4 ms·

I'm fine with allowing non-competes as long as the company pays the ex-employee their full salary for the length of the non-compete and can't rescind the non-co

I'm fine with allowing non-competes as long as the company pays the ex-employee their full salary for the length of the non-compete and can't rescind the non-compete without mutual consent. For example, an 18 month non-compete would mean 18 months of paid vacation after you leave a job. I imagine this would be functionally equivalent to a ban on non-competes because it seems like it'd be an insane waste of money but if a company wants to provide a paid vacation on the way out I see no reason to stop them. Unpaid non-competes should be illegal as somebody's right to earn a living trumps a corporation's right to impose an unconscionable contract on its employees.

MichaelZuo 4y ago
This is a smart way to go about it. Only a tiny portion of truly critical positions would have compensated non-competes under this system and the rest would have no such blocks.
- LadyCailin 4y ago
  This is how it works in Norway.
divbzero 4y ago
Paying to delay competitors could be a good use of money for companies in many circumstances. That would work fine for an individual from a financial perspective, but keeping talent away from work is suboptimal for society as a whole.
- ska 4y ago
  > but keeping talent away from work is suboptimal for society I think this is basically a non-issue in practice. People with such iron-clad non-competes typically either a) take a non competing job, or b) work on something anyway. The latter effectively means the original company funds some research. If you do this with say, sales people, or traders, or whatever, it shuts down their work. If you do it with engineers they'll just make something at home.
  - hn_zorba 4y ago
    I'm impressed by your faith in engineers, but it might be misplaced. I enjoyed a five months paid non compete when last moving between banks, and build nothing worthwhile during that time.
    - TeMPOraL 4y ago
      > I enjoyed a five months paid non compete when last moving between banks, and build nothing worthwhile during that time. Every now and then I see someone comment on HN about their experience with longer between-jobs periods, sabbatical, etc. The core theme I've noticed is that, apparently, it's common to "waste" some 3-6 months before one starts making good use of their time - apparently this is how much it takes to properly switch over to being fully self-directed. If that hypothesis is accurate, then it's not surprising you've built "nothing worthwhile" during your five-month break - you've got yanked back into employment right as you were finally ready to make good use of your time!
makestuff 4y ago
Yeah that is pretty common in the hedge fund/trading world. They call it garden leave and you get your base salary for usually 6-18 months. The downside to that is you only get your base salary which is usually a fraction of the expected bonus.
- SuperQue 4y ago
  > garden leave It's called the same thing in Germany. The term also applies to when you quit, but the employer wants to cut your access to the company ahead of your contract termination date. It's typical to have 1-3 months of "notice period" in Germany.
6502nerdface 4y ago
This is almost exactly how noncompetes work in practice in the finance industry, where most employment contracts are governed by New York law or something similar, which will generally require the payment of "consideration" during the noncompete for it to be enforceable. The amount of consideration is part of what you negotiate when you join, generally always at least your most recent base salary at resignation, but possibly much more, i.e. some fraction of your total comp. Usually the way it works is that when you resign, the employer has a fixed amount of time (specified in your contract) within which to decide whether to exercise the noncompete, and for how long (i.e. they could elect a subset of the maximum term in your contract), and once exercised, they can't change their mind. If you violate the noncompete, they'll of course stop the payments, possibly claw back payments, keep your deferred comp (which they are holding over your head during the noncompete), possibly reset the noncompete clock (so you have to start waiting all over again), and possibly sue you. Details will vary, but broadly that's my experience. Some consider it one of the major perks of the industry, assuming you become important enough to have it exercised on you, and would be sad to see them banned. Firms consider it money well spent, which makes sense when you consider that investment strategies have no real protection as intellectual property... copyright is only narrowly useful, patenting would mean disclosing, and so at the end of the day they are just trade secrets, which can really only be protected by nondisclosure and noncompete agreements.
karthikb 4y ago
> I see no reason to stop them This sort of a non-compete would almost have certainly resulted in Zoom not being built.
kelnos 4y ago
I think that's fine for the employee (great, really: long-term paid vacation!), but if the goal is to create the "next Silicon Valley" or whatever, then allowing paid non-competes is going to work against that goal. You want an employee to get excited about striking out on their own and starting a company, immediately after quitting their old job (or, hell, before quitting their old job, as some SV founders do). Allowing their previous employer to delay that by 6, 12, 18 months (or whatever) isn't great for the entrepreneurial spirit.
- rcxdude 4y ago
  Maybe, but the cost means that it won't be the norm, they'll only actually exercise it when they really, really need to.
SuperQue 4y ago
This is functionally how it works in Germany. Usually reserved for C-level types. It's also done because it not allowed to have anti-poaching clauses IIRC.

MichaelZuo 4y ago

This is a smart way to go about it. Only a tiny portion of truly critical positions would have compensated non-competes under this system and the rest would have no such blocks.

LadyCailin 4y ago
This is how it works in Norway.

divbzero 4y ago

Paying to delay competitors could be a good use of money for companies in many circumstances. That would work fine for an individual from a financial perspective, but keeping talent away from work is suboptimal for society as a whole.

ska 4y ago
> but keeping talent away from work is suboptimal for society I think this is basically a non-issue in practice. People with such iron-clad non-competes typically either a) take a non competing job, or b) work on something anyway. The latter effectively means the original company funds some research. If you do this with say, sales people, or traders, or whatever, it shuts down their work. If you do it with engineers they'll just make something at home.
- hn_zorba 4y ago
  I'm impressed by your faith in engineers, but it might be misplaced. I enjoyed a five months paid non compete when last moving between banks, and build nothing worthwhile during that time.
  - TeMPOraL 4y ago
    > I enjoyed a five months paid non compete when last moving between banks, and build nothing worthwhile during that time. Every now and then I see someone comment on HN about their experience with longer between-jobs periods, sabbatical, etc. The core theme I've noticed is that, apparently, it's common to "waste" some 3-6 months before one starts making good use of their time - apparently this is how much it takes to properly switch over to being fully self-directed. If that hypothesis is accurate, then it's not surprising you've built "nothing worthwhile" during your five-month break - you've got yanked back into employment right as you were finally ready to make good use of your time!

makestuff 4y ago

Yeah that is pretty common in the hedge fund/trading world. They call it garden leave and you get your base salary for usually 6-18 months. The downside to that is you only get your base salary which is usually a fraction of the expected bonus.

SuperQue 4y ago
> garden leave It's called the same thing in Germany. The term also applies to when you quit, but the employer wants to cut your access to the company ahead of your contract termination date. It's typical to have 1-3 months of "notice period" in Germany.

6502nerdface 4y ago

This is almost exactly how noncompetes work in practice in the finance industry, where most employment contracts are governed by New York law or something similar, which will generally require the payment of "consideration" during the noncompete for it to be enforceable. The amount of consideration is part of what you negotiate when you join, generally always at least your most recent base salary at resignation, but possibly much more, i.e. some fraction of your total comp. Usually the way it works is that when you resign, the employer has a fixed amount of time (specified in your contract) within which to decide whether to exercise the noncompete, and for how long (i.e. they could elect a subset of the maximum term in your contract), and once exercised, they can't change their mind. If you violate the noncompete, they'll of course stop the payments, possibly claw back payments, keep your deferred comp (which they are holding over your head during the noncompete), possibly reset the noncompete clock (so you have to start waiting all over again), and possibly sue you. Details will vary, but broadly that's my experience. Some consider it one of the major perks of the industry, assuming you become important enough to have it exercised on you, and would be sad to see them banned. Firms consider it money well spent, which makes sense when you consider that investment strategies have no real protection as intellectual property... copyright is only narrowly useful, patenting would mean disclosing, and so at the end of the day they are just trade secrets, which can really only be protected by nondisclosure and noncompete agreements.

karthikb 4y ago

> I see no reason to stop them This sort of a non-compete would almost have certainly resulted in Zoom not being built.

kelnos 4y ago

I think that's fine for the employee (great, really: long-term paid vacation!), but if the goal is to create the "next Silicon Valley" or whatever, then allowing paid non-competes is going to work against that goal. You want an employee to get excited about striking out on their own and starting a company, immediately after quitting their old job (or, hell, before quitting their old job, as some SV founders do). Allowing their previous employer to delay that by 6, 12, 18 months (or whatever) isn't great for the entrepreneurial spirit.

rcxdude 4y ago
Maybe, but the cost means that it won't be the norm, they'll only actually exercise it when they really, really need to.

SuperQue 4y ago

This is functionally how it works in Germany. Usually reserved for C-level types. It's also done because it not allowed to have anti-poaching clauses IIRC.