11 ms·

Connecticut moves to help low-paid workers hurt by noncompete rules

170 points by ohjeez 8y ago

AlexandrB 8y ago
About time. IMHO non-competes are inappropriate for anyone outside of C-level executives (who are well compensated for accepting such terms). For low-wage workers non-competes are just pointlessly cruel.
- umeshunni 8y ago
  Agree - they should just outlaw them for all workers.
- xfitm3 8y ago
  How do you define "well compensated"?
  - AlexandrB 8y ago
    At the high end, the typical CxO golden parachute that can be equivalent to several years of pay. At the low end, additional stock options or bonuses at the time of signing. Either way, an incoming CxO has a lot more negotiating leverage (and usually experience) to ask for such things than fresh graduate looking for his first job. Low wage employees usually have no negotiating leverage at all and must accept the contract as-is or remain jobless. Edit: I'm definitely not against banning non-competes for everyone. But a candidate for a C-level executive position is much more likely to have the resources and the knowledge to negotiate fair concessions or compensation for accepting a non-compete.
  - duskwuff 8y ago
    From a legal perspective? You can probably construct a decent definition in terms of how much of an employee's compensation is in equity.
- tathougies 8y ago
  Non-competes should be illegal for C-level execs too. It's a huge overreach of government to give corporations a venue in which to seek redress of this grievance. It's ridiculous. The government should not be involved in private agreements meant to micromanage people's lives.
skookumchuck 8y ago
If you don't want to sign a non-compete, line it out when you sign your employment contract.
- exotree 8y ago
  Low wage workers are rarely in a position to negotiate anything, much less a non-compete.
  - ilaksh 8y ago
    This goes for most people not just low wage workers. Even people that have good retirement funds don't want to break into them and so it's not necessarily easy to turn down jobs.
    - AlexandrB 8y ago
      For high demand positions it's not necessarily a matter of turning down the job. As a tech worker, I've had success in negotiating contract amendments to limit the scope of non-competes or overly broad IP assignment clauses. Hiring takes a lot of time, and many employers are willing to budge on contract terms to save the expense/hassle of starting the recruiting process from scratch. Obviously this is only possible if you work in an industry where you're sufficiently in-demand and thus have some negotiating power.
      - ilaksh 8y ago
        Well its true that you have some negotiating power and much more than low wage workers usually however there is still a power imbalance. For my contract work I have on multiple occasions pushed back on non-competes and overly broad IP. My success has been mixed. On one occasion there was a non-compete and it was a high profile contract that I didn't want to lose so I felt like I had to go along with it. The last time a non-compete came up I tried hard to argue against it but the guy wouldn't budge. He seemed to think he needed it to keep me working for him. I guess part of the problem there is that I just don't want to drop this startup that I have put so much time into. On multiple occasions I have found that I had to insist on overly broad IP assignment clauses being removed from contracts. I have been successful in those cases. Basically what they try to say, depending on how you interpret it, is that all work you do even in your spare time, is owned by them. I have been able to change that to clarify that they own only work that is directly related to the project and non-core stuff can be open source and unrelated projects are my own.
xfitm3 8y ago
Outlaw non-competes for ALL workers. Rely on NDAs.
twblalock 8y ago
None of the arguments in favor of noncompetes are convincing. There are legitimate downsides to getting rid of noncompetes, but there are solutions for all of them, e.g. using NDAs to protect trade secrets. Some say eliminating noncompetes would hurt businesses, but consider that California banned noncompetes back in the late 1800s (yes, really) and has the largest economy of any state. When low-wage workers are involved, noncompetes are a form of coercion pure and simple.
- AlexTWithBeard 8y ago
  I firmly believe that prohibiting things is rarely a good idea. Just require a business to keep paying an employee his salary and benefits during the non-compete. A business has a secrets to guard. An employee has a family to feed. All is fair.
  - throwawayjava 8y ago
    These are probably functionally equivalent for most employees... and especially the low-level employees that the article is talking about. Plus, there are real downsides to your approach. It puts the onus on the employee to collect from the employer, which is best-case arduous and worst-case more expensive than it's worth with most of the money going to a billboard lawfirm anyways. Your approach might make sense in the mid six figures and up, but for low-wage or even low to mid middle class workers, outright nullification would be way more effective.
    - AlexTWithBeard 8y ago
      Sorry, functionally equivalent to what? I don't think it will involve collections or anything like that. You just keep receiving your monthly paycheck. No paycheck - no non-compete.
  - lsiebert 8y ago
    Okay, so instead of letting the employee advance in their career, possibly earn more money because of increased responsibilities or skills, you want to pay them to sit idle? How does that help anyone? Anyway, isn't that just prohibiting a non compete without compensation for potentially lost income? I mean any law is arguably a prohibition from the right perspective.
olliej 8y ago
I feel a simpler solution(given many American politicians hatred of worker rights) would simply be that you have to pay any employees bound by non compete clauses for the period of the non compete clause. And they should be paid for 8-10 hours a day, 7 days a week - the non compete clause prevents them from working for a “competitor” every day of the week. That will quickly get rid of non competes that aren’t actually necessary for anything other than wage suppression.
- skybrian 8y ago
  Yes, and you could make that rule even simpler. Minimum price for a noncompete is $1000 a month until cancelled. (Picked as a round number; could be different.)
  - olliej 8y ago
    $1000/mo is nothing, it has to be tied to actual income, or some minimum clamp, which ever is higher. Otherwise you get something like $4k/mo in the middle of Alabama, or $1k/mo in SF one of which is gratuitous, the latter is not enough to pay rent. If you made it $10k/mo it would be more reasonable. Just having a minimum and so a forced cost to NCs isn't enough, because you have to compare it to the cost savings it implies. Take my $1k/mo in SF concept (noting that noncompetes are already not enforceable in CA). That isn't enough to pay rent, so it doesn't matter if you're guaranteed that income when you leave, because its not enough to live on. That means despite 1k obviously being more than 0, from a NC victim's PoV there isn't one - they cannot afford to quit, so their wages can still be easily suppressed.
    - mjevans 8y ago
      Also don't base it on a fixed number as a minimum. It has to automatically track inflation. A good start would be: the GREATER of the 75th percentile of wages for a given job category, and if multiple possible categories, the highest paying one that COULD apply OR the average take home pay over the last [3 years or during the time worked if shorter].
    - 8y ago
Cyclone_ 8y ago
This is a step in the right direction - my understanding is though that most non competes aren't enforceable to begin with, even outside of California.
tareqak 8y ago
What do people and politicians in right-to-work states think of non-compete clauses? Aren’t these workers being prevented from working the jobs they can get using the skills they’ve acquired in a similar way?
- tathougies 8y ago
  California has prohibited non-competes since forever. And by 'prohibit' I mean, they refuse to enforce them. I've signed many non-compete agreements, and you know what -- they don't mean anything. Might as well use them as toilet paper.
m0zg 8y ago
Just burn the whole "non-compete" thing with fire nationwide as far as I'm concerned. Basically mandate that if a person is subject to a non-compete, she needs to be paid the pre-departure salary and bennies for the duration of the non-compete. Essentially, your noncompete becomes a yearlong Hawaii vacation. I'd totally go for that. Some employers, in cases where non-compete is justified, would too. And where it's not justified, fuck them with a cactus.
caseymarquis 8y ago
This only applies to those making less than 2x the CT minimum wage, including heathcare costs. That's currently 40k or less per year.
perfunctory 8y ago
So you want noncompete. That's fine. But then it should work both ways. You don't want me to compete with you. Well, I don't want you to compete with me either. So for one year after I leave the company I am not allowed to work for your competitors and you are not allowed to hire my competitors (workers with the same skill set) on the same position. Deal?

170 points by ohjeez 8y ago

About time. IMHO non-competes are inappropriate for anyone outside of C-level executives (who are well compensated for accepting such terms). For low-wage workers non-competes are just pointlessly cruel.

umeshunni 8y ago
Agree - they should just outlaw them for all workers.
xfitm3 8y ago
How do you define "well compensated"?
- AlexandrB 8y ago
  At the high end, the typical CxO golden parachute that can be equivalent to several years of pay. At the low end, additional stock options or bonuses at the time of signing. Either way, an incoming CxO has a lot more negotiating leverage (and usually experience) to ask for such things than fresh graduate looking for his first job. Low wage employees usually have no negotiating leverage at all and must accept the contract as-is or remain jobless. Edit: I'm definitely not against banning non-competes for everyone. But a candidate for a C-level executive position is much more likely to have the resources and the knowledge to negotiate fair concessions or compensation for accepting a non-compete.
- duskwuff 8y ago
  From a legal perspective? You can probably construct a decent definition in terms of how much of an employee's compensation is in equity.
tathougies 8y ago
Non-competes should be illegal for C-level execs too. It's a huge overreach of government to give corporations a venue in which to seek redress of this grievance. It's ridiculous. The government should not be involved in private agreements meant to micromanage people's lives.

skookumchuck 8y ago

If you don't want to sign a non-compete, line it out when you sign your employment contract.

exotree 8y ago
Low wage workers are rarely in a position to negotiate anything, much less a non-compete.
- ilaksh 8y ago
  This goes for most people not just low wage workers. Even people that have good retirement funds don't want to break into them and so it's not necessarily easy to turn down jobs.
  - AlexandrB 8y ago
    For high demand positions it's not necessarily a matter of turning down the job. As a tech worker, I've had success in negotiating contract amendments to limit the scope of non-competes or overly broad IP assignment clauses. Hiring takes a lot of time, and many employers are willing to budge on contract terms to save the expense/hassle of starting the recruiting process from scratch. Obviously this is only possible if you work in an industry where you're sufficiently in-demand and thus have some negotiating power.
    - ilaksh 8y ago
      Well its true that you have some negotiating power and much more than low wage workers usually however there is still a power imbalance. For my contract work I have on multiple occasions pushed back on non-competes and overly broad IP. My success has been mixed. On one occasion there was a non-compete and it was a high profile contract that I didn't want to lose so I felt like I had to go along with it. The last time a non-compete came up I tried hard to argue against it but the guy wouldn't budge. He seemed to think he needed it to keep me working for him. I guess part of the problem there is that I just don't want to drop this startup that I have put so much time into. On multiple occasions I have found that I had to insist on overly broad IP assignment clauses being removed from contracts. I have been successful in those cases. Basically what they try to say, depending on how you interpret it, is that all work you do even in your spare time, is owned by them. I have been able to change that to clarify that they own only work that is directly related to the project and non-core stuff can be open source and unrelated projects are my own.

xfitm3 8y ago

Outlaw non-competes for ALL workers. Rely on NDAs.

twblalock 8y ago

None of the arguments in favor of noncompetes are convincing. There are legitimate downsides to getting rid of noncompetes, but there are solutions for all of them, e.g. using NDAs to protect trade secrets. Some say eliminating noncompetes would hurt businesses, but consider that California banned noncompetes back in the late 1800s (yes, really) and has the largest economy of any state. When low-wage workers are involved, noncompetes are a form of coercion pure and simple.

AlexTWithBeard 8y ago
I firmly believe that prohibiting things is rarely a good idea. Just require a business to keep paying an employee his salary and benefits during the non-compete. A business has a secrets to guard. An employee has a family to feed. All is fair.
- throwawayjava 8y ago
  These are probably functionally equivalent for most employees... and especially the low-level employees that the article is talking about. Plus, there are real downsides to your approach. It puts the onus on the employee to collect from the employer, which is best-case arduous and worst-case more expensive than it's worth with most of the money going to a billboard lawfirm anyways. Your approach might make sense in the mid six figures and up, but for low-wage or even low to mid middle class workers, outright nullification would be way more effective.
  - AlexTWithBeard 8y ago
    Sorry, functionally equivalent to what? I don't think it will involve collections or anything like that. You just keep receiving your monthly paycheck. No paycheck - no non-compete.
- lsiebert 8y ago
  Okay, so instead of letting the employee advance in their career, possibly earn more money because of increased responsibilities or skills, you want to pay them to sit idle? How does that help anyone? Anyway, isn't that just prohibiting a non compete without compensation for potentially lost income? I mean any law is arguably a prohibition from the right perspective.

olliej 8y ago

I feel a simpler solution(given many American politicians hatred of worker rights) would simply be that you have to pay any employees bound by non compete clauses for the period of the non compete clause. And they should be paid for 8-10 hours a day, 7 days a week - the non compete clause prevents them from working for a “competitor” every day of the week. That will quickly get rid of non competes that aren’t actually necessary for anything other than wage suppression.

skybrian 8y ago
Yes, and you could make that rule even simpler. Minimum price for a noncompete is $1000 a month until cancelled. (Picked as a round number; could be different.)
- olliej 8y ago
  $1000/mo is nothing, it has to be tied to actual income, or some minimum clamp, which ever is higher. Otherwise you get something like $4k/mo in the middle of Alabama, or $1k/mo in SF one of which is gratuitous, the latter is not enough to pay rent. If you made it $10k/mo it would be more reasonable. Just having a minimum and so a forced cost to NCs isn't enough, because you have to compare it to the cost savings it implies. Take my $1k/mo in SF concept (noting that noncompetes are already not enforceable in CA). That isn't enough to pay rent, so it doesn't matter if you're guaranteed that income when you leave, because its not enough to live on. That means despite 1k obviously being more than 0, from a NC victim's PoV there isn't one - they cannot afford to quit, so their wages can still be easily suppressed.
  - mjevans 8y ago
    Also don't base it on a fixed number as a minimum. It has to automatically track inflation. A good start would be: the GREATER of the 75th percentile of wages for a given job category, and if multiple possible categories, the highest paying one that COULD apply OR the average take home pay over the last [3 years or during the time worked if shorter].
  - 8y ago

Cyclone_ 8y ago

This is a step in the right direction - my understanding is though that most non competes aren't enforceable to begin with, even outside of California.

tareqak 8y ago

What do people and politicians in right-to-work states think of non-compete clauses? Aren’t these workers being prevented from working the jobs they can get using the skills they’ve acquired in a similar way?

tathougies 8y ago
California has prohibited non-competes since forever. And by 'prohibit' I mean, they refuse to enforce them. I've signed many non-compete agreements, and you know what -- they don't mean anything. Might as well use them as toilet paper.

m0zg 8y ago

Just burn the whole "non-compete" thing with fire nationwide as far as I'm concerned. Basically mandate that if a person is subject to a non-compete, she needs to be paid the pre-departure salary and bennies for the duration of the non-compete. Essentially, your noncompete becomes a yearlong Hawaii vacation. I'd totally go for that. Some employers, in cases where non-compete is justified, would too. And where it's not justified, fuck them with a cactus.

caseymarquis 8y ago

This only applies to those making less than 2x the CT minimum wage, including heathcare costs. That's currently 40k or less per year.

perfunctory 8y ago

So you want noncompete. That's fine. But then it should work both ways. You don't want me to compete with you. Well, I don't want you to compete with me either. So for one year after I leave the company I am not allowed to work for your competitors and you are not allowed to hire my competitors (workers with the same skill set) on the same position. Deal?