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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:

• 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.
        • logfromblammo 8y ago
          All other things being equal, businesses will hire the candidate that they can potentially abuse before the one that may righteously push back. So if you are one who would negotiate the terms of a non-compete, you will not even get the opportunity until all those who will just blindly sign it have been given the chance to do so. The smart-ass part is signaling that you're less-abusable before the decision is made on hiring you. The devious move would be to play dumb in the domain of HR paperwork, and delay signing anything. Just say you need to review it in private and make a copy, pocket the paper, and never give it back, or even bring it up again. Or mark up the document to completely pull its teeth, sign that, and turn it in with a stack of other paperwork. HR will probably just file it and tick their checkbox for it, without even flagging it for review by legal.
          • mehrdadn 8y ago
            How do you do this when the signature happens online rather than on paper?
            • whatshisface 8y ago
              Try sending them physical documents? Maybe they have a fax machine.
              • logfromblammo 8y ago
                If they don't have a fax, they still have a mailing address. If you can print out the document, you can alter it before sending it back. But going outside the normal workflow invites human scrutiny, so anything you do there has to be above-board. You could always add some words to your digital signature, like "this is not a contract", or "I refuse these terms", if that's the only way you could otherwise edit the document. If it's an automated system, it's likely that there is no human review until the documents are actually needed for some legal reason. By that time, you'll already have your money. You could also try hacking the document system. The worst that could happen is that you don't get to work there. Second worst is that months or years into your new job, some HR person notices a discrepancy, and wants you to sign a fresh copy, or you're fired immediately. Try sending back a document that has lorem ipsum generated text or Markov chain text with the appropriate paragraph lengths? They're probably counting on you just clicking the buttons, maybe typing out your full legal name, and automatically filling the checkboxes with green checkmarks. Putting all of it into an automated system is already a means of cutting corners on legal paperwork. You can easily outsmart the computer, if there's no human helping it.
  • LanceH 8y ago
    Even then, the person with enough clout to negotiate a $100k is way better/more valuable/in demand than $100k.
    • unstatusthequo 8y ago
      Consulting. Know of 250k for junior partner and up from there. Has to be enough to essentially be a “salary” while you are sidelined. Most companies tend to get away with less than that. Sadly many may not negotiate a proper value.
  • kevin_b_er 8y ago
    Unless you also add mandatory binding arbitration, then the courts are barred from deciding how enforceable the non-compete terms are.
• cryptonector 8y ago
  This wouldn't be realistic even if non-competes were perfectly enforceable at low cost. An enforceable non-compete does not raise an employee's value to the employer, and anyways they would not be able to afford exorbitant salaries. Non-competes really do cost employees (who mostly act as though they are enforceable), and they seem to put up with it, and since they put up with this then in a sense it is already the case that the cost of non-competes is priced into labor costs. Now, yes, the fact that employees are accepting such low compensation for non-competes is a cultural mistake, but it can't be fixed easily, and your suggestion that they negotiate better isn't going to fix it.
  • dunpeal 8y ago
    Non-competes are so vague that nobody knows how much to demand even if they were possible to negotiate (which they aren't). A friend of mine received two offers for almost the exact same compensation. One had a non-compete clause buried deep in the employment contract. Most candidates probably wouldn't even find it. He asked what the non-compete means. They told him it's almost never enforced. As in, by the mere language, they could sue pretty much any employee who switched jobs. So ask an independent lawyer to get an answer, right? The lawyer told him it basically depends on the judge and the judicial climate if it ever goes to trial. Sometimes these cases get dismissed. Other times, the NCA is enforced. Even if he wanted to negotiate, he couldn't. He doesn't know how much the clause is going to cost him. All the key information is missing, such as whether the company will actually sue, whether the "judicial climate" is right for the judge to side with the plaintiff or summarily dismiss the suit, etc. It's the perfect example of "negotiations" being useless, especially for a weak uninformed party like a job candidate.
    • chii 8y ago
      What if you judge the cost of a NC agreement to be the cost in lawyer fees to fight it? Ask for that, and if you ever get sued over it, well...the fees are covered...
• dunpeal 8y ago
  > Make them fair, not unenforceable. Nice idea. How do you do that in practice? How does the judicial system decide what NCA is "fair"? The cost of the NCA to the employee can be heavy. How do you "fairly" value it? In reality you'll get what you have right now, where entire industries (and certainly entire companies) simply mandate NCAs in all their contracts and there's no way to remove it or get compensated for it. Don't like it? Decline the offer. Oh, and good luck getting an offer that doesn't require it - they all do.
  • woolvalley 8y ago
    Full pay for the length of the non-compete + insurance to cover the company going insolvent. Otherwise it's illegal to even put it in the contract
    • dunpeal 8y ago
      Not a bad attempt, but what's "full pay"? For most senior engineers, the base salary is just a part of the compensation package. What about bonus? Also, most employees move for a better opportunity, which often means a much better base comp + potential for much higher bonus. If I'm not going to be compensated for that, how is that "fair"? Finally, my resume and likely my skillset will take a hit for sitting 1-2 years at home. Where's the compensation for that?
      • woolvalley 8y ago
        Full pay would be your tax return saying what the full amount of compensation you got from the employer. Stock rewards, bonuses, etc are all reported from specific employers. Your highest year in your previous years of employment with the employer is the year I would chose. And add other benefits like health insurance and such. Basically your still 'employed' on garden leave with the company until the non-compete period runs out. By making table stakes very expensive, the likelihood of companies even putting them into contracts will reduce to a small minority. The problem with non-competes right now is they are free and easy to put into contracts, and in practice the vast majority of employees do not refuse employment over it due to power asymmetry. They further more create chilling effects for employees to switch companies and thus make employees cheaper to hire due to the liquidity reduction. The other objections you bring up you can negotiate for yourself :) . If they were willing to put up the table stakes, you're probably an important hire to put that in for and thus probably have negotiation power.
• mindslight 8y ago
  In states that presently discourage non-competes, employers could easily offer parting employees a "stay at home" wage of say one third salary, yet they do not. Which implies they do not value non-competition anywhere near what the employee does. In general it's impossible to put a price on an unworkable concept. Attempting to do so just adds token compensation as a fictional justification for the existing problems.
  • ghaff 8y ago
    Massachusetts now has 50% garden leave. But it’s not a panacea. Some see that and go where can I sign up. But the reality is that, for a lot of people, hanging out and maybe doing some side stuff for a year for half their former base pay isn’t a great or even practical option.
    • mindslight 8y ago
      I threw out one third as some middle of the road attempt, but yeah in reality that number is going to be much closer to the full salary [0] and that's precisely my point. Market based incentives only work if there's a clearing price. [0] Or even higher if a new position would be a significant raise!
      • ghaff 8y ago
        Garden leave is better than nothing because it at least puts a cost on an employer but it's very situational. For some people, at some points in their lives/careers, a one year sabbatical at half salary is manna from the gods. For others, they were planning to shift towards a significantly different role anyway. For still others, it's a big speed bump in their careers and, anyway, how are they going to pay their mortgage and their kid's college?
    • lsllc 8y ago
      Sadly, it doesn't apply to NCAs signed before the new law.
• munk-a 8y ago
  Assuming non-competes are perfectly valid and fair (which I disagree with but that's a separate point) is this scenario fair if a large portion of the employee pool is unaware of the ramifications of their non-compete on signing? I am quite thankful non-competes are unenforceable because I believe they (and much other contract legalese) are a soft form of classism that creates an unequal information state between the majority of employers and employees. The end result is that these sorts of inequalities distort the free market.
• opnitro 8y ago
  One problem here is the differential in power between employers and employee. An employee needs a job, as they need income. An employer probably has multiple applicants. If it's beneficial for all employers to have NCs (as it helps retain employees) it's not exactly a fair negotiation.