7 ms·

Massachusetts Bill to Ban Non-Competes backed by Spark Capital

38 points by alexbeaudet 18y ago

alexbeaudet 18y ago
To what degree banning non-competes will fuel the tech scene in Massachusetts is tough to say - obviously there are a lot of other variables separating it from Silicon Valley - but it's nice to see that Spark is practicing what it preaches, having stopped requiring non-competes in 2007.
sachinag 18y ago
I would love to see what the folks at Harmonix think about this. If it passed, they'd probably be decimated by publishers grabbing teams of three to work on various rhythm games. That said, I'm fully in support. :)
ivankirigin 18y ago
I didn't get a job at a startup in MA because they feared my last company's non-compete.
- ygcfububyuf 18y ago
  MA courts have a reputation for enforcing non-competes so strongly that many silicon valley companies have a blanket no MA hiring policy. That is beginning to hurt companies in MA, whether they use non-competes or not, when they try and hire. Ultimately this hurts the state's income.
- tptacek 17y ago
  I've been involved in legal posturing between companies over noncompetes before, too. I wonder if, even if courts refuse to enforce noncompetes against individuals, the agreements will still have teeth between companies; just the cost of taking an ultimately doomed lawsuit to court might be deterrent enough.
  - ivankirigin 17y ago
    Indeed. Their fear wasn't the lawsuit, but delaying a product launch by a few months, at best.
tjic 18y ago
I dislike the government asserting that I am not a fully competent adult, capable of making my own decisions about what agreements I enter into and which I do not. If I'm not competent to read a non-compete and agree, or not agree, to it, then why do they think that I'm competent to drive a car, or vote, or sign a lease?
- biohacker42 18y ago
  I agree with the core of your argument, however in this instance we have private market manipulation. In most situations the employers have more leverage then the employee. The very best hires will not accept sub par offers. But a lot of others, including some very good ones, will. The result being that private companies influence the labor market for their own benefit and everyone else's detriment. That includes other employers and employees. Think of non competes for utilities, as in only one cable co. can serve your area. Does that make the private market manipulation more obvious? Private market distortion is no better then public market distortion. Cartels, non-competes, etc, are legitimate targets for government busting from my libertarian perspective.
  - tptacek 17y ago
    This move doesn't do anything to reduce the "market manipulation" you allege. If employers are negotiating from a position of strength, they'll get all manner of other concessions, starting with wages and benefits --- which is all most people care about. I don't see the principle that you're arguing from here. Your comparisons are a little silly, too. There are good reasons (right of way, regulation) and bad (monopoly concessions, lobbying, corruption) that private utilities own entire markets. These have nothing to do with the forces behind noncompetes. No noncompete has helped establish any company's monopoly in any product or service you can name, even regionally. Noncompetes are a trade. Companies provide employees with access to resources, client lists, and trade secrets. They want to ensure that rolodexes aren't shopped and product plans aren't bootlegged. These are reasonable goals. Employment contracts are blunt and inefficient instruments for accomplishing those goals, but that doesn't make the intent corrupt.
deleted 18y ago
[deleted]
dmillar 18y ago
I agree. If you feel your employee is a value to you and potentially a competitor, you ought to compensate them accordingly. Personally, I would never sign a non-compete unless there were not only adequate considerations for compensation, but also equity.
- josefresco 17y ago
  Exactly. If you want your employees to be loyal to your 'cause', give them equity. Don't expect them to be a team player without some sort of reward beyond simply keeping their job. As an employee I 'clock out' when my day is over and are free to pursue whatever I want in my own time. As an owner, I do everything I can to make sure my company survives and thrives around the clock both at work and at home. There's a definite line there that shouldn't be crossed (or you'll get burned)
- electromagnetic 17y ago
  I agree with a ban on putting it into an employment contract, however I don't agree with them being banned completely. I don't think my getting a job should hinge on if I agree not to use my knowledge for my own best interest. If a company wants to offer me something that (from my perception) is of better interest to me than competing with them, then I'd possibly sign it. If it's that important to a company that I don't compete with them, they should be willing to pay me enough that I have an interest not to compete.
- jacoblyles 17y ago
  From an employer's perspective, employees at a competing company are more valuable workers than employees of equivalent skill at companies in other product markets, due to their inside knowledge of competitors' operations. I can understand why some people might think this is unfair and be willing to enforce contracts that make an employee wait a certain time period before working for a competing firm.
sscheper 17y ago
Excellent movement on Spark's part. I've personally been handed a non-compete by a venture capital fund that would make a producer blush. It's preposterous what some firms try to con entrepreneurs into.
- tptacek 17y ago
  I'm really not sure why I'm expected to muster sympathy for entrepreneurs facing noncompetes from VC's. Isn't this an eminently reasonable use for noncompetes? You're epsilon from corporate-to-corporate contracts in this scenario.
  - sscheper 17y ago
    The vc will issue non-competes relating to its portfolio companies and future investments. That, to me, seemed unreasonable
    - tptacek 17y ago
      But the VC market isn't the labor market. I don't see why the response to that isn't simply not to take their money.
jhancock 17y ago
I've had lawyers in Georgia tell me a non-compete has no teeth under GA law. You still might get sued, but apparently, the law leans heavily towards the employee. Intellectual property and trade secrets are however well protected for the employer.
- tptacek 17y ago
  That's the case in most jurisdictions; judges will tend not to interpret contracts in ways that preclude individuals from earning a living. In a lot of states, judges also have the authority to modify noncompetes on the fly, so that they aren't confronted with the choice of screwing a former employee and throwing out an entire contract term wholesale.
bdr 17y ago
I'd guess that people often agree to non-competes because they don't know how bad a deal they are. This could be solved if (1) people checked their contracts with lawyers more often, or (2) contract terms were standardized in such a rigid way that people could quickly learn about all the potential clauses. Why don't people check their contracts with lawyers? If it's because of a high estimated cost, is that estimation right? Part of the problem (and therefore part of the solution) is that the choosing of contract terms asymmetrically benefits the employer, since they only have to do the lawyer work once.
jfarmer 17y ago
I read this as [Massachusetts Bill to Ban] [Non-Competes backed by Spark Capital], rather than [Massachusetts Bill to Ban Non-Competes] [backed by Spark Capital], so it's good to see that Spark is backing the ban. In general I think the state should take a utilitarian perspective in matters like this. If non-competes hurt the economy more than they help it would be self-defeating for the state to enforce them. I'll leave the rest for politicians and pundits.
- sfg 17y ago
  How do we measure the utility?

38 points by alexbeaudet 18y ago

To what degree banning non-competes will fuel the tech scene in Massachusetts is tough to say - obviously there are a lot of other variables separating it from Silicon Valley - but it's nice to see that Spark is practicing what it preaches, having stopped requiring non-competes in 2007.

sachinag 18y ago

I would love to see what the folks at Harmonix think about this. If it passed, they'd probably be decimated by publishers grabbing teams of three to work on various rhythm games. That said, I'm fully in support. :)

ivankirigin 18y ago

I didn't get a job at a startup in MA because they feared my last company's non-compete.

ygcfububyuf 18y ago
MA courts have a reputation for enforcing non-competes so strongly that many silicon valley companies have a blanket no MA hiring policy. That is beginning to hurt companies in MA, whether they use non-competes or not, when they try and hire. Ultimately this hurts the state's income.
tptacek 17y ago
I've been involved in legal posturing between companies over noncompetes before, too. I wonder if, even if courts refuse to enforce noncompetes against individuals, the agreements will still have teeth between companies; just the cost of taking an ultimately doomed lawsuit to court might be deterrent enough.
- ivankirigin 17y ago
  Indeed. Their fear wasn't the lawsuit, but delaying a product launch by a few months, at best.

tjic 18y ago

I dislike the government asserting that I am not a fully competent adult, capable of making my own decisions about what agreements I enter into and which I do not. If I'm not competent to read a non-compete and agree, or not agree, to it, then why do they think that I'm competent to drive a car, or vote, or sign a lease?

biohacker42 18y ago
I agree with the core of your argument, however in this instance we have private market manipulation. In most situations the employers have more leverage then the employee. The very best hires will not accept sub par offers. But a lot of others, including some very good ones, will. The result being that private companies influence the labor market for their own benefit and everyone else's detriment. That includes other employers and employees. Think of non competes for utilities, as in only one cable co. can serve your area. Does that make the private market manipulation more obvious? Private market distortion is no better then public market distortion. Cartels, non-competes, etc, are legitimate targets for government busting from my libertarian perspective.
- tptacek 17y ago
  This move doesn't do anything to reduce the "market manipulation" you allege. If employers are negotiating from a position of strength, they'll get all manner of other concessions, starting with wages and benefits --- which is all most people care about. I don't see the principle that you're arguing from here. Your comparisons are a little silly, too. There are good reasons (right of way, regulation) and bad (monopoly concessions, lobbying, corruption) that private utilities own entire markets. These have nothing to do with the forces behind noncompetes. No noncompete has helped establish any company's monopoly in any product or service you can name, even regionally. Noncompetes are a trade. Companies provide employees with access to resources, client lists, and trade secrets. They want to ensure that rolodexes aren't shopped and product plans aren't bootlegged. These are reasonable goals. Employment contracts are blunt and inefficient instruments for accomplishing those goals, but that doesn't make the intent corrupt.

deleted 18y ago

[deleted]

dmillar 18y ago

I agree. If you feel your employee is a value to you and potentially a competitor, you ought to compensate them accordingly. Personally, I would never sign a non-compete unless there were not only adequate considerations for compensation, but also equity.

josefresco 17y ago
Exactly. If you want your employees to be loyal to your 'cause', give them equity. Don't expect them to be a team player without some sort of reward beyond simply keeping their job. As an employee I 'clock out' when my day is over and are free to pursue whatever I want in my own time. As an owner, I do everything I can to make sure my company survives and thrives around the clock both at work and at home. There's a definite line there that shouldn't be crossed (or you'll get burned)
electromagnetic 17y ago
I agree with a ban on putting it into an employment contract, however I don't agree with them being banned completely. I don't think my getting a job should hinge on if I agree not to use my knowledge for my own best interest. If a company wants to offer me something that (from my perception) is of better interest to me than competing with them, then I'd possibly sign it. If it's that important to a company that I don't compete with them, they should be willing to pay me enough that I have an interest not to compete.
jacoblyles 17y ago
From an employer's perspective, employees at a competing company are more valuable workers than employees of equivalent skill at companies in other product markets, due to their inside knowledge of competitors' operations. I can understand why some people might think this is unfair and be willing to enforce contracts that make an employee wait a certain time period before working for a competing firm.

sscheper 17y ago

Excellent movement on Spark's part. I've personally been handed a non-compete by a venture capital fund that would make a producer blush. It's preposterous what some firms try to con entrepreneurs into.

tptacek 17y ago
I'm really not sure why I'm expected to muster sympathy for entrepreneurs facing noncompetes from VC's. Isn't this an eminently reasonable use for noncompetes? You're epsilon from corporate-to-corporate contracts in this scenario.
- sscheper 17y ago
  The vc will issue non-competes relating to its portfolio companies and future investments. That, to me, seemed unreasonable
  - tptacek 17y ago
    But the VC market isn't the labor market. I don't see why the response to that isn't simply not to take their money.

jhancock 17y ago

I've had lawyers in Georgia tell me a non-compete has no teeth under GA law. You still might get sued, but apparently, the law leans heavily towards the employee. Intellectual property and trade secrets are however well protected for the employer.

tptacek 17y ago
That's the case in most jurisdictions; judges will tend not to interpret contracts in ways that preclude individuals from earning a living. In a lot of states, judges also have the authority to modify noncompetes on the fly, so that they aren't confronted with the choice of screwing a former employee and throwing out an entire contract term wholesale.

bdr 17y ago

I'd guess that people often agree to non-competes because they don't know how bad a deal they are. This could be solved if (1) people checked their contracts with lawyers more often, or (2) contract terms were standardized in such a rigid way that people could quickly learn about all the potential clauses. Why don't people check their contracts with lawyers? If it's because of a high estimated cost, is that estimation right? Part of the problem (and therefore part of the solution) is that the choosing of contract terms asymmetrically benefits the employer, since they only have to do the lawyer work once.

jfarmer 17y ago

I read this as [Massachusetts Bill to Ban] [Non-Competes backed by Spark Capital], rather than [Massachusetts Bill to Ban Non-Competes] [backed by Spark Capital], so it's good to see that Spark is backing the ban. In general I think the state should take a utilitarian perspective in matters like this. If non-competes hurt the economy more than they help it would be self-defeating for the state to enforce them. I'll leave the rest for politicians and pundits.

sfg 17y ago
How do we measure the utility?