5 ms·

I just can't understand how anyone can, with a straight face, argue that non-compete clauses should be allowed in a free market. The free market works best whe

I just can't understand how anyone can, with a straight face, argue that non-compete clauses should be allowed in a free market. The free market works best when competition isn't stifled, and the name of the clause is literally a "non-compete".

HumblyTossed 2y ago
[flagged]
linuxftw 2y ago
I feel like they should be enforceable, but only under the same compensation as the labor was in the first place. Make companies pay for the privilege.
- Volundr 2y ago
  I didn't end up taking it, but I was offered a job with a company based out of Illinois that did this. Upon termination (voluntary or otherwise) the company had the choice to enforce the noncompete clause or not. If they chose to enforce it I'd have gotten paid my salary for the duration. A lawyer explained to me that this was how they were working around Illinois restrictions on non-compete clauses. Normally the terms they were applying wouldn't be enforceable, but by continuing the salary they were essentially extending the employment agreement.
- theluketaylor 2y ago
  To be in the realm of fair non-compete compensation needs to be total comp and not just base salary. In the US while not working you need to cover healthcare costs and many roles have a significant portion of comp from percentages of sales, bonuses, and other incentives. Just a base salary payment during a 6-12 month furlough would be a big pay cut for many. There also likely needs to be some additional compensation for lost time in the market when skills are atrophying or new experience isn't being gained. Non-competes have a place, but there needs to be tons of rules around their use, like only being available for specialized and other high paid roles. Something like 3x-4x median salary to be a position eligible for a company to even propose a non-compete.
unyttigfjelltol 2y ago
It rhymes with a minimum wage violation-- the ex-employer pays nothing, yet demands control of the ex-employee's time.
itsanaccount 2y ago
[flagged]
bluGill 2y ago
There are specific cases where they should be allowed, but in the general case no. Specific cases shouldn't even rely on competition, but of specific non-public information. The list of customers of a company is something you should not be taking with you when you go work for a competitor. The next feature you will implement is non-public information. A non compete is only about someone who you want to continue working for you. If the competitor offers a significantly better wage you didn't want to keep them in the first place (even if you offer match too bad - if you were serious you would have been paying them that much already), though of course the competitor needs to be serious (that is not hiring someone away and then letting them go). If you lay someone off then you don't want that person to work for you and the non-compete is obviously invalid.
- throwaway271811 2y ago
  Your interpretation of the coverage of applicability of noncompetes is interesting. But unfortunately that is not how many noncompetes are written and in many states enforced. Noncompetes, at least as usually written, restrict employees regardless of whether they resigned or are laid off [1,2]. The chilling effect is exceptionally strong. If you are laid off and under a noncompete, what company is going to dare subject themselves to the legal risks in hiring? I know multiple folks and personally experienced being subject to multi-year long unpaid noncompetes that were geographically universal after layoff in even California where NCs are supposedly invalid. And every attorney I talked to said there was nothing I could do. Companies have millions to spend, strong arbitration protections, and way better attorneys than individuals could ever hire. Few will dare to challenge. [1] https://www.hchlawyers.com/business-law/contract-law/non-compete-agreements/non-competes-fired-laid-off-employees/ https://www.hchlawyers.com/business-law/contract-law/non-com... [2] https://katzmelinger.com/understanding-non-compete-agreements-what-is-a-non-compete-and-can-it-be-enforced-if-i-am-fired/ https://katzmelinger.com/understanding-non-compete-agreement...
  - bluGill 2y ago
    What I wrote is my opinion of what it should be. The law is very different from what I think it should be. It is too late or I'd edit my original post to make that clearer.
ryandrake 2y ago
> I just can't understand how anyone can, with a straight face, argue that non-compete clauses should be allowed in a free market. Companies don't have a face, so they don't need to keep it straight. They will simply amorally argue for anything that increases their money or power, and argue against anything that decreases it. They don't even need to be consistent, and are unburdened from human feelings like shame and hypocrisy. They can effortlessly argue for some principle XYZ when it helps them, and then turn around and argue against XYZ in cases where it hurts them.
Dracophoenix 2y ago
They are permissible in a free market the same way NDAs are: one freely trades an opportunity to exercise a right at some future time for a guarantee of payment today.
- willcipriano 2y ago
  Generally speaking these contracts are signed the first day of work, after you just quit your other job and without any negotiating or consideration.
  - Dracophoenix 2y ago
    That's not a condemnation of non-competes per se but rather suspicious, bad-faith timing or even duress. With few exceptions, the FTC intends to rule that non-competes are illegitimate as a class of contract, not merely contend with the manner in which they are dispensed. The latter has often been used as reasoning for the former, but is not the particular target of the intended regulations.
    - deleted 2y ago
      [deleted]
- KoftaBob 2y ago
  This logic only works in a world where all employees have the same leverage as employers, such as with a labor union. In reality, in the vast majority of cases, the employers have much more leverage, and therefore non-competes aren't used as a negotiating tool for both parties, they're used by employers to stifle competition for labor and therefore stifle salaries.

HumblyTossed 2y ago

[flagged]

linuxftw 2y ago

I feel like they should be enforceable, but only under the same compensation as the labor was in the first place. Make companies pay for the privilege.

Volundr 2y ago
I didn't end up taking it, but I was offered a job with a company based out of Illinois that did this. Upon termination (voluntary or otherwise) the company had the choice to enforce the noncompete clause or not. If they chose to enforce it I'd have gotten paid my salary for the duration. A lawyer explained to me that this was how they were working around Illinois restrictions on non-compete clauses. Normally the terms they were applying wouldn't be enforceable, but by continuing the salary they were essentially extending the employment agreement.
theluketaylor 2y ago
To be in the realm of fair non-compete compensation needs to be total comp and not just base salary. In the US while not working you need to cover healthcare costs and many roles have a significant portion of comp from percentages of sales, bonuses, and other incentives. Just a base salary payment during a 6-12 month furlough would be a big pay cut for many. There also likely needs to be some additional compensation for lost time in the market when skills are atrophying or new experience isn't being gained. Non-competes have a place, but there needs to be tons of rules around their use, like only being available for specialized and other high paid roles. Something like 3x-4x median salary to be a position eligible for a company to even propose a non-compete.

unyttigfjelltol 2y ago

It rhymes with a minimum wage violation-- the ex-employer pays nothing, yet demands control of the ex-employee's time.

itsanaccount 2y ago

[flagged]

bluGill 2y ago

There are specific cases where they should be allowed, but in the general case no. Specific cases shouldn't even rely on competition, but of specific non-public information. The list of customers of a company is something you should not be taking with you when you go work for a competitor. The next feature you will implement is non-public information. A non compete is only about someone who you want to continue working for you. If the competitor offers a significantly better wage you didn't want to keep them in the first place (even if you offer match too bad - if you were serious you would have been paying them that much already), though of course the competitor needs to be serious (that is not hiring someone away and then letting them go). If you lay someone off then you don't want that person to work for you and the non-compete is obviously invalid.

throwaway271811 2y ago
Your interpretation of the coverage of applicability of noncompetes is interesting. But unfortunately that is not how many noncompetes are written and in many states enforced. Noncompetes, at least as usually written, restrict employees regardless of whether they resigned or are laid off [1,2]. The chilling effect is exceptionally strong. If you are laid off and under a noncompete, what company is going to dare subject themselves to the legal risks in hiring? I know multiple folks and personally experienced being subject to multi-year long unpaid noncompetes that were geographically universal after layoff in even California where NCs are supposedly invalid. And every attorney I talked to said there was nothing I could do. Companies have millions to spend, strong arbitration protections, and way better attorneys than individuals could ever hire. Few will dare to challenge. [1] https://www.hchlawyers.com/business-law/contract-law/non-compete-agreements/non-competes-fired-laid-off-employees/ https://www.hchlawyers.com/business-law/contract-law/non-com... [2] https://katzmelinger.com/understanding-non-compete-agreements-what-is-a-non-compete-and-can-it-be-enforced-if-i-am-fired/ https://katzmelinger.com/understanding-non-compete-agreement...
- bluGill 2y ago
  What I wrote is my opinion of what it should be. The law is very different from what I think it should be. It is too late or I'd edit my original post to make that clearer.

ryandrake 2y ago

> I just can't understand how anyone can, with a straight face, argue that non-compete clauses should be allowed in a free market. Companies don't have a face, so they don't need to keep it straight. They will simply amorally argue for anything that increases their money or power, and argue against anything that decreases it. They don't even need to be consistent, and are unburdened from human feelings like shame and hypocrisy. They can effortlessly argue for some principle XYZ when it helps them, and then turn around and argue against XYZ in cases where it hurts them.

Dracophoenix 2y ago

They are permissible in a free market the same way NDAs are: one freely trades an opportunity to exercise a right at some future time for a guarantee of payment today.

willcipriano 2y ago
Generally speaking these contracts are signed the first day of work, after you just quit your other job and without any negotiating or consideration.
- Dracophoenix 2y ago
  That's not a condemnation of non-competes per se but rather suspicious, bad-faith timing or even duress. With few exceptions, the FTC intends to rule that non-competes are illegitimate as a class of contract, not merely contend with the manner in which they are dispensed. The latter has often been used as reasoning for the former, but is not the particular target of the intended regulations.
  - deleted 2y ago
    [deleted]
KoftaBob 2y ago
This logic only works in a world where all employees have the same leverage as employers, such as with a labor union. In reality, in the vast majority of cases, the employers have much more leverage, and therefore non-competes aren't used as a negotiating tool for both parties, they're used by employers to stifle competition for labor and therefore stifle salaries.