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In finance though, don’t people usually get a cushy 6 month paid “gardening leave” when they switch? So I’m not sure how much non-competes help if employees are

In finance though, don’t people usually get a cushy 6 month paid “gardening leave” when they switch? So I’m not sure how much non-competes help if employees are already being offered contracts and $$$ to not compete. This law won’t make “gardening leave” any cushier?

standardUser 3y ago
That sounds like it applies to a miniscule amount of workers, while many more workers are forced to sign non-competes but get no special treatment (or cash) from their employer for bearing that burden.
- frankc 3y ago
  Not really. It's widely understood that NY won't enforce a non-compete if its not paid. It's very common in the hedge fund world to get paid your salary for a year to do nothing, even for junior developers. It depends on if the company really wants to hold you out or not. They will release you from the non-compete if they don't want to pay. On the other hand, in the hedge fund world, bonuses are a big part of comp but generally only base pay is paid out, so in reality you might be say 150K to 250K while your comp in expectation is much, much higher. For a junior dev maybe your bonus is .3x to .6x base but for someone senior, your bonus might be 1x to 5x base or more depending on where you sit in the organization. Therefore sitting out still costs you a lot of money.
  - masklinn 3y ago
    > It's widely understood that NY won't enforce a non-compete if its not paid. I’m sure the Walmart cashier with a non-compete hanging around their neck is much appeased by this.
    - JumpCrisscross 3y ago
      > sure the Walmart cashier with a non-compete hanging around their neck is much appeased by this You describe an enforcement, not legal issue. Even with this legislation, the manager can still verbally threaten the employee.
      - anonymouskimmer 3y ago
        I am not a lawyer but it strikes me that such a threat (of action which the employer is not legally entitled to take) would probably violate a law or two. This wouldn't help the employee unless they went to court or the NLRB with it, but if some employee eventually did the court/NLRB may require things from the employer to prevent such incidents in the future.
    - xyzzyz 3y ago
      I don’t think Walmart cashiers are saddled with non compete. You might have a good point here, but you will fail to get it across if you frame it in such ludicrous, obviously false way.
      - duskwuff 3y ago
        I don't know about Walmart cashiers, but non-competes are concerningly common for entry-level positions like sandwich chefs or delivery drivers: https://www.nytimes.com/2014/10/15/upshot/when-the-guy-making-your-sandwich-has-a-noncompete-clause.html https://www.nytimes.com/2014/10/15/upshot/when-the-guy-makin...
        xyzzyz 3y ago
        This article is just NYTimes grasping at straws, trying to conjure a narrative that’s completely foreign to 99.999% low wage workers. Non-compete clauses are not “concerningly common”, these are in fact so rare that NYT couldn’t even point out to a single example of non-compete actually affecting low-wage workers: their leading example of Jimmy Johns is not something that ever been enforced, and I seriously doubt that any worker there is even aware of this clause in the contract (low wage workers don’t read these anyway).
        anonymouskimmer 3y ago
        https://www.bls.gov/opub/mlr/2022/article/noncompete-agreements-bargaining-and-wages-evidence-from-the-national-longitudinal-survey-of-youth-1997.htm https://www.bls.gov/opub/mlr/2022/article/noncompete-agreeme... This is data from a longitudinal survey of which the respondents were 32-38 years old when in the 2017/2018 survey. Scroll down to Table 1 and Chart 2 and it looks as though non-compete agreements affect about 1 in 11 people who make approximately minimum wage (presuming these self-reports are accurate), and increase in frequency from there. ----- Non-competes for job creators can indirectly impact low-wage workers by preventing a job-providing business from opening in their area. And while trickle-down economics isn't that powerful of a force, it does exist. When non-competes suppress higher-level wages this has a knock-on effect on lower wages, and a side-effect of reducing the discretionary income the higher wage people can spend into the lower-wage economy.
  - standardUser 3y ago
    "in the hedge fund world" You are describing a minuscule world that comprises an insignificant amount of American workers.
NovemberWhiskey 3y ago
>In finance though, don’t people usually get a cushy 6 month paid “gardening leave” when they switch? Getting paid your salary for a couple of months (three is more common than six, in my experience) when most of your earnings might typically be in bonuses is less cushy than you might think.
- bradlys 3y ago
  At least in NYC - the non-competes that I know of are for way longer than a couple months. Most of the guys I know with non-competes are at least six months with many being a year or two... They're not getting paid peanuts either. They're still getting very good paychecks.
  - jen20 3y ago
    Sure, but it still doesn't cover total compensation.
  - teaearlgraycold 3y ago
    I know someone that got a HFT non-compete for $300k over 9 months with only a few years of experience.
    - steveBK123 3y ago
      DREAM
- ng12 3y ago
  Typically your new firm will cover your missed bonus.
gen220 3y ago
As I understand it, yes, but being <some long duration> "out of the game" is a large opportunity cost if your intent is to go right back into finance. So the gardening leave is often not the best decision, career-wise, unless you're planning to exit finance altogether. IMO, it's healthier for the overall industry/market if talent can move more freely. As one example, it makes it much more challenging for toxic cultures to persist in their current form, if the Sword of Damocles (NCA) isn't hanging above the off-ramp.
johnnyb9 3y ago
In theory it sounds great, but try interviewing with companies and see their reaction when you tell them you can't start for > 6 months.
- bradlys 3y ago
  This doesn't seem like as big of an issue as you make it sound from my anecdotal experience. The finance guys I know in NYC don't have this issue? It's such a common part of the work that hiring people this far out in advance is quite common...
  - ghaff 3y ago
    Garden leave and notice periods are, to some degree, a coordination issue. "You have to give us and we have to give you three months notification of termination of employment" works (mostly) fine when everyone does it and they know it's just the way things are. It's harder when you're that problem candidate who can't start for three months when that isn't the norm.
- masklinn 3y ago
  If everybody knows it’s the deal, which is apparently the case in NY finance, it’s a non issue. In fact not having a gardening leave might be more suspicious, as it means you’re so useless and out of the loop your previous employer doesn’t think there’s anything you could be carrying over.
  - frankc 3y ago
    It's not usually a deal breaker because of how common it is, but it does matter. You are going to be disadvantaged against someone who can start sooner. I fully support this legislation. Non-competes are anti-competitive, period.
- esoterica 3y ago
  That is completely normal. College hires are either returning interns from the previous summer or else mostly recruited in the fall to start after they graduate in the summer, so almost all new grad hiring takes place 6-12 months out anyway.
JumpCrisscross 3y ago
Finance uniquely has little in the way of IP protection. There are strong incentives to keep a former team member out of the market for a year if they have your secret sauce.
jedberg 3y ago
Garden leave probably won't be a thing anymore. The main reason it existed was to prevent lawsuits related to non-competes and loss of income. Basically they didn't want the non-competes challenged. Now that that doesn't matter, they may just not offer it at all. Or it might go the other way, where they offer you a year of salary and bonus to keep you away from competitors.
- RC_ITR 3y ago
  The incentives are "we will give you your full salary for 6 months, you have to work for only us, but we have no expectations of you." Non-competes are "even if we don't keep paying you, you can't work for a competitor" Nothing about the gardening leave incentives have changed.
  - esoterica 3y ago
    You are wrong, the proposed law bans both paid and unpaid non-competes. The point of gardening leave is that it’s mandatory and not voluntary. Making it voluntary defeats the purpose because anyone who wants their career to keep progressing is going to turn it down even if you offer to pay them.
    - RC_ITR 3y ago
      >If enacted, the provisions of S6748 would prevent employers from entering into or maintaining non-competition agreements with workers, including independent contractors, absent a “good faith basis” to believe that a non-compete agreement is enforceable. The bill does not expand upon what constitutes a “good faith basis.” "When you signed on, in good faith, you agreed to a 6 month paid notice period."
usefulcat 3y ago
It depends. I personally once saw an offer where 'gardening leave' was only included if the employer chose to let you go, i.e. not if you chose to leave. And it wasn't for 6 months, IIRC it was at least a year. And of course it didn't included any bonus, which is typically the larger portion of total comp in these situations.
esoterica 3y ago
The point of gardening leave is that it is mandatory, not voluntary. People are not going to choose to put their career on pause when they could be working, even if you pay them. The proposed law will ban mandatory non competes, even if they are paid.
- erosenbe0 3y ago
  The proposed law bans voluntary non-competes as well as mandatory. It states that employers may not even accept such covenants. It is an absolute ban on employment restraints.

standardUser 3y ago

That sounds like it applies to a miniscule amount of workers, while many more workers are forced to sign non-competes but get no special treatment (or cash) from their employer for bearing that burden.

frankc 3y ago
Not really. It's widely understood that NY won't enforce a non-compete if its not paid. It's very common in the hedge fund world to get paid your salary for a year to do nothing, even for junior developers. It depends on if the company really wants to hold you out or not. They will release you from the non-compete if they don't want to pay. On the other hand, in the hedge fund world, bonuses are a big part of comp but generally only base pay is paid out, so in reality you might be say 150K to 250K while your comp in expectation is much, much higher. For a junior dev maybe your bonus is .3x to .6x base but for someone senior, your bonus might be 1x to 5x base or more depending on where you sit in the organization. Therefore sitting out still costs you a lot of money.
- masklinn 3y ago
  > It's widely understood that NY won't enforce a non-compete if its not paid. I’m sure the Walmart cashier with a non-compete hanging around their neck is much appeased by this.
  - JumpCrisscross 3y ago
    > sure the Walmart cashier with a non-compete hanging around their neck is much appeased by this You describe an enforcement, not legal issue. Even with this legislation, the manager can still verbally threaten the employee.
    - anonymouskimmer 3y ago
      I am not a lawyer but it strikes me that such a threat (of action which the employer is not legally entitled to take) would probably violate a law or two. This wouldn't help the employee unless they went to court or the NLRB with it, but if some employee eventually did the court/NLRB may require things from the employer to prevent such incidents in the future.
  - xyzzyz 3y ago
    I don’t think Walmart cashiers are saddled with non compete. You might have a good point here, but you will fail to get it across if you frame it in such ludicrous, obviously false way.
    - duskwuff 3y ago
      I don't know about Walmart cashiers, but non-competes are concerningly common for entry-level positions like sandwich chefs or delivery drivers: https://www.nytimes.com/2014/10/15/upshot/when-the-guy-making-your-sandwich-has-a-noncompete-clause.html https://www.nytimes.com/2014/10/15/upshot/when-the-guy-makin...
      - xyzzyz 3y ago
        This article is just NYTimes grasping at straws, trying to conjure a narrative that’s completely foreign to 99.999% low wage workers. Non-compete clauses are not “concerningly common”, these are in fact so rare that NYT couldn’t even point out to a single example of non-compete actually affecting low-wage workers: their leading example of Jimmy Johns is not something that ever been enforced, and I seriously doubt that any worker there is even aware of this clause in the contract (low wage workers don’t read these anyway).
        anonymouskimmer 3y ago
        https://www.bls.gov/opub/mlr/2022/article/noncompete-agreements-bargaining-and-wages-evidence-from-the-national-longitudinal-survey-of-youth-1997.htm https://www.bls.gov/opub/mlr/2022/article/noncompete-agreeme... This is data from a longitudinal survey of which the respondents were 32-38 years old when in the 2017/2018 survey. Scroll down to Table 1 and Chart 2 and it looks as though non-compete agreements affect about 1 in 11 people who make approximately minimum wage (presuming these self-reports are accurate), and increase in frequency from there. ----- Non-competes for job creators can indirectly impact low-wage workers by preventing a job-providing business from opening in their area. And while trickle-down economics isn't that powerful of a force, it does exist. When non-competes suppress higher-level wages this has a knock-on effect on lower wages, and a side-effect of reducing the discretionary income the higher wage people can spend into the lower-wage economy.
- standardUser 3y ago
  "in the hedge fund world" You are describing a minuscule world that comprises an insignificant amount of American workers.

NovemberWhiskey 3y ago

>In finance though, don’t people usually get a cushy 6 month paid “gardening leave” when they switch? Getting paid your salary for a couple of months (three is more common than six, in my experience) when most of your earnings might typically be in bonuses is less cushy than you might think.

bradlys 3y ago
At least in NYC - the non-competes that I know of are for way longer than a couple months. Most of the guys I know with non-competes are at least six months with many being a year or two... They're not getting paid peanuts either. They're still getting very good paychecks.
- jen20 3y ago
  Sure, but it still doesn't cover total compensation.
- teaearlgraycold 3y ago
  I know someone that got a HFT non-compete for $300k over 9 months with only a few years of experience.
  - steveBK123 3y ago
    DREAM
ng12 3y ago
Typically your new firm will cover your missed bonus.

gen220 3y ago

As I understand it, yes, but being <some long duration> "out of the game" is a large opportunity cost if your intent is to go right back into finance. So the gardening leave is often not the best decision, career-wise, unless you're planning to exit finance altogether. IMO, it's healthier for the overall industry/market if talent can move more freely. As one example, it makes it much more challenging for toxic cultures to persist in their current form, if the Sword of Damocles (NCA) isn't hanging above the off-ramp.

johnnyb9 3y ago

In theory it sounds great, but try interviewing with companies and see their reaction when you tell them you can't start for > 6 months.

bradlys 3y ago
This doesn't seem like as big of an issue as you make it sound from my anecdotal experience. The finance guys I know in NYC don't have this issue? It's such a common part of the work that hiring people this far out in advance is quite common...
- ghaff 3y ago
  Garden leave and notice periods are, to some degree, a coordination issue. "You have to give us and we have to give you three months notification of termination of employment" works (mostly) fine when everyone does it and they know it's just the way things are. It's harder when you're that problem candidate who can't start for three months when that isn't the norm.
masklinn 3y ago
If everybody knows it’s the deal, which is apparently the case in NY finance, it’s a non issue. In fact not having a gardening leave might be more suspicious, as it means you’re so useless and out of the loop your previous employer doesn’t think there’s anything you could be carrying over.
- frankc 3y ago
  It's not usually a deal breaker because of how common it is, but it does matter. You are going to be disadvantaged against someone who can start sooner. I fully support this legislation. Non-competes are anti-competitive, period.
esoterica 3y ago
That is completely normal. College hires are either returning interns from the previous summer or else mostly recruited in the fall to start after they graduate in the summer, so almost all new grad hiring takes place 6-12 months out anyway.

JumpCrisscross 3y ago

Finance uniquely has little in the way of IP protection. There are strong incentives to keep a former team member out of the market for a year if they have your secret sauce.

jedberg 3y ago

Garden leave probably won't be a thing anymore. The main reason it existed was to prevent lawsuits related to non-competes and loss of income. Basically they didn't want the non-competes challenged. Now that that doesn't matter, they may just not offer it at all. Or it might go the other way, where they offer you a year of salary and bonus to keep you away from competitors.

RC_ITR 3y ago
The incentives are "we will give you your full salary for 6 months, you have to work for only us, but we have no expectations of you." Non-competes are "even if we don't keep paying you, you can't work for a competitor" Nothing about the gardening leave incentives have changed.
- esoterica 3y ago
  You are wrong, the proposed law bans both paid and unpaid non-competes. The point of gardening leave is that it’s mandatory and not voluntary. Making it voluntary defeats the purpose because anyone who wants their career to keep progressing is going to turn it down even if you offer to pay them.
  - RC_ITR 3y ago
    >If enacted, the provisions of S6748 would prevent employers from entering into or maintaining non-competition agreements with workers, including independent contractors, absent a “good faith basis” to believe that a non-compete agreement is enforceable. The bill does not expand upon what constitutes a “good faith basis.” "When you signed on, in good faith, you agreed to a 6 month paid notice period."

usefulcat 3y ago

It depends. I personally once saw an offer where 'gardening leave' was only included if the employer chose to let you go, i.e. not if you chose to leave. And it wasn't for 6 months, IIRC it was at least a year. And of course it didn't included any bonus, which is typically the larger portion of total comp in these situations.

esoterica 3y ago

The point of gardening leave is that it is mandatory, not voluntary. People are not going to choose to put their career on pause when they could be working, even if you pay them. The proposed law will ban mandatory non competes, even if they are paid.

erosenbe0 3y ago
The proposed law bans voluntary non-competes as well as mandatory. It states that employers may not even accept such covenants. It is an absolute ban on employment restraints.