[HN Gopher] New York State Senate passes prohibitions on non-com...
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New York State Senate passes prohibitions on non-competes
Author : hhs
Score : 574 points
Date : 2023-06-14 17:36 UTC (5 hours ago)
(HTM) web link (ogletree.com)
(TXT) w3m dump (ogletree.com)
| ldjkfkdsjnv wrote:
| Does this apply retroactively? If I am already in a non-compete
| in NYC is it null and void?
| toomuchtodo wrote:
| > Bill No. S6748 is generally aimed at preventing the
| establishment of monopolies, monopsonies, and restraints of
| trade.
|
| > If enacted, the provisions of S6748 would prevent employers
| from entering into or maintaining non-competition agreements
| with workers, including independent contractors, absent a "good
| faith basis" to believe that a non-compete agreement is
| enforceable. The bill does not expand upon what constitutes a
| "good faith basis." The legislation would also define "non-
| compete agreement" broadly to include any "de facto" agreement
| that "has the effect of prohibiting [covered individuals] from
| seeking or accepting employment[,]" such as overbroad non-
| disclosure agreements and training-repayment obligations.
| Employers would also be required to rescind unenforceable non-
| compete agreements with both current and former workers, and
| they would be required to provide notice to each worker that an
| agreement is no longer in effect. If enacted, the law would
| take effect immediately.
|
| Status: https://www.nysenate.gov/legislation/bills/2023/S6748
| epicureanideal wrote:
| Wow, they included NDAs! Amazing!
|
| See my previous comment about the problem of overly broad
| NDAs:
|
| https://news.ycombinator.com/threads?id=epicureanideal&next=.
| ..
| dburkland wrote:
| This needs to be passed in the remaining 49 states ASAP. When
| moving over to my current gig, my previous employer forced me to
| sit out for 6 months. Their agreement was so broad that it
| pertained to anywhere where there was phone or email in the
| world. Also applied to any customers, partners, or competitors so
| basically I couldn't work in tech at all (since they are a major
| reseller and everybody procures something from them).
|
| Hint: Their company color is fuchsia
| neilv wrote:
| California, and now New York. I wonder whether Massachusetts will
| match that.
|
| https://www.mass.gov/info-details/massachusetts-law-about-no...
| dabraham1248 wrote:
| The first law linked in your article (
| https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Ch...
| ) seems to me further reaching than the lesser of the two NY
| bills (S6748). Am I missing something here?
| neilv wrote:
| My bad; I was thinking of the greater of the two NY bills:
|
| > _Bill No. S3100A, proposes a ban on all non-compete
| agreements,_
| cmrdporcupine wrote:
| FWIW, to add to the joy, non-competes have been officially
| banned in Ontario since Oct 25, 2021 (but rejected by the
| courts for a long time before that. I suspect they're not
| enforceable in other provinces; but officially not allowed in
| Ontario.)
|
| So that means for all employees in the greater Toronto area.
| (And Toronto is 4th biggest city in North America just after
| Chicago).
| isk517 wrote:
| The textbook I read to study for my provincial Engineering
| Law and Ethics exam had a section on non-competes. It
| straight up said the vast majority of non-competes are not
| enforceable but warned that the more specific the
| circumstances described by the non-compete the greater the
| chance that a court would enforce it.
|
| The example they used for something that would most likely be
| enforced was a geologist working for company A doing a mining
| survey in a area under a 6 month non-compete cause would
| definitely not legally be allowed to take a job for company B
| to do a survey in the same area until the non-compete
| expired.
| alphanullmeric wrote:
| Entity that forcefully bans its competition makes it illegal to
| voluntarily not work for your competition
| Joel_Mckay wrote:
| The main reason selective non-compete clauses are important, is
| preventing industrial espionage on intangible assets... and
| customer lead-data exfiltration.
|
| In business, idealism will not be rewarded in the long-term.
|
| People intuitively understand this fact, if they were ever stung
| by a bad partnership deal or outright scam.
|
| The core issue was the scope of these terms became far too broad
| in 50 years.
|
| The sun always shines even when our faces are turned, =)
| m3kw9 wrote:
| Does it affect old contracts or just new ones
| gizmo686 wrote:
| > the second bill, S6748, would, among other things, prohibit
| employers from entering into or maintaining non-compete
| agreements with workers, absent a "good faith basis" to believe a
| non-compete agreement is enforceable.
|
| There should be a more general law about this. Drafting any
| contract without a good faith belief that it's provisions would
| be valid if tested by a court should be illegal.
| getmeinrn wrote:
| Companies have the good faith belief that employees would be so
| outgunned in a legal fight that most of the time they won't
| even challenge invalid clauses.
| gizmo686 wrote:
| Hence the need for a law. Something along the lines of:
|
| * Anyone who was given a contract with a provision that the
| drafter knew was unenforceable can sue. * If they win, they
| get, punitive damages, actual damages, and lawyer's fees. *
| It is not necessary to alledge any damages, or even that the
| provision in question was ever relevant.
|
| Do this, and there will be law firms looking and advertising
| for clients. For cases as obvious as the typical non-compete
| the law would be so clear that lawyers would have no issue
| working on contingency.
|
| Employers can drive up litigation costs all they want. Plenty
| of law firms can handle it, and are already used to it; and
| at thd end of the process, the employer would just pay the
| cost.
| kosievdmerwe wrote:
| It would be especially valuable if there was also a
| government registry of known unenforceable provisions that
| employers are assumed by the law to be aware of. This would
| cut off arguments regarding "knowledge"/
|
| I would also include provisions in the law to force
| employers to inform explicitly every other person who
| signed the contract that the clause is not valid.
| RicoElectrico wrote:
| > It would be especially valuable if there was also a
| government registry of known unenforceable provisions
| that employers are assumed by the law to be aware of.
|
| Hah, there's exactly that in Poland wrt. consumer
| protection - "klauzule niedozwolone"
| cm2012 wrote:
| Awesome news. This alone will raise NYC GDP by a few %.
| adamsmith143 wrote:
| Hedge Funds and I-Banks are on suicide watch.
| sublimefire wrote:
| Even if it passes it will need to be tested in the courts
| (possibly in multiple states). There was an interesting case in
| Ireland (I know, not U.S.) recently where non-compete should not
| be enforceable. Interestingly enough the company still tried
| their stance in the court but alas failed. This was between
| Ryanair and Mr. Bellow (ex COO) who left for a competitor
| EasyJet.
|
| https://hayes-solicitors.ie/News/Ryanair-DAC-v-Bellew---what...
|
| The abuse of power will not just suddenly stop. You will see your
| contracts polluted with non enforceable non competes for times to
| come. It probably scares people of.
| IG_Semmelweiss wrote:
| This is not going to be a popular take , but this will hurt
| employment or comp of medical fellows & residents, who expect to
| go into private practices.
|
| In summary, established SMB independent practices will offer
| fewer w2s to freshly minted MDs. Expect established doctors to
| require buying into a practice's equity, meaning the odd new MD
| with funds to buy in will do so (but will take less comp vs w2
| salaried) ; while the majority of those without funds to buy in
| (due to a pile of student loans), will end up as W2 ...but for
| hospital groups.
|
| Why ? Existing doctor-owners will be concerned with _paying_ for
| the risk of training new doctors who can then take the existing
| practice 's foot traffic with themselves across the street on a
| whim. Why Paying? The new w2 doctor is a loss leader a period of
| time, which varies across specialties. They are slower, don't
| know how to use new EMR, etc
|
| So yes, i'm for competition, but expect that hospitals will
| benefit tremendously from this new restriction in NYS. And
| healthcare costs will rise accordingly.
| ancientworldnow wrote:
| If they don't want that to happen they can simply pay deferred
| compensation like non competes work in every other nation
| instead of holding them hostage through medical debt service.
| nwiswell wrote:
| This is how it works for small vs. large business in ANY
| skilled/professional field, whether we're talking lawyers,
| accountants, engineers, whatever. If you want employees to
| stay, then incentivize them accordingly. If that means that
| junior MDs make low W2 and then that ramps up as they gain
| experience, that seems reasonable to me! Anything else is
| fundamentally not fair.
| user3939382 wrote:
| Has anyone spent the time to read this through / does anyone know
| if it's retroactive? Does it only apply to new deals?
| johncessna wrote:
| Are there a lot of issues with non-competes? I've def heard
| stories, but it's usually related to poaching scenarios where a
| contractor gets hired by the company that they are contracting
| with.
|
| That said, I also know that multiple states basically have
| mechanisms to prevent a non-complete from preventing work. For
| example, if I'm a mechanic, a non-complete can't keep me from
| being a mechanic and making a living because a former employer
| claims that every repair shop is a competitor.
| jzb wrote:
| "Are there a lot of issues with non-competes?"
|
| What would constitute "a lot"? The last few years I've seen an
| increase in the tech industry of non-competes being required
| for less senior roles, plus reports of using non-competes in
| low-wage industries to try to freeze workers from leaving jobs.
| [1]
|
| They're also over-broad and selectively enforced. I was
| considering a job last year that had a non-compete and wasn't
| eager to sign it because if you read it broadly it would've
| been hard for me to take a job that wasn't with a "competitor."
| Which was 1) over-broad and 2) bogus because the harm that
| would've been done to me was far outsized to any harm I
| could've done taking a job with any competitor.
|
| I wasn't going to be such a strategic employee that me going to
| Company B would have hurt Company A in any real way (nor would
| I have been compensated at that level...), but I was expected
| to sign a non-compete and be severely restricted in my next job
| options -- or roll the dice and hope if I took a job with
| Company B later on that it wouldn't be considered "a
| competitor" or that the employer would care.
|
| And that's the other problem - I was told by several people
| "eh, that's not enforced" but it was not something they were
| willing to forego, either. I don't sign agreements with the
| intent I'm not going to live up to them. It's not reasonable to
| have that kind of uncertainty, either.
|
| Non-competes have their place - I can see, say, Netflix putting
| in place a NC with a head of programming or major cloud
| providers having non-competes for very senior execs who have
| extensive information about strategy, budget, customer lists,
| etc. But lower-rung employees who don't even have their own
| budget or any material knowledge about the operations of the
| business? That's stupid.
|
| [1] https://www.mashed.com/620419/the-contract-you-didnt-
| realize...
| nocsi wrote:
| > Are there a lot of issues with non-competes? I've def heard
| stories, but it's usually related to poaching scenarios where a
| contractor gets hired by the company that they are contracting
| with.
|
| There's no issue unless the state is into stifling innovation.
| Want to create a Silicon Valley? You have to allow for
| employees to jump ship and form startups w/o repercussion.
| ghaff wrote:
| Cases where companies actually take someone to court are almost
| certainly not very common and tend to involve high-level people
| (or employers with a real grudge).
|
| But having worked for a very small company for a number of
| years, we wouldn't touch anyone with a remotely relevant non-
| compete. As far as our business office was concerned, no one
| was basically worth any risk of litigation and legal bills.
|
| That said, I have known companies that were apparently known
| for enforcing non-competes and departing employees who wanted
| to put out their own shingle for competing services would sit
| "on the beach" for a year before doing so.
| r00fus wrote:
| Some stores prevent _retail_ workers going to work for a
| competing store. That 's completely bananas - you can't work as
| a checkout clerk at Krogers if you worked at Safeway?
|
| If a retail worker is key to your business such that it
| requires a non-complete, your business model is broken or
| you're abusing non-competes.
| bradleyjg wrote:
| In the financial industry there's a norm that traders, and
| other high profile workers, will have gardening leave between
| jobs. The old company will pay the ex-employee for a few months
| to do nothing. This way when he starts at the new company and
| inside knowledge he gleaned is out of date. The new company
| knows that this is the deal and is okay with a start date after
| gardening leave.
|
| This is the civilized version of a non-compete developed by New
| York Bankers. Oh so nice and caring California tech companies
| use the ruthless version. Since they now have offices in NY we
| need to change the law to force them to behave.
| Timon3 wrote:
| As far as I've read noncompetes have become very common, even
| some supermarkets have them for normal store workers.
| masklinn wrote:
| IIRC Walmart makes every employee sign nccs as a matter of
| course.
| lambdasquirrel wrote:
| There was a particularly high profile case of a high-level
| Microsoft engineer who left for Google, and Ballmer literally
| threw chairs across the room and had the guy sued.
|
| Microsoft lost.
|
| Nobody hears about these stories when they stakes are lower.
| gnu8 wrote:
| Never mind the issue of tech worker poaching and whatever
| secret agreements the companies made, the real issue here is
| Ballmer's terrifying spasm of violence. He ought to have been
| removed from the building and barred from the property, and
| his employment terminated. That type of outburst is never ok
| because it forces everyone to wonder at what point he might
| assault someone.
|
| I don't care how many billions of dollars are at stake, none
| of it is worth getting hurt over, and throwing chairs around
| demonstrates that he has lost that perspective.
| paxys wrote:
| Ballmer being CEO of Microsoft for 14 years (and making
| himself $100B in the process) should be part of business
| school case studies for corporate mismanagement. He had no
| ability for the job, no technological understanding or
| vision, really no reason to be at the company at all other
| than being friends with Bill Gates in college. Microsoft as
| a company (along with its stock price) was stagnant
| throughout his tenure, and has grown 15x since Nadella took
| over.
| sidewndr46 wrote:
| This doesn't get said enough. Just because you are CEO
| should not shield you from criminal liability
| sonotathrowaway wrote:
| To be fair it wasn't his office that shielded him from
| consequences, it was his wealth. It's not like a poor
| person who founded their own LLC would be coddled by the
| legal system.
| jen20 wrote:
| Someone "close to the source" once told me that he would
| pace about meetings rotating a baseball bat like a baton.
| The chair doesn't seem like the biggest problem here!
| [deleted]
| toomuchtodo wrote:
| They are wielded as a weapon in an asymmetric power dynamic,
| hence the need to strike their use down.
|
| https://www.ftc.gov/legal-library/browse/federal-register-no...
|
| https://www.ftc.gov/news-events/news/press-releases/2023/01/...
|
| https://www.ftc.gov/news-events/news/press-releases/2023/01/...
|
| https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compet...
|
| http://www.nytimes.com/2014/10/15/upshot/when-the-guy-making...
| | https://archive.is/I8wmH
|
| Previous on the topic:
|
| https://news.ycombinator.com/item?id=34260577
|
| (disclosure: I submitted comments to the FTC advocating for
| their rule making against non competes; personal opinion: its
| important this is codified at both federal _and_ state levels
| to inhibit rollbacks in the future based on SCOTUS decisions
| around executive branch authority, consider them lines of
| defense and policy ratchets)
| _trackno5 wrote:
| The whole problem was due to the abuse towards "low skill"
| workers. Stuff like if you get a job at Subway, you can't go
| and work at another deli shop within a certain radius of the
| former employer.
|
| The point of this change is to protect these people, which is
| totally sensible
| loeg wrote:
| Non-competes are also problematic for highly-compensated tech
| workers. The phenomenon of NCA'ing low-compenation workers is
| also horrible, of course, but not the whole problem.
| WesternWind wrote:
| Yeah most of the stuff that is ostensibly the purpose of
| classic non compete agreements is well handled by NDAs and
| explicit agreements not to poach clients/workers, if I
| understand things? It's still okay to block the use of
| secret information or professional contacts from your
| former company.
|
| From a free market perspective, it's burdensome to make
| someone with experience in a sector stop working in that
| sector, even if that's what their career is about.
| tehwebguy wrote:
| > It's still okay to block the use of secret information
| or professional contacts from your former company.
|
| Indeed, and trade secrets are already protected federally
| by the Uniform Trade Secrets Act
| awkward wrote:
| Explicit agreements not to poach workers are also illegal
| in sane labor markets (California, for example).
| thequadehunter wrote:
| Yep, had a non-compete working at an isp in Hawaii. It felt
| really scummy to sign that on my first day because I knew
| it would make it difficult to work in the tech sector when
| most other companies are within a very small radius and are
| all "competitors".
|
| I did see one guy leave after 6 months and go directly back
| to his old job at a competitor and the CEO just grumbled
| about it and did nothing. It was kinda badass.
| peplee wrote:
| Easier to keep the employees around with the threat of
| legally enforced unemployment without the safety net than
| changing the business or working conditions or pay to
| something worth sticking around for.
| delfinom wrote:
| The reality was courts in NY generally would never enforce a
| non-compete for a Subway like case. Courts do weigh the
| "equivalent exchange" and what the non-compete is
| "protecting". They were more problematic in any other higher
| paying field.
|
| The first proposed bill bans all non-competes while the
| second proposed bill basically codifies non-competes are
| legal only if there's "good-faith" aka equivalent exchange.
| Which usually means payoff or enormous salary.
| mywittyname wrote:
| I've had to sign many of them. The only one that would have
| definitely been enforced was not tech-related and very narrow
| in scope (don't open competition within 10 miles).
|
| But every tech-related one amounted to, "you're not allowed to
| work if you sign this". I didn't have any "issues" with them,
| in the sense that nobody ever tried to enforce one, but it's
| still a load of BS that we shouldn't need to deal with.
|
| Non-compete agreements for employees are a farce, IMHO.
| ARandumGuy wrote:
| It's a tool for intimidating workers. Non-competes may make a
| worker afraid to leave a job for fear of being unable to work
| in their industry. It may also make a worker afraid to take
| specific positions for fear of retaliation by a former
| employer.
|
| The key is, non-competes can accomplish these things even if
| they're not legally defensible. Your average worker doesn't
| have the legal knowledge to know if a given non-compete is
| actually likely to hold up, and will often assume that they
| signed a legally valid contract. Most workers can't afford to
| go to court, so the threat of a lawsuit can be used to bully
| them into submission.
| Lk7Of3vfJS2n wrote:
| Sometimes I wish there was a law that said if you knowingly
| say something that isn't true with intention to deceive then
| you can get sued for it.
| jackmott42 wrote:
| Tucker Carlsen is having trouble with his career of lying to
| people and stoking up rage that causes murder and insurrection
| due to a non compete from Fox News right now.
| milesvp wrote:
| My understanding is that Fox is continuing to pay Calson so
| that he can't compete. I know in my state that's a
| requirement once let go, else non competes are not binding.
| petsfed wrote:
| I understand that he's still being paid by Fox News at the
| moment (and will continue to do so until 2025), so it's more
| a conflict-of-interest clause. Dunno the details of his
| contract, but I assume that completely canning him is more
| expensive than just taking his show off the air, but
| breaching his contract by doing a show on his own probably
| shields them from that.
| verall wrote:
| He's still getting paid as per his contract, it's not quite
| the same.
| gen220 wrote:
| This is a big deal! Non-competes are a major factor in the
| finance sector. In tech circles, this mainly impacts HFT firms
| and prop shops employing software people.
|
| There's a well-trodden path in NYC from HFT/Prop #1 -> Big Tech,
| for duration of a non-compete -> HFT/Prop #2, that can be
| shortened by one node.
| detroitcoder wrote:
| Yes this is great but the way non-competes are enforced for
| many in the industry this won't have a huge impact because of
| the way deferred compensation is structured. Most people when
| they leave are bound to two separate forms of non-competes.
|
| The first is what is being invalidated here, which is a
| contractual non-compete. The second is a non-compete clause
| that is a function of your deferred compensation. Here the firm
| pays a portion of your bonus into the fund that vests over
| time. Often times a condition of the vesting is that you can
| leave, but if you do anything competitive for a 1-2 year period
| following the end of employment with the firm, that deferred
| comp will be clawed back. For most people this is the most
| important. It is common for a new fund to offer the employee a
| make-whole agreement where they will transfer your marked to
| market deferred comp into the new fund knowing that your prior
| employer will zero out your deferred comp. This will now in
| theory allow employees to switch employers that are competitive
| and start immediately with zero downside as long as the new
| employer makes the employee's deferred comp whole.
|
| Where this is the worst is for new entrepreneurs leaving these
| funds that want to start on their own. Even if their
| contractual NC is no longer valid, there is not a new employer
| to make their deferred comp whole. Also even in CA where NC's
| are in theory non-enforceable, I know multiple people whose new
| employers did not want to test the water with very litigious
| firms and had people sit out the full NC. Also what this does
| not address is non-association clauses which are just as
| restrictive and non-competitive.
|
| Lastly NC structures in this industry change every year and
| vary significantly across firms so you can't paint with too
| broad of a brunsh. But all in all I love this change. There is
| a lot of passion and talent that is forced to sit idle because
| of NC's.
| kanbara wrote:
| i've never heard of the second form of non-compete. how would
| the former employer even know? how is that legal? any amount
| of compensation that is finalised upon leaving the company
| (e.g. RSUs) should be yours to own, period. that's akin to
| saying they can legally demand your paycheques back because
| they didnt like the company you went to.
|
| totally insane-- america needs more labour rights.
| HWR_14 wrote:
| In the UK and other places this is also common. They are
| just agreeing to pay you for another couple of years to not
| work for a competitor.
| hollowcelery wrote:
| In this arrangement you don't yet own the deferred
| compensation when you leave the company. It does not belong
| to you. Instead your contract with the company might say
| "we will set aside an amount of money (which isn't yet
| yours) and portion it out to you for 1-2 years after you
| leave, conditional on you not joining a competing firm in
| that period. If you join a competing firm, we will stop
| paying you." Alternatively, the company will just pay you
| your full salary (plus maybe a fraction of what you used to
| get in bonus) for this period.
|
| Essentially you're being paid an income not to work for the
| competition. Most people take this deal as it tends to be
| pretty good -- think several hundred thousand dollars for
| you to take an extended holiday or work on personal
| projects.
|
| If you do take a competing offer during the non-compete
| period, the company might also use legal action against
| you, which is another story entirely and one whose threat
| most people would prefer to avoid.
| anonymouskimmer wrote:
| > Also even in CA where NC's are in theory non-enforceable, I
| know multiple people whose new employers did not want to test
| the water with very litigious firms and had people sit out
| the full NC.
|
| It's a known effect that not working can take a physical toll
| on some people (i.e. the mortality effect of retirement -
| https://www.nber.org/bah/2018no1/mortality-effects-
| retiremen... ). I'm sure no one would ever do it, but I
| wonder if an employee would win if they sued both the old and
| new employer as co-conspirators to violate California's non-
| compete prohibition, citing the not-working health toll as
| their standing to sue.
| JohnFen wrote:
| > I know multiple people whose new employers did not want
| to test the water with very litigious firms and had people
| sit out the full NC.
|
| How did those new employers learn about the noncompete?
| anonymouskimmer wrote:
| The GP comment made this statement, not mine.
| JohnFen wrote:
| Oops, sorry
| detroitcoder wrote:
| It comes up durring hiring processes. Pretty common to
| have someone ask, "Have you entered into any legal
| agreement that would prohibit you from working with us or
| have any conflict of interest? If so please explain."
| JohnFen wrote:
| Sure, but if you're in a place where noncompetes are not
| enforceable, the honest answer to that question is "no"
| even if you did sign one.
| ghaff wrote:
| Lying is not a great place to start off with a new
| employer.
| jjav wrote:
| It is not lying if the question is "Have you entered into
| any legal agreement that would prohibit..." when in
| California that agreement is void. That means there is
| nothing that would prohibit you.
|
| For anyone who hasn't signed an employment contract in
| California, it'll have the boilerplate noncompete they
| use everywhere but it will also have an addendum page
| that says basically "the noncompete back on page x
| doesn't apply to you so ignore it".
| hamandcheese wrote:
| > Also what this does not address is non-association clauses
| which are just as restrictive and non-competitive.
|
| I've never heard of a non-association clause, could you
| explain it? Is this the same as a non-solicitation clause?
| jonluca wrote:
| It's even worse - you aren't allowed to work with anyone
| that you previously worked with for the duration of the
| clause.
|
| I worked at an NYC based hedge fund until April 2022, and
| am not allowed to work with anyone that I've worked with at
| the fund until April 2024, regardless of when they left.
| This applies even if we don't work on anything competitive
| to the fund, or even related to finance.
| anonymouskimmer wrote:
| > or even related to finance.
|
| Does this apply to working with them in, say, a
| lobbyist's office? In certain, narrow circumstances I
| think this would conflict with various laws governing the
| right to free association and petition. And if you were
| both elected/appointed to office in the same legislative
| or executive body I presume the sovereign political
| interest would trump this clause.
| Spooky23 wrote:
| It probably makes it worse as you need to disclose that
| you are a lobbyist and often who you meet with.
| delecti wrote:
| Non-compete (and non-association) clauses aren't
| government regulation, it's agreements you make when
| accepting the job. Your first amendment rights aren't
| infringed by work dress codes either. You aren't at risk
| of criminal penalty, just whatever civil penalty is
| specified in the contract.
|
| Not that that means they're necessarily okay, it's just
| unrelated.
| anonymouskimmer wrote:
| This is why I wasn't citing the first amendment. It is
| not the only such law that exists. Even if it was I
| wouldn't have cited it because of the US Constitution's
| contracts clause. Some contract terms are unenforceable
| though, at least under certain circumstances. I just
| wonder how these things balance out in edge cases.
| ortusdux wrote:
| Do you have to quit if your new employer hires someone
| from your previous workplace?
| detroitcoder wrote:
| You cannot work with a former colleague for an explicit
| duration in an economic capacity for a fixed period of
| time. This may or may not be dependent on the nature of the
| work being conscidered competitive (I have seen both). I
| have only seen these clauses referenced in deferred comp,
| not contractual non-competes.
| JohnFen wrote:
| > The second is a non-compete clause that is a function of
| your deferred compensation.
|
| Over the decades, I've learned that deferred compensation is
| such a double-edged sword that I no longer take it into
| consideration at all when I'm considering a job.
|
| My primary compensation has to be satisfactory assuming I'll
| never get a dime beyond that. If I end up getting deferred
| income, gravy! But if I don't, I'm still fairly compensated
| -- so no loss.
| detroitcoder wrote:
| This is a GREAT point, but hard to do in practice when
| deferred can be several multiples of base. I know many
| people who internalize large sign on bonuses and deferred
| comp as though they already earned the income. They are
| psychologically unable to accept writing this amount of
| money off, and force themselves to stick in situations that
| are at times not healthy or at least sub-optimal. Often
| times this is called life, and you deal with it because it
| is putting food on the table and providing above and beyond
| for your family. However a lot of times it would be better
| to just find something that makes you happier which is
| easier if you don't factor in deferred comp when thinking
| through personal finances.
| TrackerFF wrote:
| I don't know if the finance sector would consider this a big
| problem, but if it turned out to be a big problem, wouldn't
| they just be able to bypass it by opening up specific offices
| in, say, NJ or CT? A ton of firms are already located in CT.
| nocsi wrote:
| New York is also the financial hub of the country. Removing
| non-competes creates a culture where employees can readily jump
| ship from their companies and form their startups w/o recourse.
| Not sure if that Silicon Valley culture makes sense in the
| financial sector.
|
| > There's a well-trodden path in NYC from HFT/Prop #1 -> Big
| Tech, for duration of a non-compete -> HFT/Prop #2, that can be
| shortened by one node.
|
| I've seen some folks do HFT/Prop #1 -> HFT/Prop #2 in
| London/Singapore.
| tomp wrote:
| Nah, HFTs have moved on a while back.
|
| Now you've a 18 month _notice period_. You 're paid salary,
| bonus etc.
| roflyear wrote:
| I can't imagine it's a mutual notice period?? that's the only
| type of notice req. that I'm aware of.
| choppaface wrote:
| In finance though, don't people usually get a cushy 6 month
| paid "gardening leave" when they switch? So I'm not sure how
| much non-competes help if employees are already being offered
| contracts and $$$ to not compete. This law won't make
| "gardening leave" any cushier?
| JumpCrisscross wrote:
| Finance uniquely has little in the way of IP protection.
| There are strong incentives to keep a former team member out
| of the market for a year if they have your secret sauce.
| standardUser wrote:
| That sounds like it applies to a miniscule amount of workers,
| while many more workers are forced to sign non-competes but
| get no special treatment (or cash) from their employer for
| bearing that burden.
| frankc wrote:
| Not really. It's widely understood that NY won't enforce a
| non-compete if its not paid. It's very common in the hedge
| fund world to get paid your salary for a year to do
| nothing, even for junior developers. It depends on if the
| company really wants to hold you out or not. They will
| release you from the non-compete if they don't want to pay.
|
| On the other hand, in the hedge fund world, bonuses are a
| big part of comp but generally only base pay is paid out,
| so in reality you might be say 150K to 250K while your comp
| in expectation is much, much higher. For a junior dev maybe
| your bonus is .3x to .6x base but for someone senior, your
| bonus might be 1x to 5x base or more depending on where you
| sit in the organization. Therefore sitting out still costs
| you a lot of money.
| masklinn wrote:
| > It's widely understood that NY won't enforce a non-
| compete if its not paid.
|
| I'm sure the Walmart cashier with a non-compete hanging
| around their neck is much appeased by this.
| xyzzyz wrote:
| I don't think Walmart cashiers are saddled with non
| compete. You might have a good point here, but you will
| fail to get it across if you frame it in such ludicrous,
| obviously false way.
| duskwuff wrote:
| I don't know about Walmart cashiers, but non-competes are
| concerningly common for entry-level positions like
| sandwich chefs or delivery drivers:
|
| https://www.nytimes.com/2014/10/15/upshot/when-the-guy-
| makin...
| xyzzyz wrote:
| This article is just NYTimes grasping at straws, trying
| to conjure a narrative that's completely foreign to
| 99.999% low wage workers.
|
| Non-compete clauses are not "concerningly common", these
| are in fact so rare that NYT couldn't even point out to a
| single example of non-compete actually affecting low-wage
| workers: their leading example of Jimmy Johns is not
| something that ever been enforced, and I seriously doubt
| that any worker there is even aware of this clause in the
| contract (low wage workers don't read these anyway).
| JumpCrisscross wrote:
| > _sure the Walmart cashier with a non-compete hanging
| around their neck is much appeased by this_
|
| You describe an enforcement, not legal issue. Even with
| this legislation, the manager can still verbally threaten
| the employee.
| anonymouskimmer wrote:
| I am not a lawyer but it strikes me that such a threat
| (of action which the employer is not legally entitled to
| take) would probably violate a law or two. This wouldn't
| help the employee unless they went to court or the NLRB
| with it, but if some employee eventually did the
| court/NLRB may require things from the employer to
| prevent such incidents in the future.
| standardUser wrote:
| "in the hedge fund world"
|
| You are describing a minuscule world that comprises an
| insignificant amount of American workers.
| esoterica wrote:
| The point of gardening leave is that it is mandatory, not
| voluntary. People are not going to choose to put their career
| on pause when they could be working, even if you pay them.
|
| The proposed law will ban mandatory non competes, even if
| they are paid.
| NovemberWhiskey wrote:
| > _In finance though, don't people usually get a cushy 6
| month paid "gardening leave" when they switch?_
|
| Getting paid your salary for a couple of months (three is
| more common than six, in my experience) when most of your
| earnings might typically be in bonuses is less cushy than you
| might think.
| ng12 wrote:
| Typically your new firm will cover your missed bonus.
| bradlys wrote:
| At least in NYC - the non-competes that I know of are for
| _way_ longer than a couple months. Most of the guys I know
| with non-competes are at least six months with many being a
| year or two... They 're not getting paid peanuts either.
| They're still getting very good paychecks.
| teaearlgraycold wrote:
| I know someone that got a HFT non-compete for $300k over
| 9 months with only a few years of experience.
| jen20 wrote:
| Sure, but it still doesn't cover total compensation.
| jedberg wrote:
| Garden leave probably won't be a thing anymore. The main
| reason it existed was to prevent lawsuits related to non-
| competes and loss of income. Basically they didn't want the
| non-competes challenged.
|
| Now that that doesn't matter, they may just not offer it at
| all.
|
| Or it might go the other way, where they offer you a year of
| salary _and_ bonus to keep you away from competitors.
| RC_ITR wrote:
| The incentives are "we will give you your full salary for 6
| months, you have to work for only us, but we have no
| expectations of you."
|
| Non-competes are "even if we don't keep paying you, you
| can't work for a competitor"
|
| Nothing about the gardening leave incentives have changed.
| esoterica wrote:
| You are wrong, the proposed law bans both paid and unpaid
| non-competes. The point of gardening leave is that it's
| mandatory and not voluntary. Making it voluntary defeats
| the purpose because anyone who wants their career to keep
| progressing is going to turn it down even if you offer to
| pay them.
| gen220 wrote:
| As I understand it, yes, but being <some long duration> "out
| of the game" is a large opportunity cost if your intent is to
| go right back into finance. So the gardening leave is often
| not the best decision, career-wise, unless you're planning to
| exit finance altogether.
|
| IMO, it's healthier for the overall industry/market if talent
| can move more freely. As one example, it makes it much more
| challenging for toxic cultures to persist in their current
| form, if the Sword of Damocles (NCA) isn't hanging above the
| off-ramp.
| johnnyb9 wrote:
| In theory it sounds great, but try interviewing with
| companies and see their reaction when you tell them you can't
| start for > 6 months.
| esoterica wrote:
| That is completely normal. College hires are either
| returning interns from the previous summer or else mostly
| recruited in the fall to start after they graduate in the
| summer, so almost all new grad hiring takes place 6-12
| months out anyway.
| bradlys wrote:
| This doesn't seem like as big of an issue as you make it
| sound from my anecdotal experience. The finance guys I know
| in NYC don't have this issue? It's such a common part of
| the work that hiring people this far out in advance is
| quite common...
| ghaff wrote:
| Garden leave and notice periods are, to some degree, a
| coordination issue. "You have to give us and we have to
| give you three months notification of termination of
| employment" works (mostly) fine when everyone does it and
| they know it's just the way things are. It's harder when
| you're that problem candidate who can't start for three
| months when that isn't the norm.
| masklinn wrote:
| If everybody knows it's the deal, which is apparently the
| case in NY finance, it's a non issue.
|
| In fact _not_ having a gardening leave might be more
| suspicious, as it means you're so useless and out of the
| loop your previous employer doesn't think there's anything
| you could be carrying over.
| frankc wrote:
| It's not usually a deal breaker because of how common it
| is, but it does matter. You are going to be disadvantaged
| against someone who can start sooner. I fully support
| this legislation. Non-competes are anti-competitive,
| period.
| usefulcat wrote:
| It depends. I personally once saw an offer where 'gardening
| leave' was only included if the _employer_ chose to let you
| go, i.e. not if you chose to leave. And it wasn 't for 6
| months, IIRC it was at least a year.
|
| And of course it didn't included any bonus, which is
| typically the larger portion of total comp in these
| situations.
| AlexandrB wrote:
| An alternative to banning them outright would be to mandate that
| the employee is compensated at something like 80%+ of annual pay
| for the agreement's duration for it to remain valid. So if
| McDonald's thinks their burger technology is _that_ valuable they
| can pay to keep it under wraps for a while.
| awiejrliawjer wrote:
| That is an interesting idea, but I can guarantee employers
| would fine ways around that very quickly. For example, maybe
| the law stipulates that employees must be compensated for 80%
| of salary, so employers start paying mostly in benefits and
| equity. Or we specify 80% of total compensation, and they find
| a way to say healthcare is worth nothing and grossly
| underestimate the initial value of equity. There's always a
| way. Banning it outright doesn't even guarantee it will work,
| because cartels will agree not to hire each other's recently
| departed employees.
| AlexandrB wrote:
| I agree it's probably safer to just ban them instead of
| trying to plug all the loopholes.
| ubercore wrote:
| As I understand it, that's what happens in Norway. If a company
| wants to enforce a non-compete, they keep paying your salary
| while they do so.
| jewelry wrote:
| It actually sucks to be blocked from starting your own business
| with your own skill learned or sharpened during prior
| employment...
| AlexandrB wrote:
| I agree, but I suspect that if there was significant cost
| attached companies would only use non-competes in very rare
| cases.
| mr_00ff00 wrote:
| I am a junior dev hired to an HFT firm. I was excited to have 6
| months of free pay just to not work :(
| pc86 wrote:
| That's not how non-competes work.
| mywittyname wrote:
| If a company wants to _actually enforce_ a non-compete, then
| it can 't be one-sided.
| cbg0 wrote:
| It is in Europe.
| blerud wrote:
| It is at many HFT firms, including mine. You will be paid
| your base salary for some number of months to not work at a
| competitor, even if you don't have a signed offer for a
| competitor and just want to sit around
| chimeracoder wrote:
| > It is at many HFT firms, including mine. You will be paid
| your base salary for some number of months to not work at a
| competitor, even if you don't have a signed offer for a
| competitor and just want to sit around
|
| That's called "garden leave" and it's completely different
| from non-compete agreements as discussed by this bill.
| masklinn wrote:
| A garden leave is a form of compensated non-compete. The
| entire point is that you're paying a former employee to
| not compete (in this case to literally not work).
| pclmulqdq wrote:
| "Garden leave" wasn't a common term when I was in HFT in
| NYC. It was just called a "non-compete" (possibly
| confusingly).
| ghaff wrote:
| Garden leave is just a (usually?) legal (or at least
| contractual) requirement associated with non-compete
| agreements in some jurisdictions. Unsurprisingly, it was
| originally a British term, although it meant something
| different.
| pclmulqdq wrote:
| Personally, the only time I ever heard it was from the
| mouths of British recruiters.
| chimeracoder wrote:
| > "Garden leave" wasn't a common term when I was in HFT
| in NYC. It was just called a "non-compete" (possibly
| confusingly).
|
| The terms are used somewhat interchangeably in colloquial
| use, because (at least as of now) the distinction isn't
| meaningful for most people. The point is that garden
| leave isn't targeted by this bill.
| frankc wrote:
| I don't think that is true, or at least I have not seen
| that anywhere. My understanding is this bill removes any
| kind of non-competes. It was already basically
| unenforcible to have an unpaid non-compete in New York
| (through common law)
| chimeracoder wrote:
| > It was already basically unenforcible to have an unpaid
| non-compete in New York (through common law)
|
| That is not true - there are four criteria for non-
| competes to be valid in NY, and payment for the duration
| is not one of them.
|
| > I don't think that is true, or at least I have not seen
| that anywhere. My understanding is this bill removes any
| kind of non-competes.
|
| There are two bills - one of them requires payment for
| noncompetes.
| delfinom wrote:
| The first bill outlaws all non-competes and garden leave
| would fall under it. The most they could do is offer it
| as a form of severance where you get to sit on your butt
| for 6 months conditionally.
|
| The second bill would allow for garden leave aka
| compensated non-competes. It just codifies the "don't try
| any non-compensated/good faith aspect".
| bshipp wrote:
| If companies actually paid employees not to compete they
| would be able to keep them. Correct me if I'm wrong, but--at
| least where I live--non-competes lack legal authority (even
| before they were outlawed) because most companies don't
| provide compensation for limiting an ex-employee's ability to
| make a living in their field in the future.
|
| So, it's conceivable that an ex-employee could receive 6
| months severance in trade for a non-compete of that length,
| but I doubt it's very popular.
| slymon99 wrote:
| > If companies actually paid employees not to compete they
| would be able to keep them
|
| Why is this true? If someone is making $200k and leaving to
| make $350k, an employer may well be able to afford the
| $100k for 6 months to prevent them from immediately handing
| over IP, but not be able to match the $350k their new
| employer is offering.
|
| > So, it's conceivable that an ex-employee could receive 6
| months severance in trade for a non-compete of that length,
| but I doubt it's very popular.
|
| It's quite popular in finance. Also, it's not a one time
| severance, its paid as a standard paycheck. A firm might
| "release" someone from their non compete while it is still
| active (basically saying it's no longer active and we are
| no longer paying you).
| ghaff wrote:
| And there are a ton of other reasons people change
| companies as well.
|
| >an employer may well be able to afford the $100k for 6
| months to prevent them from immediately handing over IP
|
| Presumably there are other restrictions to just handing
| over IP but at least some of the reasoning for non-
| competes is that you can't really restrict the transfer
| of a lot of know-how even if they don't share corporate
| strategy decks.
| bshipp wrote:
| > Why is this true? If someone is making $200k and
| leaving to make $350k, an employer may well be able to
| afford the $100k for 6 months to prevent them from
| immediately handing over IP, but not be able to match the
| $350k their new employer is offering.
|
| Sorry, I worded that poorly. I meant companies could keep
| the ability to impose non-competes if they originally
| compensated employees who were let go.
|
| I know it gets muddled when it comes to employees moving
| around for increased pay, but non-competes aren't
| supposed to be a mechanism for holding down salaries.
| They're only intended to protect vital corporate secrets
| that, if they were released, would be so costly to the
| company that they'd risk bankruptcy. The value of those
| secrets would likely be enough that many competitors
| would be hesitant to hire those employees because they
| might fear opening themselves up to future litigation for
| patent infringement or IP or whatnot.
|
| The fact that many HR departments apply them to every
| single rank and file employee and don't explicitly define
| what constitutes a direct competitor or what explicit
| activities/information are protected by the NC is why
| they're a pretty useless legal tool in most
| circumstances.
| d_watt wrote:
| It can be https://en.wikipedia.org/wiki/Garden_leave
| rrobukef wrote:
| You still lose as you won't get raises, bonuses or promotions.
| You may lose extra-legals like company cars, insurance (?),
| long term savings-matching. Even then your cost of living will
| probably increase due to not working.
| slymon99 wrote:
| Yea, the bonus point is interesting, especially in finance
| where bonuses can be > 100% of base. You can't insist on
| firms paying last years bonus, or else people would just quit
| and get a non compete if they had an insane year. But paying
| only base also seems a bit unfair.
|
| A thought I had was you'd have to pay whatever their _new_
| offer is paying. The argument is that if you want to prevent
| someone from working, you should have to pay them their worth
| - which, in the case of someone resigning with a competing
| offer - has just been priced by the hiring market!
| rrobukef wrote:
| Paying the wage of the new offer leads to bad incentives
| w.r.t. nepotism. It also discourages starting your own
| small business where you tend to pay yourself a small wage.
| kodah wrote:
| > You still lose as you won't get raises, bonuses or
| promotions
|
| Jokes on me, I don't get raises or promotions anyway
| nburr wrote:
| Not at all how NCAs work in NYS or the US in general.
| [deleted]
| twunde wrote:
| Most companies do not pay for the period of time that a non-
| compete is in effect. What you're describing is somewhat
| different. Typically that's known as garden leave, and
| essentially you're treated as a current employee for the period
| of time, but you're not allowed to work. Which means that
| you'll likely have the 6 months of free pay. I'd definitely
| review your contract and the terms.
| doikor wrote:
| Thankfully here in Finland non-competes are void if you are
| not paid.
|
| Basically the right to earn a living wins over any contract
| you could sign against it.
| moffkalast wrote:
| Didn't the EU ban non-compete clauses entirely recently
| anyway? Or did the law not go through yet.
| rolisz wrote:
| The EU doesn't pass laws, they pass some sort of
| recommendations that individual countries must implement
| as laws in a certain for another.
| moffkalast wrote:
| Well if you want to be technically correct, EU
| _regulations_ are binding and must be implemented to the
| letter by all member countries without excuse or
| deviation. EU _directives_ are the ones that have some
| leeway with local laws. Both are legislation though so
| might as well call them laws.
| doikor wrote:
| afaik (and based on a few minutes of googling) there is
| no such EU wide regulation or directive.
| moffkalast wrote:
| Yeah I'm also having trouble finding anything concrete,
| not sure where I initially heard about it. Could've just
| been some rumor.
| pclmulqdq wrote:
| New York courts had basically already mooted unpaid
| noncompetes before this (except for executives). The ones in
| finance are paid, and often paid pretty well.
| esoterica wrote:
| That is not correct, the way mandatory gardening leave
| typically works is that you are no longer an employee but you
| still get paid. Depending on local laws you can force someone
| to not compete but you cannot force someone to be an
| employee, that is slavery and not allowed under the law.
| xilni wrote:
| Garden leave is a different beast and seems fair, you and the
| employer each get something, non competes on the other hand do
| not usually offer anything to the employee.
| ghaff wrote:
| Many garden leaves as a condition of having a non-compete
| aren't a great deal though. I think the fairly recent
| Massachusetts law is 50% pay--and that may be of just base
| pay. It might be a good deal if you want to travel in your
| twenties. It may not be such a great deal if you have a
| mortgage to pay and family to support and you're basically
| pressing pause on your career.
|
| It does make the company put skin in the game but if they
| decide to enforce anyway, it's better than nothing but hardly
| a panacea.
| esoterica wrote:
| Paid non competes are also banned under the proposed law (and
| currently banned in California).
| couchand wrote:
| It's worth taking a moment to note how many of the (co)sponsors
| are Working Families members.
| thebigman433 wrote:
| Why is that something to note?
| delfinom wrote:
| Working Families is the real progressive party in NY since
| the Dems are largely corporatists and a _organizationally_
| rotting party. Our previous Emperor Cuomo actively went out
| of his way to suppress the party since they threatened both
| the DNC and his manipulate to play the 2 party standoff game
| for his own benefit.
|
| I wouldn't be surprised with Cuomo out of the picture that
| the WF party continues to increase in size.
| msla wrote:
| > corporatists
|
| https://www.sjsu.edu/faculty/watkins/corporatism.htm
|
| So they're pro-union?
|
| > The basic idea of corporatism is that the society and
| economy of a country should be organized into major
| interest groups (sometimes called corporations) and
| representatives of those interest groups settle any
| problems through negotiation and joint agreement. In
| contrast to a market economy which operates through
| competition a corporate economic works through collective
| bargaining.
| ambicapter wrote:
| What are we supposed to know about Working Families members?
| Seems like they're a political party extremely local to me.
| senkora wrote:
| They almost always run as both democrats and working
| families. It's effectively a marker that a democratic
| candidate is progressive.
| smashah wrote:
| Ok great now let's do prohibition of anti-consumer, anti-
| innovation, anti-competitive clauses in Terms of Service/EULAs.
| xyst wrote:
| It's not entirely clear what happens if a company is NOT located
| in NY, yet hires a person remotely and that person lives in the
| state of NY. Does this law apply for as long as 1 entity in the
| relationship (ie, employer vs employee) is located in NY, or is
| the statute invalidated completely if both parties are not in NY?
| JumpCrisscross wrote:
| Broadly speaking, if your employee lives in New York you have a
| nexus to New York law in their respect.
| stainablesteel wrote:
| you can follow the laws of the state you physically work in,
| and no employer in a different state can do anything to you
| regarding a different state's law
| shin_lao wrote:
| If you have an employee in NY you need a foreign entity in NY
| and it must abide to NY law.
| duxup wrote:
| I worked for a Silicon Valley company who made a big deal about
| their family leave policy.
|
| I was an employee and live and work in Minnesota. The policy
| did not apply to me : (
| setgree wrote:
| This would have changed my life 3 years ago (not clearly for the
| better in the long run).
|
| I was working at a small startup that had pivoted and I wanted to
| keep doing the work I had signed up to do, so I reached out to a
| group that was clearly a competitor pre-pivot. My thinking was
| that that wasn't true post-pivot but I let the chairman of the
| board, who i thought of as a friend, know about my plans and he
| said, don't do this; we'll definitely sue and you'll lose. Once
| the other company took a hard look at my contract they said,
| sorry, even the threat of a lawsuit is enough to make this a
| nonstarter.
|
| I was bitter about the whole thing for a while but the second
| company folded less than two years later. No telling what would
| have happened.
|
| Anyway henceforth if I get another yearlong noncompete clause,
| I'll negotiate it downwards. 3 months is plenty.
| say_it_as_it_is wrote:
| So is Human Resources now going to train employees that it is
| unethical to recruit colleagues, firing employees who are hired
| at-will?
| RobotToaster wrote:
| Can't wait for Hochul to water it down to meaninglessness like
| she did the right to repair bill.
| SpaceManNabs wrote:
| It is crazy how much stuff Hochul gets away with. And she gets
| all this credit as a super progressive, pro consumer
| governor... She is somehow scandal free. Republicans in NY
| really messed up by nominating a DeSantis style politician in
| NY. They passed up a massive opportunity for a republican
| governor since so many dems didn't like Hochul.
| themitigating wrote:
| Would a Republican pass any right to repair bill? A watered
| down bill is better than nothing. So it's weird that you
| would suggest a Republican would be better for this issue.
| RobotToaster wrote:
| >Would a Republican pass any right to repair bill?
|
| Ironically, maybe, as a way to attack those "woke"
| corporations.
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