[HN Gopher] Laws barring noncompete clauses spreading
___________________________________________________________________
Laws barring noncompete clauses spreading
Author : hhs
Score : 226 points
Date : 2022-11-01 19:09 UTC (3 hours ago)
(HTM) web link (www.businessinsurance.com)
(TXT) w3m dump (www.businessinsurance.com)
| Waterluvian wrote:
| Years ago I had a former CEO throw a ridiculous tantrum over me
| leaving to work for a different company in an adjacent industry.
| He emailed me demanding I quit my job.
|
| A quick review with a lawyer that the non-compete is
| unenforceable in my province and a nastygram sent by my lawyer,
| and he took his tantrum elsewhere.
|
| The problem is that so many people, including some I know, get
| scared at the prospect of legal action that they fold, letting
| bully CEOs win.
|
| These laws will help.
| site-packages1 wrote:
| What's the enforcement for these anyways, when a company insists
| on enforcement? "Cease working for your new employer or else"?
| jyu wrote:
| noncompete clauses are good if you actually get compensation for
| not working at a competitor. e.g. firms paying you a decent
| salary for ~2 years after your employment is over. signing a
| blanket noncompete without compensation is the problem.
| mbostleman wrote:
| My personal experience with non-compete is something that was
| being purchased from me by my employer as part of a severance
| package. Does this mean that that ability for me and my employer
| to make those deals is removed?
| yellowapple wrote:
| > Colorado employers have expressed frustration with the new law,
| said Carrie Hoffman, a partner with Foley & Lardner LLP in
| Dallas. "Nobody likes being told when they're about to hire
| someone" that that person does not make enough to be eligible for
| a noncompete, she said.
|
| Pay up or shut up. It's that fucking simple, and these abusive
| employers should not only be grateful that these clauses haven't
| been outlawed outright (as they should be), but also grateful
| that there's an earnings cap at all, let alone one that's low
| enough to exclude large swaths of the professional workforce.
| [deleted]
| anttisalmela wrote:
| Finland is currently transitioning to a system where employer
| must compensate for the time employee is restricted, and all
| previously agreed contracts must be either terminated before this
| year ends or employee will get paid for the time according to the
| new law - 40% of the salary if restriction is for less than six
| months, 60% if more than six months.
| mkl95 wrote:
| My current contract has a lot of oddly specific noncompete stuff.
| Fortunately those clauses are mostly non enforceable in my
| country, unless your former employer still pays you a bunch of
| money every month. Those clauses are there to please investors.
| loceng wrote:
| Isn't this ethos similar to being counter to monopolistic
| patents?
|
| Could this trend lead to the abolishment of patents - and perhaps
| should an effort be made to help people understand the
| comparison?
| julienreszka wrote:
| I don't think this is comparable.
| weberer wrote:
| Lol, no.
| blep_ wrote:
| > and perhaps should an effort be made to help people
| understand the comparison?
|
| I would recommend that, because the connection isn't obvious to
| me.
| matsemann wrote:
| Where I live (Norway), these laws came thanks to unions. When I
| graduated, all developer jobs I was offered had a noncompete
| clause in the contract. These were wide and potentially career-
| altering if enforced, barring you from doing basically any kind
| of work for long stretches of time. All companies when pushed
| basically said "ohh, we seldom enforce them, only for upper
| management", but still they insisted on them being there.
|
| Luckily my union, Tekna, helped squish most of these in 2015.
| They can no longer be general, they have to name specific
| companies and areas you can't work for if you ask. And pay full
| salary while enforced. So now they're basically non-existent for
| individual contributors / devs, except for maybe naming the main
| competitor if you work for a niche company.
| shadowgovt wrote:
| I had a chance to visit Norway recently, and this was something
| that a tour guide impressed upon us about the culture; she gave
| an example of a restaurant in town that was caught skimming
| pay, and it wasn't just a union representing restaurant workers
| they heard from; they found themselves unable to find someone
| to repair plumbing or their storefront (the plumbers and
| glaziers wouldn't work with them), and their ingredient supply
| chain suffered (truck drivers told them to make their own 3AM
| trip to stock up).
| neon_electro wrote:
| https://en.wikipedia.org/wiki/Solidarity
| whimsicalism wrote:
| This also happens in the US, it just isn't reported on
| heavily by the media.
|
| When the dining workers at my university in the US were
| campaigning for a contract, teamsters blocked most truck
| deliveries to the university
| yamtaddle wrote:
| Labor action generally is barely reported on in the US. You
| have to go to far-left media like Democracy Now to hear
| about most of it. People who don't seek that out could be
| forgiven for thinking unions in the US almost never do
| anything at all.
| whimsicalism wrote:
| It's worth noting also that this sort of "secondary
| strike" approach is explicitly illegal in the United
| States.
| bonestamp2 wrote:
| > And pay full salary while enforced.
|
| That's a good clause, that will basically eliminate them. It
| makes sense from the government's standpoint, they don't want
| anything that restricts people's income because that restricts
| their (tax) income too.
| whimsicalism wrote:
| > that will basically eliminate them
|
| in NYC, it doesn't seem to stop quant firms. they have a term
| for it, although I forget what.
| [deleted]
| [deleted]
| renewiltord wrote:
| Garden leave
| tomesco wrote:
| Gardening leave.
| joebob42 wrote:
| But if they're willing to pay it, it seems like it probably
| means this is a real issue rather than just a way to punish
| employees who leave, and it seems like they're reasonably
| compensating employees for the problem.
| whimsicalism wrote:
| i think they are probably slightly disincentivizing
| leaving if they are only paying base salary.
|
| someone who knows more will have to chime in, i didn't
| even remember this was called gardening leave
| joebob42 wrote:
| Yeah, that's fair, if I only got base salary I'd be
| pretty strongly disincentivized to take such a deal.
| drogus wrote:
| In Germany in order for a non-compete agreement to be valid a
| company has to pay an employee money for the non-compete period.
| 50% of an average of last 3 months of employment. With this law I
| would be actually quite happy for a company to include a non-
| compete clause in the contract.
| hjeutysd wrote:
| The existence of non-competes doesn't surprise me and I'm OK with
| companies being allowed to require them. _But_ what shocks me is
| that companies do not offer commensurate severance packages. If
| you have a 12-month non-compete, then you 'd better pay 12 months
| of total compensation as severance. Over the past year, I did 3
| intense long interview loops and declined 2 offers and accepted
| the third (a FAANG where I work now). The first two places had me
| jumping through hoops - take home assessments, tricky behavioral
| interviews, intense live coding, etc., amounting to like 10+
| interview rounds spent evaluating me before making an offer. At
| the offer stage I politely mentioned that the offer letter
| included an X-month non-compete agreement and I was only able to
| consider signing if the doc was amended to also include an
| X-month severance package with clear terms on "just cause"
| firings (when severance is exempted) and "good reason" quitting
| (when severance is owed even if I quit, very common in cases
| where 'just cause' is included), or, I offered, the non-compete
| can just be removed (one of the two firms already had its main
| presence in California but I live on the east coast where this
| role was based ... but still, why a company already complying
| with laws banning non-competes for 90% of their workforce feels a
| need to include it for east coast employees is just beyond me).
|
| Of course, they both completely balked at this and we could not
| move forward so I declined both offers. The third company had a
| non-compete initially but removed it as soon as I asked - it was
| completely pedestrian.
|
| It's an indication of crazy entitlement on behalf of employers
| that they think workers should give away *for free* significant
| rights (like, uh, getting a new job quickly after a layoff, in
| your field of expertise). These rights are clearly not
| compensated as part of your base compensation from a job offer
| and any employee would be crazy to agree to those terms without
| severance protection. It just communicates bizarre entitlement
| and unprofessionalism. I hope more candidates will wise up to
| this and require severance packages or else decline the offers.
| chaostheory wrote:
| This is one of SF Bay Area's (and California's) largest
| advantages. It's one of the reasons why so many companies are
| formed and thrive here
|
| This is a great development for many of these new areas, but a
| bad one for California since it loses one of its edges
| brindlejim wrote:
| Banning non-competes is a great idea.
|
| However, everyone here should be aware that lots of startups are
| now including "power of attorney" clauses in their employment
| contracts that grant to the employer power of attorney to assign
| inventions to themselves. Feels like there's a lot of room for
| abuse, which could discourage moves to competitors.
| andirk wrote:
| Am I the only one who doesn't add any inventions and doesn't care
| about a non-compete clause because I will never honor it and come
| at me bro if you want to try to enforce it?
|
| I respect making sure the company doesn't steal someone's
| previous IP and I respect a company guarding their own IP. But I
| also respect that a person can work wherever the f they want
| without a previous company having any say.
| mywittyname wrote:
| > and come at me bro if you want to try to enforce it?
|
| I spoke to an employment lawyer who told me in pretty clear
| terms: the company can come after you to enforce one if they
| like; it's a tossup as to whether or not it will be upheld; and
| regardless, it will cost a pretty penny to fight.
|
| I'd personally would not want to have that hanging over my
| head.
| paxys wrote:
| You're not the only one, but this kind of "I'm a sovereign
| citizen!" defense also won't hold up in court for a second if
| the company actually wants to come after you.
|
| The vast majority of people don't run into such issues simply
| because they aren't important enough and/or haven't produced
| anything of value to waste a lawyer's time over.
| andirk wrote:
| My Attorney General and my state fully agree with me in no
| uncertain terms thanks [0]. Feel free to add all those "we're
| not responsible at all!" clauses that ski resorts add which are
| also not enforceable. Thanks for the downvotes.
|
| [0] https://oag.ca.gov/news/press-releases/attorney-general-
| bont...
| yellowapple wrote:
| I just list my GitHub/Bitbucket/Sourcehut/etc. user pages and
| my website and say "everything listed at these URLs". I've yet
| to get any complaints about that.
| ptudan wrote:
| Makes a ton of sense. Completely absurd for security guards and
| administrative assistants to have non-compete clauses. Just
| another way businesses were trying to reduce the willingness of
| employees to quit so that they can suppress wages.
| jasonwatkinspdx wrote:
| Believe it or not they're now being used for fast food
| employees.
| DebtDeflation wrote:
| It jumped the shark a few years back when Jimmy Johns tried to
| force their "sandwich artists" to sign non-competes.
| Sohcahtoa82 wrote:
| Does JJ refer to their employees as sandwich artists too? I
| thought that was just a Subway thing.
|
| But yeah, beyond ridiculous, as if a JJ employee is going to
| leak some crazy trade secret to Subway or whoever.
| munk-a wrote:
| I assume the "sandwich artist" title is an allusion to that
| old saying - y'know because they pay their employees so
| little that they're starving.
| aliqot wrote:
| Everyone knows you spread mustard from right to left. We
| aren't knaves.
| justinpombrio wrote:
| That's the most hilarious double speak. I can only imagine
| the repressed artists getting told off for putting 5 slices
| of cheese on a foot-long instead of 4. "I was just trying
| to express myself, you said I was an artist."
| [deleted]
| lazide wrote:
| Admin assistants (like actual admin assistants) usually have
| access to full customer contact lists, and exposure to rather
| intimate details of the business and executives lives.
|
| They're definitely not comparable to security guards in that
| sense.
| ChrisMarshallNY wrote:
| There are already laws against taking trade
| secrets/proprietary information, and using it elsewhere.
|
| You go to jail for that. It's called "theft."
|
| My company had us sign a _ridiculous_ NCA. It pretty much
| made it impossible to get a job _anywhere_ , after leaving
| the company; even if they fired you, or laid you off.
|
| Their description of a "competitor" was so vague, that it
| could, literally, be applied to a 7-11, as they potentially
| sold peripherals that could be plugged into our devices.
| jaxn wrote:
| Every admin assistant should be under an NDA /
| Confidentiality agreement. Same for personal security. But
| those are not non-competes.
| noasaservice wrote:
| If they're that important, then the company should pay a
| significant percentage of their pay to keep them from doing
| their profession, or GTFO.
| toomuchtodo wrote:
| This is not enough of an excuse to encumber someone from
| earning a living elsewhere.
|
| > "Employers need to get creative about how to impose
| restrictions to protect themselves against individuals" in
| whom they have made significant investments, or who have been
| allowed access to trade secrets, to protect themselves
| against such employees leaving, said Maxwell N. Shaffer, a
| partner with Holland & Knight LLP in Denver.
|
| The sort of healthy employee-employer relationship that
| retains talent.
| lazide wrote:
| What is being banned are non-competes that don't pay
| someone to not compete.
|
| There are legitimate reasons for actual non-competes in
| many of these cases, and CAlifornia for instance just
| requires you pay them for it.
|
| Which in such a situation seems justified.
| toomuchtodo wrote:
| I agree. If you want to pay someone to sit on the bench
| because that has value to you ("Garden Leave"), I support
| that. If you want to twist their arm because you have
| power as an employer, nope. That's what labor law and
| regulation are for.
|
| Lots of examples of malicious employers doing the latter,
| as you'll note the sentiment throughout the thread
| comments and laws intending to patch this bug in statute.
| prirun wrote:
| > What is being banned are non-competes that don't pay
| someone to not compete.
|
| Employers will just say "the no-compete compensations is
| built in to your pay".
| lovich wrote:
| They can say anything, but the behavior has gotten enough
| voter anger to make politicians view this as something to
| regulate, so their opinion on the matter is quickly going
| to lose any weight
| lazide wrote:
| Which is what is banned in California. If someone wants
| an enforceable non-compete, they need to pay them
| (fairly) for the time they're not allowed to compete.
| ec109685 wrote:
| There are already laws against Admin assistants from taking
| full customer contact lists from one job to another. You
| don't need non-competes to enforce that.
| lazide wrote:
| Really, which laws are those?
|
| The only ones I'm aware of would be trade secret laws, but
| they're dubiously applicable to bare customer contact
| lists.
|
| You can make contractual restrictions of course (company
| property), but good luck being able to prove they actually
| took it unless they're _really_ dumb. Merely contacting
| all, or many, customers for instance wouldn't prove it.
|
| Being able to show they work for competitor x is easy,
| however, as is showing they're pursuing customers in the
| same space.
| jahewson wrote:
| lol, no. Confidential business information is an area
| heavily protected by law. Customer lists are the
| canonical example.
|
| It's much easier to win this kind of civil suit than a
| criminal case. The court can absolutely crush a business
| that is founded in this manner to compensate the former
| employer.
| JackFr wrote:
| Then why didn't Dunder Mifflin sue the Michael Scott
| Paper Company?
| dpkirchner wrote:
| Because they didn't reach out to the very real lawyers at
| Boston Legal.
| lovich wrote:
| Assuming you were asking seriously, its a comedy show
| that was not trying to accurately portray how businesses
| run.
| JackFr wrote:
| Really?
| lazide wrote:
| Then surely you'll have no issues providing a cite of the
| relevant criminal code?
| hedora wrote:
| Specifically, you can't take trade secrets from one
| employer to the next. Customer contact lists are just one
| example of this.
| lazide wrote:
| Trade secrets have a very specific definition, and a mere
| list of contact information that is already likely public
| in an unfocused way (aka contact lists) almost certainly
| doesn't qualify. Neither would a list of company names,
| etc.
|
| That information however _IS_ highly valuable, especially
| paired with knowledge of how a company is doing sales,
| how it is positioning itself internally strategy wise,
| etc. some of those things could be trade secrets, if
| adequately protected, but almost no one I know would meet
| such a bar with how they handle it. It would be at most
| confidential information, and could count as a NDA
| violation, but would be difficult to prove unless someone
| was really sloppy.
| DiggyJohnson wrote:
| The idea of a client or customer list being public
| information is profoundly ludicrous. It's the canonical
| example, as another commenter put it.
| bhaney wrote:
| > Nobody likes being told when they're about to hire someone that
| that person does not make enough to be eligible for a noncompete
|
| Am I supposed to feel sorry because a business has to choose
| between either paying an employee more, or not restricting what
| that employee does after they leave? Let me get my tiny violin.
| rdiddly wrote:
| Yeah it's a weird thing to say. Nobody likes being told they're
| going too fast to be eligible for immunity from speeding
| tickets either, and yet they chose what speed to travel in that
| jurisdiction didn't they.
|
| Also the law isn't really about enforcing what people "like,"
| otherwise you wouldn't need a law.
| indymike wrote:
| One of the best features of legislating against non-competes is
| that an employer can't sue a former employee for violating a non-
| compete. Right now, for most occupations in my jurisdiction
| (Indiana, USA), non-competes are usually not enforceable, but it
| costs $500-$2500 to get these lawsuits thrown out. Some employers
| will sue former employees knowing they can't afford a defense, or
| just to throw shade on them at their new job.
| Natsu wrote:
| IMHO, companies should have to compensate the employee for the
| period of the non-compete since they're still effectively working
| for them. Salary limits are okay, but don't really go far enough.
| If they want this it has a value and should be compensated for
| fairly.
| drogus wrote:
| This is how it works in Germany and in some other EU countries.
| Companies need to pay 50% of an average of 3 last months salary
| in order to enforce a non-compete clause.
| debesyla wrote:
| Yeah, same in Lithuania.
| biomcgary wrote:
| I agree. Rather than having legislators get into the weeds of
| defining "compete", "trade secrets", "customer poaching", etc.,
| laws should simply require that enforcing ANY post-employment
| terms require the former employer to pay the former employee
| the greater of the employee's maximum salary plus 10% (to cover
| opportunity cost) or 110% of any offer by a prospective new
| employer. Who better than the company to price the value of
| what the former employee knows? Maybe cap enforcement to 2-3
| years.
| cma wrote:
| Why even allow this? Just makes things less competitive and
| pays people to be unproductive.
| jiggawatts wrote:
| My current employer tried to make me sign a noncompete clause
| and I asked them for precisely this.
|
| They were flabbergasted that I wanted compensation in
| exchange for essentially cutting myself off from a wide swath
| of employment opportunities.
|
| "Aren't you our slave to do with as we see fit!?" was very
| much the attitude that I was getting.
| hailwren wrote:
| Yep. This is what we do in finance. It sucks a bit because most
| of our comp is bonus and you only get your base pay on garden
| leave, but I'm shocked this isn't a requirement.
| ghaff wrote:
| Garden leave isn't a panacea. And in MA it's minimum 50% of
| salary. It does make the employer put skin in the game which
| is no small thing. But it may end up with someone not being
| able to be in a competitive job for a year for maybe 25% of
| their prior comp. Not a great situation for a lot of people.
| mywittyname wrote:
| This would make things interesting.
|
| I kind of want to see what would happen if states passed laws
| saying that all non-compete clauses contained an implicit
| agreement that the employee be paid their entire salary
| (including bonuses) for the pro-rated duration of the non-
| compete and that such clauses can be triggered by either party.
|
| We all know the value of a non-compete clause is $0 for most
| employees. Hell, they are probably most effective at bullying
| unproductive workers who hate their jobs into staying on too
| long, thus might actually be a net negative for employers.
| willcipriano wrote:
| The best part would be the rapid "Oh no, we don't need you on
| a non-compete anymore" throughout the state the day after the
| law passed. All of sudden how to fold sheets the Ramada way
| isn't a highly confidential trade secret.
| bumby wrote:
| > _The best part would be the rapid "Oh no, we don't need
| you on a non-compete anymore"_
|
| I've witnessed this on the other end. Someone was being
| pressured to engage in sales that would violate her non-
| compete that was openly discussed during the hiring phase.
| When she essentially said, "Sure, I have no problem
| breaking it as long as you put it in writing that you'll
| cover any legal fees" suddenly the new employer didn't
| think sales in that region were quite as important.
| CaptainJack wrote:
| The UK has had a government call for evidence on the subject of
| non-compete, with the aim of limiting them as well, but nothing
| has been done so far.
|
| I'm myself in the long, lengthy and costly process of trying to
| fight a two years non-compete (well, 1yr garden leave + 1yr non-
| compete), and it's taxing. It adds stress, makes it harder to
| market yourself, and on top of that there is this clear asymmetry
| where the costs if it was to go to high court (PS150k) would be
| huge for you, but petty change for your employer. On top of that,
| they'd get to claim these as expenses (so pre-tax), but you
| couldn't get any kind of tax-credit (so effectively post-tax).
| System is biased, it's about time they would change it.
| paxys wrote:
| Over the years so many different jurisdictions around the US and
| the world have stated their desire to be the "next Silicon
| Valley" and have poured an immense amount of money and effort to
| make it so, whether in the form of incentives for businesses, tax
| breaks, education, job training, or even just straight paying
| smart people to move there. Every such scheme has generally
| failed because they refused to emulate the one key piece of
| California law that is necessary for a startup ecosystem to exist
| - banning noncompetes.
|
| "But I'll spend money to train my employees and they'll just take
| those skills to go work for a competitor or start their own
| business!" Yes, that's a feature of the system, not a bug.
| kennend3 wrote:
| Here (Canada) the courts almost always rule that the non-
| compete is unenforceable. The core issue is the rights of an
| individual to earn a living supersedes the rights of a
| corporation.
|
| https://globalnews.ca/content/8363992/can-non-compete-clause...
|
| " The majority of non-compete clauses challenged in the
| judicial system have been rendered unenforceable. Canadian
| courts, in my experience, look unfavourably on clauses that
| restrict an individual's ability to use their knowledge and
| experience to earn a living."
|
| What companies here do falls into two general categories:
|
| 1) attempt to get people to sign and hope they don't know it is
| unenforceable.
|
| 2) pay people to stay at home and not-compete - Given this is
| expensive it doesnt happen often.
| rileymat2 wrote:
| Does banning non competes help if you don't already have
| businesses attracted to an area in some critical mass?
|
| I can see how it could make for a vibrant scene if you already
| have incumbents, but if you are an area trying to attract them,
| I am not sure that works.
| diob wrote:
| Right, the idea is to train + pay them well enough that they
| stay. It helps the local economy because rather than your
| business putting more into investments around the world (or
| wherever the rich store / grow their money), that person puts
| the money in the local economy.
|
| Folks understand this, but their pay depends on them not
| understanding it so. . . here we are perpetually.
|
| Funny enough, paying folks well often will pay dividends for
| your business in the long run. So long term they would make
| more money.
|
| Humans are unfortunately quite short sighted, which I'm fairly
| sure nothing can be done about. We're just fancy animals after
| all.
| lazide wrote:
| I saw first hand a sales guy at a prior company I worked for
| start a side business directly competing with the primary
| business he was working for in his day job, while still
| working with them. Including redirecting customers while
| working for them.
|
| The owner got suspicious due to some comments made by
| customers, and started listening in on the phone calls he was
| making on the company phone system.
|
| This was a small business, and it nearly tanked the company,
| as the customers were confused as hell, and the 'new' company
| wasn't doing well either. She ended up having to fire him,
| and sue him, but it took years, and meanwhile he kept
| operating.
|
| He was paid well, but for some people it's never enough.
|
| I don't care what anyone says, that is shitty criminal
| behavior.
| moron4hire wrote:
| That's basically the one situation in which non-competes
| are enforceable in the US. The problem is, most people
| don't understand that, and fall prey to companies putting
| non-compete clauses into their employment agreements that
| say they can't go do CRUD software development at any
| company in a 50 mile radius.
| vxNsr wrote:
| Yup kinda interesting to see this play out. With the federal
| trade secrets law tho it no longer matters.
| harry8 wrote:
| Beyond banning them de-jure you've also got to ban them de-
| facto.
|
| "We all know non-competes are unenforceable and illegal." <-
| Absolutely useless if you can end up in court. Using
| unenforceable rights as a deterrant is common and potential
| future employers get spooked by it even if it is illegal.
| "Don't hire Jill, Mary is almost as good and has no non-
| compete. Don't want to go to court even if its unenforceable."
|
| There are no consequences for forcing someone to have the
| stress, expense, time and to secure the financing so that if
| everything works as it should (which it often doesn't in all
| the various legal systems) you get only some of that back. If
| it doesn't work as it should you're toast. Not a nice thing to
| be hit with when the law is clearly designed that you should
| not be hit with anything at all.
|
| For an individual or a startup it matters. For a large revenue
| incumbant they have people employed to abuse the system like
| that and the business expense of doing it is trivial, more than
| worth it. The law may exist so that the strongest do not always
| get their way - but this is an ideal with many exceptions
| including this one.
|
| Ban away, but with no consequences for abuse and all
| measurements for the abused being the magnitude of the downside
| alone, no upside possible you don't get the result you're
| looking for.
|
| Summary dismissal with costs, compensation and the potential to
| be branded a vexatious litigant so it is more difficult to
| bring any court action against anyone would be a real
| consequence for abusing the rules. Is the best one? Is it fair?
| Dunno. What we have now in most countries sure isn't.
| vkou wrote:
| > Every such scheme has generally failed because they refused
| to emulate the one key piece of California law that is
| necessary for a startup ecosystem to exist - banning
| noncompetes.
|
| As I look out the window of my Seattle apartment, observing a
| literal forest of new construction, sky-rocketing rents and
| costs of living, I must interpret the tech boom here as 'the
| next Silicon Valley failing', because Washington state has had
| a very strong form of non-competes prior to 2020, and a
| somewhat strong form of non-competes today.
|
| Or, maybe I can choose to believe my eyes, and note that the
| the presence or absence of non-competes isn't a very important
| factor for driving a tech boom. [1]
|
| It is a popular topic to bikeshed over, though.
|
| [1] As a sibling poster points out, non-competes are absent in
| Canada, and yet nobody can accuse any locale in Canada of being
| the next SV...
| exabrial wrote:
| I think a better system is an up-front repayable bonus: "We'll
| pay you $2k on sign-on, but you have to stay for 2 years" or
| something.
|
| This benefits job applicants (extra money!), employers
| (retention), and protects applicants (employers abusing non-
| compete agreements for everything), and is a far easier legal
| process to execute.
| bhaney wrote:
| This seems like the equivalent of a predatory loan with the
| interest paid in opportunity cost, and doesn't even properly
| address the same problem that noncompetes do.
| shagie wrote:
| That's attempting to solve a different problem (employee
| retention) than non-competes attempt to address in their
| original form.
|
| For example, how does a company prevent (setting aside the
| "should they" debate) an employee from:
|
| 1) leaving and starting up a consultancy for installing former
| employer's software (competing with company professional
| services)
|
| 2) leaving and starting up a new company that is a competitor
| to the former company
| exabrial wrote:
| 1) That would be IP theft, and is already covered by other
| laws.
|
| 2) That is the problem I think this solves: retain your key
| employees. Maybe pay them a bit better than that 2% annual
| raise.
| shagie wrote:
| Starting up a consultancy to do installation of your former
| employer's software for clients isn't IP theft. If I worked
| for Atlassian and then created a company that did
| consulting for how to install Jira and and organize
| workflows - there's no IP theft involved there.
|
| Creating a new competitor isn't about retaining employees.
| Consider the situation of
| https://en.wikipedia.org/wiki/Rose_Blumkin
|
| > In 1989, six years after selling 90% of her company to
| Berkshire Hathaway, Blumkin retired, only to come out of
| retirement in three months to open up a rival store. It was
| called "Mrs. B's Clearance and Factory Outlet" and was
| situated directly across the street from the Furniture
| Mart. It became profitable by 1991. Buffett acquired the
| business in 1992. Blumkin continued to be involved in day-
| to-day operations until shortly before her death at the age
| of 104.
|
| While this case wasn't covered and Buffett certainly
| handled it different than the non-compete, but should there
| be the ability to prevent that sort of behavior with a non-
| compete agreement?
| yellowapple wrote:
| > If I worked for Atlassian and then created a company
| that did consulting for how to install Jira and and
| organize workflows - there's no IP theft involved there.
|
| That also seems like a very silly thing to prohibit in
| the first place, since Atlassian's getting paid either
| way in that case.
| exabrial wrote:
| I'm sorry, I misread the parent comment. I thought they
| meant recreating the the software, not installing it.
| shagie wrote:
| I'm thinking more the professional services / support. "I
| used to work for $foocorp, pay me $money and I will help
| you install your software and support it better than
| $foocorp offers."
|
| Another example is Epic's "not quite a non-compete" is
| that they won't release the certificates(?) that an
| employee got for supporting their software (as part of
| employee training) for a period of time after separating
| from the company. I'll admit to being hazy on this but (I
| believe) that this is to make it difficult to start a
| consultancy for installing health care software right
| after leaving as you wouldn't be able to demonstrate the
| certificates that you got while working there (and
| getting them again is costly).
|
| Though, if you want an example of "recreate the software"
| (though not with IP infringements), look at Dave Hitz and
| James Lau from Netapp and that they formerly worked at
| Auspex. I'm sure that they dotted all the 'i's and
| crossed all the 't's with leaving a company and starting
| a new one that became a direct competitor - but that sort
| of thing happens too. I'm not sure what California's non-
| compete laws were like in '92.
|
| ---
|
| The "you can't work anywhere using a computer" as a non-
| compete is certainly something that isn't reasonable. A
| "you can't start a competing company and try to get
| former clients to switch to you after selling your old
| one" is enforceable.
|
| So where does the "you leave a company and then start a
| consultancy that competes directly with the professional
| services, consulting, or support of the previous company"
| fall? That's a question I haven't found an answer to.
|
| As to the bit on some things being enforceable: Blue
| Mountain Enterprises, LLC v. Owen (
| https://law.justia.com/cases/california/court-of-
| appeal/2022... )
|
| > Primary Holding
|
| > Court of appeal upholds the enforcement of a
| restrictive covenant against a former employee who had
| sold his ownership interest in the company while
| concurrently agreeing to the covenant.
|
| And we've got an example where a non-compete / non-
| solicitation agreement _was_ enforced, appealed, and
| found correct.
| snapcaster wrote:
| I fail to see what's wrong with this. Not trolling, what
| actual harm is being done here? it should be priced into
| the risk of acquiring the company right?
| ptmcc wrote:
| I don't see how this addresses non-competes at all. Also that
| is already how many sign-on bonuses work.
|
| Retention is only tangentially related to non-competes. People
| leave for all sorts of reasons. If a company wants to restrict
| what they can do after they leave then they can pay them for
| that supposed value. We'd find out really quickly that most
| non-competes are bunk.
|
| Not to mention that you'd need to add a couple zeroes to that
| sign-on bonus for it to mean squat to anyone actually working
| with valuable proprietary information.
| aiperson wrote:
| They should ban unpaid non-compete clauses above 6 months. I
| wouldn't want them to go further than that. A half-year paid
| vacation is a pretty good thing for almost all workers.
| deathanatos wrote:
| Good riddance to this form of wage suppression. Let's do forced
| arbitration next.
| [deleted]
| bigmattystyles wrote:
| For some reason (I never dug deeper), my friend who is an
| attorney said she prefers arbitration. Maybe because she
| already is an attorney? The only thing I can think of is that
| it is more expedient and having seen behind the curtain the
| talk of biased arbiters (biased towards the Goliath) are
| exaggerated. But if anyone can opine I'm all ears.
| deathanatos wrote:
| I've yet to hear a single valid reason for _forced_
| arbitration. I have nothing against two parties, _at the time
| of a dispute_ , who want to engage in arbitration, in doing
| so.
|
| There's also numerous stuff that should, IMO, fall into class
| action, but gets divvied up in forced arbitration, to the
| point where it isn't worth the time and expense for the
| individuals in the class to continue to pursue justice.
| (Although there have been some novel DoS style mass-
| arbitrations ... that's more of a means of trying to force
| the corporations hand into a normal class action, and towards
| justice.)
|
| Normally the reasons cited for arbitration are things like
| "the courts are slow" or "the courts are expensive" or "the
| courts are overwhelmed" -- but you could still just do
| arbitration at the time of dispute with those. Saying that
| _forced_ arbitration is better from these arguments is non
| sequitur.
|
| There's also a conflict of interest between the chosen
| arbiter and the company. (And conflict of interest is
| _independent_ of bias; a good arbiter can very well be
| unbiased, but it is easier for everyone involved to believe
| that if there isn 't a conflict of interest.)
| jonny_eh wrote:
| > my friend who is an attorney said she prefers arbitration
|
| So let her opt-in. Why force it?
| shemnon42 wrote:
| Forced arbitration is bad for employees, based on empirical
| evidence
|
| * It has a chilling effect: less disputes are filed
|
| * employees prevail less often
|
| * when employees do win the employee portion of the award is
| less than standard litigation
|
| https://facesofforcedarbitration.com/wp-
| content/uploads/2019...
| munk-a wrote:
| In the US these clauses are almost never enforceable and simply
| serve as a chilling effect. There is a fundamental issue with
| non-competes that if they prevent a person's well being they
| can't be enforced so if a person secures a job that would violate
| their non-compete the enforcement of their non-compete would
| cause them to lose their income. This is considered a hardship so
| enforcement of a non-compete clause requires a clear
| demonstration that other work would be available which in many
| cases is hard to do in the modern world since it'll often require
| there existing a genuine offer of work to the individual - offers
| are normally private so they can be hard to discover but,
| additionally, simply demonstrating the availability and presence
| of job listings is usually insufficient because hiring processes
| are a lot more complex today then in 1800 when some dude would
| hand you a shovel and offer you a dime at the end of the day.
|
| I applaud their death - they are fundamentally bad for employees.
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