4 ms·

I think a better system is an up-front repayable bonus: "We'll pay you $2k on sign-on, but you have to stay for 2 years" or something. This benefits job applic

I think a better system is an up-front repayable bonus: "We'll pay you $2k on sign-on, but you have to stay for 2 years" or something. This benefits job applicants (extra money!), employers (retention), and protects applicants (employers abusing non-compete agreements for everything), and is a far easier legal process to execute.

bhaney 4y ago
This seems like the equivalent of a predatory loan with the interest paid in opportunity cost, and doesn't even properly address the same problem that noncompetes do.
- gruez 4y ago
  >This seems like the equivalent of a predatory loan with the interest paid in opportunity cost I don't see the issue. If you feel like you might bail later, you're free to keep the money in an interest bearing account so you can pay it back.
- ghaff 4y ago
  I agree with the second part but otherwise seems like an RSU schedule for a public company.
shagie 4y ago
That's attempting to solve a different problem (employee retention) than non-competes attempt to address in their original form. For example, how does a company prevent (setting aside the "should they" debate) an employee from: 1) leaving and starting up a consultancy for installing former employer's software (competing with company professional services) 2) leaving and starting up a new company that is a competitor to the former company
- exabrial 4y ago
  1) That would be IP theft, and is already covered by other laws. 2) That is the problem I think this solves: retain your key employees. Maybe pay them a bit better than that 2% annual raise.
  - shagie 4y ago
    Starting up a consultancy to do installation of your former employer's software for clients isn't IP theft. If I worked for Atlassian and then created a company that did consulting for how to install Jira and and organize workflows - there's no IP theft involved there. Creating a new competitor isn't about retaining employees. Consider the situation of https://en.wikipedia.org/wiki/Rose_Blumkin https://en.wikipedia.org/wiki/Rose_Blumkin > In 1989, six years after selling 90% of her company to Berkshire Hathaway, Blumkin retired, only to come out of retirement in three months to open up a rival store. It was called "Mrs. B's Clearance and Factory Outlet" and was situated directly across the street from the Furniture Mart. It became profitable by 1991. Buffett acquired the business in 1992. Blumkin continued to be involved in day-to-day operations until shortly before her death at the age of 104. While this case wasn't covered and Buffett certainly handled it different than the non-compete, but should there be the ability to prevent that sort of behavior with a non-compete agreement?
    - snapcaster 4y ago
      I fail to see what's wrong with this. Not trolling, what actual harm is being done here? it should be priced into the risk of acquiring the company right?
    - yellowapple 4y ago
      > If I worked for Atlassian and then created a company that did consulting for how to install Jira and and organize workflows - there's no IP theft involved there. That also seems like a very silly thing to prohibit in the first place, since Atlassian's getting paid either way in that case.
    - exabrial 4y ago
      I'm sorry, I misread the parent comment. I thought they meant recreating the the software, not installing it.
      - shagie 4y ago
        I'm thinking more the professional services / support. "I used to work for $foocorp, pay me $money and I will help you install your software and support it better than $foocorp offers." Another example is Epic's "not quite a non-compete" is that they won't release the certificates(?) that an employee got for supporting their software (as part of employee training) for a period of time after separating from the company. I'll admit to being hazy on this but (I believe) that this is to make it difficult to start a consultancy for installing health care software right after leaving as you wouldn't be able to demonstrate the certificates that you got while working there (and getting them again is costly). Though, if you want an example of "recreate the software" (though not with IP infringements), look at Dave Hitz and James Lau from Netapp and that they formerly worked at Auspex. I'm sure that they dotted all the 'i's and crossed all the 't's with leaving a company and starting a new one that became a direct competitor - but that sort of thing happens too. I'm not sure what California's non-compete laws were like in '92. --- The "you can't work anywhere using a computer" as a non-compete is certainly something that isn't reasonable. A "you can't start a competing company and try to get former clients to switch to you after selling your old one" is enforceable. So where does the "you leave a company and then start a consultancy that competes directly with the professional services, consulting, or support of the previous company" fall? That's a question I haven't found an answer to. As to the bit on some things being enforceable: Blue Mountain Enterprises, LLC v. Owen ( https://law.justia.com/cases/california/court-of-appeal/2022/a157054.html https://law.justia.com/cases/california/court-of-appeal/2022... ) > Primary Holding > Court of appeal upholds the enforcement of a restrictive covenant against a former employee who had sold his ownership interest in the company while concurrently agreeing to the covenant. And we've got an example where a non-compete / non-solicitation agreement was enforced, appealed, and found correct.
ptmcc 4y ago
I don't see how this addresses non-competes at all. Also that is already how many sign-on bonuses work. Retention is only tangentially related to non-competes. People leave for all sorts of reasons. If a company wants to restrict what they can do after they leave then they can pay them for that supposed value. We'd find out really quickly that most non-competes are bunk. Not to mention that you'd need to add a couple zeroes to that sign-on bonus for it to mean squat to anyone actually working with valuable proprietary information.

bhaney 4y ago

This seems like the equivalent of a predatory loan with the interest paid in opportunity cost, and doesn't even properly address the same problem that noncompetes do.

gruez 4y ago
>This seems like the equivalent of a predatory loan with the interest paid in opportunity cost I don't see the issue. If you feel like you might bail later, you're free to keep the money in an interest bearing account so you can pay it back.
ghaff 4y ago
I agree with the second part but otherwise seems like an RSU schedule for a public company.

shagie 4y ago

That's attempting to solve a different problem (employee retention) than non-competes attempt to address in their original form. For example, how does a company prevent (setting aside the "should they" debate) an employee from: 1) leaving and starting up a consultancy for installing former employer's software (competing with company professional services) 2) leaving and starting up a new company that is a competitor to the former company

exabrial 4y ago
1) That would be IP theft, and is already covered by other laws. 2) That is the problem I think this solves: retain your key employees. Maybe pay them a bit better than that 2% annual raise.
- shagie 4y ago
  Starting up a consultancy to do installation of your former employer's software for clients isn't IP theft. If I worked for Atlassian and then created a company that did consulting for how to install Jira and and organize workflows - there's no IP theft involved there. Creating a new competitor isn't about retaining employees. Consider the situation of https://en.wikipedia.org/wiki/Rose_Blumkin https://en.wikipedia.org/wiki/Rose_Blumkin > In 1989, six years after selling 90% of her company to Berkshire Hathaway, Blumkin retired, only to come out of retirement in three months to open up a rival store. It was called "Mrs. B's Clearance and Factory Outlet" and was situated directly across the street from the Furniture Mart. It became profitable by 1991. Buffett acquired the business in 1992. Blumkin continued to be involved in day-to-day operations until shortly before her death at the age of 104. While this case wasn't covered and Buffett certainly handled it different than the non-compete, but should there be the ability to prevent that sort of behavior with a non-compete agreement?
  - snapcaster 4y ago
    I fail to see what's wrong with this. Not trolling, what actual harm is being done here? it should be priced into the risk of acquiring the company right?
  - yellowapple 4y ago
    > If I worked for Atlassian and then created a company that did consulting for how to install Jira and and organize workflows - there's no IP theft involved there. That also seems like a very silly thing to prohibit in the first place, since Atlassian's getting paid either way in that case.
  - exabrial 4y ago
    I'm sorry, I misread the parent comment. I thought they meant recreating the the software, not installing it.
    - shagie 4y ago
      I'm thinking more the professional services / support. "I used to work for $foocorp, pay me $money and I will help you install your software and support it better than $foocorp offers." Another example is Epic's "not quite a non-compete" is that they won't release the certificates(?) that an employee got for supporting their software (as part of employee training) for a period of time after separating from the company. I'll admit to being hazy on this but (I believe) that this is to make it difficult to start a consultancy for installing health care software right after leaving as you wouldn't be able to demonstrate the certificates that you got while working there (and getting them again is costly). Though, if you want an example of "recreate the software" (though not with IP infringements), look at Dave Hitz and James Lau from Netapp and that they formerly worked at Auspex. I'm sure that they dotted all the 'i's and crossed all the 't's with leaving a company and starting a new one that became a direct competitor - but that sort of thing happens too. I'm not sure what California's non-compete laws were like in '92. --- The "you can't work anywhere using a computer" as a non-compete is certainly something that isn't reasonable. A "you can't start a competing company and try to get former clients to switch to you after selling your old one" is enforceable. So where does the "you leave a company and then start a consultancy that competes directly with the professional services, consulting, or support of the previous company" fall? That's a question I haven't found an answer to. As to the bit on some things being enforceable: Blue Mountain Enterprises, LLC v. Owen ( https://law.justia.com/cases/california/court-of-appeal/2022/a157054.html https://law.justia.com/cases/california/court-of-appeal/2022... ) > Primary Holding > Court of appeal upholds the enforcement of a restrictive covenant against a former employee who had sold his ownership interest in the company while concurrently agreeing to the covenant. And we've got an example where a non-compete / non-solicitation agreement was enforced, appealed, and found correct.

ptmcc 4y ago

I don't see how this addresses non-competes at all. Also that is already how many sign-on bonuses work. Retention is only tangentially related to non-competes. People leave for all sorts of reasons. If a company wants to restrict what they can do after they leave then they can pay them for that supposed value. We'd find out really quickly that most non-competes are bunk. Not to mention that you'd need to add a couple zeroes to that sign-on bonus for it to mean squat to anyone actually working with valuable proprietary information.