3 ms·
I was under the impression that non-competes were legally implemented not to stop employees moving, but to stop an owner from selling a business with goodwill,
by neumann 12y ago
I was under the impression that non-competes were legally implemented not to stop employees moving, but to stop an owner from selling a business with goodwill, and then starting up a competitor across the road and reducing the goodwill be retaining their old customers. I have no evidence, but had assumed that the modern non-compete enforced on employees by employers came out of a precedent based on this law and has slowly gained acceptance. Happy to be educated if somebody knows more.
- jwarkentin 12y agoI don't know the history but if that were the case then the non-compete should be between the owner and buyer, not employer and employee. It makes no sense to go after the employees to prevent former owner competition.
- PeterisP 12y agoNope, provisions for that are in M&A agreements and part of the reason why acquiring companies takes so much money and [lawyer]time. And it's in no way a "precedent based on this law" - what do you mean by "this law"? All of these provisions are in private contracts, not in legislation. The classic use of non-competes is for salespeople or high-level service people (lawyers, consultants, etc) not taking their customers with them when leaving.
- danielweber 12y agoThose are one of the few types of non-competes that are enforceable in California. Otherwise, the majority of non-competes in America, by raw count, are not about owners selling the company.