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Noncompete Clauses Increasingly Pop Up in Array of Jobs
- rememberlenny 12y agoAs a developer, what can be done to protect against this if you are already signed to one?
- mmastrac 12y agoI think you can work in California regardless (IANAL, of course): http://en.wikipedia.org/wiki/Non-compete_clause#California http://en.wikipedia.org/wiki/Non-compete_clause#California
- xur17 12y agoEven if you signed one in a different state?
- danielweber 12y agoYou could move to California, as the link says.
- greenwalls 12y agoSomeone I know recently started a lower level tech support job and he asked me about a non-compete he had to sign. I couldn't believe it! People just starting out in lower level positions have no bargaining power so they have no choice but to sign these or they won't get the job. These companies are just screwing themselves because once these new non-competes begin to harm lower level employees then the laws will be changed so these agreements are invalid.
- stephencanon 12y agoThere's a simple solution, of course (besides outright banning of such clauses): require that the employer continue to pay the employee's salary until they are released from the clause. See how many summer camps continue to ask for or enforce such clauses then.
- asdfologist 12y agoMany non-compete clauses already do this, especially in finance.
- stephencanon 12y agoRight; I'm guessing, however, that those covering hair stylists or summer camp counselors typically do not.
- awda 12y agoMany (and I would guess most) don't.
- TheCowboy 12y agoI do agree with the general point that at least they should pay the employee bound by such agreements, so as to eliminate frivolous use. If it's really economically important to a firm, they are more likely to demonstrate that by paying a cost. But, is there really any reason not to outright ban them? Specifically, are there any strong economic arguments for allowing these? It seems like everyone is worse off in an economy when talent has to sit on ice because these contracts, even if they still collect a salary they are no longer contributing to the wealth engine of society. It discourages more efficient uses of labor when people are effectively married to a company. It also seems like an inherently unfair practice with at-will employment being the rule. This sounds like one of those ideas people hold up as protecting small businesses or start-ups from big corporations, but really doesn't end up being an advantage.
- TTPrograms 12y agoMy impression was that "proper" use of the noncompete was to pay the employee the same salary for the time period with the purpose of preventing IP and other valuable proprietary information from being transferred to a competitor. I think this is reasonable.
- eli_gottlieb 12y ago>But, is there really any reason not to outright ban them? Yes: making them pay the employee puts more money in workers' hands ;-). That is all.
- diafygi 12y agoHonest question: would a union help protect workers here? I know many people here don't like unions in practice (corruption, stagnation, etc.), but isn't this kind of thing exactly what unions are for? It seems like employers are adding these because the feel they have more negotiating power.
- chrismcb 12y agoYes. But in reality the government should be looking out for the workers. do we need a waitressing union? A camp counselors union?
- anonymousDan 12y agoI'd prefer if they were just banned like in California. I struggle to believe the fact that California is the only place where non-competes are much harder to enforce isn't a major contributor to the success of the tech (Silicon Valley) & film (Hollywood) industries. Even here in the UK, companies offering zero-hours contracts have started to try and impose non-competes.
- gnopgnip 12y agoWhat is a zero hours contract?
- patio11 12y agoAn employment relationship with an hourly employee which, unlike more typical employment relationships with hourly employees in the UK, does not guarantee a certain minimum number of hours of work available/assigned per week/month.
- Natsu 12y agoI'm okay with them, actually, but only as long as the company is still paying you the same wages. I think this condition should be a requirement. No pay == no non-compete. If they're not paying, they shouldn't be able to keep you out of the market, period. It's not a fair trade otherwise and just having a job in the first place is not even remotely conscionable as 'consideration' for a clause that prevents you from working.
- austinz 12y agoNoncompete clauses are bullshit. We already have an extensive infrastructure in place to protect the intellectual property and trade secrets of companies, including NDAs and those clauses assigning ownership of anything you produce to your employer. But the idea that companies can overstep this bound and place restrictions on how you can use your brain and your general knowledge to produce new, creative work that has only a secondary or tertiary relation to their IP is utterly vile. If the technology existed to erase memories from brains, would these employers insist in their employment clauses that employees who resign must have any professional knowledge acquired on the job erased from existence? This is almost the same thing. If you are an engineer in a niche field, in particular, being barred from that field for a year or more is tantamount to rendering your professional knowledge obsolete.
- cordite 12y agoI am currently in Wisconsin under a non compete clause, I couldn't find many laws that help support inventors or software developers.
- nkozyra 12y agoYou'd be surprised how easy it is to negotiate around this, assuming you're in such a position. In either case, always make sure you review the terms and really think about where you'll be if you're let go or quit in the next 2-3 years.
- zachlipton 12y agoThere may be some room to negotiate as an engineer. As a hair stylist or a summer camp counselor, the terms usually tend to be closer to the take it or leave it variety.
- nkozyra 12y agoAbsolutely, but if a company is going to hire you, then you have some leverage.
- danielweber 12y agoYes, usually companies, even big companies, are fine negotiating these things. But I've experienced two companies that dealt with people having problems with the agreement by telling the candidate really hard that s/he should just sign it, don't worry, we won't enforce it.
- tomasien 12y agoSign the strictest non compete you can - if it's too strict in most states, even the less strict clauses are voided immediately. Research first but that's usually true.
- JoshTriplett 12y agoUnlikely to be true; non-competes, like most other contracts, include clauses that explicitly allow portions to be invalidated without invalidating the whole. In any case, if you're in a position to have to worry about that, you're likely already in court. Consult a lawyer, and don't sign anything you're not prepared to abide by.
- danielweber 12y agoI had one non-compete that said I couldn't work for a competitor 1) within 50 miles, 2) within 100 miles, 3) within the US, 4) within North America, 5) on the Earth, 6) anywhere in the universe. And then was relying on the severability clause to make it just as enforceable as it could be made.
- ihnorton 12y ago> 6) anywhere in the universe. Unless they were covertly testing your attention to detail and reading comprehension, this last one seems like a prank by a bored intern or paralegal :) Did you have a chance to discuss this, and if so, what did they say?
- stephencanon 12y agoThe legal principle you're groping for is unconscionability (http://en.m.wikipedia.org/wiki/Unconscionability http://en.m.wikipedia.org/wiki/Unconscionability), and it can indeed provide protection from onerous contract clauses. However, it's my understanding from various lawyer friends that the very act of knowing that a clause could be discarded as unconscionable may actually remove that as a defense. I would want to discuss the matter with a lawyer with lots of contract experience in my state before taking the route you suggest.
- bediger4000 12y agoThis seems like an extension of the growing trend towards believing that ideas are property. Given that ideas can be developed independently, ideas are not property in any real sense, and therefore require state support to enforce. But anyway, this is a bad, bad trend.
- chrismcb 12y agoThis has nothing to do with ideas. Some of it is the belief that you've spent time and money training someone, you don't want that person to work for a competitor.
- eli_gottlieb 12y agoOr in other words, you believe you own your employees' experience, implying you partly own your employees. Turns out capitalism eats even its own "I OWN MYSELF!!!111" axiom.
- kareemm 12y ago> “Noncompetes reduce the potential for poaching,” said Mr. Hazen, whose company makes scratch lottery tickets and special packaging. “We consider them an important way to protect our business. As an entrepreneur who invests a lot of money in equipment, in intellectual property and in people, I’m worried about losing these people we’ve invested in.” Then do everything you can to keep them (pay them well, create a workplace where autonomy, mastery, and purpose are the norm, etc). Spending that $$ on your people instead of lawyering up to take away a former employee's livelihood when they find a better opportunity is a terrible way to run your business.
- gedrap 12y agoThat would be true in an ideal world, with no greed and where every employee loves his company. But in our world, dealing this way might get nasty with some people. "Pay me $$$ or I am leaving for XYZ tomorrow". Wouldn't call that kind of employees toxic or something. Just everyone has a different number. It's especially true for niche businesses, like scratch tickets. I guess finding a technologist (or whatever) for such a company is a bit harder than finding a jQuery or Rails guy :)
- zachlipton 12y agoThat's how a free market for employees works though. If an employee is truly that crucial to your business, you'd better come up with a package that encourages him/her to stick around. If an employer can fire an employee at will or give him a paycut, then an employee should be just as free to demand a raise or walk to a competitor.
- jjoonathan 12y ago> But in our world, dealing this way might get nasty with some people. "Pay me $$$ or I am leaving for XYZ tomorrow". I wouldn't call that greed, I'd call that "the employee demanding their true market value." Employers get the right to fire people and replace them with cheap labor overseas (for example), it's only fair that laborers retain the right to leverage competing employers off of one another. > finding a technologist (or whatever) for such a company is a bit harder than finding a jQuery or Rails guy Then the market demands that they be payed accordingly. > [Anticipated words I'm putting into your mouth:] "You seem awfully focused on the market for someone arguing in favor of regulation." I like markets, but they have many well-known pathologies, and I see nothing wrong with addressing those with regulation. In this case, the issue is that the market can remain irrational longer than someone at the bottom can remain solvent. Sure, in some sense you could say that people who don't read their contracts and demand better terms deserve to be punished. But the market doesn't just punish them, it punishes the people who try to negotiate for better terms. Who would hire a smart worker when a dumb worker can be tricked into doing the same job for less? This is why we ban contracts involving slavery and indentured servitude. If they were allowed, 1/4 of the population would unwittingly walk into the trap-contracts. Even if they were perfectly rational, the next 1/4 would be forced to sign similar contracts by the fact that they had to compete with the irrational 1/4 on price (otherwise they starve). Regulations against this kind of thing don't just protect people from themselves (which is arguably something government shouldn't do), they protect rational workers from irrational workers. The market needs them to function (for any reasonable definition of "function"), and that makes them a good thing.
- zeruch 12y agoNoncompetes except in the most specific of cases is categorically stupid. And even in those rare cases, still feels nasty. I do understand where its useful in keeping a major dominant player/nigh monopolist from picking up key talent from up and coming competitors, but thats about it.
- tehwebguy 12y agoGood luck trying to find a judge that would enforce a non-compete for basically any employee below a C-level title. You can't sneak a non-compete clause in with no compensation for it and expect it to hold up in court.
- asdfologist 12y agoFrom the article: "Daniel McKinnon, who had been a hairstylist in Norwell, Mass., lost a court battle with his former employer who claimed that Mr. McKinnon had violated the terms of his agreement when he went to work at a nearby salon."
- tehwebguy 12y agoMy assumption was that they left significant details out since there was so little on the case in the article. For instance some payment like severance in exchange for the noncompete. If there was no compensation then it's truly insane - I can't imagine a judge possibly denying a person the right to work on the basis of a one-way contract. The thought that his options are to learn a new profession or get out of town, that's sort of insane.
- zachlipton 12y agoIn California, yes. In other states, this crap has certainly held up in court. You're also dealing with employees who, like some mentioned in the article, are unlikely to have access to lawyers or money to spare for legal bills.
- ghaff 12y agoWhether or not that's true, a lot of smaller companies in particular simply won't touch someone who has a non-compete because they don't want to get involved in any potential expense and effort of legal action. Rightly or wrongly I can tell you that a company I used to work for categorically refused to consider hiring anyone who had a remotely relevant non-compete.
- danielweber 12y ago
- crapshoot101 12y agoThis is interesting because in CA, a non-compete is almost pointless - its illegal under state law, no matter what your term-sheet says. I think there's an argument that in some cases it may make sense, but those situations are the exceptions, not the rule.
- sportanova 12y agoThey apparently only really apply when 'trade secrets' are in play, and CA has a pretty strict definition of 'trade secrets'.
- danielweber 12y agoThose exceptions do exist, but they are pretty small, such as when an LLC or partnership is being dissolved, or the goodwill in the company is being sold, or the entire company is being sold.
- nostromo 12y agoI generally think that people should be free to make whatever agreements they want. But noncompetes should be banned for the same reason we have anti-trust laws. They are in effect an agreement between companies to not compete for employees. It's anti-competitive.
- cpwright 12y agoThe agreement is between the employee and the employer, and is a term of negotiation just like salary. The two non-compete agreements I've entered into both include provisions to be paid if the company chooses to enforce it. When I worked at IBM and received a stock grant, they included non-solicitation of employees and customers as a term of the grant (though no non-compete). If the non-compete agreement includes reasonable consideration, I think banning them would be wrong.
- lgleason 12y agoYou don't want to sign a non-compete in Georgia. They went the direction of Massachusetts a few years ago. http://www.noncompetetradesecretslaw.com/?cat=37 http://www.noncompetetradesecretslaw.com/?cat=37
- Natsu 12y agoI think they should be enforceable only as long as the company is paying you. So they can either keep paying you and keep you from competitors, or they can waive the non-compete, but they can't keep you out of the job market for free.
- pm24601 12y agoAnd this is why I would not work in any state except for California. (Actually one of many reasons - California has a lot of laws to protect the employee)
- jrs235 12y agoI strongly believe that basic law and legal issues (i.e. contracts and legal rights) should be a required class and taught in all high schools.
- mcovey 12y agoI've already had to put my money where my mouth is and quit a job over a noncompete clause once. I am fine signing agreements to never disclose anything imaginable about a job, to return company property and destroy any copies of documents/information that I have, to not solicit the company's clients, etc. But to further agree not to work in the same industry for any period of time? Never, ever will I agree to such a thing.