24 ms·

The case for banning non-competes

511 points by jseliger 5y ago

fallingknife 5y ago
Should be a requirement that, to be enforceable, a non-compete must pay the agreeing employee his salary for the duration of the agreement.
- ghaff 5y ago
  Some people might think that was a good deal to travel the world but not everyone. So you're at the peak of your career and you need to take a couple years off at significantly lower total comp (because no bonus/equity).
  - deregulateMed 5y ago
    Start a new career, start an unrelated company, do non profit work, do research, etc... I imagine these people have money, so what's making potentially an extra 200k? You make that in a year.
    - ghaff 5y ago
      You live in a serious bubble if you think the typical person can shrug, say "what's $200K," and casually leave or take a break from the field they've been earning a living in.
      - deregulateMed 5y ago
        We are talking about people who's company actually used the non compete. These are not typical people.
        ghaff 5y ago
        There is absolutely no guarantee of this.
        awsthro00945 5y ago
        You really underestimate. Even standard entry-level developers are under NCAs, and I've had a former colleague (who was certainly "typical", and an additional $200k would have been life changing for them) who was hit with one. I have many other colleagues (again, just "typical" people) who lost out on job offers because the new company didn't even want to deal with the threat of an NCA.
        grogenaut 5y ago
        I had a non-compete when I was making $50k
        deregulateMed 5y ago
        And did the company invoke it?
        hannasanarion 5y ago
        If they didn't want to invoke it, they wouldn't have put it in the contract. Would you sign a contract that says I have the right to point a gun at you at all times, with only my unofficial assurances that I won't pull the trigger?
  - simcop2387 5y ago
    This would mean that you can then also work in a related but not competing industry at the same time. It's not a no-work afterwords contract, but don't compete with us. that won't affect your total compensation then, or your career trajectory usually either. The idea is that a non-compete should only be used for someone it will actually matter to the business the, and not all the low level employees that don't have any impact on anything like that. right now you have tech support and call center employees with year long non-competes that prevents the, from working in another similar role at a new company, https://www.protocol.com/policy/tech-non-compete https://www.protocol.com/policy/tech-non-compete
    - ghaff 5y ago
      So I'm a senior scientist at a pharma company. I want a new job. Cool. I can't take another pharma or biotech job but maybe I can go to coding camp and get a job mining people's data.
    - adventured 5y ago
      > This would mean that you can then also work in a related but not competing industry at the same time. If they're going to do it at all, and limit cruelty in the equation as much as possible, it should be very limited to directly comparable and competing products (Windows vs MacOS; Google Search vs Bing; consumer desktop operating systems and consumer search as narrow categories), rather than the industry broadly. Most people have a narrow labor specialization and spend their work years building up expertise and reputation in an industry. Any denial of work potential and opportunity that targets an entire industry is akin to labor cruelty and should be viewed as a human rights violation.
  - fallingknife 5y ago
    But a non-compete doesn't mean that you have to take that time off. It means that you can't work for a competitor.
    - alistairSH 5y ago
      Sure, but depending on employer or industry, that could be many/all other employers. Biologist/chemist working on novel drugs - pretty limited field. Developer at Amazon - Amazon does a bit of everything, I bet their legal team would prefer you didn't work elsewhere. As noted elsewhere, it's not even so much about an NDA/non-compete is enforceable - just the threat of legal action is enough to stop employees moving or stop other employers hiring people.
  - intricatedetail 5y ago
    In the current system you will never get wealthy from salary and bonuses, because companies are being taxed through workers by proxy and the pressure is for keeping salaries as low as possible. Only way to break through is to start own business and become lucky. Big companies keep lobbying for more red tape to keep new competition at bay.
- heipei 5y ago
  In Germany, a non-compete can only be enforced for up to two years and pays 50% of the last salary (by law).
  - drclau 5y ago
    I believe this is true in most European countries, with minor variations.
    - rytis 5y ago
      not in the UK
  - arcanus 5y ago
    Why not 100%?
    - radiator 5y ago
      It looks like it is "at least 50%" according to the law.
    - ghostbrainalpha 5y ago
      You don't think there should be any consideration for the fact the person is not performing any labor? They are still able to pursue employment in non competing fields. In a world where non-competes were funded 100% it seems like it should be the GOAL of every employee to be fired from a position where a non-compete needs to be enforced in order to secure extended paid vacations.
      - cwkoss 5y ago
        Society wants people to contribute productively. Stopping someone from working to protect business secrets is antisocial and bad for society. Really, companies should have to pay >100% salary as a disincentive to idling valuable labor.
  - wwweston 5y ago
- Taylor_OD 5y ago
  Yeah the good old garden leave. I wish.
  - etothepii 5y ago
    My 3 months in the garden was some of the best time of my life.
- 41209 5y ago
  I'd still rather they be banned. Say you start as a junior at 80k , next year you get an offer for 150k , but you can't take it. You'd end up with a large 1 year resume gap, and losing 70k. The year of career stagnation wouldn't be worth it.
  - gibba999 5y ago
    Or, you take a year to: - Get a Master's degree - Travel and see the world - Do consulting - Take a job in Indonasia - Teach - Develop a new open source project - Etc. The resume gap / career stagnation is a choice. It's rare that you can have a gap year like this. I totally don't feel bad about paid non-competes.
    - 41209 5y ago
      What if you have kids to provide for ? You'd might rather have more money. If you desperately need to increase your income even paid non competes are a bad deal
- noitpmeder 5y ago
  This kind of leave really doesn't exist outside of finance, and even then most companies would rather let you go unless you actually know some critical secret sauce.
- filoleg 5y ago
  That's how it usually works in finance/fintech with non-competes that extend beyond the period of employment (and not just for traders/analysts, it is the case for a good number of engineers and quants as well). You might not be getting the annual bonus (which is a major chunk of pay in finance), but you still get the full salary for the duration of the non-compete (usually 12-18mo). They also usually have a clause that it applies only to jobs in the same industry, so if you go from a finance shop to a FAANG company or another tech startup, then the non-compete is void, and you are welcome to pursue that opportunity without any 12-18mo timeouts (but your non-compete pay stops). That seems to be a reasonable compromise, because if you really want to continue working in finance, you are welcome to wait for 1-1.5 years while getting paid full salary (minus the annual bonus) for doing nothing. And if you want to start working again immediately, you are welcome to do so, as long as it is in an industry other than finance, and the non-compete pay stops (because non-compete at this point becomes void).
cortesoft 5y ago
My feeling has always been that non-competes are ok as long as it is an entirely separate agreement from employment. For example, you can sign a contract for $100,000 that you won’t work in field x for 2 years. If you decide to work in the field, you give up that money. The unfair thing is making it just a part of the standard employment contract.
- benrbray 5y ago
  > sign a contract for $100,000 that you won’t work in field x for 2 years Wow, sign me up!
  - ghaff 5y ago
    Most people are not in the position to take a couple years off for $100K or to work, for almost certainly lower pay, in an unrelated field assuming they can find a professional job.
  - skohan 5y ago
    It could be a really bad deal if you're basically throwing away 2 years of your career when you have maximum bargaining power
  - cortesoft 5y ago
    If it isn't worth it to the company to pay, then they should let the person work for a competitor.
- lupire 5y ago
  I'd like to over you a job. It pays $50K/yr with an optional $100K/yr for a noncompete agreement. My competitor is offering $140K/yr.
  - zatertip 5y ago
    I'll take that combo. Quit on the first day, live on Bali for 2 years.
- 5y ago
PragmaticPulp 5y ago
My state has severely limited non-compete agreements to the point that they’re only narrowly enforceable, if at all. That didn’t stop one of my previous employers from using non-compete scare tactics against employees. Many of us left in a large exodus when benefits and bonuses were cut and management made a number of other bad decisions. The company responded by sending remaining employees an e-mail with a list of competitors that they said would be covered by our non-compete agreement. The e-mail implied that if we wanted to leave for one of those companies we needed to get approval from the legal team before we moved, otherwise we might be at risk of being sued. My lawyer rolled his eyes when I showed it to him and explained that they wouldn’t win due to my state’s laws, but they could try to make my life difficult with legal proceedings if they wanted. The tactic worked enough to scare some of my old coworkers away from taking job offers at competitors, though. Some others also went into hiding and lied on their LinkedIn profiles to prevent their old employer from finding out they went to competitors. Having some clear, national guidelines that make non-competes a non-issue would do wonders for situations like this.
- mountainriver 5y ago
  What state is this?
  - lekanwang 5y ago
    This is a decent state-by-state overview of the enforceability of non-competes: https://www.wonder.legal/us/guide/what-is-the-enforceability-of-non-competes-in-my-state https://www.wonder.legal/us/guide/what-is-the-enforceability...
  - knappe 5y ago
    California, in all likelihood. California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
    - masklinn 5y ago
RikNieu 5y ago
I believe non-competes and claiming the IP of what employees do in their own time is ridiculous and way out of line. Employers do not own the people who work for them.
- lupire 5y ago
  No one owns anyone. IP assignment is contractual agreement in exchange for money. Just remember that when imputing your hourly pay and passive income opportunity.
closeparen 5y ago
This is why it’s a little ridiculous to think there could be a “tech hub” outside California. Sure maybe you have a lot of tech jobs in the same place, but that is of no consequence to the people who work them, since they’re all in binding non competes.
- ghaff 5y ago
  The idea that everyone who isn't in California is subject to draconian non-competes is California exceptionalism nonsense.
  - lostcolony 5y ago
    This is a bit out of date, but - https://www.beckreedriden.com/wp-content/uploads/2019/01/Noncompetes-50-State-Survey-Chart-20190113.pdf https://www.beckreedriden.com/wp-content/uploads/2019/01/Non... There are three states where non competes are essentially not permitted. California, Oklahoma, and North Dakota. Now, certainly, it's up to the company whether or not it imposes a non-compete, and to what it covers/applies to. It might be that you never took a job with one. But I've been subject to them at every place I've worked outside of California. While they haven't had any particularly large effect on me, I've definitely had to go back and read the fine print when considering a job change once or twice (not to mention when it came to hiring past colleagues).
    - ghaff 5y ago
      I've never had one in LA, MA, or NH except for one time when EMC (who was one of the big players who resisted the non-compete changes that MA finally put in place) acquired the company I was at. The non-compete was reasonably narrow in scope--couldn't take a senior exec position at a storage vendor--but they were also very clear this wasn't negotiable. But I've certainly been aware of non-compete enforcement by the big companies in a certain category of consultants that basically meant anyone leaving couldn't do the same type of job anywhere for a couple years. My point though is that it's hardly universal even if not rare.
MattGaiser 5y ago
The absurd part of non-competes is that they want a guarantee of exclusivity on you without a guarantee of paying you for that period of exclusivity.
mrweasel 5y ago
You don’t exactly need to ban them, but the employees should be compensated during the non-compete period and limit the lenght of the non-compete contract. In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS, but you can go to Twitter.
- TuringNYC 5y ago
  This sounds good in theory, and I was once presented with a job opportunity with something similar to this. Except much of the compensation was not in salary. So while salary goes down 60%, total comp goes down way more -- all the non-salary components goes to zero.
  - slymon99 5y ago
    This is definitely a problem, especially because industries who frequently utilize the paid non-compete (e.g. finance) often have a significant percent of comp from non-salary (bonuses etc). But you could fix this with craftier legislation instead of banning non-competes, e.g. maybe you have to pay the persons last years total compensation instead of just their salary
- matsemann 5y ago
  In Norway it's 100% pay up to some relative high amount. And the non-compete has to be very specifically towards me and my role at the company, not some generic "we do a little bit of x, y and z, therefore everything is considered a competitor". Actually my union, Tekna, was a big player in getting the laws much better in 2016. Unions work, and can be useful even for us techies even if in high demand.
  - haraball 5y ago
    Though if you get a new job during the period the non-compete is valid, the amount can be reduced down to 50%, depending on your income. The company also can't enforce the non-compete if they fire you. The Norwegian way of handling this is good, I think.
ghaff 5y ago
I appreciate the gist of the article but IMO the CA/MA dichotomy (which is often mentioned--though MA significantly restricted non-competes a few years back) is facile. It's true that a lot of the new Internet/Web companies came out of California. And Apple is of course there as well. But the Route 128 companies mentioned in the article certainly traded employees, although in general employee tenures tended to be much longer than today. Data General, for example, was founded by a Digital engineer. Similarly there is a massive biotech/pharma cluster of companies in Kendall Square in Cambridge today.
- gibba999 5y ago
  The more nuanced take is that different IP and employment laws benefit different industries. Software benefits from no patents, limited-term copyrights, no NDAs, no non-competes, due to low cost-of-entry. Innovation is cheap but hard. Pharma benefits from strong IP, NDAs, non-competes, etc. due to high capital investment levels. Innovation is easy but expensive. Hardware varies.
light_hue_1 5y ago
There's so much wrong here. > The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off. > But suppose instead that innovation is difficult. Lukas Walton has a net worth of $22 billion because his grandfather founded Walmart. If he decided he really only needs $5 billion in life and is going to plow the other $17 billion into a massive R&D effort, how much innovation will he really generate? A huge amount. Plenty of people set up research institutes or new departments at universities that make giant leaps forward. See Paul Allen for example. > To a considerable extent, this hinges on poaching. Silicon Valley was a good place to grow Facebook because fast-growing Facebook could poach from older tech companies. I wish people would stop with this anti-labor language. Poaching? That's ridiculous. It starts by offering people a better place to work, with a better mission, better people, and more money. That's not "poaching". > And Silicon Valley is a good place to launch a startup today because you can poach from Facebook. That's funny. FB and other companies offer far more money than most startups can afford. That's not why the Valley is a good place to launch a startup. > One of the big, overarching problems of our time is that productivity growth has slowed down sharply from where it was during the post-WWII decades. The overarching problem of our time is that productivity no longer means higher salary and higher quality of life. Productivity keeps going up, but salaries stagnate. What's the incentive to be more productive? > In the early days of the computer industry, Silicon Valley was rivaled by the Route 128 corridor (this is a road through the Boston suburbs) in Massachusetts as a hub of innovation. But California won out decisively here, and many people think the lack of non-compete agreements in the Golden State is part of the reason. There's a lot of debate about this. And now we're running the decisive experiment! MA just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography). Let's see if the biotech industry stays.
- ectopod 5y ago
  >> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. > No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off. The author is presenting the standard business argument, i.e. trade secrets are good for business and society generally because they generate wealth, non-competes protect trade secrets, so without non-competes trade secrets would be revealed and business and society would be poorer, so everyone would be worse off. The author isn't agreeing with this pov (and neither do you or I), they want to ban non-competes.
api 5y ago
Require companies to pay employees some percentage of their former salary (e.g. 20%) for the period of a non-compete, otherwise it is unenforceable. That would ensure that companies only bother to enforce non-competes when the stakes are high and it's serious, and prevent them from basically IP-trolling former employees by making such a thing unprofitable.
- b3morales 5y ago
  I have a very hard time with anything less than 100%. You're talking about preventing people from using their main skills to put food on the table. And frankly, even 100% discounts the professional development that comes in the natural course of employment. You will have missed opportunities for skill advancement and networking. After 2 years not working because of the non-compete, how are interviews for the next position going to go? You'll be rusty at best. Side projects are not, in general, a fair substitute: what does an Amazon SRE do on hardware at home that compares to what's on the job? Even for an individual developer, there's a world of difference hacking on your own web app and working on a team with large numbers of actual customers.
  - filoleg 5y ago
    If that becomes the norm, attitudes towards it will change, because then you won't be perceived by hiring people as at a disadvantage, since everyone will be going through this. Of course, right now it sounds ridiculous, as the percentage of your current candidates with 1-2 year working gaps is a minority. The reason I believe this will work is because that's how it works in finance right now. 1.5-2 year long non-competes, you get paid full salary for those periods (minus the annual bonus). And you can make the same point, what are they gonna do in terms of personal projects? Kind of difficult to imagine someone trading hundreds of millions in some specialty equities for a hedge fund and then going back home for 2 years and doing the same kind of a "side project" there. Nothing they can do by themselves at home is comparable to what they could at the job. And yet, this is literally the norm now, and those people don't have any issues interviewing and getting jobs afterwards at competing finance shops.
phkahler 5y ago
>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. I don't agree. I think the non-compete is more an acknowledgement that certain people have a higher degree of mastery and understanding of a subject and that the company doesn't want to lose that. Having a competitor pick that up is probably a secondary concern to losing it. Also, it does not follow that anyone would pay lower salaries. I'd think higher compensation or better working environment would be used to retain those key people. This would lead to companies needing to have a better understanding of employee value (but that's another topic entirely) rather than just limiting their mobility.
- ohazi 5y ago
  > Also, it does not follow that anyone would pay lower salaries. Bullshit. If you could fuck off to any of a dozen companies doing similar work, your employee would have to pay you well and give you raises and treat you well in order to compel you to stay, otherwise you would leave. If employers had a magic button they could press to make it so that those dozen employers are too scared to hire you, or to make it so that you're worried about getting sued if you leave, then you will be more likely to stay at your employee, even if they treat you poorly and never give you a raise. The non-compete agreement is that button, and making you feel like you're captive and can't do anything about it is the real reason why companies like to mash it. They like being able to mistreat you with impunity.
calkuta 5y ago
We shall not dictate to others what type of private, mutually consensual agreements they may make.
mabbo 5y ago
There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours. But my employer does everything. There is no field that my employer is not involved in, somehow. You can guess who they are, probably, or just read my profile. And they say "You cannot do anything that competes with anything we do". Which is everything. Want to make a Sudoku app? That's a game, we do games. Want to do some open source ML library work? We do ML, you can't do ML outside of work (I asked legal that one). And that's ignoring the who-knows-how-many secret un-released projects that might relate. They don't even tell us "no" anymore. They just say "read the non-compete agreement and do what it says". Basically "do what you like, but if we ever feel like it wasn't right, you're fired and maybe sued". And when I apply to other companies, they ask "do you have a github account?". No, I've been highly motivated not to. Edit: eesh, this was a bit of a rant, wasn't it? Apologies for that. But maybe folks have ideas on what to do about it, apart from the obvious.
- tshaddox 5y ago
  > Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours. Why is that obvious? If I work as a studio musician can I also be working on my own album after hours?
  - an_opabinia 5y ago
    > If I work as a studio musician can I also be working on my own album after hours? Yes. > Why is that obvious? Just because there's a law somewhere that covers both a part of making music and part of making software, and just because some programmers make music and some musicians write software, and both are sometimes creative, doesn't mean they have much in common.
  - lifeformed 5y ago
zucker42 5y ago
I strongly agree with the case against non-competes, and think almost all of them should be unenforceable. That said, is there any reason for this to be undertaken at the national level instead of the state level? Generally, I prefer state level interventions because they are easier to undo/avoid, less removed from the people they are serving, and less catastrophic if they are flawed (essentially, I agree with "laboratories of democracy" conception).
Teknoman117 5y ago
I lived in Alabama for 4 years or so and at least at the time (I have no idea if it's changed since I left), their non-compete situation was garbage. They were valid and enforceable even if you got laid off or fired. One of my friends' mother got laid off in the 2008 financial crisis from Bellsouth (or AT&T, I don't recall if the (re)merger was finished yet). She was told she couldn't work for any other telecom in the state for at least 18 months. She ended up going to stay with family in another state for that time so she could find another job, even though her husband and her son were in AL. It was a hard period for them. I've had a hatred of non-competes since for the most part. If you (a company) are afraid of losing key talent, maybe you should actively try to retain it rather than turning your company into a prison.
- jonnycomputer 5y ago
  Non-competes undermine one of the main ideas underpinning capitalism: the free flow of labor. Otherwise, you're just a damned serf.
  - etothepii 5y ago
    I wonder if the "I have read the Terms and Conditions" checkbox has some responsibility for this. I'm constantly amazed at how many people don't seem to understand that a contract is a negotiation. Most people wouldn't dream of taking a job that didn't pay enough financially, but agree to jobs with awful terms and conditions because they didn't read. We are all used to contracts that are too long to understand.
    - jonnycomputer 5y ago
      Libertarians would permit people to sell themselves into slavery by contract. Another reason why libertarianism take too far is pure madness, and infantile fantasy.
  - sonotathrowaway 5y ago
    That’s a feature, not a bug.
WaitWaitWha 5y ago
EDIT: I have completely went off on the wrong thought path. As noted, despite reading the article and comments, somehow my mind got latched onto NDAs instead of NCAs. Sorry. ---- I will be the contrarian. For those who insist on no NDA, what prevents ex-employees from spilling secrets to be hired at a competitor? I understand the concerns with NDAs. I was under one which limited my work in a radius, and within a very broad field. Imagine having to leave the country to practice in my field. The owner threatened me when I left (with tiny droplets of spittle on my face from his screaming). This kind of NDA is horrible. That said, NDAs are there to protect a company from ex-employees sharing competitive knowledge about a product or service, damaging or even shuttering a the company. I will ask you to sign an NDA if you want to work for me. You are not going to directly compete against me in a specific sub-industry, you are not taking my clients, and you are not poaching my employees for a reasonable period. This NDA is presented prior you taking the job. Not all NDAs are "out to get the little guy". Maybe NDAs need some precedent cases where overly broad NDAs are struck down.
- lupire 5y ago
  the topic is NCA, not NDA.
  - WaitWaitWha 5y ago
    well... That was painful. :D
    - lupire 5y ago
      To be fair, the OP made the same mistake.
- Avshalom 5y ago
  Arguing for the status quo is not contrarian.
- Frost1x 5y ago
  It's interesting how we celebrate that capitalism instills competition that leads to global improvement for everyone, yet we like to hand-pick the segments of capitalism where we want competition and the segments we don't want competition. An NDA is one case of this, as are non-compete agreements, and many behaviors within cartels, say when Apple et al conspired to not hire each others labor. Usually, this hand-picking is performed by those succeeding the most in the given system because they have resources and leverage to dictate such terms and force them on others, yet another anticompetitive behavior. The fact is that most people just celebrate capitalism when it benefits them and reject it when it doesn't. Personally, I think any such agreements should be illegal. If we had more labor unions where the labor force organized and created their own anticompetitive behaviors to counter balance the leverage of large capital holders, then I'd be far more sympathetic. Such is not the case and the labor force is on a near Darwinian level of competitiveness so I have no sympathy for any sort of anticompetitive behaviors from businesses. To be clear, I understand how this perspective blows up many business models, but it has also blown up the livelihoods of many of us in the labor force on this push to commoditize labor for the goodness of whatever. I say, why don't we commoditize these business secrets for the same unknown goodness? Why is it we keep picking and choosing who gets breaks on competition and who doesn't. Let the markets decide.
rytis 5y ago
I'm in this pickle right now. It's a scare tactic. New employer would not take a bet, and that's understandable. Current employer responds with the most vague legalese possible to my straight up question "are you going to enforce?". The choices are: a) take a gamble against an entity that has so much more to fund their legal team than I will ever dream of or b) suck it up. Take a guess what most people pick, even if "most likely outcome" of enforcing non-compete is very slim. It's in UK btw.
- etothepii 5y ago
  Have you checked if your legal fees might be covered on your home contents policy.
  - rytis 5y ago
    I do have legal coverage as part of home insurance package, however, it seem that it's only against direct "attack" towards me, and employment disputes aren't covered. Pretty useless tbh.
lyptt 5y ago
I had a non-compete at a previous employer that prevented me working in tech altogether for a year after quitting. Fortunately I managed to get out of that when they made me redundant. I doubt it'd stand up in court, but it's pretty shocking all the same.
Meph504 5y ago
In a world that is constantly touting competition drives innovation, it seems strange to me that this was ever legal. Restricting the industry a person can work in, or the ability to switch between companies at will only serves to harm the employee and their ability to negotiate their compensation. I've only signed one non compete, and where I am they are only enforceable in the county they are signed in, and even then it started the relationship with the employer off on the wrong foot, I didn't stay long.
austincheney 5y ago
I have never encountered a non-compete in my home state of Texas, so I looked this up: https://www.texasnoncompetelaw.com/articles/noncompete-agreements/ https://www.texasnoncompetelaw.com/articles/noncompete-agree... It appears in Texas non-competes are a thing, but only to restrict the direct transfer of business/market responsibility to a competing business, which I imagine generally applies to only senior executives and sales agents. It seems at one point almost all of the travel industry, except Expedia, was located in my area and people were bouncing between competing employers all the time without any limitation. People were even leaving their employers to found competing businesses without limitation. As somebody who has never had to deal with this madness it seems strange that any state would want to wound its own economy by restricting employee mobility.
- wolverine876 5y ago
  > it seems strange that any state would want to wound its own economy by restricting employee mobility It seems strange that a state would make laws that serve the interests of the wealthy and powerful?
- claytonjy 5y ago
  Good to know; I got a rather broader non-compete from an Austin startup recently, though they have an overseas HQ. To their credit, they removed it upon my request, though I ultimately accepted a different role.
- HWR_14 5y ago
  > it seems strange that any state would want to wound its own economy by restricting employee mobility. That's because you think the goal is to maximize the state's overall revenue/economy. It's not. It's to maximize the income to specific well connected individuals and their investments.
tracyhenry 5y ago
A noob question: how can a small business get to keep the secret ingredient of their success if employees are allowed to jump ship as they wish? From the employee perspective banning non-competes are ofc the best thing. But this feels terrible if it means that secret sauces of small startups will get copied easily (potentially by bigger players).
- j4yav 5y ago
  Patents if they are really secret sauce. If your startup fails because someone finds out what you are working on then you are already doomed.
  - josaka 5y ago
    This is the right answer, and it has implications for the development of patent law: folks cheering the restrictions on NDAs should anticipate that doing so will tend to increase pressure on lawmakers to strengthen patent rights, as those investing in R&D lobby for other ways to protect their investments. Not saying we shouldn't weaken NDAs, though. The amazing last century of technical innovation emanating from California, which has relatively strong limits on NDAs, would suggest it's a good idea.
  - tracyhenry 5y ago
    I don't feel this is the right answer. Patents are very time-consuming. Lawsuits (esp against big players) are something most startups can't afford.
- ivanbakel 5y ago
  The fact is that "secret sauces" are basically worthless. Every successful business is 99% execution (& luck). A startup, especially in tech, will never be able to base its value on something simple enough for an employee to smuggle out legally (i.e. in their brain).
  - tracyhenry 5y ago
    This is a very biased view IMO. Plenty of businesses are based on patented secret sauces. Even for the type of companies that rely on execution, there will be important lessons learned, which ultimately become the "secret sauces". And you don't fear a random employee who might fit your secrets in their brain. You fear a set of experienced employees who can replicate your businesses somewhere else if they want to.
IncRnd 5y ago
> Joe Biden says he’s going to ask the Federal Trade Commission to try to ban non-compete agreements In the United States the Executive branch can't write their own law, even if it is to ban non-compete agreements.
- hannasanarion 5y ago
  1789 called, they want their naive interpretation of the Constitution back. Congress has the power to delegate regulatory authority to federal agencies. This precedent was established by the 2nd law Congress ever passed.
mattficke 5y ago
>The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. I don't think this is quite right. The main idea is that hiring and developing employees is hard and expensive, and companies want to have a claim on the future labor of the employee because of the investment they made. In the tech industry, recruiting fees of 25% of the first year salary are common, which is an enormous amount of money and shows how valuable anything that accelerates the hiring process is. Banning non-competes is a good idea for essentially the same reason a low unemployment rate is good: companies have to compete against each other to be the best place to work, which improves compensation and conditions for workers. It's easier when your only competition is poverty and unemployment, but that's not a good outcome for society at large.
johnrbent 5y ago
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. Anyone else confused by this statement? How do you make the leap from non-competes to higher salaries, or conversely, that a ban on non-competes would result in lower salaries? I mean I think I can see the author's intent (that the company would need to divert funds from wages to somewhere else to protect their IP), but it seems like the rest of the article disagrees; namely, linking the Californian ban on NCAs to the innovative success in that state (and high salaries) would suggest that banning NCAs might foster higher wages. Intuitively, it feels like, in absence of a non-compete, a higher salary is the biggest deterrent to losing trade-secrets to other companies via poaching.
- daveFNbuck 5y ago
  I think the idea is that the non-compete increases your value to the company, and that your salary is strongly tied to your value to the company. Both of those are pretty questionable.
achenatx 5y ago
As a professional services company we have had a few people over the years shop their contract or try to go direct with the client. They essentially split our gross margin with the client. The client reduces their cost and the employee gets paid more. Our non-compete mainly is focused on not taking our clients.
- ghaff 5y ago
  I've heard those called non-solicitation agreements which seem perfectly reasonable.
cletus 5y ago
So let's differentiate between conflicts and noncompetes. Conflicts arise when you do work for someone else while employed by a company that may compromise your ability to effectively work for that company or may be detrimental to that company's business. This is an employment condition that is common and reasonable burt with large companies may exclude pretty much everything because large companies compete everywhere. Often companies will have a blanket rule on such things. This could be as simple as "this is your full time job, you can't have another" but it shouldn't exclude running a restaurant if your company is a food delivery app. Noncompetes apply after the end of employment. There are a very few high-level employees for which this makes sense. If someone can leave a company and take all that company's clients then that's a problem. But again noncompetes are used for normal employees that make no sense. We don't need to ban them. We need to force companies to pay for the privilege. Courts generally uphold the principle that a company can't deny you the reasonable ability to earn a living. So if you're a plumber and your noncompete says you can't work for another plumber within the same state then that's likely not enforceable. Rather than this interpretation, how about we force companies to say "we will pay you a year's salary upon termination and you agree not to work for X". I think you'll see a whole lot less noncompetes.
neilwilson 5y ago
This is where the U.K’s “try not to be a dick” approach to law wins out. A former employer has to show the court that they will suffer genuine damage if the clause is not enforced and even then the court won’t enforce it unless it is reasonable. The case law on that is pretty tight. If you’re setting up in direct competition and trying to poach clients and staff the courts will favour the former employer. If you’re just moving to another job then courts will likely favour you. The courts recognise that there is an imbalance of power between employer and employer in the job market. Although each case turns on the specifics the English concept of reasonableness runs through its resolution.
plank_time 5y ago
The fact that Silicon Valley thrives without non-competes proves that they are unnecessary. It’s just a way for employers to put their claws in employees. If non-competes came with guaranteed 100% salary during the non-compete time, that would be more palatable.
rafaelero 5y ago
Any type of non-compete agreement is ridiculous and the fact that it is so widespread in what was supposed to be the most free country in the world makes you guys look like a joke.
jxidjhdhdhdhfhf 5y ago
IMO, non-competes should always include cash payments to the former employee. For example, if your employer doesn't want you to go to a competitor for a year then they should pay you full salary plus the value of whatever benefits you had for that year to not work in your field.
- occz 5y ago
  Agreed. A multiple of the total compensation of the competitor is warranted.
lsllc 5y ago
Related article/discussion on Biden's recent executive order on non-competes: https://news.ycombinator.com/item?id=27855855 https://news.ycombinator.com/item?id=27855855
LightG 5y ago
Cartman Voice: "Whatever! I compete with whoever I want!". https://www.youtube.com/watch?v=IpF9O0R873I https://www.youtube.com/watch?v=IpF9O0R873I
DebtDeflation 5y ago
Non-competes jumped the shark when Jimmy Johns started requiring their Sandwich Artists to sign them.
softwaredoug 5y ago
Consultant/freelancers frequently deal with: Client: "you can't work with competitors" Consultant: "ok, how do you define competitor?" Client: "Anyone that might compete with a line-of-business we have or plan to have" Consultant: "ok, can you list those lines of businesses?" Client: "no... some are in R&D phases... many won't even work out" Consultant: "can you just give us a list of competitors?" Client: "not really, because who knows what kind of company we'll be in 3 years!"
BrandoElFollito 5y ago
Non-competes in France are regulated by law. If you put one in the contract, it means that you have to compensate me (70% of total compensation if memory serves me right) during the time it is enforced. Since there is no way for me company to know where I am going, it may mean 70% of salary for free, if I go to a non competitor. It is rarely enforced, though. The second non compete (while working at a company) is very muddy waters though.
saxman001 5y ago
I think that non-competes can be valid in very narrow, very specific scopes. One of my friends has a job that involves evaluating companies and allocating millions of dollars of funding towards them. His contract states that he cannot go and work for the companies that he's evaluating for two years.
A4ET8a8uTh0 5y ago
I think the issue with non competes is that it was taken from the world of highly paid executives and some companies tried ( https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compete-clauses-following-settlement.html https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compet... ) to apply those to rank and file employees. Needless to say, that sort of non-compete should be outright banned. I do have some mixed feelings about them the higher you go in the company hierarchy.
blhack 5y ago
Somebody downthread made what I thought was a joke about Jimmy John's requiring employees to sign non compete agreements. Apparently it wasn't a joke: https://www.reuters.com/article/us-jimmyjohns-settlement-idUSKBN13W2JA https://www.reuters.com/article/us-jimmyjohns-settlement-idU... >The Jimmy John’s agreement prohibited employees during their employment and for two years afterward from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within 2 miles of any Jimmy John’s shop in the United States This is absolutely absurd. I worked on JJ's when I was in college. I honestly had no idea that this was a thing. These companies know that these contracts are almost certainly unenforceable, but they also know that their employees won't have the money to fight them. No acceptable.
igorzx31 5y ago
Garden leave vs non-competes are very different.
notananthem 5y ago
Noncompetes should be illegal. Competition is good. Noncompetes are only harmful.
seanhunter 5y ago
Had a fun one just happen to me in the last few days. I got contacted by an agent out of the blue. "Hey Sean we've got a role that you seem perfect for, just sign this NDA so we can talk." I look at the NDA and it includes a noncompete for the duration of the project + 12 months after. The nda is also not mutual so the noncompete and nondisclosure is only binding on me not the other party. In fact I don't even know who the other party is or what they do. Only if I sign this then for an undisclosed period of the project + 12 months _whether or not I get the job_ I can't compete with them whatever they do. I get back to the agent and say there's no way I can sign a noncompete until I know what it is I'm committing not to compete with. The guy spends several days trying various desperate negotiating tactics "I spoke to my boss and he says there really is no risk to you if you sign this, it's totally standard"... "I spoke with our CFO and you have to sign for us to proceed"....(That's great for your boss and CFO but I'm the one on the hook here if I sign, not them) "The noncompete really doesn't commit you to anything, but you have to sign..." (if it doesn't commit me to anything there's no downside to you removing it) ... "The client is so secretive and the project such a big deal we can't risk it leaking..." etc. At each point I just held firm and said there's no way I can sign a noncompete unless I know what I'm committing not to compete with. After one more go of "there's no way we can go ahead without an NDA in place" (even though I've already said I'm happy with the NDA as long as they strike the noncompete clause) I said "OK well in that case it's 'no thanks' from me". 24 hours later they get back to me with "What about if we tell you who the client is, will you sign then?". I'm just letting them marinade for now...
- glenneroo 5y ago
  Well since you didn't sign the NDA... care to divulge who was making this preposterous "offer"? ;)
  - seanhunter 5y ago
    I currently don't know. Just dealt with a random agency who was representing them.
- 908B64B197 5y ago
  Quote them a rate that's 5x what you normally go for and see if they bite. Add a clause where you need to be compensated for the complete duration of the non-compete too. See if they respond.
Quanttek 5y ago
I don't get the following quote: > The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. If employers lack such "protections" (i.e. non-competes), wouldn't they need to pay a higher salary, so that their workers are not poached by rival companies?
- MrStonedOne 5y ago
  This is misinformation 101, state a detailed premise, tie it in with some cause and effect that sounds plausible, make no attempt to back up the synthesis.
- hannasanarion 5y ago
  Also, the correct method for preventing disclosure of trade secrets is NDA, not Non-Compete.
slymon99 5y ago
This is entirely different from garden leave (a non-compete period where you remain on payroll but are not working), correct? This seems like a fair version, where if a company thinks their trade secrets are that important (often true in finance), they have to pay you your salary for the period of the non-compete.
908B64B197 5y ago
Non-competes are pretty much banned in the only place that matters for tech (California). It's one of the factor that drove the emergence of Silicon Valley. If your local state/country doesn't have California like laws, maybe it's an indicator it's time to jump ship!
bruiseralmighty 5y ago
I am intrigued by the framing of the 'banning' of non-competes as regulatory intervention. It seems to me like we would be asking the court to refuse to enforce a contract. But this refusal manifests as a distinct lack of intervention on the part of regulators. I.E. prior to this 'intervention' you could be hauled to court and/or jail for failure to meet a contractual obligation. Post 'intervention' nothing happens and you simply continue to search for a new job as you always had. I understand that in our given legal framework every change must be some kind of positive action, but it seems odd to me to frame it in conversation (as this article did) as a positive action rather than negative one which is how it actually manifests. I'll just finish by saying that I agree with the sentiment that non-competes should be unenforceable. If you do have company secrets an NDA has long standing precedent and is less intrusive.
legulere 5y ago
There are a lot of things you could do to let the labour market behave more like a free market, like for instance mandatory wage ranges on job postings. The problem is that a lot of people in power would lose from this and manage to prevent it from happening.
mtnGoat 5y ago
hopefully they die sooner, rather than later. ive never signed one, never will. literally walked away from business deals and job contracts because of this. try to restrict me into the future beyond our agreement and you are not worth my time. don't tell me i cant feed my kids the best way i know how and we can always come to a deal, otherwise you are not my friend. i aint that desperate to make others wealthy. :X
3wolf 5y ago
One argument in favor of non-competes in the consulting world is that they avoid a situation where Company B undercuts Company A during a recompete, and then poaches all of Company A's employees to staff the project (likely at lower salaries since they put in a lower bid on the contract).
wcunning 5y ago
Interesting anecdata: the automotive industry does not actively enforce any of this on engineering talent. Per one of the other comments, I am prevented from attempting to create a competitive product on my own time during my employment, but that's mostly an IP assignment clause and not directly non-compete. Honestly, they'd love for me to do a bunch of unpaid work that they'll assert ownership over, I'm sure. But, when I quit one of the Big 3 and moved to another (for better career movement, thank god), I didn't even have to live out my 2 weeks because I might steal IP, nevermind that I created a bunch of it, and no non-compete was mentioned. Similarly, lots of engineers move up and down from OEM to supplier and back again, so there's nothing directly tied to that either. The only example that I'm aware of in the industry at large was when Ford partnered with Argo AI, there was an agreement with Argo that they would not hire Ford engineers beyond the initial group going over as part of the partnership. My understanding, having no direct access to any agreements, was that this was fairly time limited, but did prevent me from applying at the time, though in retrospect, I'm grateful since Argo has a bad reputation for chewing up engineers. Final note: I'm curious if some rule along these lines would encourage more actions like the Google/Apple deal that wound up costing them in lawsuits later on -- specifically, would that kind of deal get more enforcement action and more scrutiny because it would be the last refuge after the non-compete if they were severely limited or banned?
avereveard 5y ago
A ban would be wildly exaggerated. As an employee you get privileged access to a wealth of trade secrets, so a compromise on your liberty to act upon these is needed. What they need is regulation; non compete need monetary compensation, if not during the time of employment, at least for the entire period they remain enforced after employment, with a regulated minimum compensation proportional to a significant fraction of what was the employment salary
singingfish 5y ago
Signing non-competes in australia is pretty standard. Understanding that non-competes are almost always unenforcable in australia is also pretty standard. I once spent a week in a foreign country under an assumed name because of an unenforcable non-compete - it wasn't because we thought I had a problem it was because of some ongoing acrimonious lawyering between the two companies which we didn't want me to contribute to.
silexia 5y ago
I am an employer with 180 employees and we absolutely should ban non competes. Doing so would increase competition throughout the market and the to better products for consumers and much better work lives for workers.
xyzzy21 5y ago
In California they are already illegal except at an executive level. As is working on your own as long as your use your own time, materials and resources, while working for a company. I think these are some of the few things the California does right; they definitely hit it out of the ball park. This dates back to the 1960s though, so there's no attribution to the current residents or government - I'd guess they'd love to get rid of it these days.
RIMR 5y ago
I have never signed a non-compete. An employer sent me home with an envelope full of employment paperwork once, and it included a non-compete. I shredded it, and returned everything else signed. They never noticed until they attempted to enforce it against me when I found a new job, and then they had nothing to stand on. It's one of the first questions I ask when interviewing now, and I treat it as an absolute deal-breaker.

511 points by jseliger 5y ago

Should be a requirement that, to be enforceable, a non-compete must pay the agreeing employee his salary for the duration of the agreement.

ghaff 5y ago
Some people might think that was a good deal to travel the world but not everyone. So you're at the peak of your career and you need to take a couple years off at significantly lower total comp (because no bonus/equity).
- deregulateMed 5y ago
  Start a new career, start an unrelated company, do non profit work, do research, etc... I imagine these people have money, so what's making potentially an extra 200k? You make that in a year.
  - ghaff 5y ago
    You live in a serious bubble if you think the typical person can shrug, say "what's $200K," and casually leave or take a break from the field they've been earning a living in.
    - deregulateMed 5y ago
      We are talking about people who's company actually used the non compete. These are not typical people.
      - ghaff 5y ago
        There is absolutely no guarantee of this.
      - awsthro00945 5y ago
        You really underestimate. Even standard entry-level developers are under NCAs, and I've had a former colleague (who was certainly "typical", and an additional $200k would have been life changing for them) who was hit with one. I have many other colleagues (again, just "typical" people) who lost out on job offers because the new company didn't even want to deal with the threat of an NCA.
      - grogenaut 5y ago
        I had a non-compete when I was making $50k
        deregulateMed 5y ago
        And did the company invoke it?
        hannasanarion 5y ago
        If they didn't want to invoke it, they wouldn't have put it in the contract. Would you sign a contract that says I have the right to point a gun at you at all times, with only my unofficial assurances that I won't pull the trigger?
- simcop2387 5y ago
  This would mean that you can then also work in a related but not competing industry at the same time. It's not a no-work afterwords contract, but don't compete with us. that won't affect your total compensation then, or your career trajectory usually either. The idea is that a non-compete should only be used for someone it will actually matter to the business the, and not all the low level employees that don't have any impact on anything like that. right now you have tech support and call center employees with year long non-competes that prevents the, from working in another similar role at a new company, https://www.protocol.com/policy/tech-non-compete https://www.protocol.com/policy/tech-non-compete
  - ghaff 5y ago
    So I'm a senior scientist at a pharma company. I want a new job. Cool. I can't take another pharma or biotech job but maybe I can go to coding camp and get a job mining people's data.
  - adventured 5y ago
    > This would mean that you can then also work in a related but not competing industry at the same time. If they're going to do it at all, and limit cruelty in the equation as much as possible, it should be very limited to directly comparable and competing products (Windows vs MacOS; Google Search vs Bing; consumer desktop operating systems and consumer search as narrow categories), rather than the industry broadly. Most people have a narrow labor specialization and spend their work years building up expertise and reputation in an industry. Any denial of work potential and opportunity that targets an entire industry is akin to labor cruelty and should be viewed as a human rights violation.
- fallingknife 5y ago
  But a non-compete doesn't mean that you have to take that time off. It means that you can't work for a competitor.
  - alistairSH 5y ago
    Sure, but depending on employer or industry, that could be many/all other employers. Biologist/chemist working on novel drugs - pretty limited field. Developer at Amazon - Amazon does a bit of everything, I bet their legal team would prefer you didn't work elsewhere. As noted elsewhere, it's not even so much about an NDA/non-compete is enforceable - just the threat of legal action is enough to stop employees moving or stop other employers hiring people.
- intricatedetail 5y ago
  In the current system you will never get wealthy from salary and bonuses, because companies are being taxed through workers by proxy and the pressure is for keeping salaries as low as possible. Only way to break through is to start own business and become lucky. Big companies keep lobbying for more red tape to keep new competition at bay.
heipei 5y ago
In Germany, a non-compete can only be enforced for up to two years and pays 50% of the last salary (by law).
- drclau 5y ago
  I believe this is true in most European countries, with minor variations.
  - rytis 5y ago
    not in the UK
- arcanus 5y ago
  Why not 100%?
  - radiator 5y ago
    It looks like it is "at least 50%" according to the law.
  - ghostbrainalpha 5y ago
    You don't think there should be any consideration for the fact the person is not performing any labor? They are still able to pursue employment in non competing fields. In a world where non-competes were funded 100% it seems like it should be the GOAL of every employee to be fired from a position where a non-compete needs to be enforced in order to secure extended paid vacations.
    - cwkoss 5y ago
      Society wants people to contribute productively. Stopping someone from working to protect business secrets is antisocial and bad for society. Really, companies should have to pay >100% salary as a disincentive to idling valuable labor.
- wwweston 5y ago
Taylor_OD 5y ago
Yeah the good old garden leave. I wish.
- etothepii 5y ago
  My 3 months in the garden was some of the best time of my life.
41209 5y ago
I'd still rather they be banned. Say you start as a junior at 80k , next year you get an offer for 150k , but you can't take it. You'd end up with a large 1 year resume gap, and losing 70k. The year of career stagnation wouldn't be worth it.
- gibba999 5y ago
  Or, you take a year to: - Get a Master's degree - Travel and see the world - Do consulting - Take a job in Indonasia - Teach - Develop a new open source project - Etc. The resume gap / career stagnation is a choice. It's rare that you can have a gap year like this. I totally don't feel bad about paid non-competes.
  - 41209 5y ago
    What if you have kids to provide for ? You'd might rather have more money. If you desperately need to increase your income even paid non competes are a bad deal
noitpmeder 5y ago
This kind of leave really doesn't exist outside of finance, and even then most companies would rather let you go unless you actually know some critical secret sauce.
filoleg 5y ago
That's how it usually works in finance/fintech with non-competes that extend beyond the period of employment (and not just for traders/analysts, it is the case for a good number of engineers and quants as well). You might not be getting the annual bonus (which is a major chunk of pay in finance), but you still get the full salary for the duration of the non-compete (usually 12-18mo). They also usually have a clause that it applies only to jobs in the same industry, so if you go from a finance shop to a FAANG company or another tech startup, then the non-compete is void, and you are welcome to pursue that opportunity without any 12-18mo timeouts (but your non-compete pay stops). That seems to be a reasonable compromise, because if you really want to continue working in finance, you are welcome to wait for 1-1.5 years while getting paid full salary (minus the annual bonus) for doing nothing. And if you want to start working again immediately, you are welcome to do so, as long as it is in an industry other than finance, and the non-compete pay stops (because non-compete at this point becomes void).

cortesoft 5y ago

My feeling has always been that non-competes are ok as long as it is an entirely separate agreement from employment. For example, you can sign a contract for $100,000 that you won’t work in field x for 2 years. If you decide to work in the field, you give up that money. The unfair thing is making it just a part of the standard employment contract.

benrbray 5y ago
> sign a contract for $100,000 that you won’t work in field x for 2 years Wow, sign me up!
- ghaff 5y ago
  Most people are not in the position to take a couple years off for $100K or to work, for almost certainly lower pay, in an unrelated field assuming they can find a professional job.
- skohan 5y ago
  It could be a really bad deal if you're basically throwing away 2 years of your career when you have maximum bargaining power
- cortesoft 5y ago
  If it isn't worth it to the company to pay, then they should let the person work for a competitor.
lupire 5y ago
I'd like to over you a job. It pays $50K/yr with an optional $100K/yr for a noncompete agreement. My competitor is offering $140K/yr.
- zatertip 5y ago
  I'll take that combo. Quit on the first day, live on Bali for 2 years.
5y ago

PragmaticPulp 5y ago

My state has severely limited non-compete agreements to the point that they’re only narrowly enforceable, if at all. That didn’t stop one of my previous employers from using non-compete scare tactics against employees. Many of us left in a large exodus when benefits and bonuses were cut and management made a number of other bad decisions. The company responded by sending remaining employees an e-mail with a list of competitors that they said would be covered by our non-compete agreement. The e-mail implied that if we wanted to leave for one of those companies we needed to get approval from the legal team before we moved, otherwise we might be at risk of being sued. My lawyer rolled his eyes when I showed it to him and explained that they wouldn’t win due to my state’s laws, but they could try to make my life difficult with legal proceedings if they wanted. The tactic worked enough to scare some of my old coworkers away from taking job offers at competitors, though. Some others also went into hiding and lied on their LinkedIn profiles to prevent their old employer from finding out they went to competitors. Having some clear, national guidelines that make non-competes a non-issue would do wonders for situations like this.

mountainriver 5y ago
What state is this?
- lekanwang 5y ago
  This is a decent state-by-state overview of the enforceability of non-competes: https://www.wonder.legal/us/guide/what-is-the-enforceability-of-non-competes-in-my-state https://www.wonder.legal/us/guide/what-is-the-enforceability...
- knappe 5y ago
  California, in all likelihood. California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
  - masklinn 5y ago

RikNieu 5y ago

I believe non-competes and claiming the IP of what employees do in their own time is ridiculous and way out of line. Employers do not own the people who work for them.

lupire 5y ago
No one owns anyone. IP assignment is contractual agreement in exchange for money. Just remember that when imputing your hourly pay and passive income opportunity.

closeparen 5y ago

This is why it’s a little ridiculous to think there could be a “tech hub” outside California. Sure maybe you have a lot of tech jobs in the same place, but that is of no consequence to the people who work them, since they’re all in binding non competes.

ghaff 5y ago
The idea that everyone who isn't in California is subject to draconian non-competes is California exceptionalism nonsense.
- lostcolony 5y ago
  This is a bit out of date, but - https://www.beckreedriden.com/wp-content/uploads/2019/01/Noncompetes-50-State-Survey-Chart-20190113.pdf https://www.beckreedriden.com/wp-content/uploads/2019/01/Non... There are three states where non competes are essentially not permitted. California, Oklahoma, and North Dakota. Now, certainly, it's up to the company whether or not it imposes a non-compete, and to what it covers/applies to. It might be that you never took a job with one. But I've been subject to them at every place I've worked outside of California. While they haven't had any particularly large effect on me, I've definitely had to go back and read the fine print when considering a job change once or twice (not to mention when it came to hiring past colleagues).
  - ghaff 5y ago
    I've never had one in LA, MA, or NH except for one time when EMC (who was one of the big players who resisted the non-compete changes that MA finally put in place) acquired the company I was at. The non-compete was reasonably narrow in scope--couldn't take a senior exec position at a storage vendor--but they were also very clear this wasn't negotiable. But I've certainly been aware of non-compete enforcement by the big companies in a certain category of consultants that basically meant anyone leaving couldn't do the same type of job anywhere for a couple years. My point though is that it's hardly universal even if not rare.

MattGaiser 5y ago

The absurd part of non-competes is that they want a guarantee of exclusivity on you without a guarantee of paying you for that period of exclusivity.

mrweasel 5y ago

You don’t exactly need to ban them, but the employees should be compensated during the non-compete period and limit the lenght of the non-compete contract. In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS, but you can go to Twitter.

TuringNYC 5y ago
This sounds good in theory, and I was once presented with a job opportunity with something similar to this. Except much of the compensation was not in salary. So while salary goes down 60%, total comp goes down way more -- all the non-salary components goes to zero.
- slymon99 5y ago
  This is definitely a problem, especially because industries who frequently utilize the paid non-compete (e.g. finance) often have a significant percent of comp from non-salary (bonuses etc). But you could fix this with craftier legislation instead of banning non-competes, e.g. maybe you have to pay the persons last years total compensation instead of just their salary
matsemann 5y ago
In Norway it's 100% pay up to some relative high amount. And the non-compete has to be very specifically towards me and my role at the company, not some generic "we do a little bit of x, y and z, therefore everything is considered a competitor". Actually my union, Tekna, was a big player in getting the laws much better in 2016. Unions work, and can be useful even for us techies even if in high demand.
- haraball 5y ago
  Though if you get a new job during the period the non-compete is valid, the amount can be reduced down to 50%, depending on your income. The company also can't enforce the non-compete if they fire you. The Norwegian way of handling this is good, I think.

ghaff 5y ago

I appreciate the gist of the article but IMO the CA/MA dichotomy (which is often mentioned--though MA significantly restricted non-competes a few years back) is facile. It's true that a lot of the new Internet/Web companies came out of California. And Apple is of course there as well. But the Route 128 companies mentioned in the article certainly traded employees, although in general employee tenures tended to be much longer than today. Data General, for example, was founded by a Digital engineer. Similarly there is a massive biotech/pharma cluster of companies in Kendall Square in Cambridge today.

gibba999 5y ago
The more nuanced take is that different IP and employment laws benefit different industries. Software benefits from no patents, limited-term copyrights, no NDAs, no non-competes, due to low cost-of-entry. Innovation is cheap but hard. Pharma benefits from strong IP, NDAs, non-competes, etc. due to high capital investment levels. Innovation is easy but expensive. Hardware varies.

light_hue_1 5y ago

There's so much wrong here. > The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off. > But suppose instead that innovation is difficult. Lukas Walton has a net worth of $22 billion because his grandfather founded Walmart. If he decided he really only needs $5 billion in life and is going to plow the other $17 billion into a massive R&D effort, how much innovation will he really generate? A huge amount. Plenty of people set up research institutes or new departments at universities that make giant leaps forward. See Paul Allen for example. > To a considerable extent, this hinges on poaching. Silicon Valley was a good place to grow Facebook because fast-growing Facebook could poach from older tech companies. I wish people would stop with this anti-labor language. Poaching? That's ridiculous. It starts by offering people a better place to work, with a better mission, better people, and more money. That's not "poaching". > And Silicon Valley is a good place to launch a startup today because you can poach from Facebook. That's funny. FB and other companies offer far more money than most startups can afford. That's not why the Valley is a good place to launch a startup. > One of the big, overarching problems of our time is that productivity growth has slowed down sharply from where it was during the post-WWII decades. The overarching problem of our time is that productivity no longer means higher salary and higher quality of life. Productivity keeps going up, but salaries stagnate. What's the incentive to be more productive? > In the early days of the computer industry, Silicon Valley was rivaled by the Route 128 corridor (this is a road through the Boston suburbs) in Massachusetts as a hub of innovation. But California won out decisively here, and many people think the lack of non-compete agreements in the Golden State is part of the reason. There's a lot of debate about this. And now we're running the decisive experiment! MA just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography). Let's see if the biotech industry stays.

ectopod 5y ago
>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. > No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off. The author is presenting the standard business argument, i.e. trade secrets are good for business and society generally because they generate wealth, non-competes protect trade secrets, so without non-competes trade secrets would be revealed and business and society would be poorer, so everyone would be worse off. The author isn't agreeing with this pov (and neither do you or I), they want to ban non-competes.

api 5y ago

Require companies to pay employees some percentage of their former salary (e.g. 20%) for the period of a non-compete, otherwise it is unenforceable. That would ensure that companies only bother to enforce non-competes when the stakes are high and it's serious, and prevent them from basically IP-trolling former employees by making such a thing unprofitable.

b3morales 5y ago
I have a very hard time with anything less than 100%. You're talking about preventing people from using their main skills to put food on the table. And frankly, even 100% discounts the professional development that comes in the natural course of employment. You will have missed opportunities for skill advancement and networking. After 2 years not working because of the non-compete, how are interviews for the next position going to go? You'll be rusty at best. Side projects are not, in general, a fair substitute: what does an Amazon SRE do on hardware at home that compares to what's on the job? Even for an individual developer, there's a world of difference hacking on your own web app and working on a team with large numbers of actual customers.
- filoleg 5y ago
  If that becomes the norm, attitudes towards it will change, because then you won't be perceived by hiring people as at a disadvantage, since everyone will be going through this. Of course, right now it sounds ridiculous, as the percentage of your current candidates with 1-2 year working gaps is a minority. The reason I believe this will work is because that's how it works in finance right now. 1.5-2 year long non-competes, you get paid full salary for those periods (minus the annual bonus). And you can make the same point, what are they gonna do in terms of personal projects? Kind of difficult to imagine someone trading hundreds of millions in some specialty equities for a hedge fund and then going back home for 2 years and doing the same kind of a "side project" there. Nothing they can do by themselves at home is comparable to what they could at the job. And yet, this is literally the norm now, and those people don't have any issues interviewing and getting jobs afterwards at competing finance shops.

phkahler 5y ago

>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. I don't agree. I think the non-compete is more an acknowledgement that certain people have a higher degree of mastery and understanding of a subject and that the company doesn't want to lose that. Having a competitor pick that up is probably a secondary concern to losing it. Also, it does not follow that anyone would pay lower salaries. I'd think higher compensation or better working environment would be used to retain those key people. This would lead to companies needing to have a better understanding of employee value (but that's another topic entirely) rather than just limiting their mobility.

ohazi 5y ago
> Also, it does not follow that anyone would pay lower salaries. Bullshit. If you could fuck off to any of a dozen companies doing similar work, your employee would have to pay you well and give you raises and treat you well in order to compel you to stay, otherwise you would leave. If employers had a magic button they could press to make it so that those dozen employers are too scared to hire you, or to make it so that you're worried about getting sued if you leave, then you will be more likely to stay at your employee, even if they treat you poorly and never give you a raise. The non-compete agreement is that button, and making you feel like you're captive and can't do anything about it is the real reason why companies like to mash it. They like being able to mistreat you with impunity.

calkuta 5y ago

We shall not dictate to others what type of private, mutually consensual agreements they may make.

mabbo 5y ago

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours. But my employer does everything. There is no field that my employer is not involved in, somehow. You can guess who they are, probably, or just read my profile. And they say "You cannot do anything that competes with anything we do". Which is everything. Want to make a Sudoku app? That's a game, we do games. Want to do some open source ML library work? We do ML, you can't do ML outside of work (I asked legal that one). And that's ignoring the who-knows-how-many secret un-released projects that might relate. They don't even tell us "no" anymore. They just say "read the non-compete agreement and do what it says". Basically "do what you like, but if we ever feel like it wasn't right, you're fired and maybe sued". And when I apply to other companies, they ask "do you have a github account?". No, I've been highly motivated not to. Edit: eesh, this was a bit of a rant, wasn't it? Apologies for that. But maybe folks have ideas on what to do about it, apart from the obvious.

tshaddox 5y ago
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours. Why is that obvious? If I work as a studio musician can I also be working on my own album after hours?
- an_opabinia 5y ago
  > If I work as a studio musician can I also be working on my own album after hours? Yes. > Why is that obvious? Just because there's a law somewhere that covers both a part of making music and part of making software, and just because some programmers make music and some musicians write software, and both are sometimes creative, doesn't mean they have much in common.
- lifeformed 5y ago

zucker42 5y ago

I strongly agree with the case against non-competes, and think almost all of them should be unenforceable. That said, is there any reason for this to be undertaken at the national level instead of the state level? Generally, I prefer state level interventions because they are easier to undo/avoid, less removed from the people they are serving, and less catastrophic if they are flawed (essentially, I agree with "laboratories of democracy" conception).

Teknoman117 5y ago

I lived in Alabama for 4 years or so and at least at the time (I have no idea if it's changed since I left), their non-compete situation was garbage. They were valid and enforceable even if you got laid off or fired. One of my friends' mother got laid off in the 2008 financial crisis from Bellsouth (or AT&T, I don't recall if the (re)merger was finished yet). She was told she couldn't work for any other telecom in the state for at least 18 months. She ended up going to stay with family in another state for that time so she could find another job, even though her husband and her son were in AL. It was a hard period for them. I've had a hatred of non-competes since for the most part. If you (a company) are afraid of losing key talent, maybe you should actively try to retain it rather than turning your company into a prison.

jonnycomputer 5y ago
Non-competes undermine one of the main ideas underpinning capitalism: the free flow of labor. Otherwise, you're just a damned serf.
- etothepii 5y ago
  I wonder if the "I have read the Terms and Conditions" checkbox has some responsibility for this. I'm constantly amazed at how many people don't seem to understand that a contract is a negotiation. Most people wouldn't dream of taking a job that didn't pay enough financially, but agree to jobs with awful terms and conditions because they didn't read. We are all used to contracts that are too long to understand.
  - jonnycomputer 5y ago
    Libertarians would permit people to sell themselves into slavery by contract. Another reason why libertarianism take too far is pure madness, and infantile fantasy.
- sonotathrowaway 5y ago
  That’s a feature, not a bug.

WaitWaitWha 5y ago

EDIT: I have completely went off on the wrong thought path. As noted, despite reading the article and comments, somehow my mind got latched onto NDAs instead of NCAs. Sorry. ---- I will be the contrarian. For those who insist on no NDA, what prevents ex-employees from spilling secrets to be hired at a competitor? I understand the concerns with NDAs. I was under one which limited my work in a radius, and within a very broad field. Imagine having to leave the country to practice in my field. The owner threatened me when I left (with tiny droplets of spittle on my face from his screaming). This kind of NDA is horrible. That said, NDAs are there to protect a company from ex-employees sharing competitive knowledge about a product or service, damaging or even shuttering a the company. I will ask you to sign an NDA if you want to work for me. You are not going to directly compete against me in a specific sub-industry, you are not taking my clients, and you are not poaching my employees for a reasonable period. This NDA is presented prior you taking the job. Not all NDAs are "out to get the little guy". Maybe NDAs need some precedent cases where overly broad NDAs are struck down.

lupire 5y ago
the topic is NCA, not NDA.
- WaitWaitWha 5y ago
  well... That was painful. :D
  - lupire 5y ago
    To be fair, the OP made the same mistake.
Avshalom 5y ago
Arguing for the status quo is not contrarian.
Frost1x 5y ago
It's interesting how we celebrate that capitalism instills competition that leads to global improvement for everyone, yet we like to hand-pick the segments of capitalism where we want competition and the segments we don't want competition. An NDA is one case of this, as are non-compete agreements, and many behaviors within cartels, say when Apple et al conspired to not hire each others labor. Usually, this hand-picking is performed by those succeeding the most in the given system because they have resources and leverage to dictate such terms and force them on others, yet another anticompetitive behavior. The fact is that most people just celebrate capitalism when it benefits them and reject it when it doesn't. Personally, I think any such agreements should be illegal. If we had more labor unions where the labor force organized and created their own anticompetitive behaviors to counter balance the leverage of large capital holders, then I'd be far more sympathetic. Such is not the case and the labor force is on a near Darwinian level of competitiveness so I have no sympathy for any sort of anticompetitive behaviors from businesses. To be clear, I understand how this perspective blows up many business models, but it has also blown up the livelihoods of many of us in the labor force on this push to commoditize labor for the goodness of whatever. I say, why don't we commoditize these business secrets for the same unknown goodness? Why is it we keep picking and choosing who gets breaks on competition and who doesn't. Let the markets decide.

rytis 5y ago

I'm in this pickle right now. It's a scare tactic. New employer would not take a bet, and that's understandable. Current employer responds with the most vague legalese possible to my straight up question "are you going to enforce?". The choices are: a) take a gamble against an entity that has so much more to fund their legal team than I will ever dream of or b) suck it up. Take a guess what most people pick, even if "most likely outcome" of enforcing non-compete is very slim. It's in UK btw.

etothepii 5y ago
Have you checked if your legal fees might be covered on your home contents policy.
- rytis 5y ago
  I do have legal coverage as part of home insurance package, however, it seem that it's only against direct "attack" towards me, and employment disputes aren't covered. Pretty useless tbh.

lyptt 5y ago

I had a non-compete at a previous employer that prevented me working in tech altogether for a year after quitting. Fortunately I managed to get out of that when they made me redundant. I doubt it'd stand up in court, but it's pretty shocking all the same.

Meph504 5y ago

In a world that is constantly touting competition drives innovation, it seems strange to me that this was ever legal. Restricting the industry a person can work in, or the ability to switch between companies at will only serves to harm the employee and their ability to negotiate their compensation. I've only signed one non compete, and where I am they are only enforceable in the county they are signed in, and even then it started the relationship with the employer off on the wrong foot, I didn't stay long.

austincheney 5y ago

I have never encountered a non-compete in my home state of Texas, so I looked this up: https://www.texasnoncompetelaw.com/articles/noncompete-agreements/ https://www.texasnoncompetelaw.com/articles/noncompete-agree... It appears in Texas non-competes are a thing, but only to restrict the direct transfer of business/market responsibility to a competing business, which I imagine generally applies to only senior executives and sales agents. It seems at one point almost all of the travel industry, except Expedia, was located in my area and people were bouncing between competing employers all the time without any limitation. People were even leaving their employers to found competing businesses without limitation. As somebody who has never had to deal with this madness it seems strange that any state would want to wound its own economy by restricting employee mobility.

wolverine876 5y ago
> it seems strange that any state would want to wound its own economy by restricting employee mobility It seems strange that a state would make laws that serve the interests of the wealthy and powerful?
claytonjy 5y ago
Good to know; I got a rather broader non-compete from an Austin startup recently, though they have an overseas HQ. To their credit, they removed it upon my request, though I ultimately accepted a different role.
HWR_14 5y ago
> it seems strange that any state would want to wound its own economy by restricting employee mobility. That's because you think the goal is to maximize the state's overall revenue/economy. It's not. It's to maximize the income to specific well connected individuals and their investments.

tracyhenry 5y ago

A noob question: how can a small business get to keep the secret ingredient of their success if employees are allowed to jump ship as they wish? From the employee perspective banning non-competes are ofc the best thing. But this feels terrible if it means that secret sauces of small startups will get copied easily (potentially by bigger players).

j4yav 5y ago
Patents if they are really secret sauce. If your startup fails because someone finds out what you are working on then you are already doomed.
- josaka 5y ago
  This is the right answer, and it has implications for the development of patent law: folks cheering the restrictions on NDAs should anticipate that doing so will tend to increase pressure on lawmakers to strengthen patent rights, as those investing in R&D lobby for other ways to protect their investments. Not saying we shouldn't weaken NDAs, though. The amazing last century of technical innovation emanating from California, which has relatively strong limits on NDAs, would suggest it's a good idea.
- tracyhenry 5y ago
  I don't feel this is the right answer. Patents are very time-consuming. Lawsuits (esp against big players) are something most startups can't afford.
ivanbakel 5y ago
The fact is that "secret sauces" are basically worthless. Every successful business is 99% execution (& luck). A startup, especially in tech, will never be able to base its value on something simple enough for an employee to smuggle out legally (i.e. in their brain).
- tracyhenry 5y ago
  This is a very biased view IMO. Plenty of businesses are based on patented secret sauces. Even for the type of companies that rely on execution, there will be important lessons learned, which ultimately become the "secret sauces". And you don't fear a random employee who might fit your secrets in their brain. You fear a set of experienced employees who can replicate your businesses somewhere else if they want to.

IncRnd 5y ago

> Joe Biden says he’s going to ask the Federal Trade Commission to try to ban non-compete agreements In the United States the Executive branch can't write their own law, even if it is to ban non-compete agreements.

hannasanarion 5y ago
1789 called, they want their naive interpretation of the Constitution back. Congress has the power to delegate regulatory authority to federal agencies. This precedent was established by the 2nd law Congress ever passed.

mattficke 5y ago

>The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. I don't think this is quite right. The main idea is that hiring and developing employees is hard and expensive, and companies want to have a claim on the future labor of the employee because of the investment they made. In the tech industry, recruiting fees of 25% of the first year salary are common, which is an enormous amount of money and shows how valuable anything that accelerates the hiring process is. Banning non-competes is a good idea for essentially the same reason a low unemployment rate is good: companies have to compete against each other to be the best place to work, which improves compensation and conditions for workers. It's easier when your only competition is poverty and unemployment, but that's not a good outcome for society at large.

johnrbent 5y ago

> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. Anyone else confused by this statement? How do you make the leap from non-competes to higher salaries, or conversely, that a ban on non-competes would result in lower salaries? I mean I think I can see the author's intent (that the company would need to divert funds from wages to somewhere else to protect their IP), but it seems like the rest of the article disagrees; namely, linking the Californian ban on NCAs to the innovative success in that state (and high salaries) would suggest that banning NCAs might foster higher wages. Intuitively, it feels like, in absence of a non-compete, a higher salary is the biggest deterrent to losing trade-secrets to other companies via poaching.

daveFNbuck 5y ago
I think the idea is that the non-compete increases your value to the company, and that your salary is strongly tied to your value to the company. Both of those are pretty questionable.

achenatx 5y ago

As a professional services company we have had a few people over the years shop their contract or try to go direct with the client. They essentially split our gross margin with the client. The client reduces their cost and the employee gets paid more. Our non-compete mainly is focused on not taking our clients.

ghaff 5y ago
I've heard those called non-solicitation agreements which seem perfectly reasonable.

cletus 5y ago

So let's differentiate between conflicts and noncompetes. Conflicts arise when you do work for someone else while employed by a company that may compromise your ability to effectively work for that company or may be detrimental to that company's business. This is an employment condition that is common and reasonable burt with large companies may exclude pretty much everything because large companies compete everywhere. Often companies will have a blanket rule on such things. This could be as simple as "this is your full time job, you can't have another" but it shouldn't exclude running a restaurant if your company is a food delivery app. Noncompetes apply after the end of employment. There are a very few high-level employees for which this makes sense. If someone can leave a company and take all that company's clients then that's a problem. But again noncompetes are used for normal employees that make no sense. We don't need to ban them. We need to force companies to pay for the privilege. Courts generally uphold the principle that a company can't deny you the reasonable ability to earn a living. So if you're a plumber and your noncompete says you can't work for another plumber within the same state then that's likely not enforceable. Rather than this interpretation, how about we force companies to say "we will pay you a year's salary upon termination and you agree not to work for X". I think you'll see a whole lot less noncompetes.

neilwilson 5y ago

This is where the U.K’s “try not to be a dick” approach to law wins out. A former employer has to show the court that they will suffer genuine damage if the clause is not enforced and even then the court won’t enforce it unless it is reasonable. The case law on that is pretty tight. If you’re setting up in direct competition and trying to poach clients and staff the courts will favour the former employer. If you’re just moving to another job then courts will likely favour you. The courts recognise that there is an imbalance of power between employer and employer in the job market. Although each case turns on the specifics the English concept of reasonableness runs through its resolution.

plank_time 5y ago

The fact that Silicon Valley thrives without non-competes proves that they are unnecessary. It’s just a way for employers to put their claws in employees. If non-competes came with guaranteed 100% salary during the non-compete time, that would be more palatable.

rafaelero 5y ago

Any type of non-compete agreement is ridiculous and the fact that it is so widespread in what was supposed to be the most free country in the world makes you guys look like a joke.

jxidjhdhdhdhfhf 5y ago

IMO, non-competes should always include cash payments to the former employee. For example, if your employer doesn't want you to go to a competitor for a year then they should pay you full salary plus the value of whatever benefits you had for that year to not work in your field.

occz 5y ago
Agreed. A multiple of the total compensation of the competitor is warranted.

lsllc 5y ago

Related article/discussion on Biden's recent executive order on non-competes: https://news.ycombinator.com/item?id=27855855 https://news.ycombinator.com/item?id=27855855

LightG 5y ago

Cartman Voice: "Whatever! I compete with whoever I want!". https://www.youtube.com/watch?v=IpF9O0R873I https://www.youtube.com/watch?v=IpF9O0R873I

DebtDeflation 5y ago

Non-competes jumped the shark when Jimmy Johns started requiring their Sandwich Artists to sign them.

softwaredoug 5y ago

Consultant/freelancers frequently deal with: Client: "you can't work with competitors" Consultant: "ok, how do you define competitor?" Client: "Anyone that might compete with a line-of-business we have or plan to have" Consultant: "ok, can you list those lines of businesses?" Client: "no... some are in R&D phases... many won't even work out" Consultant: "can you just give us a list of competitors?" Client: "not really, because who knows what kind of company we'll be in 3 years!"

BrandoElFollito 5y ago

Non-competes in France are regulated by law. If you put one in the contract, it means that you have to compensate me (70% of total compensation if memory serves me right) during the time it is enforced. Since there is no way for me company to know where I am going, it may mean 70% of salary for free, if I go to a non competitor. It is rarely enforced, though. The second non compete (while working at a company) is very muddy waters though.

saxman001 5y ago

I think that non-competes can be valid in very narrow, very specific scopes. One of my friends has a job that involves evaluating companies and allocating millions of dollars of funding towards them. His contract states that he cannot go and work for the companies that he's evaluating for two years.

A4ET8a8uTh0 5y ago

I think the issue with non competes is that it was taken from the world of highly paid executives and some companies tried ( https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compete-clauses-following-settlement.html https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compet... ) to apply those to rank and file employees. Needless to say, that sort of non-compete should be outright banned. I do have some mixed feelings about them the higher you go in the company hierarchy.

blhack 5y ago

Somebody downthread made what I thought was a joke about Jimmy John's requiring employees to sign non compete agreements. Apparently it wasn't a joke: https://www.reuters.com/article/us-jimmyjohns-settlement-idUSKBN13W2JA https://www.reuters.com/article/us-jimmyjohns-settlement-idU... >The Jimmy John’s agreement prohibited employees during their employment and for two years afterward from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within 2 miles of any Jimmy John’s shop in the United States This is absolutely absurd. I worked on JJ's when I was in college. I honestly had no idea that this was a thing. These companies know that these contracts are almost certainly unenforceable, but they also know that their employees won't have the money to fight them. No acceptable.

igorzx31 5y ago

Garden leave vs non-competes are very different.

notananthem 5y ago

Noncompetes should be illegal. Competition is good. Noncompetes are only harmful.

seanhunter 5y ago

Had a fun one just happen to me in the last few days. I got contacted by an agent out of the blue. "Hey Sean we've got a role that you seem perfect for, just sign this NDA so we can talk." I look at the NDA and it includes a noncompete for the duration of the project + 12 months after. The nda is also not mutual so the noncompete and nondisclosure is only binding on me not the other party. In fact I don't even know who the other party is or what they do. Only if I sign this then for an undisclosed period of the project + 12 months _whether or not I get the job_ I can't compete with them whatever they do. I get back to the agent and say there's no way I can sign a noncompete until I know what it is I'm committing not to compete with. The guy spends several days trying various desperate negotiating tactics "I spoke to my boss and he says there really is no risk to you if you sign this, it's totally standard"... "I spoke with our CFO and you have to sign for us to proceed"....(That's great for your boss and CFO but I'm the one on the hook here if I sign, not them) "The noncompete really doesn't commit you to anything, but you have to sign..." (if it doesn't commit me to anything there's no downside to you removing it) ... "The client is so secretive and the project such a big deal we can't risk it leaking..." etc. At each point I just held firm and said there's no way I can sign a noncompete unless I know what I'm committing not to compete with. After one more go of "there's no way we can go ahead without an NDA in place" (even though I've already said I'm happy with the NDA as long as they strike the noncompete clause) I said "OK well in that case it's 'no thanks' from me". 24 hours later they get back to me with "What about if we tell you who the client is, will you sign then?". I'm just letting them marinade for now...

glenneroo 5y ago
Well since you didn't sign the NDA... care to divulge who was making this preposterous "offer"? ;)
- seanhunter 5y ago
  I currently don't know. Just dealt with a random agency who was representing them.
908B64B197 5y ago
Quote them a rate that's 5x what you normally go for and see if they bite. Add a clause where you need to be compensated for the complete duration of the non-compete too. See if they respond.

Quanttek 5y ago

I don't get the following quote: > The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off. If employers lack such "protections" (i.e. non-competes), wouldn't they need to pay a higher salary, so that their workers are not poached by rival companies?

MrStonedOne 5y ago
This is misinformation 101, state a detailed premise, tie it in with some cause and effect that sounds plausible, make no attempt to back up the synthesis.
hannasanarion 5y ago
Also, the correct method for preventing disclosure of trade secrets is NDA, not Non-Compete.

slymon99 5y ago

This is entirely different from garden leave (a non-compete period where you remain on payroll but are not working), correct? This seems like a fair version, where if a company thinks their trade secrets are that important (often true in finance), they have to pay you your salary for the period of the non-compete.

908B64B197 5y ago

Non-competes are pretty much banned in the only place that matters for tech (California). It's one of the factor that drove the emergence of Silicon Valley. If your local state/country doesn't have California like laws, maybe it's an indicator it's time to jump ship!

bruiseralmighty 5y ago

I am intrigued by the framing of the 'banning' of non-competes as regulatory intervention. It seems to me like we would be asking the court to refuse to enforce a contract. But this refusal manifests as a distinct lack of intervention on the part of regulators. I.E. prior to this 'intervention' you could be hauled to court and/or jail for failure to meet a contractual obligation. Post 'intervention' nothing happens and you simply continue to search for a new job as you always had. I understand that in our given legal framework every change must be some kind of positive action, but it seems odd to me to frame it in conversation (as this article did) as a positive action rather than negative one which is how it actually manifests. I'll just finish by saying that I agree with the sentiment that non-competes should be unenforceable. If you do have company secrets an NDA has long standing precedent and is less intrusive.

legulere 5y ago

There are a lot of things you could do to let the labour market behave more like a free market, like for instance mandatory wage ranges on job postings. The problem is that a lot of people in power would lose from this and manage to prevent it from happening.

mtnGoat 5y ago

hopefully they die sooner, rather than later. ive never signed one, never will. literally walked away from business deals and job contracts because of this. try to restrict me into the future beyond our agreement and you are not worth my time. don't tell me i cant feed my kids the best way i know how and we can always come to a deal, otherwise you are not my friend. i aint that desperate to make others wealthy. :X

3wolf 5y ago

One argument in favor of non-competes in the consulting world is that they avoid a situation where Company B undercuts Company A during a recompete, and then poaches all of Company A's employees to staff the project (likely at lower salaries since they put in a lower bid on the contract).

wcunning 5y ago

Interesting anecdata: the automotive industry does not actively enforce any of this on engineering talent. Per one of the other comments, I am prevented from attempting to create a competitive product on my own time during my employment, but that's mostly an IP assignment clause and not directly non-compete. Honestly, they'd love for me to do a bunch of unpaid work that they'll assert ownership over, I'm sure. But, when I quit one of the Big 3 and moved to another (for better career movement, thank god), I didn't even have to live out my 2 weeks because I might steal IP, nevermind that I created a bunch of it, and no non-compete was mentioned. Similarly, lots of engineers move up and down from OEM to supplier and back again, so there's nothing directly tied to that either. The only example that I'm aware of in the industry at large was when Ford partnered with Argo AI, there was an agreement with Argo that they would not hire Ford engineers beyond the initial group going over as part of the partnership. My understanding, having no direct access to any agreements, was that this was fairly time limited, but did prevent me from applying at the time, though in retrospect, I'm grateful since Argo has a bad reputation for chewing up engineers. Final note: I'm curious if some rule along these lines would encourage more actions like the Google/Apple deal that wound up costing them in lawsuits later on -- specifically, would that kind of deal get more enforcement action and more scrutiny because it would be the last refuge after the non-compete if they were severely limited or banned?

avereveard 5y ago

A ban would be wildly exaggerated. As an employee you get privileged access to a wealth of trade secrets, so a compromise on your liberty to act upon these is needed. What they need is regulation; non compete need monetary compensation, if not during the time of employment, at least for the entire period they remain enforced after employment, with a regulated minimum compensation proportional to a significant fraction of what was the employment salary

singingfish 5y ago

Signing non-competes in australia is pretty standard. Understanding that non-competes are almost always unenforcable in australia is also pretty standard. I once spent a week in a foreign country under an assumed name because of an unenforcable non-compete - it wasn't because we thought I had a problem it was because of some ongoing acrimonious lawyering between the two companies which we didn't want me to contribute to.

silexia 5y ago

I am an employer with 180 employees and we absolutely should ban non competes. Doing so would increase competition throughout the market and the to better products for consumers and much better work lives for workers.

xyzzy21 5y ago

In California they are already illegal except at an executive level. As is working on your own as long as your use your own time, materials and resources, while working for a company. I think these are some of the few things the California does right; they definitely hit it out of the ball park. This dates back to the 1960s though, so there's no attribution to the current residents or government - I'd guess they'd love to get rid of it these days.

RIMR 5y ago

I have never signed a non-compete. An employer sent me home with an envelope full of employment paperwork once, and it included a non-compete. I shredded it, and returned everything else signed. They never noticed until they attempted to enforce it against me when I found a new job, and then they had nothing to stand on. It's one of the first questions I ask when interviewing now, and I treat it as an absolute deal-breaker.