has so much negotiating power that true negotiations are impossible. A software engineer in the middle of SV might be able to demand $100k to sign a noncompete, but who else?
- dunpeal 8y ago
  A candidate demanding another $100k on top of a fair offer, whether to sign a non-compete or for any other reason, is not going to get the offer. There's a myth that SV engineers can demand whatever they want and get it. No, they can't. If I get an offer for $200k, and that's actually my market value, and I demand another $100k for any reason whatsoever - I won't get them, period. NCAs aren't legal in California, but if they were, and some smartass decided to demand another $100k cash to sign them, I guarantee he'd just get a pass, and someone less smartass would get the job instead.
  - sidlls 8y ago
    It's interesting that you use the pejorative "smartass" and imply the demand is unreasonable. This couldn't be a clearer example of the low social status engineers have.
    - dunpeal 8y ago
      I'm actually an engineer :-) I used "smartass" because it's a move that superficially seems clever, but is actually completely futile when you look at the broad picture - as my comment shows. I don't know if us engineers have "low social status", but we certainly don't have as much negotiating power as some of us may fancy, certainly not against a huge mega-corporation.

chris_engel 8y ago

Thank god the german law requires a NC clause to have a compensation directly mentioned in the contract that is not allowed to be less than 60% the person earned in the company in the last year she worked there. If the compensation is missing or too low, the NC is against the law. In other words: if a company wants me to not compete, they need to pay me for the time the NC is active. Its also limited to a maximum of 1 year.

BonesJustice 8y ago
60%? Forget that. Why should anyone give up their right to work for a little over half of their market value? There is no excuse for allowing less than 100% compensation, and that should include not just salary, but projected bonuses.
- chii 8y ago
  It's not like the specific job is the only thing you can do - there are other jobs that don't break the NC. 100% is too high, and 50% is too low. But the amount should be negotiable for each person.
  - walshemj 8y ago
    But many countries ban people being allowed to ply their trade which is why non competes to be enforceable have to be narrowly drawn.
  - luckydata 8y ago
    that's disingenuous, it's very hard to find a job that doesn't look exactly like the 5 last jobs you had. If you want to fix that you gotta fix the labor market and hiring practices first, which is wishful thinking. 60% is low.
    - adrianratnapala 8y ago
      > it's very hard to find a job that doesn't look exactly like the 5 last jobs you had That's funny, I've never had a job that was exactly like any of the other jobs I've had. Depending on how picky you are, I've never had a job that was even particularly similar to any of my previous ones.

samstave 8y ago

I would love to see a spoof where a middle age serf is going to move to a new farm, but his current lord forces him to sign a contract which precludes the serf from using his wheat farming skills for the new lord who is the current lords political competition.

nraynaud 8y ago
nice try but serves were attached to the land by nature.
- elliottkember 8y ago
  This is correct but it's serfs not serves
  - nraynaud 8y ago
    English be hard, I tried to follow some kind of rule :(
- samstave 8y ago
  Well, tying your labor force to the land should be no basis for a free economy! Imagine, just shackling your primary economic labor force to an arbitrary plot of land and demanding taxes and work of them?! How ghastly. Next thing you know, you'll be claiming right to their innovations in the advancement of farming technology. Ill have you know that I shall not be sharing MY designs for soil improvement through the addition of various rock powders and animal droppings for a greater yield in the annual barley production with this stingy, short-sighted lord. That's for sure. And don't get me started on Johnson's idea about switching out the types of crops grown between plots. There is no way I am going to share THAT idea with a lord who limits MY ability to migrate between estates!
  - nraynaud 8y ago
    Who cares, the lord will be gone at the next reversal of alliance.

tareqak 8y ago

I think you could sort of argue that non-compete agreements are a sort of price-control in favor of companies that write add them into their employment contracts. These companies are effectively trying to both lower the costs of their hiring, and make it cheaper for themselves to compete against their competitors.

grellas 8y ago

Non-competes under U.S. law are neither all good nor all bad. They have their legitimate uses but these are the narrow cases and not the norm. For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair. So too if you exit a professional practice and get bought out. Same principle. You get paid for the goodwill value and you should not be able to capitalize on the payment and simultaneously raid the goodwill of your former practice by competing against it. Fair and reasonable even though it restricts you in your livelihood. Thus, even states like California, which basically ban the use of non-competes in an employment context, will fully enforce them in the situations noted above. On the bad side, non-competes tend to operate unfairly and to burden ex-employees by preventing them from engaging in their normal livelihood even when they have been paid nothing for the privilege. Many jurisdictions do enforce them in that context and the only way to challenge them is to argue that they are unreasonably broad, which (if fought out) takes a tidy six-figure sum to prove in court. So, yeah, all jurisdictions should adopt the California rule that largely bans non-competes in an employment context. But I don't see this happening anytime soon. In the meantime, as an employee, you should try to avoid these if you can, negotiate to be paid for any non-compete if you have the leverage, or, if you have no choice, live with them as best you can until the law comes to a better place. As long as the law enforces them, you are sometimes just stuck.

munk-a 8y ago
> For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair. During the sale the customer information and contacts can be (and by default usually are IIRC) considered an asset of the company, as such the seller reusing contacts can be considered a form of corporate espionage and can be prosecuted in that manner. This holds just as clearly for departing employees, making unauthorized use of a company's assets after leaving a company is illegal whether it's sneaking in and using your old office or continuing to use contacts, just because in one of those cases the data might be in your phone doesn't change the legality. But! This sort of corporate espionage is rather common and hard to prove. This brings us back to the commonly known point that sales people have a habit of ruining it for everyone else /s

tamersalama 8y ago

Anyone know what the state of NC in Canada is?

hellbanner 8y ago

Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made. I pointed out that a couple of the phrases in the contract, when combined, indicated they would have IP rights to EVERYTHING I did not just work they paid me for. They moved on to another candidate.

rectang 8y ago
Things like this motivate me to stay in California and work for small companies for the rest of my life, so that California Labor Code § 2870 applies and I get to keep the rights to independent inventions if I'm careful.
masklinn 8y ago
> Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made. IANAL but I really doubt that would be legal under german IR/IP laws.

londons_explore 8y ago

> They also determined that patenting rates -- a useful proxy for innovation -- dropped after the change. In a place where non-compete agreements are not allowed, patenting ideas is a neat way to prevent your employees leaving and then doing the exact same thing for a competitor. Where non-competes are allowed, patenting things is far less important, since employees won't be able to jump ship with your ideas easily.

swish_bob 8y ago
This really isn't true. Generally patents are used to prevent your competitors deliberately reverse engineering your innovation and selling it (which isn't _generally_ all that hard), and (by very large companies) to have something to negotiate with when you inevitably discover you're violating a patent you were unaware of, since at this point you dig for the patent your competitor is accidentally violating and come to an agreement to license them back to each other in exchange for not suing.

baron816 8y ago

I’m not convinced NCs are always bad for workers. There are lots of junior SWEs out there who can’t get jobs because no company wants to hire them and pay to train them just to watch them leave for more money once they become productive. There was once a time when I would have happily signed an NC since the alternative was unemployment.

perfunctory 8y ago
There was once a time when I would have happily become a slave, since the alternative was starvation.

AtlasBarfed 8y ago

These aren't the free markets the ultrarich are interested in. Actually, America doesn't care much for free markets at all, which is why virtually all industries are monopolies or cartels.

ryandrake 8y ago

While we are at it, let’s also send anti-moonlighting clauses into the abyss and drastically scale back IP-assignment clauses too! One’s employer should have no control over what you do on your own time using your own brain and equipment at home. All large companies I’ve worked for include such garbage and they are never open to negotiate them out. These clauses stifle innovation and actively deter entrepreneurship.

yellowapple 8y ago

I feel like the proliferation of non-compete agreements is counterproductive even from a practical standpoint. Sure, you get to prevent your employees from jumping ship to your competitors, but your competitors are doing the same thing. Better to be against them even for short-term gains, let alone long-term.

goatherders 8y ago

I've had non competes at my last 3 jobs (all in web hosting) The first, a darling "startup" adored by investors and customers alike sued me twice, sent a process server to my door at 6am on a saturday and tried to call me in for a deposition the afternoon of Christmas eve. They regularly win company culture awards and receive undeserved praise for being a place people can grow. I had a chance to grow from IC to VP and they did everything they could legally do to stop me. The second, a publicly traded hosting company that has battled negative public perception for years had an EVP handle it wherein he basically said "sounds like you are leaving for a great opportunity. We wish you and your family well and you'll always be 'one of us.'" The third company voluntarily and without my asking remover the non compete from my separation paperwork. Non competes are a disaster and always will be. But how companies enforce them is the real culprit.

georgeecollins 8y ago
So ban them, at least in most cases. That's what we do in California.
quickthrower2 8y ago
What does the process server say? They are so glamorized in TV shows, lime Suits where they deliver a Chinese takeaway!
- goatherders 8y ago
  He said "I'm sorry, I know this is disruptive" as my two small children cried behind me, unsure why someone had banged on the door so early in the morning.
- dfxm12 8y ago
  As someone who did this for a few years, I can tell you it's all very ho hum, and not once did I need to pretend I was delivering Chinese food.
kough 8y ago
I'm glad that you had a good experience with GoDaddy; I also used to work there, I think they've done a really good job of turning the culture around and making the place better.

tanbog 8y ago

"In Great Britain, courts generally endorsed NCAs so long as they remained “reasonable” -- a quality that was very much in the eye of the beholder." Legally speaking, reasonable refers to "The man on the Clapham omnibus" and is a standard test in many jurisdictions. It is NOT the same thing as the general use of the term in the English language. AT least in Great Britain and most Commonwealth countries. https://en.wikipedia.org/wiki/Reasonable_person https://en.wikipedia.org/wiki/Reasonable_person

neilwilson 8y ago

The UK approach is as ever very reasonable. “To rely on a restrictive covenant in a contract of employment an employer needs to be able to show that it is designed to protect a legitimate business interest (e.g. goodwill or confidential information); and goes no further than is reasonably necessary to protect that interest.” Any more than that and it is unenforceable. Enforcement is in Employment Tribunals not courts where the burden of proof is largely on the employer.

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drawkbox 8y ago

Non-competes, the most anti-innovation, anti-skilled worker, anti-free market, anti-business and anti-American thing in working today. Non-competes are protectionism for larger businesses over small/medium businesses and try to own employees skills that they may have brought to the company or client themselves. As a freelancer, contractor and self-employed business owner/worker, please make these illegal, tired of these. The worst part about non-competes is they are blanket protectionism usually and up to 2+ years of non-compete, this sometimes happens on a job that is only 1-3 months. You have to laugh at those types of situations. Usually the client will push them aside or lower the time to the job plus some time, but both non-competes and arbitration agreements are horrible for workers in today's economy where people change jobs frequently and many are self-employed/freelancing/contracting. NDAs are plenty enough to protect companies from clients and work done specifically for the projects. After SCOTUS upheld arbitration agreements [1] I am worried if non-competes become fully legal which they are not in extreme cases except in California [2]. We need to move the way of California and make them null and illegal, it hasn't stopped innovation in CA and may be a big reason why so much innovation goes on in Cali. The non-compete should not exist. At the core, removing competition from skilled workers in our economy is bad all around, unless you are one of the current big fish. [1] https://www.nytimes.com/2018/05/21/business/supreme-court-upholds-workplace-arbitration-contracts.html https://www.nytimes.com/2018/05/21/business/supreme-court-up... [2] https://www.nytimes.com/2017/05/13/business/noncompete-clauses.html https://www.nytimes.com/2017/05/13/business/noncompete-claus...

mongodude 8y ago

NCs are a legacy management technique that needs to be replaced with continuous innovation, better work culture and a mentality to innovate or die!

dhbradshaw 8y ago

Have a friend who makes crowns etc. for dentists. He took a job here in town working for two dentists. They hired some junior folk and had him train them and then fired him. He tried to start his own business so they sued him with a noncompete. They claimed thousands of dentists as their territory and the judge became angry with them but in the end the noncompete crippled his ability to make a living for years.

dhbradshaw 8y ago
On the flip side, I have another friend who was brought into a small town for a small branch of a medical-related practice. After awhile, he joined with the other guys in town and they started their own thing. They actually did buy the business from the group who had brought them out, but it was a bit of a forced sale because there was no legal way for the group to stop them.

Nasrudith 8y ago

Really the problem is the laws themselves are basically embezzling. The government is paying to make society worse for the benefit of wealthy actors. In no world does that make sense - it is corruption plain and simple. Like other such laws the beneficiaries should be told to go fuck themselves as a matter of good management alone.

StillBored 8y ago

What surprised me most about a recent job offer I got from one of the big SV companies, was just how restrictive and limiting they were. Sure, they didn't have a traditional non-compete as such, but they had layers of code of conducts and the like which basically made it a firing offense to do anything that wasn't effectively invisible. I turned them down for a number of reasons. But the general "your our slave, and you will suffer and regret doing anything outside of work" sure didn't help much. The idea that I might have to take down my github account, or fill out piles of paperwork to continue helping a non-profit I am involved in was just too much (combined with the fact that basically nothing was negotiable other than RSU's).

xtat 8y ago

The idea this this is a silicon valley thing is funny to me since I didn't get asked to sign one until I came out here, and then when I refused the other party freaked out.

earn 8y ago

There's a new tactic non-supervisory coworkers can use to escape their non-compete BEFORE leaving their job, at noncompetes.org.

vivaamerica 8y ago

This is ironic for Bloomberg as it has a clause in its contract banning "influencing current employees to work for competitors" for a period of 3 years after an employee leaves the firm. Source: I am ex-Bloomberg employee.