White House urges ban on non-compete agreements for many workers(reuters.com)
reuters.com
White House urges ban on non-compete agreements for many workers
http://reuters.com/article/businessNews/idUSKCN12P2YP
419 comments
> I don't understand why there's so many people in the comments defending non-competes.
There are many "temporarily embarrassed" entrepreneurs that read HN who can't stomach the thought of their future tech lead stealing their idea.
I personally worked for one such person, whose startup was so new that employees were being paid only with shares, but still had about 10 pages of legal documentation for new employees to sign.
There are many "temporarily embarrassed" entrepreneurs that read HN who can't stomach the thought of their future tech lead stealing their idea.
I personally worked for one such person, whose startup was so new that employees were being paid only with shares, but still had about 10 pages of legal documentation for new employees to sign.
As most readers here would agree, ideas are worth almost nothing but executing on them is the value.
> As most readers here would agree
And yet we are still confronted with NDAs just to listen to "Facebook for Farmers" pitches.
Perhaps it's better to say those entrepreneurs are afraid of their implementers leaving with all of the domain specific knowledge; believing that it would allow them re-create the product and outmaneuver the entrepreneur.
Of course it's never really that easy, but so few fears are rational.
And yet we are still confronted with NDAs just to listen to "Facebook for Farmers" pitches.
Perhaps it's better to say those entrepreneurs are afraid of their implementers leaving with all of the domain specific knowledge; believing that it would allow them re-create the product and outmaneuver the entrepreneur.
Of course it's never really that easy, but so few fears are rational.
I work at an organization with about 75 employees, and I'm the only person who can program. Half the time I go out for drinks with coworkers, someone corners me and wants to tell me about this awesome idea they have. Unfortunately, they can't tell me anything because I haven't signed an NDA yet. So they spend a few hours being coy, and I spend a few hours trying to politely decline. It's always an iPhone app too. I've never worked on mobile development or Apple products before. This does not discourage them in the least.
Half the reason I want increased computer science education is because I'd like this madness distributed across more people.
Half the reason I want increased computer science education is because I'd like this madness distributed across more people.
That was so on the money. This happens to me too. My financial advisor and his friend want me to build them an iphone app. Please save me.
I've got another good anecdote.
I went in for an in-person interview at a company. At the end of the interview process, the interviewer let me know I hadn't gotten the job, but told me I should connect with him on LinkedIn because he and his friend had a great business idea that needed a developer.
I guess I shouldn't have been surprised, since I've had interviewers reach out to me after I've been rejected to say the same thing. It seemed exceedingly strange that I was solicited to work on another project in person by the interviewer during the interview process.
I went in for an in-person interview at a company. At the end of the interview process, the interviewer let me know I hadn't gotten the job, but told me I should connect with him on LinkedIn because he and his friend had a great business idea that needed a developer.
I guess I shouldn't have been surprised, since I've had interviewers reach out to me after I've been rejected to say the same thing. It seemed exceedingly strange that I was solicited to work on another project in person by the interviewer during the interview process.
> My financial advisor and his friend want me to build them an iphone app
You can get a new financial advisor. My _wife_ wants me to build her an iPhone app.
You can get a new financial advisor. My _wife_ wants me to build her an iPhone app.
If you don't build her iPhone app for too long, that will be done by someone else, you know.
You can get a new wife.
Some people really like their financial advisors!
Some people really like their financial advisors!
THIS!
I used to help run 3 Day Startup San Antonio. Part of the format is that the first night includes pitches by a select number of people hoping to get voted into the top X ideas that are worked on for the rest of the weekend.
We once had a guy whose first slide was just an NDA in tiny font that he actually read aloud to 50 people. I was in the back of the room with some of the other staff and I had to step out because I was laughing too much.
We once had a guy whose first slide was just an NDA in tiny font that he actually read aloud to 50 people. I was in the back of the room with some of the other staff and I had to step out because I was laughing too much.
Well, if it's the typical person who does pitch "Facebook for Farmers", I'd say the fear is kinda rational, as those people never intend to do any of the work. They just had the idea, and now you need to go make it happen.
There is an argument to be made that a larger organization might be able to take your idea and run faster than you with it.
In practice though, most of the time your idea is too small or too risky to be on the radar of those organizations.
A bit like how when you wake up a dream you had makes perfect sense until you try to describe it to someone else.
In practice though, most of the time your idea is too small or too risky to be on the radar of those organizations.
A bit like how when you wake up a dream you had makes perfect sense until you try to describe it to someone else.
You just defined Amazon.
That's the core of the innovator's dilemma.
The idea that ideas have no value is prima facie ridiculous. The reason we aren't just a slightly odd species of chimpanzees is that we developed the ability to produce ideas. Ideas are the only thing of fundamental value to us as an intelligent species.
The statement that ideas don't matter, only execution matters, can only apply among sets of trivial ideas that don't change the landscape. Yes, if you want to make Facebook for Farmers, that's an idea that is completely interchangeable with hundreds of other equally trivial ideas, and it doesn't matter which one you choose so much as how well you execute on it. But if you have a genuinely significant idea, something that can fundamentally alter the landscape or advance humanity, then execution is secondary, and, in fact, lots of different people or organizations could implement it. That isn't to say that you can't screw up the execution and fail thereby, but the limiting factor to success is different for trivial ideas vs significant ideas: there are thousands of trivials and the major factor of success is how well you execute the one you choose; there are few significants, and the major factor in success is having them first/getting to market first. If you think you have one of the latter, NDAs might make sense.
The statement that ideas don't matter, only execution matters, can only apply among sets of trivial ideas that don't change the landscape. Yes, if you want to make Facebook for Farmers, that's an idea that is completely interchangeable with hundreds of other equally trivial ideas, and it doesn't matter which one you choose so much as how well you execute on it. But if you have a genuinely significant idea, something that can fundamentally alter the landscape or advance humanity, then execution is secondary, and, in fact, lots of different people or organizations could implement it. That isn't to say that you can't screw up the execution and fail thereby, but the limiting factor to success is different for trivial ideas vs significant ideas: there are thousands of trivials and the major factor of success is how well you execute the one you choose; there are few significants, and the major factor in success is having them first/getting to market first. If you think you have one of the latter, NDAs might make sense.
>Ideas are the only thing of fundamental value to us as an intelligent species.
I'm sorry but you're wrong. Its not ideas that are the only thing of fundamental value... information might come close.
Ideas + experimentation to validate them + implementation is where its at. An idea by itself without execution is a fantasy.
Ideas + experimentation to validate them + implementation is where its at. An idea by itself without execution is a fantasy.
> Ideas are the only thing of fundamental value to us as an intelligent species.
In my usage, 'information' describes patterns that exist in the universe, and 'ideas', at least loosely, describes the apprehension of one or more of those inherent patterns by an intelligent mind. An idea is the mental perception or conception of external information. Information might be fundamental to the universe, but ideas are fundamental to intelligent minds, being the lens through and by which we perceive everything.
My point, though, was mostly that it's false that ideas have no value - I wasn't trying to make the complete opposite error and say that execution has no value. Of course to make something happen in the world you need execution as well as something to execute.
In my usage, 'information' describes patterns that exist in the universe, and 'ideas', at least loosely, describes the apprehension of one or more of those inherent patterns by an intelligent mind. An idea is the mental perception or conception of external information. Information might be fundamental to the universe, but ideas are fundamental to intelligent minds, being the lens through and by which we perceive everything.
My point, though, was mostly that it's false that ideas have no value - I wasn't trying to make the complete opposite error and say that execution has no value. Of course to make something happen in the world you need execution as well as something to execute.
The reason we aren't just a slightly odd species of chimpanzees is that we developed the ability execute on ideas. Otherwise we're low-hair primates thinking about maybe fire.
> Ideas are the only thing of fundamental value to us as an intelligent species.
I'm not arguing that execution has no value. Obviously ideas, particularly business/startup ideas, must be acted on effectively in order to become real. But: ideas are logically prior to execution; the ability to conceive of abstract ideas is a far larger developmental step than is the subsequent ability to act on those ideas; and being able to have abstract ideas is the thing that most definitively separates homo sapiens from all other species on Earth.
I'm not arguing that execution has no value. Obviously ideas, particularly business/startup ideas, must be acted on effectively in order to become real. But: ideas are logically prior to execution; the ability to conceive of abstract ideas is a far larger developmental step than is the subsequent ability to act on those ideas; and being able to have abstract ideas is the thing that most definitively separates homo sapiens from all other species on Earth.
I agree with what you're saying here, but the argument isn't about the the value of ideas with regards to our species's success, but rather about the value of ideas with regards to a given businesses's success.
The original argument was about business success, and that's what my original comment was mostly about. But the reply to my original comment that I was replying to here, seemed to be taking the argument toward the general success of our species, and that's what I was responding to (although I did note even within that context how it related to business success).
Most readers here would agree, but then again most readers here benefit from that perspective and tend overvalue their work relative to the creativity and research behind it. Both are necessary. Sure, there are delusional business types that think that their idea is gold and are willing to offer you 3% if you do all the work. But you are suggesting the exact opposite and it is just as delusional. Silicon Valley is a testament to bad ideas backed by talented executors.
In hindsight what would be some ideas that you think would be worth lots of money? Most of the unicorns I know about and are aware of what they do don't boil down to a great idea.
> startup was so new that employees were being paid only with shares, but still had about 10 pages of legal documentation for new employees to sign.
Startup law in a nutshell: Management completely disregards labor law but is very concerned about intellectual property.
Startup law in a nutshell: Management completely disregards labor law but is very concerned about intellectual property.
I suppose lawyers also like to justify their salaries by inventing more things to worry about and creating a sense of fear (patent BS, etc)
The 'temporarily embarrassed' phrase is a trope used to belittle those who aren't sore losers about other people being more successful than them.
Not at all. I used the phrase as a riff on "Temporarily Embarrassed Millionaires": people who make judgement calls based not on their current societal class but on their expected class, since they expect to soon join that other class.
I feel it's an adequate explanation of why people who are currently employees who support such employee-hostile policies.
I feel it's an adequate explanation of why people who are currently employees who support such employee-hostile policies.
Business owners have widely varying interpretations of what trade secrets consist of. For example, a local Jimmy John's was successfully sued for it's non compete with sandwich makers.
https://consumerist.com/2016/06/22/jimmy-johns-to-stop-using...
"Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after … he or she will not have any direct or indirect interest in or perform services for … any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop."
https://consumerist.com/2016/06/22/jimmy-johns-to-stop-using...
"Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after … he or she will not have any direct or indirect interest in or perform services for … any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop."
That is fucking unbelievable - it's basically contractual extortion. Though the 3 mile clause makes it an entirely different beast than a tech noncompete. Which makes me wonder - are noncompetes ever enforced internationally? Or rather, are there countries that explicitly and reciprocally enforce US noncompetes?
Not being allowed to work within 3 miles of a Jimmy Johns can rule out working in fast food in an entire city.
For an illustration of this, take a look at the Jimmy John's noncompete map, which maps out everything that's within 3 miles of a Jimmy John's: http://sigacts.com/jimmy-johns-non-compete-zones/ .
Wow, I live in Massachusetts and have never seen a Jimmy John's around here, but apparently there is one... and a 3 mile radius covers the entirety of metropolitan Boston, and some of the hot spots in neighboring Cambridge and Somerville. I think that's everywhere I've ever worked as a software engineer.
Looks like that map is out of date, too - they've expanded in Boston. https://www.jimmyjohns.com/find-a-jjs/#/02142
Not sure. The geographic ones are crazy though... my sister in law (who is a PA) was initially told that she couldn't practice in a 16 county region.
Fortunately, PAs are in enough demand that she was able to get it modified to a 20 mile radius and scoped to a particular aspect of the practice.
Fortunately, PAs are in enough demand that she was able to get it modified to a 20 mile radius and scoped to a particular aspect of the practice.
> The only thing a non-compete does is say that Employee A cannot work in their chosen field for some period of time after they are fired or quit. In doing so it offers no consideration or compensation typically in the contract.
Many (if not most) EU countries require compensation for non-competes to be valid (usually at least 30% gross), and the non-compete can still be challenged in court if e.g. it applies to too large a geographical area (e.g. the entire state/country) or if it's broad enough to prevent the employee from finding work in the field.
Many (if not most) EU countries require compensation for non-competes to be valid (usually at least 30% gross), and the non-compete can still be challenged in court if e.g. it applies to too large a geographical area (e.g. the entire state/country) or if it's broad enough to prevent the employee from finding work in the field.
Yeah. Germany is a big one on this. If ask you for a non compete, they have to basically pay you for the full duration of it.
As a consequence, almost no one ever does, except for very high level executives.
As a consequence, almost no one ever does, except for very high level executives.
Yes, and it's rarely enforced. Most of the time its activation is at the employer's discretion.
It's not just that it's rarely enforced it's that it's rare at all, there's no point in putting one in the contract when there's 95% chance you'll get big fat middle finger in whatever labor court has jurisdiction if you try to activate it, and inane contractual obligations are a risky bet for the contract itself.
> there's no point in putting one in the contract when there's 95% chance you'll get big fat middle finger in whatever labor court has jurisdiction if you try to activate it.
There's potentially plenty of point if you don't expect your employees to understand that (or be able to count on it)
There's potentially plenty of point if you don't expect your employees to understand that (or be able to count on it)
That's how it works in the US, most of the time a non-compete is entirely unenforceable.
In New York, the fear that drives some of us [edit:] to [not fight against] non-competes [on an individual level] is the threat of expensive litigation. If I get sued by my employer, it might cost us the same but I can't afford the legal costs as much as they can afford them. In New York State, commonly it's expected that the courts will enforce a year of non-compete, even if the contract is for more.
It's nice to say that contracts are freely entered into. They are not freely fought over when things are disputed, however. We're not on an equal playing field if my employer can afford legal representation and I can't, and that's a very real financial threat that is a form of coercion.
It's nice to say that contracts are freely entered into. They are not freely fought over when things are disputed, however. We're not on an equal playing field if my employer can afford legal representation and I can't, and that's a very real financial threat that is a form of coercion.
The threat that you can get sued makes you very cautious in your selection of your next job.
In one of my previous gigs, the language of the non-compete was so broad that it engulfed in scope the entire industry - being legal language it was borderline ambiguous, one of those things you could argue either way. Anyway, that 'argue either way' piece could encompass what's basically the biggest and highest-paying employing industry in IT here.
One guy I knew there had told me that, after he got an offer from a new employer, sent them the non-compete of this current place - and never heard from them again. It was for a mid-level manager role in a large corporation in a very cautious (in a CYA way) industry. It was even worse because both of us has understood from management that they'll probably not enforce it, unless one of the partners feels resentful and could send the lawyers your way.
It has a chilling effect that's totally beyond the scope of the usefulness of the employer demanding the non-compete, especially when you encompass a whole industry.
I think that the right approach is to legislate to make them illegal (like in California, right?), or enforce some compensatory aspect like in some countries as people in this thread mentioned (eg. I'd love to be paid 70% of my salary during the period of non-compete). The most likely scenario in favor of the employee right now I believe is the courts having the employer show that damage was committed in order for the contract to be valid. I'm pretty sure this employer got around that by tying the non-compete+non-solicitation to stock option grants!
In one of my previous gigs, the language of the non-compete was so broad that it engulfed in scope the entire industry - being legal language it was borderline ambiguous, one of those things you could argue either way. Anyway, that 'argue either way' piece could encompass what's basically the biggest and highest-paying employing industry in IT here.
One guy I knew there had told me that, after he got an offer from a new employer, sent them the non-compete of this current place - and never heard from them again. It was for a mid-level manager role in a large corporation in a very cautious (in a CYA way) industry. It was even worse because both of us has understood from management that they'll probably not enforce it, unless one of the partners feels resentful and could send the lawyers your way.
It has a chilling effect that's totally beyond the scope of the usefulness of the employer demanding the non-compete, especially when you encompass a whole industry.
I think that the right approach is to legislate to make them illegal (like in California, right?), or enforce some compensatory aspect like in some countries as people in this thread mentioned (eg. I'd love to be paid 70% of my salary during the period of non-compete). The most likely scenario in favor of the employee right now I believe is the courts having the employer show that damage was committed in order for the contract to be valid. I'm pretty sure this employer got around that by tying the non-compete+non-solicitation to stock option grants!
I agree. This is sort of like a lot of constitutional issues. The forth amendment is clear, you can't take cash off of people without charging them with a crime. The problem is you have to be wealthy to fight it.
Depends on the state. I live in Illinois. It's been enforced plenty of times here. They tend to argue over what is a 'reasonable' restriction, and it goes back and forth. For example: http://www.w-p.com/Articles/Illinois-Non-Compete-World-Now-E...
And in 2013, the TekSystems recruitment company sued its former employee (a recruiter) over a noncompete and it got upheld in Illinois court: http://paulporvaznik.com/court-can-shorten-overly-broad-non-...
And in 2013, the TekSystems recruitment company sued its former employee (a recruiter) over a noncompete and it got upheld in Illinois court: http://paulporvaznik.com/court-can-shorten-overly-broad-non-...
It seems that the same standard applies there, even if the judges in Illinois seem take liberties with it. From the first link:
"3. Question: Does an employer still need to have "adequate legal consideration" in a non-compete agreement?
Answer: Yes"
It appears they have to compensate you for the agreement. Federal courts have ruled that your wage is compensation for your regular duties and thus the non-compete compensation has to be a separate payment that is negotiable. A contract is not valid if a party receives nothing in return for it.
"Consideration to create a legally enforceable contract entails a bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor. Under the notion of "pre-existing duties", if either the promisor or the promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense."
https://en.wikipedia.org/wiki/Consideration
"3. Question: Does an employer still need to have "adequate legal consideration" in a non-compete agreement?
Answer: Yes"
It appears they have to compensate you for the agreement. Federal courts have ruled that your wage is compensation for your regular duties and thus the non-compete compensation has to be a separate payment that is negotiable. A contract is not valid if a party receives nothing in return for it.
"Consideration to create a legally enforceable contract entails a bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor. Under the notion of "pre-existing duties", if either the promisor or the promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense."
https://en.wikipedia.org/wiki/Consideration
Well it doesn't stop just about every company from adding it into their employee contracts. Out of the last six jobs I've had here in Illinois, five of them had non-compete agreements, including two startups, one small business, one major corporation, and a contracting company (TekSystems).
The one job that didn't have a non-compete was a student job I held at the university while I was taking classes there.
None of them offered to pay me extra outside of the salary for 'consideration'. I've ended up switching which industry I work for with pretty much every job I've had (still software dev though), so it hasn't been an issue so far.
That being said, knowing that they're there has affected my decision making, including holding back on releasing games I developed in my spare time, to the point where I've been tempted to move to California to escape such bullshit.
The one job that didn't have a non-compete was a student job I held at the university while I was taking classes there.
None of them offered to pay me extra outside of the salary for 'consideration'. I've ended up switching which industry I work for with pretty much every job I've had (still software dev though), so it hasn't been an issue so far.
That being said, knowing that they're there has affected my decision making, including holding back on releasing games I developed in my spare time, to the point where I've been tempted to move to California to escape such bullshit.
Well, I got this clause in all of my (two) employment contracts. Never heard of someone fighting over a non-compete, though.
(I live in France)
(I live in France)
> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees.
To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing.
I take it as one of my priors that people at news.yc are intelligence.
When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something.
In this case, you say "They have literally no value to society".
This is not an argument. This is a conclusion, or an axiom.
Let me explain why I think non-competes are a good thing:
1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc.
> you have literally no incentive to support non-competes...There is no rational basis...mystic powers
Your entire approach here is quite arrogant.
Consider, for a moment, that the other people on news.yc are not idiots.
To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing.
I take it as one of my priors that people at news.yc are intelligence.
When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something.
In this case, you say "They have literally no value to society".
This is not an argument. This is a conclusion, or an axiom.
Let me explain why I think non-competes are a good thing:
1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc.
> you have literally no incentive to support non-competes...There is no rational basis...mystic powers
Your entire approach here is quite arrogant.
Consider, for a moment, that the other people on news.yc are not idiots.
1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
That's not a strong argument either. You could substitute "contract" with anything. I say this as a staunch libertarian. Government restrictions aren't bad because "government", but because restrictions.
The free market works best when government restricts the freedom to restrict freedom. That's why cartels being illegal is good (they restrict competition), bans on insider trading are good (they restrict fair competition), etc. Non-compete restricts the freedom on the labor markets.
If you let people do anything they want because freedom, you don't actually get freedom.
That's not a strong argument either. You could substitute "contract" with anything. I say this as a staunch libertarian. Government restrictions aren't bad because "government", but because restrictions.
The free market works best when government restricts the freedom to restrict freedom. That's why cartels being illegal is good (they restrict competition), bans on insider trading are good (they restrict fair competition), etc. Non-compete restricts the freedom on the labor markets.
If you let people do anything they want because freedom, you don't actually get freedom.
>>[...] restricts the freedom to restrict freedom [...]
That's a great turn of phrase. I'll try to use it the next time somebody asks me to summarize the GPL, which has similar restrictions built in as per Stallman's original intent.
That's a great turn of phrase. I'll try to use it the next time somebody asks me to summarize the GPL, which has similar restrictions built in as per Stallman's original intent.
See Karl Popper's "intolerance of intolerance". Rawls and others have also opined.
I am in favor of banning non competes, but only because we lack the freedom due to lack of competition. I think the evidence of that is when Jimmy John's can have force fast food workers to sign them.
To me it seems, banning non-competes, will create more competition.
To me it seems, banning non-competes, will create more competition.
The logical conclusion of a regulation-free system is of corporations large enough to destroy competition before it starts.
That's not the logical conclusion.
Have you ever seen a large corp and how inefficient they are? The only reason they can remain large is because they can afford to buy politicians and legislation to keep their competitors small. Big Corp creates new regulations to protect their business, the most clear examples are in telecommunications and the music/movie/copyrightable industries.
If we removed more regulations today, the big corps would try and place them back to destroy their competition.
Have you ever seen a large corp and how inefficient they are? The only reason they can remain large is because they can afford to buy politicians and legislation to keep their competitors small. Big Corp creates new regulations to protect their business, the most clear examples are in telecommunications and the music/movie/copyrightable industries.
If we removed more regulations today, the big corps would try and place them back to destroy their competition.
It doesn't really matter how inefficient you are if you have the cash to buyout any potential competitors before they have a chance to threaten your bottom line.
In a purely capitalist society wealth (power) accumulates at the top. Money creates money so whomever starts out with the most money tends to win. This is why highly capitalist societies turn into Dubai, with an ultra rich ruling class and a serf/slave class with little in between.
In a purely capitalist society wealth (power) accumulates at the top. Money creates money so whomever starts out with the most money tends to win. This is why highly capitalist societies turn into Dubai, with an ultra rich ruling class and a serf/slave class with little in between.
Seriously, has no one on here heard of the Gilded Age? Of anticompetitive practices by Standard Oil before regulation was brought in?
Are you talking about the outlawing of railroad rate rebates or the break up of the company?
Just as an FYI (and apologies if you are already aware of this), but Standard Oil had already lost about ~25% of it's market share by the time it was broken up. Rockefeller had no influence in Texas and California where the wildcatters had moved to and found oil.
Just as an FYI (and apologies if you are already aware of this), but Standard Oil had already lost about ~25% of it's market share by the time it was broken up. Rockefeller had no influence in Texas and California where the wildcatters had moved to and found oil.
But then everyone would create competitors so you would buy them out, and eventually you would run out of money.
You essentially said the same thing that the comment above you, just in a less succinct way.
A regulation-free system is not a stable equilibrium, so the conclusion will not be regulation-free.
A regulation-free system is not a stable equilibrium, so the conclusion will not be regulation-free.
Of course it's the logical conclusion. Power abhors a vacuum. Do you honestly think that companies are going to sit back and not try to take that power for themselves?
Fortunately, our current legal system does not recognize contracts for slavery or indentured servitude (other than schools loans).
yeah. if the government court system is assigned the role of deciding civil disputes in contracts between people or companies, doesn't the government also therefore have some right to shape and define the types of contracts which are allowed?
> The free market works best when government restricts the freedom to restrict freedom. That's why cartels being illegal is good (they restrict competition), bans on insider trading are good (they restrict fair competition), etc. Non-compete restricts the freedom on the labor markets.
I'm reminded of the old adage "too much capitalism leads to too few capitalists".
I'm reminded of the old adage "too much capitalism leads to too few capitalists".
The fact that the grandfather comment is the top-rated comment (as of this writing) in the thread to me suggests that a great number of people agree with him/her, which sort of contradicts your "argument from ignorance" point.
Just because thousands of HN readers are intelligent engineers, founders, scientists, marketers, etc. doesn't make them legal experts, or political experts.
You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. In an environment with high unemployment (like we were not to long ago) it could mean that employees would jump at any job they were offered, out of necessity, even if it came with a nasty non-compete.
Government regulators can look at an overall picture and see that, statistically, in great numbers, there are overarching problems with the non-competes, like their being used with employees who don't have trade secrets.
Just because thousands of HN readers are intelligent engineers, founders, scientists, marketers, etc. doesn't make them legal experts, or political experts.
You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. In an environment with high unemployment (like we were not to long ago) it could mean that employees would jump at any job they were offered, out of necessity, even if it came with a nasty non-compete.
Government regulators can look at an overall picture and see that, statistically, in great numbers, there are overarching problems with the non-competes, like their being used with employees who don't have trade secrets.
> You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power.
No, it doesn't. I'm Hayek-friendly, so I don't think two entities EVER have the same knowledge.
"Freedom to contract" no more implies equal knowledge than "freedom to drink" implies equal knowledge of brewing, or "freedom to date" implies equal attractiveness.
No, it doesn't. I'm Hayek-friendly, so I don't think two entities EVER have the same knowledge.
"Freedom to contract" no more implies equal knowledge than "freedom to drink" implies equal knowledge of brewing, or "freedom to date" implies equal attractiveness.
I have been told by a lawyer friend of mine that for a contact to be valid both parties must have the ability to negotiate it. He said that is why most non-competes are unenforceable in the first place as you don't really have the leverage to negotiate that for most jobs. I took his advice and advantage of his letterhead and told a previous employer to pound sand when they wanted me to not work for a competitor. Worked out fine.
I'm not a lawyer, but from what I understand is it depends where are you. In many states non compete is valid, it can't be enforced in California for example. My current company does have non compete agreement, but they have exceptions for California and in the end it translates to that I supposed to let them know where I will be working next.
Perhaps to help establish a lack of negotiating leverage, one should always ask for the non-compete clause to be removed in writing and then save the (highly likely) employer pushback for future use.
In general, it's a good rule of thumb to archive written communications (paper or electronic) for any deal, but it's easier said than done when part of the negotiation takes place over the phone.
In general, it's a good rule of thumb to archive written communications (paper or electronic) for any deal, but it's easier said than done when part of the negotiation takes place over the phone.
That might work. If I wanted to put an employee under a non-compete the easiest way seems to offer something in return. Something along the lines of: "...Employee shall not work for any competitor during his employment and 6 months thereafter, as such he will receive a one time payment of 10,000 dollars...". I think the main issue here is employers want this service for free.
I'd consider even $10,000 insulting in the Bay Area - that's 1 month salary in return for having control over them for 6 months.
The key is that number is negotiable. If it was low and static that agreement won't be enforceable.
But taken seriously, that would mean all employment contracts, and therefore employment in general, should be illegal.
Once you get on the "less bargaining power = invalid contract" train, you may not like where it stops.
Once you get on the "less bargaining power = invalid contract" train, you may not like where it stops.
My "argument from ignorance" comment seems pretty rock solid, given that the original comment began with the words "I don't understand why..."
That is literally the definition of an argument from ignorance.
That is literally the definition of an argument from ignorance.
He's saying "I don't understand why..." shouldn't be followed with a conclusion or statement (here, "They have literally no value to society"). That it should instead be followed with "could someone please explain this?"
1) There are limits to the freedom to make contracts. I can't sell myself into slavery and that is a good thing.
2) maybe I have better information than the government, but my potential employer has better information than either of us. I won't have a better picture of the local employment market than a business so I will easily get swindled.
3) allowing the desperate to sign a contract no wants to sign leads to a race to the bottom where everyone has to sign a non-compete. How can I refuse to sign if 99% of applicants will sign even if I am the best applicant? They will just say no to me and take the #2 applicant. The only way to fight non-competes here would be a union to form collective bargaining at which point we have lost the ability to make our own contracts as individuals entirely.
2) maybe I have better information than the government, but my potential employer has better information than either of us. I won't have a better picture of the local employment market than a business so I will easily get swindled.
3) allowing the desperate to sign a contract no wants to sign leads to a race to the bottom where everyone has to sign a non-compete. How can I refuse to sign if 99% of applicants will sign even if I am the best applicant? They will just say no to me and take the #2 applicant. The only way to fight non-competes here would be a union to form collective bargaining at which point we have lost the ability to make our own contracts as individuals entirely.
The Jimmy John's burger flippers had the power to individually negotiate their contracts?
Here your #2 conflicts with your #3. If a person is so desperate to find entry-level minimum-wage work that she would pay any price to do so, then she doesn't actually have the freedom to negotiate contracts.
Here your #2 conflicts with your #3. If a person is so desperate to find entry-level minimum-wage work that she would pay any price to do so, then she doesn't actually have the freedom to negotiate contracts.
Against all that is the fact that California -- which, if it were a separate country, would be the world's seventh largest economy -- does just fine without non-competes. Compare the vibrancy of Silicon Valley with that of the Boston area, for example, which has a much older tradition as an intellectual center and is even better supplied with top universities; but Boston's tech economy has been dominated by large, old firms, without the vitality of innovation we have in the Valley.
You may not be an idiot, but you do seem to be ignorant of the empirical evidence. Non-competes choke off innovation. It's that simple, and that well established.
You may not be an idiot, but you do seem to be ignorant of the empirical evidence. Non-competes choke off innovation. It's that simple, and that well established.
I can expand on this a bit.
Non-competes [0] are a tragedy of the commons. There's no incentive for any single employer, in a jurisdiction that allows non-competes, not to require them of most employees. Any employer who did that would be unilaterally taking a loss (the potential employees they can't hire because they're subject to their current employers' non-competes) with no corresponding benefit. But if all employers require non-competes, we demonstrably wind up with a less vibrant economy.
So, what is the libertarian response to a tragedy of the commons? Is it not to create and assign property rights so that someone has a legally defensible interest in protecting the common property? In this case, I would suggest that by outlawing non-competes, California has asserted that workers have a property right to the general skills and knowledge that they acquire by working. The word "general" is important here; companies still have IP rights to their specific techniques and processes. But companies cannot claim ownership of the worker's general knowledge; it belongs to the worker.
[0] I'm using the term as shorthand for "non-compete restrictions that don't require the employer to pay at least a substantial fraction of the employee's salary for the duration of the restriction".
Non-competes [0] are a tragedy of the commons. There's no incentive for any single employer, in a jurisdiction that allows non-competes, not to require them of most employees. Any employer who did that would be unilaterally taking a loss (the potential employees they can't hire because they're subject to their current employers' non-competes) with no corresponding benefit. But if all employers require non-competes, we demonstrably wind up with a less vibrant economy.
So, what is the libertarian response to a tragedy of the commons? Is it not to create and assign property rights so that someone has a legally defensible interest in protecting the common property? In this case, I would suggest that by outlawing non-competes, California has asserted that workers have a property right to the general skills and knowledge that they acquire by working. The word "general" is important here; companies still have IP rights to their specific techniques and processes. But companies cannot claim ownership of the worker's general knowledge; it belongs to the worker.
[0] I'm using the term as shorthand for "non-compete restrictions that don't require the employer to pay at least a substantial fraction of the employee's salary for the duration of the restriction".
Your arguments could be used against worker protection laws as well: 14hours/day workdays, lack of safety regulations. You could even import some slaves from poor countries, many people will sign up as working on a plantation for food and shelter is better than starving.
I think history shows that this kind of thinking leads to bad outcomes. The main reason is that there is power unbalance between employers and would be workers. In natural state of the world the workers would just take resources by force and share. As we are guaranteeing that this won't happen (by enforcing property laws) we need to give something back as well to people in worse negotiating position (worker rights, minimum wage, some contracts being illegal are all example of it).
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I think history shows that this kind of thinking leads to bad outcomes. The main reason is that there is power unbalance between employers and would be workers. In natural state of the world the workers would just take resources by force and share. As we are guaranteeing that this won't happen (by enforcing property laws) we need to give something back as well to people in worse negotiating position (worker rights, minimum wage, some contracts being illegal are all example of it).
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> 1) deontological: freedom to contract is always a good thing.
A good thing for whom? It is good for lawyers and others who benefit from writing contracts.
Imagine for a moment a world in which you sign a non-compete before ordering a burger. It sounds silly, but sillier clauses are signed in order to purchase far cheaper consumer goods every day.
Is the world really a better place because two parties are hypothetically able to achieve their longtime dream of finally combining a legal instrument and a sandwich? Are you excited that you "have local knowledge" and are ready to exploit this knowledge to review legal terms with counsel before ordering your burger OR is this hypothetical benefit dwarfed by a very real huge volume of people who aren't going to hire a lawyer to negotiate a contract of adhesion for a $10 purchase when under social pressure while they're dining with someone else?
Freedom to contract is not always a social good. It introduces complexity, and complexity creates friction which prevents people from participating optimally in a market and prevents the market from clearing. Contract innovation is not optimal for the burger market.
What is optimal is common law, which is mostly the same everywhere so that an entire society understands how it works. It's how the police know what to do when facing a diner who didn't pay their bill, it's how you know what to do when the order is wrong, it's how a business can hire employees who know all this stuff without training them on custom procedure. Standardization is optimal for the vast, vast majority of transactions, so that people can get on with whatever they do when they're not negotiating legal instruments. The benefit of designing something bespoke for some marginal case is dwarfed by the cost of increased complexity of the transaction and the deviation from the established standard.
If you believe that job contracts are so positive and innovative, insist on reviewing one as a condition of doing an interview. If it is really about local knowledge, surely it will be positive for all involved to develop that knowledge early and comparison shop. In reality people will look at you funny and probably decline, because the real function of that contract is to appear after you've decided to take the job and exploit social pressure in order to get a stronger deal for the company.
A good thing for whom? It is good for lawyers and others who benefit from writing contracts.
Imagine for a moment a world in which you sign a non-compete before ordering a burger. It sounds silly, but sillier clauses are signed in order to purchase far cheaper consumer goods every day.
Is the world really a better place because two parties are hypothetically able to achieve their longtime dream of finally combining a legal instrument and a sandwich? Are you excited that you "have local knowledge" and are ready to exploit this knowledge to review legal terms with counsel before ordering your burger OR is this hypothetical benefit dwarfed by a very real huge volume of people who aren't going to hire a lawyer to negotiate a contract of adhesion for a $10 purchase when under social pressure while they're dining with someone else?
Freedom to contract is not always a social good. It introduces complexity, and complexity creates friction which prevents people from participating optimally in a market and prevents the market from clearing. Contract innovation is not optimal for the burger market.
What is optimal is common law, which is mostly the same everywhere so that an entire society understands how it works. It's how the police know what to do when facing a diner who didn't pay their bill, it's how you know what to do when the order is wrong, it's how a business can hire employees who know all this stuff without training them on custom procedure. Standardization is optimal for the vast, vast majority of transactions, so that people can get on with whatever they do when they're not negotiating legal instruments. The benefit of designing something bespoke for some marginal case is dwarfed by the cost of increased complexity of the transaction and the deviation from the established standard.
If you believe that job contracts are so positive and innovative, insist on reviewing one as a condition of doing an interview. If it is really about local knowledge, surely it will be positive for all involved to develop that knowledge early and comparison shop. In reality people will look at you funny and probably decline, because the real function of that contract is to appear after you've decided to take the job and exploit social pressure in order to get a stronger deal for the company.
Non-competes do have value to employers. But if they really don't have value to employees or society, what exactly is he supposed to argue with? There's no way to prove the non-existence of something.
He could prove they're detrimental in some way, but that's different than proving that they have no positive aspect for those groups.
It sounds to me like he has already stopped and pondered it, and came away with nothing. Then he posted here, offering people a chance to correct his ignorance.
So far as I can tell, he's done everything correctly.
He could prove they're detrimental in some way, but that's different than proving that they have no positive aspect for those groups.
It sounds to me like he has already stopped and pondered it, and came away with nothing. Then he posted here, offering people a chance to correct his ignorance.
So far as I can tell, he's done everything correctly.
> Your entire approach here is quite arrogant.
Seriously? There's nothing arrogant about the OP's post which expresses dismay that others as employees (not founders or CEO's) would support having such restrictions put on their careers.
> Consider, for a moment, that the other people on news.yc are not idiots
Parent didn't accuse anyone of being idiots, nor did they frame their concern in terms of intelligence or likewise..
Your post is thought provoking, but you ruin it in those last two sentences.
Seriously? There's nothing arrogant about the OP's post which expresses dismay that others as employees (not founders or CEO's) would support having such restrictions put on their careers.
> Consider, for a moment, that the other people on news.yc are not idiots
Parent didn't accuse anyone of being idiots, nor did they frame their concern in terms of intelligence or likewise..
Your post is thought provoking, but you ruin it in those last two sentences.
Nobody is calling anyone an idiot, just greedy and amoral.
Fundamentally, you should have the freedom to work in your profession without fear. If a Jimmy John sandwich makers skills are precious things, there's an easy way to retain those skills -- pay the worker what they deserve.
If you think that's unfair to the business person, that's fine, but don't call yourself a capitalist or a good person.
Fundamentally, you should have the freedom to work in your profession without fear. If a Jimmy John sandwich makers skills are precious things, there's an easy way to retain those skills -- pay the worker what they deserve.
If you think that's unfair to the business person, that's fine, but don't call yourself a capitalist or a good person.
> freedom to contract is always a good thing
Hardly. Freedom to contract would be a good thing if we could assume that the sides stand on more or less equal footing, which is almost unheard of in the case of corporations and people.
Hardly. Freedom to contract would be a good thing if we could assume that the sides stand on more or less equal footing, which is almost unheard of in the case of corporations and people.
1) and 2) both go out of the window if you add to the equation this little
fact that company almost always has an upper hand over a single (soon-to-be)
employee. Freedom of contract would be "always a good thing" if the parties
held the same power in their relationship.
This reads like someone who feels that while they were studying the works of Ayn Rand, the rest of the world was eating Oreos and watching Jersey Shore.
Aren't those roughly equivalent activities?
I don't know. I'd rather be fat and entertained than an asshole.
In addition to every one else:
>I have local knowledge regarding both my costs and my benefits from signing a non-compete contract.
No, you don't. The non-competes don't cost you anything until an uncertain time in the future. Unless you can predict the labor market that will exist when/if you leave the company (and you can't) you can't actually know what the cost will be.
>I have local knowledge regarding both my costs and my benefits from signing a non-compete contract.
No, you don't. The non-competes don't cost you anything until an uncertain time in the future. Unless you can predict the labor market that will exist when/if you leave the company (and you can't) you can't actually know what the cost will be.
Freedom to contract is unlimited. You can draw up a contract with any terms you can imagine.
Limited government has limited power to enforce contracts. Take, as an example, an assassination contract. You can write one up and sign it. If you or your hit man later breach the contract, you cannot sue each other in any civilized government's civil courts. You may, however, be able to engage a black-market arbiter to resolve your dispute, and that arbiter may allow terms of the contract that are otherwise illegal to be considered in rendering their judgment.
This is, in effect, saying that no government court will honor any non-compete clause in a contract. It is not saying that you cannot put such clauses into your contracts. But you won't be able to convince the government's justice services to enforce it for you (at lesser cost) if you do.
As government is widely considered a social contract for mutual benefit, a democratic form can certainly alter it such that government power is less readily wielded by those who might use it to harm or exploit the people. Businesses that use non-compete clauses can either assent to the change or start shopping for new jurisdictions.
With respect to your #3, having to pay an arbitrary and unnecessary barrier to entry in order to work profitably using a particular skill set is, in my opinion, unconscionable. It is indicative of an environment where the worker has little bargaining power. Any sane group would band together and use their collective power and mutual self-interest to halt that extraction of rents from their members. Since certain types of worker seem to be knee-jerk opposed to collective bargaining organizations, that leaves government edict.
Your #2 cannot be generalized. It can only be fairly judged on a contract by contract basis. But when enough unconscionable non-compete agreements cross a legislator's desk, the practice is judged by the worst examples. And the worst examples are when big companies collude to depress worker wages, using agreements that are non-negotiable and provide no tangible benefit to the employee. Some people were abusing it, and the only cost-effective way to stop the abuse also stops many of the legitimate uses.
Limited government has limited power to enforce contracts. Take, as an example, an assassination contract. You can write one up and sign it. If you or your hit man later breach the contract, you cannot sue each other in any civilized government's civil courts. You may, however, be able to engage a black-market arbiter to resolve your dispute, and that arbiter may allow terms of the contract that are otherwise illegal to be considered in rendering their judgment.
This is, in effect, saying that no government court will honor any non-compete clause in a contract. It is not saying that you cannot put such clauses into your contracts. But you won't be able to convince the government's justice services to enforce it for you (at lesser cost) if you do.
As government is widely considered a social contract for mutual benefit, a democratic form can certainly alter it such that government power is less readily wielded by those who might use it to harm or exploit the people. Businesses that use non-compete clauses can either assent to the change or start shopping for new jurisdictions.
With respect to your #3, having to pay an arbitrary and unnecessary barrier to entry in order to work profitably using a particular skill set is, in my opinion, unconscionable. It is indicative of an environment where the worker has little bargaining power. Any sane group would band together and use their collective power and mutual self-interest to halt that extraction of rents from their members. Since certain types of worker seem to be knee-jerk opposed to collective bargaining organizations, that leaves government edict.
Your #2 cannot be generalized. It can only be fairly judged on a contract by contract basis. But when enough unconscionable non-compete agreements cross a legislator's desk, the practice is judged by the worst examples. And the worst examples are when big companies collude to depress worker wages, using agreements that are non-negotiable and provide no tangible benefit to the employee. Some people were abusing it, and the only cost-effective way to stop the abuse also stops many of the legitimate uses.
> Your entire approach here is quite arrogant.
You're right, it was unintentional but I can see how what I wrote could be perceived this way. My apologies. I am clearly acknowledging the intelligence of other posters by attempting to make a clear case for my position. If I did not believe that other posters were intelligent I would not engage in the discussion at all.
> 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
Freedom to contract implies that both parties to the contract have bargaining power. In an employee/employer relationship this is mostly untrue. The only bargaining power that the employee has is simply to walk away. Legally any term of a contract is supposed to be met with "due consideration". In an employment contract, typically the offer of employment is treated as "consideration". I argue that a non-compete is so onerous as to require additional consideration beyond a mere offer of employment, however this is rarely if ever given. As an employee you may only choose to accept it or walk away, unless you individually have some unique position which grants you bargaining power.
While I am generally opposed to government regulation, if we had an absence of all regulation it leads to less freedom for individuals, not more. Or rather, it leads to less freedom for the majority of individuals in favor of more freedoms for a small number of individuals. This is not beneficial to society, and thus this argument does not refute my statement "They have literally no value to society."
> 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
This is possible, but isn't a societal argument. This is an argument that says there may be value to you as an individual employee due to local knowledge, but it doesn't mean there's a larger value to society. I accept that it's possible to have local knowledge that gains you a benefit from the non-compete. Such as: You have some special skill that is required by the employer. You are one of the few people with that skill. The employer both /must/ hire you and /must/ keep the non-compete in the contract. This provides you local knowledge which could allow you to bargain for an outsized salary or bonus compared to others in your field, or to get special severance arrangements to counter-balance the non-compete.
In this case, it might be possible that the insistence of the employer on the non-compete provides you individual value. Although, I'd also argue that the terms of the non-compete are not valuable to you, it's the fact your opponent in the negotiation won't let it go and your knowledge of what that is worth that lends it value. In either case, it doesn't give it value for society as a whole, so this does not refute my statement "They have literally no value to society."
> 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc.
In this case, your desperation as an individual implies you don't have the bargaining power necessary to negotiate a contract fairly. Your willingness to agree to a coercive term is a sign of desperation, not value. This argument establishes neither a societal value or an individual value to the terms of the non-compete.
If your skills are lower than your peers, then other employers are less likely to hire you away. If the company hiring you is trying to get you to agree to a non-compete because they intend to train you to increase your skills, then a fairer method would be to increase your compensation as your skills increase with the understanding that your increased skills increase your value as an employee. The non-compete is unnecessary and exists again only to provide coercive action against you. This argument neither establishes a societal value or an individual value for the non-compete.
If you know you're moving in three years and the terms of the non-compete are strictly geographic, then you have local knowledge which means the non-compete cannot harm you. It doesn't provide any additional value you for you, but you've managed to nullify its downsides for you individually. I'll concede this one neutrally on an individual level that this provides some level of local knowledge (in the vein of your 2nd argument) that assists you in contract negotiation. This argument though fails to establish a societal value.
Again, this argument fails to refute "They have literally no value to society."
I cannot prove a negative, but I spent quite a bit of time thinking about why they exist before I wrote my original post. I could not come up with any reason why non-competes are valuable to society. I could not come up with any reason why they are valuable to employees. I could only come up with reasons why they might be valuable to an employer and narrow cases where an employee might use them as a bargaining chip but only in a way which nullifies their downsides. There is no upside to an employee for a non-compete. None. They restrict freedom of movement in the labor market and arguably lower the overall innovative output of a society.
I reiterate my original statement. "They have literally no value to society."
You're right, it was unintentional but I can see how what I wrote could be perceived this way. My apologies. I am clearly acknowledging the intelligence of other posters by attempting to make a clear case for my position. If I did not believe that other posters were intelligent I would not engage in the discussion at all.
> 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
Freedom to contract implies that both parties to the contract have bargaining power. In an employee/employer relationship this is mostly untrue. The only bargaining power that the employee has is simply to walk away. Legally any term of a contract is supposed to be met with "due consideration". In an employment contract, typically the offer of employment is treated as "consideration". I argue that a non-compete is so onerous as to require additional consideration beyond a mere offer of employment, however this is rarely if ever given. As an employee you may only choose to accept it or walk away, unless you individually have some unique position which grants you bargaining power.
While I am generally opposed to government regulation, if we had an absence of all regulation it leads to less freedom for individuals, not more. Or rather, it leads to less freedom for the majority of individuals in favor of more freedoms for a small number of individuals. This is not beneficial to society, and thus this argument does not refute my statement "They have literally no value to society."
> 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
This is possible, but isn't a societal argument. This is an argument that says there may be value to you as an individual employee due to local knowledge, but it doesn't mean there's a larger value to society. I accept that it's possible to have local knowledge that gains you a benefit from the non-compete. Such as: You have some special skill that is required by the employer. You are one of the few people with that skill. The employer both /must/ hire you and /must/ keep the non-compete in the contract. This provides you local knowledge which could allow you to bargain for an outsized salary or bonus compared to others in your field, or to get special severance arrangements to counter-balance the non-compete.
In this case, it might be possible that the insistence of the employer on the non-compete provides you individual value. Although, I'd also argue that the terms of the non-compete are not valuable to you, it's the fact your opponent in the negotiation won't let it go and your knowledge of what that is worth that lends it value. In either case, it doesn't give it value for society as a whole, so this does not refute my statement "They have literally no value to society."
> 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc.
In this case, your desperation as an individual implies you don't have the bargaining power necessary to negotiate a contract fairly. Your willingness to agree to a coercive term is a sign of desperation, not value. This argument establishes neither a societal value or an individual value to the terms of the non-compete.
If your skills are lower than your peers, then other employers are less likely to hire you away. If the company hiring you is trying to get you to agree to a non-compete because they intend to train you to increase your skills, then a fairer method would be to increase your compensation as your skills increase with the understanding that your increased skills increase your value as an employee. The non-compete is unnecessary and exists again only to provide coercive action against you. This argument neither establishes a societal value or an individual value for the non-compete.
If you know you're moving in three years and the terms of the non-compete are strictly geographic, then you have local knowledge which means the non-compete cannot harm you. It doesn't provide any additional value you for you, but you've managed to nullify its downsides for you individually. I'll concede this one neutrally on an individual level that this provides some level of local knowledge (in the vein of your 2nd argument) that assists you in contract negotiation. This argument though fails to establish a societal value.
Again, this argument fails to refute "They have literally no value to society."
I cannot prove a negative, but I spent quite a bit of time thinking about why they exist before I wrote my original post. I could not come up with any reason why non-competes are valuable to society. I could not come up with any reason why they are valuable to employees. I could only come up with reasons why they might be valuable to an employer and narrow cases where an employee might use them as a bargaining chip but only in a way which nullifies their downsides. There is no upside to an employee for a non-compete. None. They restrict freedom of movement in the labor market and arguably lower the overall innovative output of a society.
I reiterate my original statement. "They have literally no value to society."
>When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something.
Intelligence is just the ability to precisely handle complex intellectual structures. It doesn't make those structures meaningful or accurate.
What's that quote again? Ah, googling found it.
“I make mistakes like the next man. In fact, being--forgive me--rather cleverer than most men, my mistakes tend to be correspondingly huger.”
Intelligence is just the ability to precisely handle complex intellectual structures. It doesn't make those structures meaningful or accurate.
What's that quote again? Ah, googling found it.
“I make mistakes like the next man. In fact, being--forgive me--rather cleverer than most men, my mistakes tend to be correspondingly huger.”
freedom to contract is always a good thing.
I disagree. In an unbalanced relationship, the more powerful can take advantage of their power and impose contracts that leave the less powerful significantly worse off. If your choice is, for example, to contract to surrender your statutory rights or be unemployed, the freedom people have is the freedom to be worse off or much worse off. I wouldn't say this is a good thing. We rely on government and (if we're lucky) unions to prevent this freedom.
I disagree. In an unbalanced relationship, the more powerful can take advantage of their power and impose contracts that leave the less powerful significantly worse off. If your choice is, for example, to contract to surrender your statutory rights or be unemployed, the freedom people have is the freedom to be worse off or much worse off. I wouldn't say this is a good thing. We rely on government and (if we're lucky) unions to prevent this freedom.
>To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelligence. When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something.
That's a strawman, since it assumes that only insanity or ignorance makes people favor a position that's bad for the general public. There are much more probable causes for such a view, such as personal interests.
>1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
This is not an argument. This is a conclusion, or an axiom. ("Because human rights" are not an argument either. See where how deep this rabbit hole goes?).
Second, it can be argued that freedom to contract is NOT "always a good thing". It's a good thing only when one side is not far more powerful than the other to the point of forcing the contract. When one side is coerced to sign (because e.g. else they cannot find employment in SV because all employers require non-competes), then it's not a freely chosen contract clause anymore, nor a free job market.
Third, even if freedom of contract was "always good", still what's good thing for an individual, is not necessarily a good thing for society.
Stealing and cheating, for example, can be good for the person doing it, but it's not good for society (and even less so in many people start doing it).
>2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
That's a naive view that assumes government as some removed from society enemy entity. In a democracy a government is the representation (imperfect as most human creations are) of the will of the people, and laws are based on historical experience and reasoned arguments, with input from people "in the field" in drafting them.
Also, government has much more complete information and view of the overall societal cost of non-competes, whereas you as individual mostly have your local knowledge to go by and personal gain as your guide (assuming of course you're freely entering the contract out of calculation, and not because employers have created a trust on the issue, and you are left with no other option).
>3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete.
Or offer to have sex with them. This rabbit hole also goes very far...
That's a strawman, since it assumes that only insanity or ignorance makes people favor a position that's bad for the general public. There are much more probable causes for such a view, such as personal interests.
>1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.
This is not an argument. This is a conclusion, or an axiom. ("Because human rights" are not an argument either. See where how deep this rabbit hole goes?).
Second, it can be argued that freedom to contract is NOT "always a good thing". It's a good thing only when one side is not far more powerful than the other to the point of forcing the contract. When one side is coerced to sign (because e.g. else they cannot find employment in SV because all employers require non-competes), then it's not a freely chosen contract clause anymore, nor a free job market.
Third, even if freedom of contract was "always good", still what's good thing for an individual, is not necessarily a good thing for society.
Stealing and cheating, for example, can be good for the person doing it, but it's not good for society (and even less so in many people start doing it).
>2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
That's a naive view that assumes government as some removed from society enemy entity. In a democracy a government is the representation (imperfect as most human creations are) of the will of the people, and laws are based on historical experience and reasoned arguments, with input from people "in the field" in drafting them.
Also, government has much more complete information and view of the overall societal cost of non-competes, whereas you as individual mostly have your local knowledge to go by and personal gain as your guide (assuming of course you're freely entering the contract out of calculation, and not because employers have created a trust on the issue, and you are left with no other option).
>3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete.
Or offer to have sex with them. This rabbit hole also goes very far...
First you're assuming a certain level of intelligence and then using that to argue from authority; that the arguments put forth on news.yc are somehow "better" because of this assumed intelligence of the news.yc commenters. I'm sorry but each comment and argument must stand on its own merits and the facts, it cannot rely on the supposed intelligence of the commenters.
Now let's get down to the real business of your arguments.
> Freedom to contract is always a good thing
This is only true if the people signing the contract are not coerced, whether by force or by poverty into signing that contract.
> Freedom to contract is a human right
So then you agree that it's a human right when it's not coerced yes?
> Government has no legitimate moral power to remove that right from people
It does if you follow the social contract. It does not remove the right but it does impose restrictions that follow from other human rights. It definitely has a legitimate moral power to impose restrictions. Whether you consider governments in general to be legitimate or moral is up to you but in this case? We have loads of precedent showing that in certain cases it has been absolutely necessary for governments to impose restrictions on contracts. Not to mention that we have courts, which you do not address. Are courts the only place where the judge or jury of your peers has a legitimate moral power to remove or impose restrictions on contracts?
> I have local knowledge regarding both my costs and my benefits from signing a non-compete contract.
Quite an assumption to make.
> Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
I can agree with this though it would have to be supported; they do collect all sorts of data so they may have some knowledge, greater than "almost no knowledge".
The argument against non-competes is that they place limits on freedom of speech and freedom of expression. They put a limit on employment options as well and are harming my future earnings which are very much real in contrast to the imaginary losses. Willingness to sign a non-compete is not a competitive advantage for employees, it's the equivalent of saying "I am willing to be treated like a slave" or "I will work for free". It's degrading and violates fundamental human rights. You cannot be in support of less restricted commerce and still support non-competes. You cannot be in favour of fundamental human rights and still support non-competes which take away or immensely restrict those rights.
Your arguments, in the end, contradict one another. I will not comment on the arrogance of your approach here.
Now let's get down to the real business of your arguments.
> Freedom to contract is always a good thing
This is only true if the people signing the contract are not coerced, whether by force or by poverty into signing that contract.
> Freedom to contract is a human right
So then you agree that it's a human right when it's not coerced yes?
> Government has no legitimate moral power to remove that right from people
It does if you follow the social contract. It does not remove the right but it does impose restrictions that follow from other human rights. It definitely has a legitimate moral power to impose restrictions. Whether you consider governments in general to be legitimate or moral is up to you but in this case? We have loads of precedent showing that in certain cases it has been absolutely necessary for governments to impose restrictions on contracts. Not to mention that we have courts, which you do not address. Are courts the only place where the judge or jury of your peers has a legitimate moral power to remove or impose restrictions on contracts?
> I have local knowledge regarding both my costs and my benefits from signing a non-compete contract.
Quite an assumption to make.
> Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.
I can agree with this though it would have to be supported; they do collect all sorts of data so they may have some knowledge, greater than "almost no knowledge".
The argument against non-competes is that they place limits on freedom of speech and freedom of expression. They put a limit on employment options as well and are harming my future earnings which are very much real in contrast to the imaginary losses. Willingness to sign a non-compete is not a competitive advantage for employees, it's the equivalent of saying "I am willing to be treated like a slave" or "I will work for free". It's degrading and violates fundamental human rights. You cannot be in support of less restricted commerce and still support non-competes. You cannot be in favour of fundamental human rights and still support non-competes which take away or immensely restrict those rights.
Your arguments, in the end, contradict one another. I will not comment on the arrogance of your approach here.
I would say this specific fallacy is that of failing to understand that there are upsides and downsides to every policy, that you can oppose a policy even when it has upsides and that it should be a red flag if you can't think of any upsides.
The "flaw" you talk about here has an exact opposite, which is a reactionary knee-jerk defense of the status quo just because it must have been arrived to optimally.
Often called "Panglossianism" as per Voltaire's character in Candide:
> Dr. Pangloss was the pedantic old tutor in Voltaire's satirical novel Candide. Pangloss was an incurable, albeit misguided, optimist who claimed that "all is for the best in this best of all possible worlds." So persistent was he in his optimism that he kept it even after witnessing and experiencing great cruelty and suffering. The name "Pangloss" comes from Greek pan, meaning "all," and glossa, meaning "tongue," suggesting glibness and talkativeness.
The idea that there's always a good reason for every societal practice that we currently observe is arrogant too, just in a different way.
Often called "Panglossianism" as per Voltaire's character in Candide:
> Dr. Pangloss was the pedantic old tutor in Voltaire's satirical novel Candide. Pangloss was an incurable, albeit misguided, optimist who claimed that "all is for the best in this best of all possible worlds." So persistent was he in his optimism that he kept it even after witnessing and experiencing great cruelty and suffering. The name "Pangloss" comes from Greek pan, meaning "all," and glossa, meaning "tongue," suggesting glibness and talkativeness.
The idea that there's always a good reason for every societal practice that we currently observe is arrogant too, just in a different way.
The alternative way of looking at it is that there is a good reason for many of the societal practices we observe - it's just that it's not you who profits. Considering the number of defenders of non-competes, it seems that the propaganda works very nicely.
I'm sorry, but I cannot take any of those arguments seriously. They are all coming from a point of corporate worship, to the point where one believes that a company can do absolutely no wrong.
> So your employer underpays you by 40% and treats you badly? You want to leave for greener pastures at that hip new startup that offered you a Senior Engineer gig? Well, sorry to say you have a mortgage, a wife, and 2 kids and that non-compete says you are only legally allowed to be a burger flipper for two years after quitting, that software engineering is verboten.
Whoah! Way too close to home. Only 1 kid and 70% underpaid.
Whoah! Way too close to home. Only 1 kid and 70% underpaid.
In theory, I see nothing wrong with them.
Non-competes ask employees to give up something extremely significant: freedom to work there they choose. Which I have no problem with if they get something significant in exchange.
Let's an employer wants some insurance that I won't go work elsewhere because there is going to be a long training period or what not. I expect significant compensation for that, ideally in the form of a large signing bonus, maybe 50k per year of non compete.
Don't want to pay 50k in cash up front per year of non compete? Take out the non compete. Simple negotiation.
I guess the problem in practice is that employees just sign their employment contract no matter what it says, which is unfortunate.
Non-competes ask employees to give up something extremely significant: freedom to work there they choose. Which I have no problem with if they get something significant in exchange.
Let's an employer wants some insurance that I won't go work elsewhere because there is going to be a long training period or what not. I expect significant compensation for that, ideally in the form of a large signing bonus, maybe 50k per year of non compete.
Don't want to pay 50k in cash up front per year of non compete? Take out the non compete. Simple negotiation.
I guess the problem in practice is that employees just sign their employment contract no matter what it says, which is unfortunate.
Correct. You want me to "non compete" with you? Pay me either a bonus or a salary (90% is fine) during the non-compete period
Apart from that please shove your non-compete there
Apart from that please shove your non-compete there
> I guess the problem in practice is that employees just sign their employment contract no matter what it says, which is unfortunate.
In other words, the problem is that they are coercive. Employees usually sign because the company has more legal power and can be intimidating or because they could be homeless.
In other words, the problem is that they are coercive. Employees usually sign because the company has more legal power and can be intimidating or because they could be homeless.
If companies had that much leverage we would all work at minimum wage. I've seen non-competes in contracts with 150k+ compensation. Getting 150k to do something is not coercion, it's an exchange. As for people becoming homeless, I think welfare should be the duty of the government, not individual corporations.
I agree that contracts can be intimidating, but they shouldn't be. Non competes, like most things, can be spelled out in totally ordinary English that anyone can comprehend. Rather than having to create 1 law against every possible employee-adverse thing an employer might put in a contract, I would much prefer a law that mandates employee contracts be easily understood by an average employee.
I agree that contracts can be intimidating, but they shouldn't be. Non competes, like most things, can be spelled out in totally ordinary English that anyone can comprehend. Rather than having to create 1 law against every possible employee-adverse thing an employer might put in a contract, I would much prefer a law that mandates employee contracts be easily understood by an average employee.
> If companies had that much leverage we would all work at minimum wage
Yes, we would! And they try really hard to do that.
> I've seen non-competes in contracts with 150k+ compensation. Getting 150k to do something is not coercion, it's an exchange.
When you're generating value in excess of double that amount? It's coercion, you aren't get paid your worth. We've actually seen this with the big tech companies like Intel, Google and Adobe. They kept salaries down for over 4 years so that 150k and a non-compete actually is a huge hindrance and it is coercion.
Yes, we would! And they try really hard to do that.
> I've seen non-competes in contracts with 150k+ compensation. Getting 150k to do something is not coercion, it's an exchange.
When you're generating value in excess of double that amount? It's coercion, you aren't get paid your worth. We've actually seen this with the big tech companies like Intel, Google and Adobe. They kept salaries down for over 4 years so that 150k and a non-compete actually is a huge hindrance and it is coercion.
>Let's an employer wants some insurance that I won't go work elsewhere because there is going to be a long training period or what not. I expect significant compensation for that, ideally in the form of a large signing bonus, maybe 50k per year of non compete.
They already have a mechanism for that. It's called a contract - you promise to work for the company for 2 years.
Your argument could easily be twisted to support cartels.
They already have a mechanism for that. It's called a contract - you promise to work for the company for 2 years.
Your argument could easily be twisted to support cartels.
No they don't. At will employment. Anyone can quit any job anytime they want.
From Wikipedia:
"The doctrine of at-will employment can be overridden by an express contract or civil service statutes (in the case of government employees)."
"The doctrine of at-will employment can be overridden by an express contract or civil service statutes (in the case of government employees)."
There are a number of legal constructions -- non-competes, mandatory binding arbitration, civil asset forfeiture, and even plea bargains -- that simply should never have been allowed to exist because they are obviously fraud/theft/abuse/coercion and it's mind boggling that the nearly all of the "esteemed" "scholarly" attorneys and judges who represent the elite of the elite in our society have worked themselves through the mental contortions required to simply accept that the status quo is essentially criminal from a moral perspective and that's okay because that's just how it is.
What's with the hate for plea bargains? Should every charge go to trial? In cases where a conviction isn't guaranteed, why shouldn't they split the difference between going free and the full penalty?
Every time I've challenged someone on this point, their objection turns out not to be about plea bargains per se, but the (unrelated) fact that the law permits such severe punishments in the first place, defendants have insufficient resources to fight them, and prosecutors have therefore enough leverage to secure them at all.
But that's not an argument against "plea bargains"; its disgust at the whole system and misattribution to one part.
Every time I've challenged someone on this point, their objection turns out not to be about plea bargains per se, but the (unrelated) fact that the law permits such severe punishments in the first place, defendants have insufficient resources to fight them, and prosecutors have therefore enough leverage to secure them at all.
But that's not an argument against "plea bargains"; its disgust at the whole system and misattribution to one part.
Yes, anyone who is charged with something serious should go to trial. It's expensive, but you're locking a person in a cage with criminals for years of their life (incidentally to be repeatedly beaten and raped, but we can leave aside problems with the CJ system that aren't explicitly plea bargains for the moment), not choosing a floral arrangement.
I agree the extreme and severe punishments exacerbate the problems with plea bargains but plea bargains are bad by themselves, in isolation, even if other punishments are fair.
The government should NEVER be in the business of giving people special treatment and rewards for waiving their fundamental rights because it's more convenient for the government. Everyone has the right to a trial, but people who exercise it are punished. Which means people don't REALLY have a right to a trial. Imagine if the government promised it would tax people less if they chose to avoid engaging in political speech critical of the government. This case is identical to a plea bargain. Except it's less serious, since it's about money, not about jailing somebody.
I'm okay with someone pleading guilty and throwing themselves at the mercy of the court and asking forgiveness. Then it's up to the human beings in the trial to decide how to handle it. Creating a formal system where you do this in exchange for something tangible? Before a trial? No. Innocence or guilt is too important to be bartered like that.
I agree the extreme and severe punishments exacerbate the problems with plea bargains but plea bargains are bad by themselves, in isolation, even if other punishments are fair.
The government should NEVER be in the business of giving people special treatment and rewards for waiving their fundamental rights because it's more convenient for the government. Everyone has the right to a trial, but people who exercise it are punished. Which means people don't REALLY have a right to a trial. Imagine if the government promised it would tax people less if they chose to avoid engaging in political speech critical of the government. This case is identical to a plea bargain. Except it's less serious, since it's about money, not about jailing somebody.
I'm okay with someone pleading guilty and throwing themselves at the mercy of the court and asking forgiveness. Then it's up to the human beings in the trial to decide how to handle it. Creating a formal system where you do this in exchange for something tangible? Before a trial? No. Innocence or guilt is too important to be bartered like that.
I still don't see the logic. You're okay with
- someone pleading guilty in return for an indefinite punishment, but not a definite one, and
- someone getting a more time in the horrible, horrible cage because the trial found them guilty but not less because they realized they would lose
- someone getting mercy from the court for pleading guilty, but not "getting special treatment and rewards for waiving right to trial" (which a guilty plea is)
- someone leaving their fate in the hands of a capricious, unpredictable jury, but not leaving their fate in the hands of a capricious, unpredictable sentencing judge for the guilty plea
I just don't see a consistent preference ordering that spits out "plea bargains should be banned".
- someone pleading guilty in return for an indefinite punishment, but not a definite one, and
- someone getting a more time in the horrible, horrible cage because the trial found them guilty but not less because they realized they would lose
- someone getting mercy from the court for pleading guilty, but not "getting special treatment and rewards for waiving right to trial" (which a guilty plea is)
- someone leaving their fate in the hands of a capricious, unpredictable jury, but not leaving their fate in the hands of a capricious, unpredictable sentencing judge for the guilty plea
I just don't see a consistent preference ordering that spits out "plea bargains should be banned".
None of those points really have anything to do with plea bargains -- they are just bad things about the CJ system.
-If the CJ system gives out indefinite punishments for trivial things, that's a problem unrelated to plea bargains. The solution isn't to make things even worse by allowing prosecutors to abuse the extreme sentences to force people into (sometimes false) confessions.
-Why should someone get years of freedom over someone else because they were law-savvy enough (or paid someone law-savvy enough) to realize they were going to lose and gave the prosecutor a sweet deal to make his job easier? Why create an even more uneven distribution of sentences based on who understands the system or can pay a lawyer to understand it?
-The court is set up to be run by humans; they can take mercy on whoever they like. We've chosen to set up our laws that way and I'm pretty ambivalent about whether or not that's a good thing. But even so, that's after the court has found that they are guilty. Mercy can only be applied after guilt is accurately and appropriately assigned -- something plea bargains make impossible. They induce false confessions (it's often the case that an innocent person would spend more time in jail waiting on their trial than they will if they plea bargain -- many decide they don't particularly like jail and take the plea. Not to mention the threat of a bigger sentence). They distort the findings of the court as prosecutors do not try to jail the person for what they can prove they did, rather they use the potential threat of what they might be able to suggest a person did in the future to provide the punishment.
-The law is always capricious and unreasonable. It is a human institution and it's adversarial. If someone is given an unreasonable and capricious sentence it's the fault of the prosecutor who pushed for an inappropriate charge (and happened to win anyway), or the judge who abuses his power to punish the person, or the lawmaker to design laws with appropriate punishments.
Plea bargains can make punishments more consistent and predictable -- everyone is guilty whenever they are accused. Their sentences are milder than technically could be possible but guilty nonetheless. For the unlucky few who have the audacity to maintain their innocence in the face of a prosecutor on the attack, well, capricious and unreasonable is exactly the name of the game. The phrase "throwing the book at you" exists for a reason.
The real point which I don't think you touched on is the simple principle of the government giving citizens special rewards and treatment for waiving their fundamental rights. It shouldn't happen if rights are to remain rights. Why shouldn't congress pass a law saying no taxes for people who sign a pledge to give the government permanent permission to search through all of their documents, computers, affairs, so they waive all protection against search and seizure? It's purely voluntary. Why should citizens subject themselves to the capricious and unpredictable execution of search warrants when they can just come home one evening to a police officer politely saying hello as he rifles through their closet? It's much better than a ridiculous unpredictable SWAT raid at 4am. And they get rewarded for it!
-If the CJ system gives out indefinite punishments for trivial things, that's a problem unrelated to plea bargains. The solution isn't to make things even worse by allowing prosecutors to abuse the extreme sentences to force people into (sometimes false) confessions.
-Why should someone get years of freedom over someone else because they were law-savvy enough (or paid someone law-savvy enough) to realize they were going to lose and gave the prosecutor a sweet deal to make his job easier? Why create an even more uneven distribution of sentences based on who understands the system or can pay a lawyer to understand it?
-The court is set up to be run by humans; they can take mercy on whoever they like. We've chosen to set up our laws that way and I'm pretty ambivalent about whether or not that's a good thing. But even so, that's after the court has found that they are guilty. Mercy can only be applied after guilt is accurately and appropriately assigned -- something plea bargains make impossible. They induce false confessions (it's often the case that an innocent person would spend more time in jail waiting on their trial than they will if they plea bargain -- many decide they don't particularly like jail and take the plea. Not to mention the threat of a bigger sentence). They distort the findings of the court as prosecutors do not try to jail the person for what they can prove they did, rather they use the potential threat of what they might be able to suggest a person did in the future to provide the punishment.
-The law is always capricious and unreasonable. It is a human institution and it's adversarial. If someone is given an unreasonable and capricious sentence it's the fault of the prosecutor who pushed for an inappropriate charge (and happened to win anyway), or the judge who abuses his power to punish the person, or the lawmaker to design laws with appropriate punishments.
Plea bargains can make punishments more consistent and predictable -- everyone is guilty whenever they are accused. Their sentences are milder than technically could be possible but guilty nonetheless. For the unlucky few who have the audacity to maintain their innocence in the face of a prosecutor on the attack, well, capricious and unreasonable is exactly the name of the game. The phrase "throwing the book at you" exists for a reason.
The real point which I don't think you touched on is the simple principle of the government giving citizens special rewards and treatment for waiving their fundamental rights. It shouldn't happen if rights are to remain rights. Why shouldn't congress pass a law saying no taxes for people who sign a pledge to give the government permanent permission to search through all of their documents, computers, affairs, so they waive all protection against search and seizure? It's purely voluntary. Why should citizens subject themselves to the capricious and unpredictable execution of search warrants when they can just come home one evening to a police officer politely saying hello as he rifles through their closet? It's much better than a ridiculous unpredictable SWAT raid at 4am. And they get rewarded for it!
>None of those points really have anything to do with plea bargains -- they are just bad things about the CJ system.
I think you're making my point for me -- to prevent the "plea bargains are bad" position from painting you into a corner, you attribute the inconsistency to the horribleness of the CJ system itself. That was my point all along! The problems you describe are problems with that selfsame horribleness:
A) Punishments are excessive.
B) Defendants get insufficient advice.
C) Trials (and waiting for them) take too long
D) You are detained (from excessive bail) while waiting for the trial
E) Prosecutors are likely to get convictions even in the absence of guilt.
F) The system is so capricious that people are willing accept a large punishment in lieu of riding it out for the true final judgment.
G) A-F lead to people people confessing in the hopes of leniency rather than because of literal culpability.
Hence my point -- those are the problem. If plea bargains were an independently bad thing -- let alone "the" obviously wrong thing that should be prohibited (on the level of non-competes etc), then it follows that we would be better off removing plea bargains even if everything else remained in its current state of horribleness.[1]
But that implication is emphatically not true! If you just banned plea bargains, A) punishments would be just as excessive, B) defendants just as flat-footed and likely to lose at trial, C/D) people would be in detained limbo even longer waiting for every last trial to play out, E) unwarranted guilty verdicts for the longer punishments just as likely, and F) a capricious/over-the-top punishment still waiting for them at the end.
And for the cherry on top, G) people would still be pleading guilty, still waiving their right to trial in the desperate hope that some judge might show mercy, and still being effectively rewarded for it!
And yet, I still wouldn't see the preference ordering under which that's better.
Would you say the same thing about plea bargains if A-G were removed? Criticisms would be far less defensible: imagine that the punishment for shoplifting is something relatively mild (one month plus record expungement) and a defendant were expecting 90% chance of conviction based on expert advice. The prosecutor offers a week in return for a plea, and the trial would happen in about a month and last a day. Do you really think it's an improvement to force the defendant into a trial or "whatever the judge gives them for a guilty plea"?
[1] Would you be able to say the same for the other horrors you mentioned? Non-competes, mandatory arb, etc? It seems that removing them and changing nothing else would be an improvement.
I think you're making my point for me -- to prevent the "plea bargains are bad" position from painting you into a corner, you attribute the inconsistency to the horribleness of the CJ system itself. That was my point all along! The problems you describe are problems with that selfsame horribleness:
A) Punishments are excessive.
B) Defendants get insufficient advice.
C) Trials (and waiting for them) take too long
D) You are detained (from excessive bail) while waiting for the trial
E) Prosecutors are likely to get convictions even in the absence of guilt.
F) The system is so capricious that people are willing accept a large punishment in lieu of riding it out for the true final judgment.
G) A-F lead to people people confessing in the hopes of leniency rather than because of literal culpability.
Hence my point -- those are the problem. If plea bargains were an independently bad thing -- let alone "the" obviously wrong thing that should be prohibited (on the level of non-competes etc), then it follows that we would be better off removing plea bargains even if everything else remained in its current state of horribleness.[1]
But that implication is emphatically not true! If you just banned plea bargains, A) punishments would be just as excessive, B) defendants just as flat-footed and likely to lose at trial, C/D) people would be in detained limbo even longer waiting for every last trial to play out, E) unwarranted guilty verdicts for the longer punishments just as likely, and F) a capricious/over-the-top punishment still waiting for them at the end.
And for the cherry on top, G) people would still be pleading guilty, still waiving their right to trial in the desperate hope that some judge might show mercy, and still being effectively rewarded for it!
And yet, I still wouldn't see the preference ordering under which that's better.
Would you say the same thing about plea bargains if A-G were removed? Criticisms would be far less defensible: imagine that the punishment for shoplifting is something relatively mild (one month plus record expungement) and a defendant were expecting 90% chance of conviction based on expert advice. The prosecutor offers a week in return for a plea, and the trial would happen in about a month and last a day. Do you really think it's an improvement to force the defendant into a trial or "whatever the judge gives them for a guilty plea"?
[1] Would you be able to say the same for the other horrors you mentioned? Non-competes, mandatory arb, etc? It seems that removing them and changing nothing else would be an improvement.
Yes of course I would still argue against plea bargains if A-G were removed. That's exactly what I stated in my previous post, including reasons why, which you've avoided discussing.
Of course I think removing plea bargains and changing nothing else would be an improvement (no hassle-free imprisonment and brutal torture perpetuated by the state? sounds great!).
Of course I think removing plea bargains and changing nothing else would be an improvement (no hassle-free imprisonment and brutal torture perpetuated by the state? sounds great!).
And you believe that in light of the arguments I just gave about how removing only plea bargains would be bad thing, as it would just backlog the courts even further and make defendants suffer even worse punishments?
If you're thinking something like "oh yeah, every charge should go to trial, and we should fund it better so there's not a ginormous backlog, and require a big burden of proof before you can detain someone awaiting trial" -- well, that doesn't count, as it's changing the court funding and bail policies too. As it stands now, making every charge go to trial means waiting ten years for a trial. Doesn't sound like an improvement to me.
Do you also accept the implications of the scenario I gave, in a post-A-G world? Where, rather than take the lighter punishment, you prefer that the defendant risk the heavier punishment or put himself at the mercy of the judge?
If you're thinking something like "oh yeah, every charge should go to trial, and we should fund it better so there's not a ginormous backlog, and require a big burden of proof before you can detain someone awaiting trial" -- well, that doesn't count, as it's changing the court funding and bail policies too. As it stands now, making every charge go to trial means waiting ten years for a trial. Doesn't sound like an improvement to me.
Do you also accept the implications of the scenario I gave, in a post-A-G world? Where, rather than take the lighter punishment, you prefer that the defendant risk the heavier punishment or put himself at the mercy of the judge?
Non-competes allow employees to get training they otherwise would not get.
A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor. NDAs/IP assignment agreements do not address this need. If it weren't for non-competes, that investment would be infeasible and we would all be paying our employers for the training we get – either directly, in the form of course fees, or indirectly, in the form of depressed wages during the course of the training.
Edit: For a deeper dive on this, see Paul H. Rubin and Peter Shedd, "Human Capital and Covenants Not to Compete," available at https://www.jstor.org/stable/724227?seq=1#page_scan_tab_cont....
A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor. NDAs/IP assignment agreements do not address this need. If it weren't for non-competes, that investment would be infeasible and we would all be paying our employers for the training we get – either directly, in the form of course fees, or indirectly, in the form of depressed wages during the course of the training.
Edit: For a deeper dive on this, see Paul H. Rubin and Peter Shedd, "Human Capital and Covenants Not to Compete," available at https://www.jstor.org/stable/724227?seq=1#page_scan_tab_cont....
This need is best addressed by termed employment contracts. E.g., in consideration of us paying $10k for you to pursue training in blah we mutually agree that you will work for us in your existing position a minimum of 6 months after the training concludes.
As an employer, after investing in training an employee you only need to ensure that you get an acceptable return on investment before the employee leaves. You want to prevent the employee leaving, so your agreement should specifically target that.
Non-competes are overly broad here and this has the consequence of making them coercive and punitive, both completely unnecessary. The non-compete doesn't guarantee your ROI except as a knock-on effect of its coercive nature. It only prevents your (former) employee from working at all. A net negative for society and arguable for you as an employer.
As an employer, after investing in training an employee you only need to ensure that you get an acceptable return on investment before the employee leaves. You want to prevent the employee leaving, so your agreement should specifically target that.
Non-competes are overly broad here and this has the consequence of making them coercive and punitive, both completely unnecessary. The non-compete doesn't guarantee your ROI except as a knock-on effect of its coercive nature. It only prevents your (former) employee from working at all. A net negative for society and arguable for you as an employer.
Noncompetes are usually helpful in the service industry. If I hire you in my HVAC business and spend a year sending you on client jobs, then you leave, start your own HVAV business and start contacting all of my clients that I sent you to work on...that's a problem. Without a means of preventing that it's almost impossible to grow a service business.
Client lists are covered under NDA and you can add a non-solicitation clause which is different from a non-compete and seems both reasonable and fair.
NDA + non-solicitation: You can't start your own HVAC company by handing your sales person a copy of my client list and calling everyone who currently works with me.
Non-Compete: You can't start your own HVAC company. Full-stop.
Do you see the difference? Do you understand why one is reasonable and fair and the other is not?
NDA + non-solicitation: You can't start your own HVAC company by handing your sales person a copy of my client list and calling everyone who currently works with me.
Non-Compete: You can't start your own HVAC company. Full-stop.
Do you see the difference? Do you understand why one is reasonable and fair and the other is not?
See whenever I've seen a noncompete like that it's specifically said "within 5 miles of this location, up to 2 years, cannot contact any clients of this business"
I'm in a right to work state though and that means that noncompetes don't hold up at all unless they have a reasonable and non excessive scope. In a right to work state nobody can prevent you from earning a living so in order for a noncompete to hold it has to ensure that you have plenty of other options in your field in the area outside of the scope of that agreement.
I think we are talking about the same thing just using different terms.
I'm in a right to work state though and that means that noncompetes don't hold up at all unless they have a reasonable and non excessive scope. In a right to work state nobody can prevent you from earning a living so in order for a noncompete to hold it has to ensure that you have plenty of other options in your field in the area outside of the scope of that agreement.
I think we are talking about the same thing just using different terms.
> "within 5 miles of this location, up to 2 years, cannot contact any clients of this business"
What you just described is a textbook non-solicitation agreement.
A non-compete would read something like: "You covenant and agree that, during the term of your employment with the Company and for twelve (12) months after the termination thereof, regardless of the reason for the employment termination, you will not, directly or indirectly, anywhere in the Territory, on behalf of any Competitive Business perform the same or substantially the same Job Duties."
In a contract, terms like "Competitive Business", "Job Duties", "Territory", and "Company" would be previously defined. What this says in essence though is that for 1 year after your termination (either you quit or are let go) you cannot do the same job anywhere within the "Territory" which could be the city, state, country, region, or world-wide depending on how its defined in the contract.
So, let's say in your HVAC example. A non-compete says you cannot work in HVAC at all for the term. A non-solicitation, like you says prevents contacting clients of the "Company".
What you just described is a textbook non-solicitation agreement.
A non-compete would read something like: "You covenant and agree that, during the term of your employment with the Company and for twelve (12) months after the termination thereof, regardless of the reason for the employment termination, you will not, directly or indirectly, anywhere in the Territory, on behalf of any Competitive Business perform the same or substantially the same Job Duties."
In a contract, terms like "Competitive Business", "Job Duties", "Territory", and "Company" would be previously defined. What this says in essence though is that for 1 year after your termination (either you quit or are let go) you cannot do the same job anywhere within the "Territory" which could be the city, state, country, region, or world-wide depending on how its defined in the contract.
So, let's say in your HVAC example. A non-compete says you cannot work in HVAC at all for the term. A non-solicitation, like you says prevents contacting clients of the "Company".
That's definitely where the disconnect is then. The non-compete you are describing would be totally illegal in a right to work state.
I'm 36 years old, have run a business and dealt with a lot of contracts like this for clients in the area and this is the first time I've ever heard of a specific "non-solicitation" agreement. My guess is that's because around this area it's what we understand a "non-compete" to be.
I can't imagine anyone would ever sign a document that said they couldn't work in their field at all because they worked for this company.
I'm 36 years old, have run a business and dealt with a lot of contracts like this for clients in the area and this is the first time I've ever heard of a specific "non-solicitation" agreement. My guess is that's because around this area it's what we understand a "non-compete" to be.
I can't imagine anyone would ever sign a document that said they couldn't work in their field at all because they worked for this company.
> I can't imagine anyone would ever sign a document that said they couldn't work in their field at all because they worked for this company.
Yep, but they do. Even Jimmy John's was making employees sign a non-compete saying they wouldn't work for any competing fast food delivery chains if they quit. E.g. if you drove for Jimmy John's you can't quit to drive for Domino's. http://fortune.com/2016/06/22/jimmy-johns-non-compete-agreem...
They got sued and lost, but thousands of employees signed them because their only alternative was to not have the job or possibly any job.
Yep, but they do. Even Jimmy John's was making employees sign a non-compete saying they wouldn't work for any competing fast food delivery chains if they quit. E.g. if you drove for Jimmy John's you can't quit to drive for Domino's. http://fortune.com/2016/06/22/jimmy-johns-non-compete-agreem...
They got sued and lost, but thousands of employees signed them because their only alternative was to not have the job or possibly any job.
Non-competes are enforceable in all fifty states except California, Oklahoma and North Dakota [1].
"Right to work" means you have the right to work without being required to join a union, i.e. it bans union shops where one must pay union dues or lose their job [2]. It is a response by 26 states to federal collective-bargaining laws.
[1] http://www.nolo.com/legal-encyclopedia/understanding-noncomp...
[2] https://en.m.wikipedia.org/wiki/Right-to-work_law
"Right to work" means you have the right to work without being required to join a union, i.e. it bans union shops where one must pay union dues or lose their job [2]. It is a response by 26 states to federal collective-bargaining laws.
[1] http://www.nolo.com/legal-encyclopedia/understanding-noncomp...
[2] https://en.m.wikipedia.org/wiki/Right-to-work_law
Interesting. I'd always heard it was due to right to work, but after researching it a little bit more it's just how non-competes are handled in my state (South Carolina).
http://www.scnoncompetelawyer.com/
"A covenant not to compete will be upheld only if it is:
(1) necessary for the protection of the legitimate interest of the employer;
(2) reasonably limited in its operation with respect to time and place;
(3) not unduly harsh and oppressive in curtailing the legitimate efforts of the employee to earn a livelihood;
(4) reasonable from the standpoint of sound public policy; and
(5) supported by a valuable consideration.
* * * *
If a covenant not to compete is defective in one of the above referenced areas, it is totally defective and cannot be saved."
http://www.scnoncompetelawyer.com/
"A covenant not to compete will be upheld only if it is:
(1) necessary for the protection of the legitimate interest of the employer;
(2) reasonably limited in its operation with respect to time and place;
(3) not unduly harsh and oppressive in curtailing the legitimate efforts of the employee to earn a livelihood;
(4) reasonable from the standpoint of sound public policy; and
(5) supported by a valuable consideration.
* * * *
If a covenant not to compete is defective in one of the above referenced areas, it is totally defective and cannot be saved."
> I'm in a right to work state though and that means that noncompetes don't hold up [...] In a right to work state nobody can prevent you from earning a living
Generally speaking, so-called right-to-work laws are about preventing an employer from requiring that all employees join a union. Maybe some of those laws are worded broadly enough to also cover non-compete contracts, but I've never seen any real indication of that being the case.
Generally speaking, so-called right-to-work laws are about preventing an employer from requiring that all employees join a union. Maybe some of those laws are worded broadly enough to also cover non-compete contracts, but I've never seen any real indication of that being the case.
You do realize this article explicitly highlights a Jimmy Johns non-compete which was about not working within N miles from a Jimmy Johns restaurant?
I do not think this proposal makes the distinction that you make. Both are in the crosshairs.
I do not think this proposal makes the distinction that you make. Both are in the crosshairs.
When I worked at a consultancy there was a separate non-solicitation clause about clients that was written into my contract and I'm pretty sure was written into the contract clients signed too to not poach consultants.
No business has a fundamental right to exist. If you hire me for your HVAC business, and I manage to leave, build a competing business, and shut you down, then that isn't my problem. Your business never had a right to be free of competition from me. Period.
It doesn't and that's true, however, no business should have to constantly fear their own employees gutting their business from the inside either - and it appears that the above mentioned non-solicitation agreements cover that as entirely reasonable.
> Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements
> Client lists, contract terms, sales strategies, reported metrics, financials: covered by NDA and in some cases SEC regulations about insider trading.
This is largely unenforceable as I'm sure you're aware. The fact is that legally preventing someone from working at a competitor is simply the only effective way of deterring IP getting to a competitor.
> Client lists, contract terms, sales strategies, reported metrics, financials: covered by NDA and in some cases SEC regulations about insider trading.
This is largely unenforceable as I'm sure you're aware. The fact is that legally preventing someone from working at a competitor is simply the only effective way of deterring IP getting to a competitor.
Exactly. It's the only verifiable option. That said, if your IP is so valuable that you want to prevent your employee from walking away with it, you'd better be prepared to pay them.
It's a little extreme to say they have no value. It marginally helps an individual manager to know that their employees can't move. And if an employee wants to negotiate higher salary in return for signing a non-compete, who is to say that they legally can't do that? (Everyone knows that Bridgewater aggressively pursues onerous non-competes, but employees can retire young as a result if they stick around)
From a macro level, non-competes are awful. The economy as a whole does much better (is more productive) when the best labor is free to chase the most productive uses of capital. (And vice versa) Successful companies are constrained by the existence of non-competes, because they have a reduced pool of employees to hire. They may still do them for their own employees, but they can't take the step without everyone else taking it too. (A variation of prisoner's dilemma)
I'm generally a small-government low-regulation person, but this may be an instance where companies need to be nudged as a group to accept something that will help them in aggregate.
From a macro level, non-competes are awful. The economy as a whole does much better (is more productive) when the best labor is free to chase the most productive uses of capital. (And vice versa) Successful companies are constrained by the existence of non-competes, because they have a reduced pool of employees to hire. They may still do them for their own employees, but they can't take the step without everyone else taking it too. (A variation of prisoner's dilemma)
I'm generally a small-government low-regulation person, but this may be an instance where companies need to be nudged as a group to accept something that will help them in aggregate.
>The only thing a non-compete does is say that Employee A cannot work in their chosen field for some period of time after they are fired or quit. In doing so it offers no consideration or compensation typically in the contract.
I know you probably know this, but it doesn't have to be laid out explicitly to be compensated. The compensation would be present silently through higher wages, better perks, higher vacation etc. Workers evaluate the sum total of the costs and benefits of a job when deciding to work somewhere. It can be argued that workers don't always make the best decisions for themselves, so we should restrict their options, although to do that you have to show that the government makes better decisions for them which is sort of difficult.
I know you probably know this, but it doesn't have to be laid out explicitly to be compensated. The compensation would be present silently through higher wages, better perks, higher vacation etc. Workers evaluate the sum total of the costs and benefits of a job when deciding to work somewhere. It can be argued that workers don't always make the best decisions for themselves, so we should restrict their options, although to do that you have to show that the government makes better decisions for them which is sort of difficult.
"Silent compensation" is no compensation at all.
An ordinary person would rightly believe that 100% of their job compensation is in exchange for doing their job, and that any additional bonus compensation for doing something else must be explicitly laid out in a separate contract.
In order for what you say to be true, jobs with non-compete agreements should in aggregate pay more than jobs without them. I do not have that data, but I believe that they actually pay less, due to the tautological competition-suppressing effect of non-competes.
An ordinary person would rightly believe that 100% of their job compensation is in exchange for doing their job, and that any additional bonus compensation for doing something else must be explicitly laid out in a separate contract.
In order for what you say to be true, jobs with non-compete agreements should in aggregate pay more than jobs without them. I do not have that data, but I believe that they actually pay less, due to the tautological competition-suppressing effect of non-competes.
"Silent compensation" definitely is compensation. To turn things around, I don't know for certain but I doubt Google puts in its software engineer contracts "we are paying you $X less in salary because of the free food". Rather, they offer a salary and list the other benefits (and negatives like noncompetes) in the contract and let the job candidate consider it.
It sounds like it would be beneficial to list out each of the non-monetary advantages and disadvantages of a job and how much money they're each worth, but in reality there's too many [1] to make that practical. Not only are there a ton of these unseen effects but their value is different for each individual.
One person may value their ability to take another job at a competitor quite highly while another may not. And that's the case for all these unseen effects.
[1] Examples of unseen effects that make the implicit wage different from the explicit one:
* having to sign a noncompete
* do you like the sorts of people you'll be working with?
* do you like the tasks you'll be working on?
* do you have flexible hours?
* do you like the place where you work?
* do you like the length of the commute to work?
* do you like the smell of the rhododendron's outside your office window?
etc.
It sounds like it would be beneficial to list out each of the non-monetary advantages and disadvantages of a job and how much money they're each worth, but in reality there's too many [1] to make that practical. Not only are there a ton of these unseen effects but their value is different for each individual.
One person may value their ability to take another job at a competitor quite highly while another may not. And that's the case for all these unseen effects.
[1] Examples of unseen effects that make the implicit wage different from the explicit one:
* having to sign a noncompete
* do you like the sorts of people you'll be working with?
* do you like the tasks you'll be working on?
* do you have flexible hours?
* do you like the place where you work?
* do you like the length of the commute to work?
* do you like the smell of the rhododendron's outside your office window?
etc.
What about non competes for low wage workers like subway and mcdonalds? Cuz thats beeen starting to happen.
That's a point in favor of banning it, because we have minimum wage laws and piling on disadvantages would allow employers to effectively get below the minimum wage.
In practice that probably isn't necessary because the employer doesn't see much benefit from having a non-compete. Workers are no more qualified to work for their competitors after having worked for subway for a year than they were when they were first hired.
In practice that probably isn't necessary because the employer doesn't see much benefit from having a non-compete. Workers are no more qualified to work for their competitors after having worked for subway for a year than they were when they were first hired.
> Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements
As a developer pretty much none of these matter or protects anything.
Imagine this scenario; - John has no idea about video encoding but a good developer.
- John joins to a video encoding startup
- This startup encodes videos 3 times faster than the competitor
- After working on the core product for 2 years, John knows a lot about video encoding, because he's been trained. He also knows why they can do faster than anyone else. It's not one thing, bunch of things.
- Then John receives an offer from the competitor with 50% more salary (obviously this is smart thing to do for competing company). He obviously leaves, because 50% more! All the know-how, experience etc. will be just automatically transferred to this competitor. NDA, copyright etc. nothing can prevent it.
So how is this good for anyone but John? If you think this kind of stuff doesn't happen and all this kind of advancements are public domain anyway, you are wrong. There are many niche fields where competing advantage comes from technical excellence and understanding couple of key things better than your competition.
Not to mention John will have inner knowledge of so many other non-technical but important details that can give obvious unfair competitive advantage.
When non-competes are removed companies do need to treat their employees differently. "If I don't trust this employee enough I shouldn't give them the important bit of the source code, shouldn't train them on X know-how that we internally produced" etc. which is pretty bad for everyone.
As a developer pretty much none of these matter or protects anything.
Imagine this scenario; - John has no idea about video encoding but a good developer.
- John joins to a video encoding startup
- This startup encodes videos 3 times faster than the competitor
- After working on the core product for 2 years, John knows a lot about video encoding, because he's been trained. He also knows why they can do faster than anyone else. It's not one thing, bunch of things.
- Then John receives an offer from the competitor with 50% more salary (obviously this is smart thing to do for competing company). He obviously leaves, because 50% more! All the know-how, experience etc. will be just automatically transferred to this competitor. NDA, copyright etc. nothing can prevent it.
So how is this good for anyone but John? If you think this kind of stuff doesn't happen and all this kind of advancements are public domain anyway, you are wrong. There are many niche fields where competing advantage comes from technical excellence and understanding couple of key things better than your competition.
Not to mention John will have inner knowledge of so many other non-technical but important details that can give obvious unfair competitive advantage.
When non-competes are removed companies do need to treat their employees differently. "If I don't trust this employee enough I shouldn't give them the important bit of the source code, shouldn't train them on X know-how that we internally produced" etc. which is pretty bad for everyone.
To summarize your argument, you're saying that in practice NDAs are meaningless as a term of your employment contract, so adding an even more onerous and one-sided term, the non-compete is advisable? Contracts are only as good as their enforcement and the honor of those involved in the agreement. If an employee leaves and spreads your trade secrets to your competitor, then you sue them and the competitor, the same as if your competitor hires that employee in violation of a non-compete. The difference here is the NDA is specific, a non-compete is broad. The NDA says not to share your secrets while working at a competitor, the non-compete prevents you from working for the competitor entirely.
Since the secrets aren't yours to share at will, they belong to the company, there's nothing that restricts your freedoms in an NDA. It's more of a covenant than a restriction. You're making a legally enforceable promise to not spread about things you know full well are supposed to be confidential. A non-compete however restricts your freedom of movement in the labor market and directly provides a tool for the employer to coerce your actions in and outside of work. There's a huge difference in consequences and incentives, while the NDA provides sufficient protection for the things that matter in your scenario.
Since the secrets aren't yours to share at will, they belong to the company, there's nothing that restricts your freedoms in an NDA. It's more of a covenant than a restriction. You're making a legally enforceable promise to not spread about things you know full well are supposed to be confidential. A non-compete however restricts your freedom of movement in the labor market and directly provides a tool for the employer to coerce your actions in and outside of work. There's a huge difference in consequences and incentives, while the NDA provides sufficient protection for the things that matter in your scenario.
Sorry I wasn't clear on the original comment, how can NDA stop a developer to use what he knows while writing code or creating procedures?
If you are a developer and worked on a code for 2 years. NDA cannot cover what you know what you don't. Your know-how that you captured on that company can simply be replicated in another company. You'll write the code from scratch, and NDA or copyright, or even patent in majority of the cases will not be enough to enforce or stop such a think. In rare cases patent can solve it but do we want all companies to patent everything?
If you are a developer and worked on a code for 2 years. NDA cannot cover what you know what you don't. Your know-how that you captured on that company can simply be replicated in another company. You'll write the code from scratch, and NDA or copyright, or even patent in majority of the cases will not be enough to enforce or stop such a think. In rare cases patent can solve it but do we want all companies to patent everything?
What you're describing isn't "intellectual property", it's experience. The company you work for has no legal claim to your experience. Your experience is a personal asset which has value in the market and is a direct reason why a company hires and compensates you to do that job.
And that's exactly my point. This is why non-compete makes sense. To repeat, because none of the stuff you have mentioned can replace what non-compete provides.
Yes, what non-compete provides is an attempted legal claim on something inherent in you as a person. This is unconscionable.
If you replace "developer" with "general contractor" and "writing code" with "constructing a building", do you believe your argument holds up? How about "doctor" and "practicing medicine"? "Attorney" and "practicing law"? "Salesperson" and "selling effectively"? I could go on.
While employed, a person necessarily learns skills in order to perform their duties; as an employer, it would be impossible to derive value from the worker without training and knowledge transfer. Your argument is that it should be a two-way street until employment is terminated, then it becomes a one-way restriction against the employee. That's not fair to workers and is extremely biased toward the employer.
While employed, a person necessarily learns skills in order to perform their duties; as an employer, it would be impossible to derive value from the worker without training and knowledge transfer. Your argument is that it should be a two-way street until employment is terminated, then it becomes a one-way restriction against the employee. That's not fair to workers and is extremely biased toward the employer.
My argument was about software development and I don't know how much it would hold up for other fields.
Employer pays the time for that employee to acquire the knowledge, employer serves the know-how that the employee might never ever able to learn by herself. How is it not reasonable to expect that knowledge to be used against the employer? Why is it one-way? I'm not talking about knowledge in a sense that "good code should include comment" kind of dev best practice. I'm talking about domain specific know-how that the employer came up with in many years by spending lots of money (R&D, trial & error, field studies etc).
Employer pays the time for that employee to acquire the knowledge, employer serves the know-how that the employee might never ever able to learn by herself. How is it not reasonable to expect that knowledge to be used against the employer? Why is it one-way? I'm not talking about knowledge in a sense that "good code should include comment" kind of dev best practice. I'm talking about domain specific know-how that the employer came up with in many years by spending lots of money (R&D, trial & error, field studies etc).
> So how is this good for anyone but John?
How about the consumer/society as a whole who now widely benefits from advanced technology being proliferated through the industry instead of being hoarded by one company?
How about the consumer/society as a whole who now widely benefits from advanced technology being proliferated through the industry instead of being hoarded by one company?
I agree, but if we want that we should start from demolishing "patents" and many other similar more basic issues first, but we all know why that's not going to happen.
Secondly when you do that, aren't you actually killing commercial research? Why would I spend $10M to research something if one of my employees can just take that know-how and move to my competitor?
Secondly when you do that, aren't you actually killing commercial research? Why would I spend $10M to research something if one of my employees can just take that know-how and move to my competitor?
>I agree, but if we want that we should start from demolishing "patents" and many other similar more basic issues first, but we all know why that's not going to happen.
It's not going to happen because your logic is off a little.
Patents are there to promote growth to society, not to promote growth of the patent holder. It works because it's set up to be a win-win for both.
If at any point the patent system hurts growth to society, it should be revamped or eliminated.
Patents are not fundamental human rights. Nor are copyrights. They exist to serve the society, not the holder. Once they cease to do so, they should be removed.
So the question is: Do non-competes serve society's interests?
How about no-poaching agreements? They're almost like non-competes.
It's not going to happen because your logic is off a little.
Patents are there to promote growth to society, not to promote growth of the patent holder. It works because it's set up to be a win-win for both.
If at any point the patent system hurts growth to society, it should be revamped or eliminated.
Patents are not fundamental human rights. Nor are copyrights. They exist to serve the society, not the holder. Once they cease to do so, they should be removed.
So the question is: Do non-competes serve society's interests?
How about no-poaching agreements? They're almost like non-competes.
a) any shrewd company would simply pay key people more – and, indeed, good pay and retention bonuses are common for people who are truly valued by most companies (senior management, top sales people, etc.) but that very rarely includes developers. The fact that many developers self-identify politically with the CEO doesn't mean their boss shares that belief.
b) that company's value is based on a mix of value which they created and where they benefited from prior art. In the former case, copyright law would prevent John from taking source code and patents would prevent him from taking novel work. In the latter, passing on a trained employee is no more unreasonable than it was for them to benefit from the long history of work which they also benefited from without having to pay for it.
b) that company's value is based on a mix of value which they created and where they benefited from prior art. In the former case, copyright law would prevent John from taking source code and patents would prevent him from taking novel work. In the latter, passing on a trained employee is no more unreasonable than it was for them to benefit from the long history of work which they also benefited from without having to pay for it.
IMHO in this scenario the leave is the company's fault for lowballing John for years.
Video encoding tech doesn't change very quickly, and a 3x improvement is huge, so a competitor might well be happy to ask John to take 6 months off and pay him a joining bonus to make up for it. If the improvement is big enough they might pay him to take a couple of years off.
So how long should John be banned from working for a competitor for exactly? 5 years? 10 years? Until his current employer says he can?
What if John leaves and starts an open source project doing the thing he's learned how to do really well? Should he be stopped from writing code in a particular domain as a hobby?
What if John leaves because he's had a brilliant idea that his current employer refuses to listen to? Should John be banned from starting his own competing company? Should an employer be able to restrict an idea from getting to market when they're not using it themselves?
So how long should John be banned from working for a competitor for exactly? 5 years? 10 years? Until his current employer says he can?
What if John leaves and starts an open source project doing the thing he's learned how to do really well? Should he be stopped from writing code in a particular domain as a hobby?
What if John leaves because he's had a brilliant idea that his current employer refuses to listen to? Should John be banned from starting his own competing company? Should an employer be able to restrict an idea from getting to market when they're not using it themselves?
And if an employee came up with some novel way to do something you will own and exploit that IP to potentially produce unlimited gains. The situation is skewed in employers favor even without non-compete.
>So how is this good for anyone but John? If you think this kind of stuff doesn't happen and all this kind of advancements are public domain anyway, you are wrong. There are many niche fields where competing advantage comes from technical excellence and understanding couple of key things better than your competition.
This is good for society, because society gets more competitive labor markets and more competitive video-encoding markets. This encourages the spread of high-quality products and technical knowledge at low prices.
Remember: companies exist to supply a product efficiently. You are not entitled to get rich by rentiering on ideas.
If you want to keep John from working for a competitor, just agree to pay him his salary for two years after he stops working for you, while he goes on vacation around the world. The amount of competition and poaching you want to avoid should be priced in terms of years of salary you're willing to pay in exchange for non-labor.
This is good for society, because society gets more competitive labor markets and more competitive video-encoding markets. This encourages the spread of high-quality products and technical knowledge at low prices.
Remember: companies exist to supply a product efficiently. You are not entitled to get rich by rentiering on ideas.
If you want to keep John from working for a competitor, just agree to pay him his salary for two years after he stops working for you, while he goes on vacation around the world. The amount of competition and poaching you want to avoid should be priced in terms of years of salary you're willing to pay in exchange for non-labor.
You're imagining IP to be things like the coca-cola recipes, but the reality is much more complex than that especially in tech where the valuable IP is learnings.
Say you ran the marketing campaign at X and through extensive testing you discovered what works in the space X is in, now you go to competitor Y. Are you going to cleanse your brain of everything you learnt at X or are you going to apply the learnings at Y ?
The reality is the reason Y hired you is to get the learnings that you got from X, what you learnt could save them years of work and reduce the competitive edge that X has.
The exact same thing applies to developers. Say you built a ML model for driving cars at Google and now you're working for Apple on a similar project. You're not going to copy and paste the code you built at Google but you're 100% not going to go down the dead-ends that Google went down because you know they don't work.
Say you ran the marketing campaign at X and through extensive testing you discovered what works in the space X is in, now you go to competitor Y. Are you going to cleanse your brain of everything you learnt at X or are you going to apply the learnings at Y ?
The reality is the reason Y hired you is to get the learnings that you got from X, what you learnt could save them years of work and reduce the competitive edge that X has.
The exact same thing applies to developers. Say you built a ML model for driving cars at Google and now you're working for Apple on a similar project. You're not going to copy and paste the code you built at Google but you're 100% not going to go down the dead-ends that Google went down because you know they don't work.
The issue is with lumping all learnings and knowledge transfer with protectable intellectual property that belongs to someone. (Hence the "property" part.)
Of course there's overlap. But the issue that people have with non-competes (especially broad ones) is that they effectively try to limit all knowledge transfer that may benefit a competitor directly or indirectly. Especially when this gets to a point of prohibiting people from working in a given profession or role for anyone else without any compensation, this seems wrong.
Of course there's overlap. But the issue that people have with non-competes (especially broad ones) is that they effectively try to limit all knowledge transfer that may benefit a competitor directly or indirectly. Especially when this gets to a point of prohibiting people from working in a given profession or role for anyone else without any compensation, this seems wrong.
AFAIK and from my own experience, non-competes are not enforceable in most states, or have little to no legal teeth. Anyone concerned should consult with an attorney.
Somewhat related, where folks usually get into trouble is reuse of intellectual property or derivative works. IP laws actually have teeth and are enforced in numerous countries.
Somewhat related, where folks usually get into trouble is reuse of intellectual property or derivative works. IP laws actually have teeth and are enforced in numerous countries.
In our system it actually doesn't matter if they have no legal teeth. If your former employer wants to spend money to take you to court to attempt to enforce a non-compete, you'll be forced to spend tens of thousands of dollars (if not hundreds) defending yourself.
It doesn't matter if they'll eventually lose. Just as long as they can play legal chicken with you and get you to give up because you don't want to waste all your money on lawyers defending yourself.
It doesn't matter if they'll eventually lose. Just as long as they can play legal chicken with you and get you to give up because you don't want to waste all your money on lawyers defending yourself.
I completely agree that some businesses will play chicken. Fear of being dragged into court is a powerful thing.
Sales oriented companies derive a majority of their accounting book value from their client list. When a salesman leaves, they can solicit clients and thereby the value of the company can rapidly diminish. Fair is fair, right? What's best for the customer is best for the economy, right?
...well, now imagine an industry where sales oriented companies have essentially no stable book value. They cannot get loans securitized by the value of their book, and therefor cannot invest in growth or innovation. In the end it is a race to the bottom.
A reasonable balance exists whereby employees are bound by a 2-3 year non-compete clause that prevents them from stealing clients. Markets are still competitive within 2-3 years, and since everyone has these clauses, employee value is retained.
...well, now imagine an industry where sales oriented companies have essentially no stable book value. They cannot get loans securitized by the value of their book, and therefor cannot invest in growth or innovation. In the end it is a race to the bottom.
A reasonable balance exists whereby employees are bound by a 2-3 year non-compete clause that prevents them from stealing clients. Markets are still competitive within 2-3 years, and since everyone has these clauses, employee value is retained.
>They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market.
This is why they are a valuable part of an agreement. Including a non-compete means that your contract is lower risk for the employer, which can mean higher salary or better retention. Early termination terms exist for the same reason.
That said, a non-compete which prevents you entirely from practicing your craft would be a hard one to enforce, I've certainly never seen a contract like that.
If there are non-compete clauses in entry-level food service jobs, I hardly think they would bother to enforce them. The loss of a burger flipper from a McDonalds to a Burger King is less than the cost of lawyering them into a pit of despair.
This is why they are a valuable part of an agreement. Including a non-compete means that your contract is lower risk for the employer, which can mean higher salary or better retention. Early termination terms exist for the same reason.
That said, a non-compete which prevents you entirely from practicing your craft would be a hard one to enforce, I've certainly never seen a contract like that.
If there are non-compete clauses in entry-level food service jobs, I hardly think they would bother to enforce them. The loss of a burger flipper from a McDonalds to a Burger King is less than the cost of lawyering them into a pit of despair.
> If there are non-compete clauses in entry-level food service jobs, I hardly think they would bother to enforce them.
Well at least one fast food company forced employees to sign non-competes up until earlier this year: Jimmy John's sandwiches: http://fortune.com/2016/06/22/jimmy-johns-non-compete-agreem...
Well at least one fast food company forced employees to sign non-competes up until earlier this year: Jimmy John's sandwiches: http://fortune.com/2016/06/22/jimmy-johns-non-compete-agreem...
>I don't understand why there's so many people in the comments defending non-competes
They are the large number of libertarians who believe all regulation is bad under all circumstances. Mental contortions follow to justify it in this case.
They are the large number of libertarians who believe all regulation is bad under all circumstances. Mental contortions follow to justify it in this case.
It's not coercive, it's agreed upon. But some people are just itching to restrict other's freedom of association, I get it.
Sales is tricky because you build up a relationship with said client on the companies dime usually. poaching customers seems wrong to me.
Non-solicitation clauses [1] cover this.
[1] https://www.contractstandards.com/clauses/non-solicitation
[1] https://www.contractstandards.com/clauses/non-solicitation
And unless you're applying for an absolute entry-level position, nobody will hire you for a sales job if you don't have a fat, juicy contact list.
A list of clients that you have an established relationship with is to sales what experience with a set of technologies is to software engineering.
The sales industry relies on account executives being able to take their address books with them. If that stops happening, everybody loses.
A list of clients that you have an established relationship with is to sales what experience with a set of technologies is to software engineering.
The sales industry relies on account executives being able to take their address books with them. If that stops happening, everybody loses.
This is a valid non compete reason, and also a TV news anchor who a company invests in marketing shouldn't be able to jump to a cross town rival. Out of market sure, but not cross town.
Note that this is being proposed as something states should do. Federal legislation is not being proposed. Worst case would be Federal legislation which was weak and pre-empted state legislation, weakening California's ban.
California employment law prohibits non-compete agreements for employees, and has since 1872. California also prohibits any employee agreement which claims employer ownership of intellectual property developed on the employee's own time.[1] This is one reason Silicon Valley is so successful.
[1] http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...
California employment law prohibits non-compete agreements for employees, and has since 1872. California also prohibits any employee agreement which claims employer ownership of intellectual property developed on the employee's own time.[1] This is one reason Silicon Valley is so successful.
[1] http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...
Please note the typically more important parts with respect to employee ownership:
> "shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either [...]"
I wouldn't expect everyone to visit the source link. I would hate to see incomplete advice (for the sake of brevity, I understand) mislead someone into thinking they can use a company device in any way for something they wish to assert ownership of.
> "shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either [...]"
I wouldn't expect everyone to visit the source link. I would hate to see incomplete advice (for the sake of brevity, I understand) mislead someone into thinking they can use a company device in any way for something they wish to assert ownership of.
> California also prohibits any employee agreement which claims employer ownership of intellectual property developed on the employee's own time
I have always wondered how could such a claim on ownership could exist in the first place. This reduces the employee to a mere company slave.
I have always wondered how could such a claim on ownership could exist in the first place. This reduces the employee to a mere company slave.
Which is why you rarely see successful lawsuits by companies toward former employees on this matter.
Law is solidified by precedence and the rulings have been more and more against employers, rightly so. It's OK to trust in the system on this matter, as no one is ruling for employers on the matter.
Law is solidified by precedence and the rulings have been more and more against employers, rightly so. It's OK to trust in the system on this matter, as no one is ruling for employers on the matter.
I think that the idea behind such employee agreements is that they encourage the sharing of new ideas within companies, as employees will not 'hold the ideas back' to use when they go off and start their own companies.
> I think that the idea behind such employee agreements is that they encourage the sharing of new ideas within companies, as employees will not 'hold the ideas back' to use when they go off and start their own companies.
It's up to the company to provide incentive for workers to "share new ideas" by rewarding innovation within the company, not limiting where the employee can work. Of course, most companies don't do that, steal ideas from employees without rewarding them in any ways or even give them credit when an idea leads to a successful product. Boss A or manager B gets all the recognition, and the employee gets nothing.
It's up to the company to provide incentive for workers to "share new ideas" by rewarding innovation within the company, not limiting where the employee can work. Of course, most companies don't do that, steal ideas from employees without rewarding them in any ways or even give them credit when an idea leads to a successful product. Boss A or manager B gets all the recognition, and the employee gets nothing.
The company thinks it is providing incentive for the employees to share the new ideas by paying their wages; their argument would be that if a prospective employee disagrees with the assessment of the value of the work and ideas, that individual should not accept the agreement.
That argument is flawed because an offer of employment is based on current and future expected value in a job role, not on unexpected new value that gets added by non required innovation. New ideas which bring new value should entitle an employee to additional new compensation if the company wants to claim ownership of those ideas regardless of where they are made.
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IMO, more companies should use systems like YouEarnedIt to promote recognition of employees' contributions. My employer does, and I've learned a lot about what some people have done for us just by seeing their YEI recommendations on the screen in our break room.
I also don't understand how using company property justifies ownership of intellectual work. What about using a company pencil should give you the right to any sketches I produce with it?
When the company purchases equipment for use by you-as-employee, and you use that equipment for your own company spare time, how is that fair?
A pencil is so cheap and undetectable that it makes a poor example, but if you stole my paint and painted a picture I would expect some compensation?
A pencil is so cheap and undetectable that it makes a poor example, but if you stole my paint and painted a picture I would expect some compensation?
Up to the value of the paint only. If Leonardo had painted Mona Lisa with stolen colours, no-one would expect the painting itself to be ownership of the paint merchant.
However everything the company does is seen in terms of investment... you invest in machinery and employees so that you can get more back than what you put in.
When you loan from VCs, you can't tell them "you only get back what I loaned". They want a cut of the result.
If you borrow something from the company for your own use, you are in a very real way making use of their investment. Since assumption is you didn't ask, why do you assume they want to give a bank-kind loan, not a VC-kind loan? (In fact, what we are discussing here are employee contracts where it is stipulated that such loans are of the VC variety... If you want to borrow under other terms, make a contract for it...)
When you loan from VCs, you can't tell them "you only get back what I loaned". They want a cut of the result.
If you borrow something from the company for your own use, you are in a very real way making use of their investment. Since assumption is you didn't ask, why do you assume they want to give a bank-kind loan, not a VC-kind loan? (In fact, what we are discussing here are employee contracts where it is stipulated that such loans are of the VC variety... If you want to borrow under other terms, make a contract for it...)
Bad example: I'd expect prison for theft (the paints aren't re-usable afterwards.)
Better example: borrowing a rular and giving it back, using a company car but paying for the fuel and a service yourself, etc.
Better example: borrowing a rular and giving it back, using a company car but paying for the fuel and a service yourself, etc.
...prison? Really?
Considering the price of paint I would expect it to most likely be a civil case, at best.
Considering the price of paint I would expect it to most likely be a civil case, at best.
A fine at best. Theft is criminal full stop. Civil cases are for slander and other civil offenses.
(At least that how it works in the UK. With regard to the US, I remain astonished at the scene in the West Wing where someone advises Josh Liman to sue the people who shot him.)
(At least that how it works in the UK. With regard to the US, I remain astonished at the scene in the West Wing where someone advises Josh Liman to sue the people who shot him.)
I think this is a badly chosen example because it seems that the paint is tangential to the employee employer relationship just an office supply. Perhaps you could refine and clarify your example and it would be stronger?
Unfortunately, yes. As long as your employment agreement is legal.
If you're an exempt salaried employee, then there is no real distinction between "your own time" and "the company's time".
I get paid the same no matter how many hours a week I work.
On rare occasion, I've connected to our VPN or sent some emails outside of normal hours because something came up, with no effect on my salary. I'm lucky in that these occasions are rare, but some people are not so lucky. In the other direction, we have a policy that PTO has to be billed in 4-hour increments, and anything that consumes less than that doesn't have to be reported, such as an early-morning doctor's appointment that takes one hour. Is that doctor's appointment "on company time" because it was too short to bill PTO for?
Does it count as being "on company time" if I'm looking at my phone when an email notification comes up because one of my co-workers CC'd me on something? Is it "on my own time" when I'm sharing memes back and forth with a coworker on our Slack?
I get paid the same no matter how many hours a week I work.
On rare occasion, I've connected to our VPN or sent some emails outside of normal hours because something came up, with no effect on my salary. I'm lucky in that these occasions are rare, but some people are not so lucky. In the other direction, we have a policy that PTO has to be billed in 4-hour increments, and anything that consumes less than that doesn't have to be reported, such as an early-morning doctor's appointment that takes one hour. Is that doctor's appointment "on company time" because it was too short to bill PTO for?
Does it count as being "on company time" if I'm looking at my phone when an email notification comes up because one of my co-workers CC'd me on something? Is it "on my own time" when I'm sharing memes back and forth with a coworker on our Slack?
It's derived (for anglo saxon based systems) from the common law governing "masters and servants" guess what we are
Some interpret a salary as buying all of your intellectual output for as long as you have the job. This position generally holds that the employee needs to be hourly for the concept of "employee's own time" to make any sense.
Federal legislation can not weaken state legislation in most situations where a state legislation is stricter. A good example of this is minimum wage at the federal and state level.
If legislation at the federal level were to apply a weaker standard for who can not be covered by a non-compete clause, a state can still expand coverage to all jobs.
If legislation at the federal level were to apply a weaker standard for who can not be covered by a non-compete clause, a state can still expand coverage to all jobs.
Federal laws frequently explicitly preempt state laws. When CAN-SPAM was passed, it invalidated California's stricter spam law.
California has stricter auto emissions because Federal law allows it. Other states are allowed to follow the California standard, because Federal law allows that.
California has stricter auto emissions because Federal law allows it. Other states are allowed to follow the California standard, because Federal law allows that.
Mostly federal laws prempt state laws by threat of witholding some sort of funding. When the federal interstate speed limit was 55mph, states could still have higher limits but they would lose their federal transportation funding.
Yep; these are very specifically crafted situations though, which is why I said most and not all.
Ideally, you could get something like the motor vehicle emissions model - the federal government passed restrictions only after California, and they were less strict, so the California Air Resources Board got dispensation to set stricter standards. Individual states could then decide to follow the EPA restrictions or the stricter CARB ones; this has led to a gradual convergence of EPA regulations to the stricter CARB standards.
These two points are awesome. Every state could use that. Both are not prohibited in Ohio.
Why don't they just make an Executive Order?
Because executive orders have limited power and are controversial and possibly unconstitutional.
Almost all executive orders direct federal agencies, which are part of the executive branch, to take a given action. An executive order that attempts to compel a state to enact a certain policy is unheard of.
Almost all executive orders direct federal agencies, which are part of the executive branch, to take a given action. An executive order that attempts to compel a state to enact a certain policy is unheard of.
Non-competes, the most anti-innovation, anti-skilled worker, anti-free market, anti-business and anti-American thing in working today. Non-competes are protectionism for larger businesses over small/medium businesses.
As a freelancer, contractor and self-employed business owner/worker, please make these illegal, tired of these.
The worst part about non-competes is they are blanket protectionism usually and up to 2+ years of non-compete, this sometimes happens on a job that is only 1-3 months. You have to laugh at those types of situations. Usually the client will push them aside or lower the time to the job plus some time, but both non-competes and arbitration agreements are horrible for workers in today's economy where people change jobs frequently and many are self-employed/freelancing/contracting.
The non-compete should not exist, at the core removing competition from skilled workers in our economy is bad all around, unless you are one of the current big fish.
As a freelancer, contractor and self-employed business owner/worker, please make these illegal, tired of these.
The worst part about non-competes is they are blanket protectionism usually and up to 2+ years of non-compete, this sometimes happens on a job that is only 1-3 months. You have to laugh at those types of situations. Usually the client will push them aside or lower the time to the job plus some time, but both non-competes and arbitration agreements are horrible for workers in today's economy where people change jobs frequently and many are self-employed/freelancing/contracting.
The non-compete should not exist, at the core removing competition from skilled workers in our economy is bad all around, unless you are one of the current big fish.
I posted this above, but it applies here too: Non-competes allow employees to get training they otherwise would not get.
A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor. NDAs/IP assignment agreements do not address this need. If it weren't for non-competes, that investment would be infeasible and we would all be paying our employers for the training we get – either directly, in the form of course fees, or indirectly, in the form of depressed wages during the course of the training.
For a deeper dive on this, see Paul H. Rubin and Peter Shedd, "Human Capital and Covenants Not to Compete," available at https://www.jstor.org/stable/724227?seq=1#page_scan_tab_cont....
A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor. NDAs/IP assignment agreements do not address this need. If it weren't for non-competes, that investment would be infeasible and we would all be paying our employers for the training we get – either directly, in the form of course fees, or indirectly, in the form of depressed wages during the course of the training.
For a deeper dive on this, see Paul H. Rubin and Peter Shedd, "Human Capital and Covenants Not to Compete," available at https://www.jstor.org/stable/724227?seq=1#page_scan_tab_cont....
>Non-competes allow employees to get training they otherwise would not get.
Yeah, because employers refuse to train employees unless they sign a non-compete. It's not that they are unable to provide training, it is that they are unwilling. If Non-competes are banned, then they can start providing better training to more workers because there's no more needless red tape...
>A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor.
Then why to most non-competes extend 2 years after you leave a company, and why do they get applied to workers who have been with a company for years? You, like many others in this thread, seem to be confusing "experience", a thing the employee owns, with "training" and "know-how", things the employer owns.
Yeah, because employers refuse to train employees unless they sign a non-compete. It's not that they are unable to provide training, it is that they are unwilling. If Non-competes are banned, then they can start providing better training to more workers because there's no more needless red tape...
>A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor.
Then why to most non-competes extend 2 years after you leave a company, and why do they get applied to workers who have been with a company for years? You, like many others in this thread, seem to be confusing "experience", a thing the employee owns, with "training" and "know-how", things the employer owns.
Non compete is fine if you were paid full salary for the entire time.
For the entire extent of the non-compete or for the entire time of your job? If it's the former then maybe (Germany requires at least 50% gross for the extent of the non-compete, and it can still be struck down by courts if it unreasonably hampers the former employee's ability to find a new job)
Which full salary, the one you got before, or the one you could make as a skilled software developer moving to a much better gig with a rival employer willing to offer a more attractive deal?
This is a good question. I think if you were offered better salary, the former company should either match it or let you take new contract.
This is sensible but its a lot easier just to make non competes go away entirely.
In the end if there is no compete clause in your contract, you can just not take it...
That might be okay for a software engineer who can likely find a different offer somewhere else without much trouble, but that's not going to be realistic for everybody.
That is a good strategy, but it will just cause unemployment to rise.
Though, I wouldn't mind keeping my own "non-termination agreement" on hand so that if I am asked to sign a non-compete, I can ask them to sign my contract too.
After all, if they think it's fair that I shouldn't be able to work for another company doing the same thing, it should be equally fair that they can't replace me with another worker doing the same thing.
So yeah, I'll sign your non-compete, so long as you agree that you cannot terminate me without invalidating it.
Though, I wouldn't mind keeping my own "non-termination agreement" on hand so that if I am asked to sign a non-compete, I can ask them to sign my contract too.
After all, if they think it's fair that I shouldn't be able to work for another company doing the same thing, it should be equally fair that they can't replace me with another worker doing the same thing.
So yeah, I'll sign your non-compete, so long as you agree that you cannot terminate me without invalidating it.
So now what happens when a competing firm starts "offering" artificially high salaries just to force the current employer's costs up?
Some workers will switch to the competing firm, causing pay disparity within that firm, which in turn might cause decreased worker productivity or brain drain.
Depends. I'll happily take my old salary for just sitting on my butt and not doing anything. Of course, I would not be sitting like that - I'd probably take a part-time job somewhere else, and spend the rest of the time educating myself (for my field as well as for other things). Non-competes don't cover reading books.
Or you could develop some software in your spare time for your own use that you could repurpose for commercial sale and release once the non-compete has lapsed.
That, or go back to school on their dime. Then you make yourself that much more wanted.
Are you more attractive to the new employer because of the training and education that your current employer has provided?
In my entire career (as a professional software developer) I'm pretty sure every employer I ever worked for gained far more from my own personal development off the clock than they ever gained from any training they provided, not least because the main "training" most of them provided was simply a chance to use my skills and develop my experience. I therefore find the whole idea that an employer is somehow nurturing and developing someone in our profession and so should be entitled to everything that person ever does, even off the clock and even into the future, a bit bizarre.
Even if it weren't, employers aren't hiring machines, they're hiring human beings. If they've become so greedy that they have forgotten that, I see no reason our laws shouldn't compel them to treat their employees (and past employees) properly.
Even if it weren't, employers aren't hiring machines, they're hiring human beings. If they've become so greedy that they have forgotten that, I see no reason our laws shouldn't compel them to treat their employees (and past employees) properly.
From your comments I gather you might not understand the problem.
Were Soft Engs simply to do 'work' then you would be absolutely right.
But in a world of IP ... it's a different story.
Company ABC brings you in, trains you on their know-how and core IP, which took a lot of struggle, $, and R&D to create - then you leave, go to a competitor, and effectively communicate and give away ABC Corps. most valuable asset.
Non-competes can certainly applied far too aggressively, esp. in situations where there is not merit ... but there are definitely cases wherein I think it does make sense.
I'm thinking companies like DWAVE in Vancouver that built the 'first' qubit/quantum computer. The guy spent his whole life developing that tech. It's feasible that Google just grabs up some of the team and internalizes all that work and effort for the price of a few headcount.
It's a real problem in some cases, but worse - very difficult to parameterize.
Were Soft Engs simply to do 'work' then you would be absolutely right.
But in a world of IP ... it's a different story.
Company ABC brings you in, trains you on their know-how and core IP, which took a lot of struggle, $, and R&D to create - then you leave, go to a competitor, and effectively communicate and give away ABC Corps. most valuable asset.
Non-competes can certainly applied far too aggressively, esp. in situations where there is not merit ... but there are definitely cases wherein I think it does make sense.
I'm thinking companies like DWAVE in Vancouver that built the 'first' qubit/quantum computer. The guy spent his whole life developing that tech. It's feasible that Google just grabs up some of the team and internalizes all that work and effort for the price of a few headcount.
It's a real problem in some cases, but worse - very difficult to parameterize.
> But in a world of IP ... it's a different story.
If the employee violates the IP then sue him for that. No need for non-compete agreements. If you're worried the employee will steal your clients then you're not giving your clients a good deal at first place, and the employee shouldn't be prevented from working with your clients. This is a free market. Non compete agreements are completely anti-freedom of both enterprise and work.
> Company ABC brings you in, trains you on their know-how and core IP, which took a lot of struggle, $, and R&D to create - then you leave, go to a competitor, and effectively communicate and give away ABC Corps. most valuable asset.
Then the burden of proof should lie with the previous company, there shouldn't be any possibility of preemptive clause within the former contract. If it's clear corporate secrets were leaked then sue. If you don't want your employee go work somewhere else then compensate him, that's the problem here , most of the time there is no compensation.
It doesn't matter how much R&D was created. That's the role of patents to deal with that thing.
If the employee violates the IP then sue him for that. No need for non-compete agreements. If you're worried the employee will steal your clients then you're not giving your clients a good deal at first place, and the employee shouldn't be prevented from working with your clients. This is a free market. Non compete agreements are completely anti-freedom of both enterprise and work.
> Company ABC brings you in, trains you on their know-how and core IP, which took a lot of struggle, $, and R&D to create - then you leave, go to a competitor, and effectively communicate and give away ABC Corps. most valuable asset.
Then the burden of proof should lie with the previous company, there shouldn't be any possibility of preemptive clause within the former contract. If it's clear corporate secrets were leaked then sue. If you don't want your employee go work somewhere else then compensate him, that's the problem here , most of the time there is no compensation.
It doesn't matter how much R&D was created. That's the role of patents to deal with that thing.
> give away ABC Corps. most valuable asset.
Maybe ABC corp was mistaken, and their most valuable asset was that employee and not just the model parameters he struggled for years to optimize?
Maybe ABC corp was mistaken, and their most valuable asset was that employee and not just the model parameters he struggled for years to optimize?
"It doesn't matter how much R&D was created. That's the role of patents to deal with that thing."
I'm beginning to think none of you have ever worked in companies that actually produce IP.
First off - that's not what patents are for. Patents protect publicly known information - not trade secrets. And they don't do it very well. There are very few things you can defend with a patent.
What companies are concerned with is 'trade secrets' and 'know how' - and it's a serious thing.
"Then the burden of proof should lie with the previous company, there shouldn't be any possibility of preemptive clause within the former contract."
If you work at DWAVE for 5 years and learn everything you know about Quantum Computing there - and go to Google to work on Quantum Computing - then there is basically a 100% chance that you are passing on 'know how' and 'trade secrets' - otherwise - Google would not hire you.
Your comments about customers etc. are irrelevant with respect to IP issues.
If you work for ABC corp and they make a 'sales automation tool' - and you go off and build your own 'sales automation tool' - then fine. It's not about IP or trade secrets. You can do as you like.
But for other types of things, no way. You work at Nuance on Speech recognition - then you leave and build a nearly identical speech recognition system? That's probably IP theft.
There would not be any technology if IP could not be protected in some reasonable way.
I'm not suggesting that many of these contracts are crazy - and that there can be absurd limitations and weird corner cases - of course it's very tricky - but companies deserve the right to protect their IP in some manner.
I'm beginning to think none of you have ever worked in companies that actually produce IP.
First off - that's not what patents are for. Patents protect publicly known information - not trade secrets. And they don't do it very well. There are very few things you can defend with a patent.
What companies are concerned with is 'trade secrets' and 'know how' - and it's a serious thing.
"Then the burden of proof should lie with the previous company, there shouldn't be any possibility of preemptive clause within the former contract."
If you work at DWAVE for 5 years and learn everything you know about Quantum Computing there - and go to Google to work on Quantum Computing - then there is basically a 100% chance that you are passing on 'know how' and 'trade secrets' - otherwise - Google would not hire you.
Your comments about customers etc. are irrelevant with respect to IP issues.
If you work for ABC corp and they make a 'sales automation tool' - and you go off and build your own 'sales automation tool' - then fine. It's not about IP or trade secrets. You can do as you like.
But for other types of things, no way. You work at Nuance on Speech recognition - then you leave and build a nearly identical speech recognition system? That's probably IP theft.
There would not be any technology if IP could not be protected in some reasonable way.
I'm not suggesting that many of these contracts are crazy - and that there can be absurd limitations and weird corner cases - of course it's very tricky - but companies deserve the right to protect their IP in some manner.
> If you work at DWAVE for 5 years and learn everything you know about Quantum Computing there - and go to Google to work on Quantum Computing - then there is basically a 100% chance that you are passing on 'know how' and 'trade secrets' - otherwise - Google would not hire you.
That isn't trade secrets, it's experience.
That isn't trade secrets, it's experience.
Exactly. The views on this are so twisted in US. People actualy believe that its the company giving away everything. Truth is if youve worked on quantum computers for five years youve generated so much of this know how. Youve invested ideas, energy, time - its you givin away knowledge not company.
Also, was this that employees first job? Certainly he gained experience somewhere else first. Why should the first company benefit from that? It's the circle of life.
"That isn't trade secrets, it's experience"
No.
100% false.
If that information is key to the nature and success of a product, then it's called 'know how' and it's both legally and rationally protectable.
You people need to grow up and grasp that fact that once you go to a company and they teach you what they have spent $100 Million dollars on developing, that you cannot walk across the street and spill the beans on 80% of the materiality of that R&D which happens to be such details.
No.
100% false.
If that information is key to the nature and success of a product, then it's called 'know how' and it's both legally and rationally protectable.
You people need to grow up and grasp that fact that once you go to a company and they teach you what they have spent $100 Million dollars on developing, that you cannot walk across the street and spill the beans on 80% of the materiality of that R&D which happens to be such details.
It's people like you that have made the White House address this problem.
All you care about is the profitability of the company, and you think forcing employees to sign away their ability to work in their field is an acceptable solution.
People are getting hired for 3-month contracts and then getting sued when they find a similar job a year later. People are getting laid off and then getting sued by the companies that laid them off for getting a job at a competitor.
Fuck that. The job market needs competition, not a focus on raw profits above all else.
If your employee leaves your company, joins your competitor, and then leaks your trade secrets, then sue them for that. Don't sue them for even getting a job at your competitor - that doesn't mean that they are leaking secrets.
And if you think that your employees are so untrustworthy that getting hired by a competitor is a guaranteed leak of trade secrets, then that probably explains why you are so terrified that they will leave you to find a new job. You're a terrible employer, and they would be better off with a different job.
But let's face it, you don't have any employees, because you aren't an employer. You're a "temporarily embarrassed" entrepreneur who is already convinced that someone will try to steal that million-dollar idea you haven't had yet. Well, I wouldn't work for you, nor should anyone else, so good luck with that idea once you have it.
All you care about is the profitability of the company, and you think forcing employees to sign away their ability to work in their field is an acceptable solution.
People are getting hired for 3-month contracts and then getting sued when they find a similar job a year later. People are getting laid off and then getting sued by the companies that laid them off for getting a job at a competitor.
Fuck that. The job market needs competition, not a focus on raw profits above all else.
If your employee leaves your company, joins your competitor, and then leaks your trade secrets, then sue them for that. Don't sue them for even getting a job at your competitor - that doesn't mean that they are leaking secrets.
And if you think that your employees are so untrustworthy that getting hired by a competitor is a guaranteed leak of trade secrets, then that probably explains why you are so terrified that they will leave you to find a new job. You're a terrible employer, and they would be better off with a different job.
But let's face it, you don't have any employees, because you aren't an employer. You're a "temporarily embarrassed" entrepreneur who is already convinced that someone will try to steal that million-dollar idea you haven't had yet. Well, I wouldn't work for you, nor should anyone else, so good luck with that idea once you have it.
There's clearly a gray area. Knowledge does get transferred when people move from company to company. If someone developed experience in, say, running retail marketing campaigns for millennials at company X (to remove this discussion from the technical domain) and they take a job at competing company Y, OF COURSE they're bringing over both know how and negative know how developed at their prior employer.
That said, it doesn't mean that it's either ethical or necessarily legal for them to go to company Y and immediately do a core dump of every marketing campaign they ran and what the results were. But there's a fuzzy line between doing that and saying "Oh, millennials really respond well to this sort of language, but be careful not to say this."
That said, it doesn't mean that it's either ethical or necessarily legal for them to go to company Y and immediately do a core dump of every marketing campaign they ran and what the results were. But there's a fuzzy line between doing that and saying "Oh, millennials really respond well to this sort of language, but be careful not to say this."
I hope you only ever hire fresh graduates and not people with experience. Otherwise you're stealing someones trade secrets.
> If you work for ABC corp and they make a 'sales automation tool' - and you go off and build your own 'sales automation tool' - then fine. It's not about IP or trade secrets. You can do as you like.
Unless you have a noncompete clause. That's exactly why they're a problem. You can't develop your professional skills. When you leave, you have to start from scratch in a different industry.
Unless you have a noncompete clause. That's exactly why they're a problem. You can't develop your professional skills. When you leave, you have to start from scratch in a different industry.
"Unless you have a noncompete clause. That's exactly why they're a problem. You can't develop your professional skills. When you leave, you have to start from scratch in a different industry."
Buddy - I'm saying there should be no 'non compete' clause in that situation. Obviously - there's no basis for it because there is no IP involved. Which is a case of over-aggressive application of these protocols.
Buddy - I'm saying there should be no 'non compete' clause in that situation. Obviously - there's no basis for it because there is no IP involved. Which is a case of over-aggressive application of these protocols.
> but companies deserve the right to protect their IP
Sure. What I have in my head isn't the companies IP though, it's my experience.
"IP" is often confused with "the collective experience of your employees". IP is physical artifacts such as code, drawings, patents etc. The memory of having written that code is not part of the IP, nor is the capability of doing it again in a fraction of the time.
Sure. What I have in my head isn't the companies IP though, it's my experience.
"IP" is often confused with "the collective experience of your employees". IP is physical artifacts such as code, drawings, patents etc. The memory of having written that code is not part of the IP, nor is the capability of doing it again in a fraction of the time.
"What I have in my head isn't the companies IP though, it's my experience."
Again - 100% false. A lot of 'what is in your head' is the IP of the company you worked for.
Clearly, you grasp this, because you people seem to accept that NDA's are valid.
So - that yo accept and 'NDA' is valid, means you accept that 'what is in your head' can be the property of the company.
These 'I'm paid for labour' arguments are naive. You are paid to create outcomes, and to keep information about the company private - indefinitely.
Again - 100% false. A lot of 'what is in your head' is the IP of the company you worked for.
Clearly, you grasp this, because you people seem to accept that NDA's are valid.
So - that yo accept and 'NDA' is valid, means you accept that 'what is in your head' can be the property of the company.
These 'I'm paid for labour' arguments are naive. You are paid to create outcomes, and to keep information about the company private - indefinitely.
> Again - 100% false. A lot of 'what is in your head' is the IP of the company you worked for.
I consider most of it "experience". How would you draw the line between what is "experience" and what is "IP"?
> you people seem to accept that NDA's are valid.
> 'NDA' is valid, means you accept that 'what is in your head' can be the property of the company
Well it rather means that I can't disclose things to certain people at certain times. I accept that e.g. for unreleased products and other secrets.
> to keep information about the company private - indefinitely.
Not sure what that means? If I work for ABC corp to develop over 10 years some advanced tech for ad targeting, and I have a non-compete that doesn't let me go to google for a year. For that full year they pay me full salary. That is the non-compete. I accept that (only with full salary). While at ABC, I had an NDA. That's cool.
After that year I can clean room implement something similar. I might have to avoid making the exact same system I did at ABC corp if there are IP issues such as patents. Note that this IP (patents) is not secret. I don't necessarily agree with software patents of most kinds however.
I develop the similar system at google in 1 year. That's what experience does: I take none of the dead ends I did at ABC corp. That's why google can pay me a load of money: I have experience. Is that experience in large part the SAME as ABC corps "IP"? yes. Of course. Do they "own" all of that experience? No. They still have their product. They own that. Google will have a product too, which they own. I wrote both.
I consider most of it "experience". How would you draw the line between what is "experience" and what is "IP"?
> you people seem to accept that NDA's are valid.
> 'NDA' is valid, means you accept that 'what is in your head' can be the property of the company
Well it rather means that I can't disclose things to certain people at certain times. I accept that e.g. for unreleased products and other secrets.
> to keep information about the company private - indefinitely.
Not sure what that means? If I work for ABC corp to develop over 10 years some advanced tech for ad targeting, and I have a non-compete that doesn't let me go to google for a year. For that full year they pay me full salary. That is the non-compete. I accept that (only with full salary). While at ABC, I had an NDA. That's cool.
After that year I can clean room implement something similar. I might have to avoid making the exact same system I did at ABC corp if there are IP issues such as patents. Note that this IP (patents) is not secret. I don't necessarily agree with software patents of most kinds however.
I develop the similar system at google in 1 year. That's what experience does: I take none of the dead ends I did at ABC corp. That's why google can pay me a load of money: I have experience. Is that experience in large part the SAME as ABC corps "IP"? yes. Of course. Do they "own" all of that experience? No. They still have their product. They own that. Google will have a product too, which they own. I wrote both.
An NDA and a non-compete are not the same thing. What you are describing is an NDA. It is quite possible for someone to change jobs, even in the same industry, and still abide by an NDA.
Companies protect their IP via NDAs and patents and such, not non-competes.
And yes, I have a lot of patents and trade-secrets to my name.
And yes, I have a lot of patents and trade-secrets to my name.
One thing I suspect (in SW), the strongest the company wants to protect "their IP" the most BS it is usually
I've seen people talk with a straight face how they think their company invented the use of IFNDEF/DEFINE for C .h files
And parent comment only goes to show how there are cattle that supports barbecues
I've seen people talk with a straight face how they think their company invented the use of IFNDEF/DEFINE for C .h files
And parent comment only goes to show how there are cattle that supports barbecues
> I'm beginning to think none of you have ever worked in companies that actually produce IP.
All software companies produce intellectual property.
All software companies produce intellectual property.
My company has IP, I guess I'll never get to work with HTML, CSS, and Javascript ever again if I leave.
On the other hand, you work at a company for most of your professional life, and become an expert in a field you love. One day you are no longer employed for some reason, but due to non-compete there is no way to get a job you want, since your expertise is somewhat niche. So you are forced to build websites or sell coffee for two years. Or drop your life in US and work some other place.
If the person from your quantum computer example gets fired with non-compete, it would mean being forced out of he field with 100% certainty. Quite a leverage for a company.
In my opinion, there is still enough stuff out there benefiting corps over employees even if non-competes go away.
If the person from your quantum computer example gets fired with non-compete, it would mean being forced out of he field with 100% certainty. Quite a leverage for a company.
In my opinion, there is still enough stuff out there benefiting corps over employees even if non-competes go away.
Well, the counter-example is that the tech industry in California completely collapsed because... oh, wait, we're doing OK.
According to other posts here, CA banned non competes some 150 years ago.
The post you were replying to was sarcastic. The point is that if non-competes really were essential to companies, you would expect to see that reflected in CA. Instead the most notable thing is CA has higher salaries.
Take the job and let them sue. Scotus won't enforce a noncompete.
Non-competes are successfully enforced (outside CA) all of the time. Just take a look at the tech press, there are quite a few articles about it.
Non-compete lawsuits are typically only worth it for VP level people who have strategic secrets. No one cares about or sues 99.9% of workers who go work somewhere else.
I agree that when it hits the news it's generally a lawsuit against a VP, but you have no idea how many times lawyers send nasty letters, which are pretty effective.
Yep, letters cost almost nothing to send. Almost all employees have nothing to worry about for one reason. The corp will not go ahead with a lawsuit because the employee will almost always have no money or assets to take. It's amazing how pathological corporate behavior becomes when one views it from the money perspective.
But there's a chilling effect. For lots of potential employers, the existence of a non-compete that might be litigated is a complete non-starter. I worked for a small company and I know for a fact we passed on at least one person who had a non-compete that was unlikely to be litigated but it just wasn't worth the risk.
Jimmy John's managed to enforce it on their employees for years
http://m.huffpost.com/us/entry/7042112
Um... that story states that the clause was never actually enforced therefore there was no valid claim of harm.
Good point, that wasn't the best article for my point! There are no specific lawsuits fighting the non-compete, however in the years following that case several states decided that the harm actually is caused simply by making employees sign the non-compete, and the company no longer has one.
so go work for a company in CA
An NDA would suffice in that case.
Not being able to work work in the same field for up to 2 years (non-compete) and not disclosing internal ip, processes, etc when you go work at another company (NDA) in the field are much different.
Preventing someone from working in a field and not disclosing or sharing secrets/ip are two different animals.
NDAs are useful and I use them myself when contractors work with us, but non-competes create a very master/slave type of relationship, ownership of someone's skill that they need to work.
Paid non-competes are something that isn't as bad but non paid non-competes are horrible for the little guy and really a form of ownership that really goes against 'pro-business' ideals for smaller companies trying to compete while seemingly being 'pro-business' for the company doling out non-competes (big fish).
Contractors can't be told where to work, how to work or times to work, why are we allowing companies to tell skilled workers what they can and can't work on after the contract is up aside from what is under NDA?
Not being able to work work in the same field for up to 2 years (non-compete) and not disclosing internal ip, processes, etc when you go work at another company (NDA) in the field are much different.
Preventing someone from working in a field and not disclosing or sharing secrets/ip are two different animals.
NDAs are useful and I use them myself when contractors work with us, but non-competes create a very master/slave type of relationship, ownership of someone's skill that they need to work.
Paid non-competes are something that isn't as bad but non paid non-competes are horrible for the little guy and really a form of ownership that really goes against 'pro-business' ideals for smaller companies trying to compete while seemingly being 'pro-business' for the company doling out non-competes (big fish).
Contractors can't be told where to work, how to work or times to work, why are we allowing companies to tell skilled workers what they can and can't work on after the contract is up aside from what is under NDA?
My first exposure to non-competes was from a guy I did some work for. He was a network firmware/driver guy back in the 80's/90's. Took a six month contract with a European company. After the contract ended his recruiter got him another gig. When the original company found out they threatened to sue him. Because they said he had signed a five year non-compete.
5 years lol no way is that enforceable
> Company ABC brings you in, trains you on their know-how and core IP, which took a lot of struggle, $, and R&D to create - then you leave, go to a competitor, and effectively communicate and give away ABC Corps. most valuable asset.
Um, that's covered by an NDA--Non-Disclosure Agreement.
Those are generally QUITE enforceable, even in California and often last for 3 to 5 years.
Non-compete is quite different.
Um, that's covered by an NDA--Non-Disclosure Agreement.
Those are generally QUITE enforceable, even in California and often last for 3 to 5 years.
Non-compete is quite different.
Your comments about NDA's are not quite right. NDA's do not capture a lot of the essential issue.
Pragmatically speaking, it's nary impossible to work in some fields, and then move to a competing firm without passing on know how or trade secrets.
Even the 'manner of approach' to a problem, while it may not be a trade secret, is basically a core part of the 'true IP' that is developed by a company.
Using DWAVE as an example - there are thousands of 'little things' that they will have had to figure out along the way - from which parts to use, which vendors work well, material types, tooling, physical test units, support gear (like cooling etc.) - all of this is IP.
Any number of small issues can be the 'key ingredients' that make or break a project. When DWAVE spends a year trying to figure out how to keep some material at a steady temperature in order to bind it to another ... then that's IP.
It's a paradox when nearly one's entire skill set is tantamount to 'trade secrets' but it's feasible.
An NDA - in the broadest sense - in this case would be a de-facto 'non compete' - because there's hardly a thing this Eng could do for Google that wouldn't involve giving away important information.
In case you guys are not aware: hiring people to steal away trade secrets and know-how is very common in the Valley, often by major players and firms.
If you haven't noticed - the biggest and most successful tech companies all have either natural monopolies (i.e. Facebook/Twitter with network externalities), or insurmountable massive barriers to entry keeping others out (i.e. Apple having MacOS/iOS, a retail distribution chain, massive leverage over supply chain, and market share).
In business scenarios it happens as well, in less 'protectable' scenarios. Apple snared away tons of BlackBerry sales/BD execs - not because they were necessarily skilled or talented - but because of their established relationships within carrier channels. Apple was buying access to Verizon and AT&T - not random sales guys abilities.
Pragmatically speaking, it's nary impossible to work in some fields, and then move to a competing firm without passing on know how or trade secrets.
Even the 'manner of approach' to a problem, while it may not be a trade secret, is basically a core part of the 'true IP' that is developed by a company.
Using DWAVE as an example - there are thousands of 'little things' that they will have had to figure out along the way - from which parts to use, which vendors work well, material types, tooling, physical test units, support gear (like cooling etc.) - all of this is IP.
Any number of small issues can be the 'key ingredients' that make or break a project. When DWAVE spends a year trying to figure out how to keep some material at a steady temperature in order to bind it to another ... then that's IP.
It's a paradox when nearly one's entire skill set is tantamount to 'trade secrets' but it's feasible.
An NDA - in the broadest sense - in this case would be a de-facto 'non compete' - because there's hardly a thing this Eng could do for Google that wouldn't involve giving away important information.
In case you guys are not aware: hiring people to steal away trade secrets and know-how is very common in the Valley, often by major players and firms.
If you haven't noticed - the biggest and most successful tech companies all have either natural monopolies (i.e. Facebook/Twitter with network externalities), or insurmountable massive barriers to entry keeping others out (i.e. Apple having MacOS/iOS, a retail distribution chain, massive leverage over supply chain, and market share).
In business scenarios it happens as well, in less 'protectable' scenarios. Apple snared away tons of BlackBerry sales/BD execs - not because they were necessarily skilled or talented - but because of their established relationships within carrier channels. Apple was buying access to Verizon and AT&T - not random sales guys abilities.
That's certainly a problem about salesmen taking their clients and other relationships with them. For small sales-only companies anyway, where the company doesn't provide much infrastructure beyond a desk and a phone. But in those cases, maybe the company really is a bit worthless and it's the salesmen that created the value mostly independently and should be able to keep it.
Don't forget that not only do companies lose their "IP" with outgoing workers, but they also get more free with incoming ones. Perhaps it balances out but with a net positive effect since effective skills get spread around the industry instead of being locked up whereever they were discovered.
I think this is part of a bigger argument about how much IP protection is enough to encourage innovation but not so much that it stifles the market. You seem to be advocating protecting every last little bit of knowledge but perhaps that's stifling for the economy overall even if it is more fair for individual members.
Don't forget that not only do companies lose their "IP" with outgoing workers, but they also get more free with incoming ones. Perhaps it balances out but with a net positive effect since effective skills get spread around the industry instead of being locked up whereever they were discovered.
I think this is part of a bigger argument about how much IP protection is enough to encourage innovation but not so much that it stifles the market. You seem to be advocating protecting every last little bit of knowledge but perhaps that's stifling for the economy overall even if it is more fair for individual members.
Even in the case of salesmen, a non-solicitation agreement takes care of that just as well as a non-compete does.
I don't buy for one second that anything not covered by trade secrets, patents, or nda ought to be protected. You bought the employees labor for a finite duration not the contents of their skull.
Intellectual property is a bit of a misnomer it has very little in common with property of the standard sort and the burden falls upon you to explain why we ought to create greater artificial scarcity for imaginary property.
Intellectual property is a bit of a misnomer it has very little in common with property of the standard sort and the burden falls upon you to explain why we ought to create greater artificial scarcity for imaginary property.
"I don't buy for one second that anything not covered by trade secrets, patents, or nda ought to be protected. You bought the employees labor for a finite duration not the contents of their skull."
+ My point is nearly everything that you learn at a company could be considered a 'trade secret' - depending on the company or project.
In the example I gave, I listed a variety of situations in which minute operational skills and knowledge, all contribute to be 'key information' regarding the development of the product, and can essentially be 'trade secrets'.
Ergo - it would be nary difficult to work for a competitor and not give that information up.
+ My point is nearly everything that you learn at a company could be considered a 'trade secret' - depending on the company or project.
In the example I gave, I listed a variety of situations in which minute operational skills and knowledge, all contribute to be 'key information' regarding the development of the product, and can essentially be 'trade secrets'.
Ergo - it would be nary difficult to work for a competitor and not give that information up.
I agree that non-competes can be inconvenient for some, depending on their business model or career plans, but I am not sure how they are anti-innovation or anti-worker. Is there some evidence that they reduce overall productivity, or any other quantifiable metric?
I am not particularly in favor of or against non-competes as a whole, (though I would be reluctant to sign one,) but they strike me as less invasive than other marketplace restrictions (such as government regulations).
I am not particularly in favor of or against non-competes as a whole, (though I would be reluctant to sign one,) but they strike me as less invasive than other marketplace restrictions (such as government regulations).
Anything that stands in the way of a worker finding and securing their best employment, in terms of both productivity and play, is both anti-competitive and anti-worker. The fact that noncompetes also prevent effective technology transfer between companies (which is how innovation happens) means they're also anti-innovation.
On the last point, see generally J. Doyne Farmer and John C. Holland who've done significant work on innovation and the processes by which it occurs. You'll find presentations from both on YouTube, as well as publications. Both are/were associated with the Santa Fe Institute (Holland died in 2015).
On the last point, see generally J. Doyne Farmer and John C. Holland who've done significant work on innovation and the processes by which it occurs. You'll find presentations from both on YouTube, as well as publications. Both are/were associated with the Santa Fe Institute (Holland died in 2015).
What if the prospective employee is presented with two offers:
1) No non-compete, long hours, and low salary
2) Non-compete agreement, short and flexible hours, and high salary
If this is a possible scenario, would the ban on non-competes be anti-worker?
1) No non-compete, long hours, and low salary
2) Non-compete agreement, short and flexible hours, and high salary
If this is a possible scenario, would the ban on non-competes be anti-worker?
Non-sequitur, unless banning non-competes would make the hours longer and less flexible or the salary lower on the second job.
You are assuming that no employer would ever pay more and be more flexible in exchange for a non-compete; I can imagine many employers in highly competitive industries who would.
You can imagine many things, but can you point to any evidence? Many people write blog postings about non-competes; I can't recall a single one where extra money was attached.
If you agree with my supposition that forcing an employee to choose the lower-paying job with bad hours would make the agreement anti-employee, we should look at evidence of whether non-competes are paid for by employers. If you disagree with my supposition, we should address that first, as the rest of the argument depends entirely on that.
My first piece of evidence for the proposition that employers pay for non-competes is that some of them prefer to hire employees with non-competes. Companies pay for everything they require of employees, as all unnecessary conditions reduce their options (for employees), and the only reason they ever offer money is to increase their options (from 0-1 or 100-200). In addition, it is very common for employers to value non-competes as assets (for accounting purposes). There are many other points in favor of the idea that companies do pay for non-competes, but we can start here.
My first piece of evidence for the proposition that employers pay for non-competes is that some of them prefer to hire employees with non-competes. Companies pay for everything they require of employees, as all unnecessary conditions reduce their options (for employees), and the only reason they ever offer money is to increase their options (from 0-1 or 100-200). In addition, it is very common for employers to value non-competes as assets (for accounting purposes). There are many other points in favor of the idea that companies do pay for non-competes, but we can start here.
Sorry, I don't agree with how you approach the entire problem. Labor law exists mainly because there's information asymmetry between companies and employees. You seem to be presuming that there's a free market for labor; that's not the case when there's information asymmetry. Your "evidence" falls apart when there's information asymmetry.
I think it is well known that there is information asymmetry in every transaction/deal/agreement involving more than one individual; saying that there is information asymmetry proves nothing. There is a highly regulated market for employees, and for employers. I didn't provide any evidence at all; I just asked if you agreed that in certain situations, it was possible for a non-compete ban to be anti-employee.
You said "My first piece of evidence" and now "I didn't provide any evidence at all". Given all the downvotes you've gotten, I recommend that you sharpen your debating tactics. You'll probably get better engagement that way.
Ah I'm sorry, I got confused thinking that we had gone back to my comment on taneq's last parent of this branch.
I attribute the downvotes to the unpopularity of non-complete clauses on HN. In addition to that, most of the libertarian and right-leaning users seem to be in North America, so I can count on less sympathy from ~4-12 GMT. It is also possible that my writing has gotten substantially worse in the last few hours, but it seems unlikely that I am being more rude or unfair than I normally am.
I attribute the downvotes to the unpopularity of non-complete clauses on HN. In addition to that, most of the libertarian and right-leaning users seem to be in North America, so I can count on less sympathy from ~4-12 GMT. It is also possible that my writing has gotten substantially worse in the last few hours, but it seems unlikely that I am being more rude or unfair than I normally am.
It can't be anti employee. Employers don't pay more for employees with non competes they pay less. In the case of the fictional employees you mentioned previously both employers would have faced a more competitive market for employees resulting in higher wages.
The non compete is nearly entirely valuable in that it it depresses wages. In reality its entirely likely that between firm A and firm B neither has a whole lot of special sauce non competes mostly serve to keep each other from competing for employees thus driving up wages.
The non compete is nearly entirely valuable in that it it depresses wages. In reality its entirely likely that between firm A and firm B neither has a whole lot of special sauce non competes mostly serve to keep each other from competing for employees thus driving up wages.
Lack of wage growth (and accompanying erosion of quality of life) is already a major issue.
Why would you suggest that the employee pay a cost for accepting a fair workers agreement (no non-compete clause)? At least suggest that salaries be raised for people on non-competes.
The value the employee is generating through this IP is always going to be considerably (orders of magnitude) larger than whatever their salary is - the company can afford to pay them more.
Why would you suggest that the employee pay a cost for accepting a fair workers agreement (no non-compete clause)? At least suggest that salaries be raised for people on non-competes.
The value the employee is generating through this IP is always going to be considerably (orders of magnitude) larger than whatever their salary is - the company can afford to pay them more.
The fact that employers value non competes as assets tells you that a) decreased turnover saves money b) employees who can't as easily leave require smaller/fewer incentives to stay
In fact its trivial to show that non competes result in depressed wages. It in fact shows you the exact opposite of what you intend to show. Non competes are valued as assets as it enables employers to pay employees LESS than in a free market.
In fact its trivial to show that non competes result in depressed wages. It in fact shows you the exact opposite of what you intend to show. Non competes are valued as assets as it enables employers to pay employees LESS than in a free market.
You're raising the spectre of artificially nonfungible conditions, and ignoring power differentials between employers and employees, as well as game theory leading to non-optimal equilibria.
I don't understand what you mean when you say that I am "raising the spectre of artificially nonfungible conditions"; I described a possible situation, and asked whether you agreed that it was possible that non-compete bans could be 'anti-employee' per your definitions.
I agree that I am ignoring many things, as this is a limited discussion, and I am only addressing the impact of a law on a single employee, and its ethical ramifications.
I agree that I am ignoring many things, as this is a limited discussion, and I am only addressing the impact of a law on a single employee, and its ethical ramifications.
First, you're moving goalposts (the initial question was about how or why noncompetes are anti-worker, anti-competitive, and/or anti-innovative), and doing so without acknowledging the point. Chalk it up to my own history of arguing on the intartubes, but I find that tedious and generally a Bad Sign of things to come.
Secondly: my second point answers my first.
Markets don't manifest in individual transactions, they manifest as the emergent behaviour of multiple transactions. As others have noted, setting bounds to what can be traded away has proven necessary, empirically, to avoid winding up in a highly non-optimal equilibrium point.
If you're interested in ethical ramifications, I recommend two excellent works on the topic: A Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations.
Even that treatment is unsatisfactory as it neglects considerations of short-term vs. long-term trade-offs.
Your example is contrived in that it essentially poses a Sophie's Choice: give up condition of long-term viability A or because of my superior position in establishing and enforcing terms, give up condition of long-term viability B.
The optimum condition would be for no artificial constraint on A or B imposed by the employer.
Secondly: my second point answers my first.
Markets don't manifest in individual transactions, they manifest as the emergent behaviour of multiple transactions. As others have noted, setting bounds to what can be traded away has proven necessary, empirically, to avoid winding up in a highly non-optimal equilibrium point.
If you're interested in ethical ramifications, I recommend two excellent works on the topic: A Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations.
Even that treatment is unsatisfactory as it neglects considerations of short-term vs. long-term trade-offs.
Your example is contrived in that it essentially poses a Sophie's Choice: give up condition of long-term viability A or because of my superior position in establishing and enforcing terms, give up condition of long-term viability B.
The optimum condition would be for no artificial constraint on A or B imposed by the employer.
Its possible in theory for employers to offer additional pay to work in conditions wherein the employee will be slowly poisoned where such additional pay is cheaper than proper safety equipment. Its even possible that the employer will find people dumb/ignorant enough to take this it doesn't mean its reasonable economically for the society to allow this sort of transaction.
Your earlier scenario made no sense as their would be no reason to suspect that the 2 employers respective pay and conditions were related you have just presented it as such. Imagine the law were changed tomorrow? Would the high paying non compete using employer suddenly start paying smaller wages? Would they have any employees tomorrow if they did? A freer labor market would be MORE competitive not less there is no reason to suspect that they wouldn't have to pay more not less to retain the same talent.
Your earlier scenario made no sense as their would be no reason to suspect that the 2 employers respective pay and conditions were related you have just presented it as such. Imagine the law were changed tomorrow? Would the high paying non compete using employer suddenly start paying smaller wages? Would they have any employees tomorrow if they did? A freer labor market would be MORE competitive not less there is no reason to suspect that they wouldn't have to pay more not less to retain the same talent.
I know this, when I get a non-compete it makes me not want to work on that project.
It is like a reverse market regulation against workers that are bringing the productivity and skills to the company.
Company: "Hey come here and build us this thing that makes us capable in this area, and when you are done you can't go on building things for other people". It almost seems like a fatal attraction or overly obsessed/attached owner/girlfriend.
Non-competes are a kick in the nuts really to put it bluntly. You'll know the feeling when you get one. It is closer to a company trying to own a skilled worker rather than a partnership.
It is like a reverse market regulation against workers that are bringing the productivity and skills to the company.
Company: "Hey come here and build us this thing that makes us capable in this area, and when you are done you can't go on building things for other people". It almost seems like a fatal attraction or overly obsessed/attached owner/girlfriend.
Non-competes are a kick in the nuts really to put it bluntly. You'll know the feeling when you get one. It is closer to a company trying to own a skilled worker rather than a partnership.
You are speaking to emotions, which means I have no way of addressing your concerns, but I will try to highlight why I do not share your conclusions:
>"makes me not want"
I do not want to agree to many terms, so I do not agree to them; this does not make me want to ban those terms.
>"It is like a reverse market regulation"
Non-competes are 'like' any other business agreement to me. In any case, I am not sure what a 'reverse market regulation' is.
>"seems like a fatal attraction or overly obsessed/attached owner/girlfriend"
If you were analogizing an employer/employee relationship to a sexual one, they would seem most similar to a pimp or john; I do not think this is a useful analogy.
>"are a kick in the nuts... You'll know the feeling"
Many agreements feel unpleasant; I dislike any deal which obligates me to pay a large sum of money. This is interesting, but not very important to anyone else.
>"makes me not want"
I do not want to agree to many terms, so I do not agree to them; this does not make me want to ban those terms.
>"It is like a reverse market regulation"
Non-competes are 'like' any other business agreement to me. In any case, I am not sure what a 'reverse market regulation' is.
>"seems like a fatal attraction or overly obsessed/attached owner/girlfriend"
If you were analogizing an employer/employee relationship to a sexual one, they would seem most similar to a pimp or john; I do not think this is a useful analogy.
>"are a kick in the nuts... You'll know the feeling"
Many agreements feel unpleasant; I dislike any deal which obligates me to pay a large sum of money. This is interesting, but not very important to anyone else.
The way I look at a job is you get paid three ways.
1. Money.
2. Skills and Knowledge.
3. Career Contacts.
With non-competes a company is trying to screw you out of #2 and 3.
1. Money.
2. Skills and Knowledge.
3. Career Contacts.
With non-competes a company is trying to screw you out of #2 and 3.
As a counterpoint, it allows companies to give you a higher salary in exchange for #2 and 3. Or alternatively, if non-competes are the norm, it would allow a business to provide lower salaries for the incentive of no non-compete clause.
The argument whether to ban non-competes should be rooted in the practical applications of the clause. Highly skilled, in-demand workers have the power and financial safety to negotiate a non-compete clause.
The question is when the power dynamic between employer and employee is heavily skewed yowards the employer, can they abuse this imbalance to force non-competes as a market equilibrium.
For example, for a person struggling financially, the slightly higher salary may be a short-term requirement, while the non-compete ruins their long-term prospects.
The argument whether to ban non-competes should be rooted in the practical applications of the clause. Highly skilled, in-demand workers have the power and financial safety to negotiate a non-compete clause.
The question is when the power dynamic between employer and employee is heavily skewed yowards the employer, can they abuse this imbalance to force non-competes as a market equilibrium.
For example, for a person struggling financially, the slightly higher salary may be a short-term requirement, while the non-compete ruins their long-term prospects.
The issue is, as you mentioned, the employer does have an unfair negotiating advantage. Most employees don't have the luxury of paying lawyers (or the knowledge that this is something they should do) to look at every non-compete offer and explain the contract. Having just gone through the process, lawyers are very expensive and time consuming. Talking to people about it reveals that most people don't really understand the issue either, believing wrongly that non-competes are not enforceable. Many companies also try to hide non-competes until after you have accepted the job offer. Companies in contrast have a much easier time hiring a lawyer, as they can offer a standard non-compete to each of their potential hires. So this is an area where it makes sense for the government to step in and protect workers.
iff it's a higher salary in exchange for #2 and 3
i suspect the employer / (healthcareinsurer if in US) imbalance is really the core issue.
In medical research ethics, informed consent acknowledges the imbalance. I think e.g. CA unenforcement of non-compete does a similar job.
(I am also a worker bee and benefit from non-enforcement, so take my input for the electrons they're based on.)
i suspect the employer / (healthcareinsurer if in US) imbalance is really the core issue.
In medical research ethics, informed consent acknowledges the imbalance. I think e.g. CA unenforcement of non-compete does a similar job.
(I am also a worker bee and benefit from non-enforcement, so take my input for the electrons they're based on.)
I'd be ok with #2 and #3 if the company would continue to pay the employee for the full duration of the non-compete.
Or the non-compete allows them to keep your salary lower because you have fewer options of places to work.
That is the right answer.
If you think non-compete agreements 'screw you out of #2 and 3", but still want the job (probably) because it is your best chance to get #1, it seems that you are being paid 1 in exchange for 2 and 3. The non-compete ban simply blinds you to the opportunity of selling 2 and 3.
That is how it should work in theory, but not how it works in practice. In practice companies can use their better understanding of the true value/cost of non-competes to exploit workers. If there exists a large pool of workers who are willing to sign non-competes because they are not well informed about them, than in order to get a job you will have to sign a non-compete (or move to CA).
If a particular situation like non-competes is a net negative for society as a whole I don't see why we should bother to allow them.
I'm not sure if you came here for anecdotes, but my very first full time web developer position had a non-compete clause. After 2.5 years, I moved to a new company about 15 miles away for a roughly 20% raise. Some time into this job, I ended up doing some work for a client that had left my previous employer. I reached out to the previous employer because I needed something changed on the server (they still managed hosting) - this tipped them off that I was (gasp) doing work for one of their previous clients. They ended up attempting to sue me and my new employer based on the non-compete! We went to a disposition, but then the lawyers huddled, and the end result was that the non-compete was reduced from 5 Years (!!) to just 1 year, and that we agreed I wouldn't do work on that specific client for the duration. Otherwise, there was no penalty or fallout. I consider it a big dramatic show with no benefit to the previous employer; they stomped their feet and pouted, the end.
Depending on the phrasing of the non-compete, I tend to cross that section out, initial them, and then include a note when I submit them to my employer. Most are fine with that change.
Depending on the phrasing of the non-compete, I tend to cross that section out, initial them, and then include a note when I submit them to my employer. Most are fine with that change.
Yeah, I think that's what I'm going to do going forward. If there's a non-compete in an otherwise viable contract, I'm going to strike it, sign, and if it's of real value to them and they still want me, they can pay me to agree to it.
Massachusetts has realized that its current legislation allowing for non-competes sniffles innovation.
https://techcrunch.com/2016/02/18/silicon-valley-keeps-winni...
http://news.wgbh.org/2016/06/29/politics-government/deleo-pl...
https://techcrunch.com/2016/02/18/silicon-valley-keeps-winni...
http://news.wgbh.org/2016/06/29/politics-government/deleo-pl...
I'm glad that non-competes are being looked at with a stink-eye, I feel it's bullshit to ask someone to sign away their right to use their skills to make a living in exchange for...using their skills to make a living.
"If I can't have you, nobody can" is the long and short of a non-compete IMO, I don't feel that's an acceptable condition in any relationship.
Maybe I misunderstand what a non-compete is, but it seems relatively straightforward. I don't think an employer is entitled to that kind of benefit, especially considering loyalty to an employer is usually rewarded with indifference at best.
"If I can't have you, nobody can" is the long and short of a non-compete IMO, I don't feel that's an acceptable condition in any relationship.
Maybe I misunderstand what a non-compete is, but it seems relatively straightforward. I don't think an employer is entitled to that kind of benefit, especially considering loyalty to an employer is usually rewarded with indifference at best.
In 2013 I turned down a job in Philadelphia, with a company who was headquartered in Boston. They wanted me to sign a 1yr non-compete with the stipulation that I wouldn't work for a company sold similar products within a +/- 30% wholesale cost of their product. After two trans-continental flights, interviews etc, I said no because of the NC. The recruiter flipped over it. He basically yelled at me "you're going to come work with us, we'll train you, then you'll go somewhere else?"
No. I'm mid-career. I have skills you want. You're not training me. Your company is not an engineering school. I'll leave because I might not like working for you, or living where your company's office is. It's my life, not yours.
Decided to stay in California where this wouldn't ever even be a question that would come up.
No. I'm mid-career. I have skills you want. You're not training me. Your company is not an engineering school. I'll leave because I might not like working for you, or living where your company's office is. It's my life, not yours.
Decided to stay in California where this wouldn't ever even be a question that would come up.
That's almost as ridiculous as parents asking their kids for a lifelong non-compete in the same field as them.
I'm glad you did that. It shows principle. You may have been able to negotiate it out but the fact that they wanted it shows you a good deal about the company character.
It was a privilege I had and exercised. I later found out that the company was notorious for pursing violators of their NC, and sort of well-known about it in my industry- which has companies from 1-person shops to multinationals, all operating within the same price point (food and beverage). So the NC was absolutely insane.
Today, after completing almost a month of my trial at a new job, HR asked me to sign a document on Stamp paper with a very vague 1 year non-compete clause. All my objections to the same were casually shrugged of by her, by saying they don't use it until I would directly hurt the revenue of the employer.
When I refused to sign it she said that it might be hard to offer me a job in the case I don't sign it. Which very much sounded like a threat to me. If they insist I would most probably sign it, as without the salary I wouldn't be able to afford rent next month. According to her all the other employees have signed it and none questioned her on it.
Notably non-competes are mostly illegal in India, still almost all agreements I have come across have the clause mentioned in them. I don't understand the point in having a clause like this, when its non-enforceable.
Many other points of the agreement were as egregious as the non-compete clause. Also the whole agreement was extremely one sided. It also said all the IP/Products/patents I develop, even in my own time, during my tenure would belong by the employer.
When I refused to sign it she said that it might be hard to offer me a job in the case I don't sign it. Which very much sounded like a threat to me. If they insist I would most probably sign it, as without the salary I wouldn't be able to afford rent next month. According to her all the other employees have signed it and none questioned her on it.
Notably non-competes are mostly illegal in India, still almost all agreements I have come across have the clause mentioned in them. I don't understand the point in having a clause like this, when its non-enforceable.
Many other points of the agreement were as egregious as the non-compete clause. Also the whole agreement was extremely one sided. It also said all the IP/Products/patents I develop, even in my own time, during my tenure would belong by the employer.
> It also said all the IP/Products/patents I develop, even in my own time, during my tenure would belong by the employer.
These clauses are getting worse too, claiming what you develop up to a year after you leave the company. I had to sign one of these or not take the job, non-negotiable. Not taking the job wasn't a choice at that time, sadly.
These clauses are getting worse too, claiming what you develop up to a year after you leave the company. I had to sign one of these or not take the job, non-negotiable. Not taking the job wasn't a choice at that time, sadly.
This, to me, is the shadiest part of non-competes. I've only gotten one, but it was after I had quit my previous job, and moved across the country. Am I supposed to say no, now that I've already moved and have no other current source of income for my family?
Shame on me for not asking up-front what I would have to sign, but also, how is it legal to start throwing new contracts at someone, when they weren't part of the original agreement in the first place.
Shame on me for not asking up-front what I would have to sign, but also, how is it legal to start throwing new contracts at someone, when they weren't part of the original agreement in the first place.
I am gonna try to change the management's mind about these policies. I am hopeful that they would accept my request especially since these are not enforceable in court and this would makes the whole agreement void.
Is it legal to have a extremely one sided agreement? Also if it is signed under threat(no job/no livelihood) isn't it void, as its signed under duress?
Is it legal to have a extremely one sided agreement? Also if it is signed under threat(no job/no livelihood) isn't it void, as its signed under duress?
I don't understand how these clauses are even legal at first place. It violates the basic right of freedom of work. You can't have on one end freedom of enterprise but on the other hand no freedom of work for employees. the worst thing is the fact that these agreements usually come with 0 compensation.
Completely agree. In the UK it's called garden leave: the employer pays you to drink tea in your garden.
It's too easy for companies to claim losses from competing employees. They need to put their $$$ where their mouth is
It's too easy for companies to claim losses from competing employees. They need to put their $$$ where their mouth is
In the UK you're usually paid full salary though and garden leave is rarely longer than 3 months iirc.
I believe that this is basically allowed in California, too, but the employee can still quit.
> with 0 compensation
I don't agree compensation would be any useful. In France non-compete agreements must be compensated proportionnaly.
Example: My company prohibited me from working with the customers on the whole territory of France for a duration of 3 months, paid at 1/3 of the salary per month. The real mean clause is that they can decide whether to apply it or not, and they can tell you on the day you leave. Therefore: They save, except when the employee gets hired by the customer, in which case they only have to spend 33% of the salary for 3 months to prevent you from working.
Last point, in France, Company-to-Employee non-competes are restricted, but Company-to-Company are not. Which makes things hard for consultants.
So don't fall in that trap: Asking for a compensation will only seem fair on the surface. Require your government to drop non-competes altogether, and both for employees and B2B contracts.
I don't agree compensation would be any useful. In France non-compete agreements must be compensated proportionnaly.
Example: My company prohibited me from working with the customers on the whole territory of France for a duration of 3 months, paid at 1/3 of the salary per month. The real mean clause is that they can decide whether to apply it or not, and they can tell you on the day you leave. Therefore: They save, except when the employee gets hired by the customer, in which case they only have to spend 33% of the salary for 3 months to prevent you from working.
Last point, in France, Company-to-Employee non-competes are restricted, but Company-to-Company are not. Which makes things hard for consultants.
So don't fall in that trap: Asking for a compensation will only seem fair on the surface. Require your government to drop non-competes altogether, and both for employees and B2B contracts.
From I recall from past French cases. 33% is not enough to enforce a non compete. That won't held in a court.
Why can't congress do something about this? Non-competes are clearly terrible for workers, and should at the least be illegal without a severance agreement. If a company wants to keep me from working they should pay for the privilege. Workers also need to start refusing to sign egregiously bad non-compete agreements.
Among other reasons, Congress has the power to regulate interstate commerce, but not intrastate commerce.
Congress might, say, prohibit noncompetes across state lines, but would have a harder time making the case for a noncompete prohibition within a given state. Perhaps not impossible.
OTOH, there are Federal standards for labour in the US under the NLRA -- National Labor Relations Act.
Lay understanding of law.
Congress might, say, prohibit noncompetes across state lines, but would have a harder time making the case for a noncompete prohibition within a given state. Perhaps not impossible.
OTOH, there are Federal standards for labour in the US under the NLRA -- National Labor Relations Act.
Lay understanding of law.
Wickard v. Filburn can be twisted in virtually any way you like: "Noncompetes in one state affect national labor market price levels, thus are subject to the commerce clause, and are heretofore banned."
Not that I support this reading, but it's been used to shake off commerce clause challenges for the better part of a century now.
Not that I support this reading, but it's been used to shake off commerce clause challenges for the better part of a century now.
"If a company wants to keep me from working they should pay for the privilege."
They are paying you. You join the company on those terms. If you don't want to join, then don't join.
What they don't want you dong is taking all their IP, walking off and passing it onto a competitor.
It would be extremely naive to not understand that this happens all the time.
It's a tricky and nuanced problem, but it's real.
They are paying you. You join the company on those terms. If you don't want to join, then don't join.
What they don't want you dong is taking all their IP, walking off and passing it onto a competitor.
It would be extremely naive to not understand that this happens all the time.
It's a tricky and nuanced problem, but it's real.
> What they don't want you dong is taking all their IP, walking off and passing it onto a competitor.
Bullshit, that's what NDAs are for.
Bullshit, that's what NDAs are for.
"Bullshit, that's what NDAs are for."
Totally false and completely naive.
Most knowledge and know-how is not explicit - they are often learned.
For example - suppose you worked at Nuance, and helped develop their new AI/Neural Network speech recognition system. Everything you know about Speech + AI you learned from them, in that language specific setting.
If you went to work on Google's new Speech Recognition, which is AI-based - it would basically be impossible not to pass on know how and relevant knowledge. The application-specific skills are basically IP.
Totally false and completely naive.
Most knowledge and know-how is not explicit - they are often learned.
For example - suppose you worked at Nuance, and helped develop their new AI/Neural Network speech recognition system. Everything you know about Speech + AI you learned from them, in that language specific setting.
If you went to work on Google's new Speech Recognition, which is AI-based - it would basically be impossible not to pass on know how and relevant knowledge. The application-specific skills are basically IP.
> For example - suppose you worked at Nuance, and helped develop their new AI/Neural Network speech recognition system. Everything you know about Speech + AI you learned from them, in that language specific setting.
And the knowledge and experience you got from your previous job before Nuance ? where does it come from ? why would the buck stop at Nuance ? or the former company ? or the company before it ? your point is ridiculous. The knowledge I acquire, if it doesn't involve a company's secret is my own and no company owns it. There is no such thing as intellectual slavery which you basically promote. If you don't pay me I owe nothing more than the respect of your patents and other corporate secrets and those are covered by NDA.
And the knowledge and experience you got from your previous job before Nuance ? where does it come from ? why would the buck stop at Nuance ? or the former company ? or the company before it ? your point is ridiculous. The knowledge I acquire, if it doesn't involve a company's secret is my own and no company owns it. There is no such thing as intellectual slavery which you basically promote. If you don't pay me I owe nothing more than the respect of your patents and other corporate secrets and those are covered by NDA.
Actually, that's a very interesting question - your prior knowledge in a field, particularly if you've paid for your education, might become significantly more valuable if a non-compete is implemented. Valuable enough perhaps to refuse Nuance the right to use your work.
Of course, the counter-argument there is that they paid you for your work, and that's why it's their property. It may follow that if the work is theirs and you can't use it, then surely your student loan in its entirety would also be their responsibility for just that reason.
Shame I have more important problems to solve in the meantime, that idea could be quite fascinating to work through.
Of course, the counter-argument there is that they paid you for your work, and that's why it's their property. It may follow that if the work is theirs and you can't use it, then surely your student loan in its entirety would also be their responsibility for just that reason.
Shame I have more important problems to solve in the meantime, that idea could be quite fascinating to work through.
> If you went to work on Google's new Speech Recognition, which is AI-based - it would basically be impossible not to pass on know how and relevant knowledge. The application-specific skills are basically IP.
If Nuance wants to pay me to not work for google for a long time - fine. As long as the non compete is fully paid that's fine.
Without pay from my former competitor, it must of course be completely within my rights to go to Google and develop in 1 year what took me 10 years at Nuance. That's what my experience does - helps me do the same thing quicker. That experience, and nuances "Trade Secrets" are more or less the same thing. Nuance paid me for years of failed attempts and dead ends. Google pays me (more) to not repeat them.
If Nuance wants to pay me to not work for google for a long time - fine. As long as the non compete is fully paid that's fine.
Without pay from my former competitor, it must of course be completely within my rights to go to Google and develop in 1 year what took me 10 years at Nuance. That's what my experience does - helps me do the same thing quicker. That experience, and nuances "Trade Secrets" are more or less the same thing. Nuance paid me for years of failed attempts and dead ends. Google pays me (more) to not repeat them.
> The application-specific skills are basically IP.
No. Those application-specific skills are called experience.
No. Those application-specific skills are called experience.
Companies aren't paying you for the duration of the non-compete, they only pay you when you are working there. If a company really wants non-competes to prevent you from working for a competitor, they could afford to pay for that. Instead companies are using non-competes as a form of control, to coerce workers into keeping working for that company.
Once again they paid for a finite duration of your time and labor not the contents of your brain. For you to somehow by dint of experience BECOME employer property in whole or in total is a truly bizarre perspective.
If you can't own them forever as slaves then preventing them from freely applying their learned skills for a period of time isn't coherent and logical.
If you can't own them forever as slaves then preventing them from freely applying their learned skills for a period of time isn't coherent and logical.
"Once again they paid for a finite duration of your time and labor not the contents of your brain."
+ Absolutely false. Whenever you work for a company, you will gain knowledge that is their property - almost always. It doesn't matter who/what/when/how you work for - that knowledge is theirs. Even McDonald's workers are subject to private info such as operating details.
+ "For you to somehow by dint of experience BECOME employer property in whole or in total is a truly bizarre perspective."
Nobody is anybodies property. If nearly everything you know about a subject is a trade secret, then you obviously cannot use that elsewhere.
+ "If you can't own them forever as slaves then preventing them from freely applying their learned skills for a period of time isn't coherent and logical."
Would you children stop talking about slavery?
If your skills and experience are tantamount to trade secrets than you cannot use them elsewhere.
The idea that some company is going to let you in on their $1 Billion dollars and research, so you can walk across the street and hand it over to another company 'because you think it's your right' - is not coherent or logical. Put yourself in the perspective of the manager of that IP.
+ Absolutely false. Whenever you work for a company, you will gain knowledge that is their property - almost always. It doesn't matter who/what/when/how you work for - that knowledge is theirs. Even McDonald's workers are subject to private info such as operating details.
+ "For you to somehow by dint of experience BECOME employer property in whole or in total is a truly bizarre perspective."
Nobody is anybodies property. If nearly everything you know about a subject is a trade secret, then you obviously cannot use that elsewhere.
+ "If you can't own them forever as slaves then preventing them from freely applying their learned skills for a period of time isn't coherent and logical."
Would you children stop talking about slavery?
If your skills and experience are tantamount to trade secrets than you cannot use them elsewhere.
The idea that some company is going to let you in on their $1 Billion dollars and research, so you can walk across the street and hand it over to another company 'because you think it's your right' - is not coherent or logical. Put yourself in the perspective of the manager of that IP.
“If your skills and experience are tantamount to trade secrets than you cannot use them elsewhere.“
What is protected is defined in terms of patents, trade secrets, and non disclosure. It looks like the long term prospects of software patents is extremely grim and neither of the later items can be so broadly construed.
Your skills and experience can't be owned by your employer. It looks as if you actually understand that none of the above are so broad and want to use non competes to protect some sort of moral right.
The problem is that such employers are 0.0001% of the population the freedom of everyone else and in fact the efficiency of the labor market as a whole is vastly more important than some sort of moral right for Bob the employer to keep Jim the employee from learning the trade and using that experience down the road.
Your perspective is antiquited and based on a belief in an entire social framework of mutual employee employer loyalty that was always mostly imaginary and now practically fictional.
It's highly likely that you have personal issues heretofore unexpressed wherein you feel badly treated.
Maybe you should elaborate on THAT.
What is protected is defined in terms of patents, trade secrets, and non disclosure. It looks like the long term prospects of software patents is extremely grim and neither of the later items can be so broadly construed.
Your skills and experience can't be owned by your employer. It looks as if you actually understand that none of the above are so broad and want to use non competes to protect some sort of moral right.
The problem is that such employers are 0.0001% of the population the freedom of everyone else and in fact the efficiency of the labor market as a whole is vastly more important than some sort of moral right for Bob the employer to keep Jim the employee from learning the trade and using that experience down the road.
Your perspective is antiquited and based on a belief in an entire social framework of mutual employee employer loyalty that was always mostly imaginary and now practically fictional.
It's highly likely that you have personal issues heretofore unexpressed wherein you feel badly treated.
Maybe you should elaborate on THAT.
How would a company "pay for the privilege" of preventing you from transferring their trade secrets without being able to enforce non-competes?
If a company is preventing me from working, and doing so is actually important to the company above and beyond a tool to keep me working for them, they can afford to pay a salary for the duration of the non-compete. The fact that companies aren't willing to do so reveals that the companies want non-competes so they don't have to pay market wages and to restrict freedom of movement of employees. It is a terrible standard to have non-competes for at-will employees.
I have actually refused a job offer because the terms of the non-compete were so one-sided for the employer. The contract had things like one-way attorney fees, applied everywhere in the US for a year, wasn't limited to what the company actually worked on, and other employer favored terms. This was for at-will employment, and apparently I was the first person to refuse the job offer due to the contract. I wish more people would refuse to sign such biased contracts, as it stands companies can get away with the practice because too many workers allow them to do so.
I have actually refused a job offer because the terms of the non-compete were so one-sided for the employer. The contract had things like one-way attorney fees, applied everywhere in the US for a year, wasn't limited to what the company actually worked on, and other employer favored terms. This was for at-will employment, and apparently I was the first person to refuse the job offer due to the contract. I wish more people would refuse to sign such biased contracts, as it stands companies can get away with the practice because too many workers allow them to do so.
The fact that companies are unwilling to pay you to avoid harming them after you no longer work for them proves very little in my view. I understand that a non-compete could reduce potential future earnings, but prospective employees should take that into account, as you seem to have done.
I commend you for looking out for your long-term self interests, and agree that more people should carefully scrutinize their employment agreements. This does not bring me to conclude that non-compete terms should be banned, as they are simply one of many terms of the contract which should be priced appropriately.
I commend you for looking out for your long-term self interests, and agree that more people should carefully scrutinize their employment agreements. This does not bring me to conclude that non-compete terms should be banned, as they are simply one of many terms of the contract which should be priced appropriately.
The problem is that there is an asymmetric bargaining power between companies and potential employees. I had a family friend who is a lawyer I could talk to, most people don't have that luxury and don't have the time to educate themselves about non-competes. Talking to people reveals most (wrongly, for most states in the US) think non-competes are unenforceable. Companies use non-competes to avoid paying a fair market wage. The fact that companies resist paying severance in accordance with non-competes reveals the true motive companies have for non-competes - to keep workers at their company while paying below market rates. In situations where companies don't have unequal bargaining power, but still want non-competes (top level executives), these contracts almost always include a large severance package.
With a severance package. Non-competes should not be allowed to last any longer than the severance package.
P.S. Non-competes should have nothing to do with trade secrets; those should be covered by an NDA.
P.S. Non-competes should have nothing to do with trade secrets; those should be covered by an NDA.
The thing is, they're used by companies as a way of trying to stop their competitors from getting access to insider information even when it wouldn't qualify as a trade secret and would be difficult to protect with an NDA. Which is insane, because they only hire you for your experience and skills, which came from doing similar jobs for other employers, and yet they somehow expect to own any new experience you gain while working for them.
And in California, it has to be a full salary, not $1.
I'm not sure why nickff is mentioning trade secrets, when that's a separate issue, covered by NDA.
I'm not sure why nickff is mentioning trade secrets, when that's a separate issue, covered by NDA.
So the company should keep paying an employee's full salary without any guarantee that the employee won't 'quit' the severance to work for a competitor? This is basically guaranteeing that nobody who has valuable knowledge can be fired for cause or laid off.
NDAs are nice, but there is no way to know whether a trade secret has been transferred to a competitor (if the competitor keeps their secrets secret).
The other problem with allowing NDAs but disallowing non-competes is that it provides a huge loophole, where businesses can classify all non-public information as trade secrets, thereby preventing the former employee from implementing any competing system (which will inevitably contain some non-public process from the previous employer).
NDAs are nice, but there is no way to know whether a trade secret has been transferred to a competitor (if the competitor keeps their secrets secret).
The other problem with allowing NDAs but disallowing non-competes is that it provides a huge loophole, where businesses can classify all non-public information as trade secrets, thereby preventing the former employee from implementing any competing system (which will inevitably contain some non-public process from the previous employer).
No, the point is the non-compete keeps the employee from working for a competitor, so the employer pays the salary to prevent the employee from working for a competitor. The employer chooses to either pay the salary of the employee or free them to find work elsewhere. Why is it fair that an employer can fire someone or lay someone off and keep that person from working for a year?
Why is it fair that an employee can stop working at their job or commit fraud, then immediately sell all the non-public information they have to a competitor?
> Why is it fair that an employee can stop working at their job or commit fraud, then immediately sell all the non-public information they have to a competitor?
Then sue if you have proof. What is not fair is to reduce a worker's opportunity to work when he isn't on your payroll.
Then sue if you have proof. What is not fair is to reduce a worker's opportunity to work when he isn't on your payroll.
You can sue people for not working at their job? There are many people who simply stop accomplishing tasks when they want to be laid off or fired.
The parent's logic would say that if someone does this, the only way to stop this 'bad employee' from selling all your non-public information is to pay (at least) their full salary indefinitely.
The parent's logic would say that if someone does this, the only way to stop this 'bad employee' from selling all your non-public information is to pay (at least) their full salary indefinitely.
> You can sue people for not working at their job? There are many people who simply stop accomplishing tasks when they want to be laid off or fired.
Then let them quit and go somewhere else. NDA cover corporate secrets, non-compete are anti freedom, anti competition and should be illegal. If your employee stops working then perhaps you should question the way you do business and how you manage your work environment. Usually it's a clear sign you treat your employees like shit. They should have all the rights to go work in a better environment whether it is at a competitor or not doesn't matter.
Then let them quit and go somewhere else. NDA cover corporate secrets, non-compete are anti freedom, anti competition and should be illegal. If your employee stops working then perhaps you should question the way you do business and how you manage your work environment. Usually it's a clear sign you treat your employees like shit. They should have all the rights to go work in a better environment whether it is at a competitor or not doesn't matter.
The parent was commenting on fairness, I was positing a situation that was unfair to the employer. Please stop fighting the hypothetical, it is unproductive to the discussion.[1]
[1] http://lesswrong.com/lw/bwp/please_dont_fight_the_hypothetic...
[1] http://lesswrong.com/lw/bwp/please_dont_fight_the_hypothetic...
It would be unfair for you to have to pay them for shoddy or nonexistent work it is similarly unfair to keep them from doing said shoddy work at your competitor. I'm not seeing any problem.
If the company wants to stop you from working, they should pay your salary for the duration they want to keep you from working, not indefinitely. Already most states won't enforce non-competes lasting more than a year. Obviously companies benefit from non-competes, but they do so at the expense of workers. The fact that a company can fire someone on day 2 and not let them work for a year is absurd, but that is how non-competes are written. Once a company fires someone or lays them off, they shouldn't be able to keep that person from working without compensation, and compensation given while the person is employed doesn't count - that is money given for work. If an employee leaving for a competitor really harmed a company, that company can sign an agreement that isn't at-will employment.
Why is it fair that an employer can force an employee to kill kittens and then fire the employee and prevent them from ever working when they refuse?
Do you realize that what you just said has nothing to do with Non-compete clauses?
Do you realize that what you just said has nothing to do with Non-compete clauses?
I am sorry, but you've lost me. What do kittens have to do with intellectual property? I am also unsure of how a non-compete can stop someone from "ever working", as I cannot imagine a non-compete that would cover all other corporations (this would seem to be indentured servitude).
In any case, I created a hypothetical to further the discussion; please address that one instead of changing the subject.
In any case, I created a hypothetical to further the discussion; please address that one instead of changing the subject.
In my understanding, you can't unilaterally quit the severance to terminate your non-compete.
My understanding is that severance is usually terminated when the former employee accepts a new position; I am not sure how a former employer could prevent the former employee from accepting a position from a competitor without use of a non-compete.
Do you agree that NDAs are flawed in the ways I described?
Do you agree that NDAs are flawed in the ways I described?
The non-compete keeps someone from signing a position with a competitor. But in order for a non-compete to be legal, the company should have to pay the employees salary (or a significant fraction of the salary) for the duration of the non-compete contract.
Most severance I've witnessed was paid out in a lump sum. Severance that wasn't paid out in a lump sum generally did not end when the former employee accepted a new job. However, I have heard of some that does.
But that's irrelevant. The severance and non-compete contracts were two separate contracts, not linked in any way. The fact they had the same length wasn't a coincidence, but after they were signed it may as well have been.
And no, I don't agree that NDA's are flawed in the way you describe. If a former employee is willing to commit criminal fraud or theft then the choice of paper you make them sign isn't going to make any difference.
But that's irrelevant. The severance and non-compete contracts were two separate contracts, not linked in any way. The fact they had the same length wasn't a coincidence, but after they were signed it may as well have been.
And no, I don't agree that NDA's are flawed in the way you describe. If a former employee is willing to commit criminal fraud or theft then the choice of paper you make them sign isn't going to make any difference.
Isn't that what the Non-Disclosure Agreement is for? I don't understand how a non-compete keeps trade secrets safe, it's not like you can't transfer a trade secret a year later, or however long the non-compete lasts.
My comment from a child:
<<"NDAs are nice, but there is no way to know whether a trade secret has been transferred to a competitor (if the competitor keeps their secrets secret)."
<<"The other problem with allowing NDAs but disallowing non-competes is that it provides a huge loophole, where businesses can classify all non-public information as trade secrets, thereby preventing the former employee from implementing any competing system (which will inevitably contain some non-public process from the previous employer)."
I am unsure what you mean by the following quote:
>"it's not like you can't"
<<"NDAs are nice, but there is no way to know whether a trade secret has been transferred to a competitor (if the competitor keeps their secrets secret)."
<<"The other problem with allowing NDAs but disallowing non-competes is that it provides a huge loophole, where businesses can classify all non-public information as trade secrets, thereby preventing the former employee from implementing any competing system (which will inevitably contain some non-public process from the previous employer)."
I am unsure what you mean by the following quote:
>"it's not like you can't"
I'm perfectly OK with a non-compete agreement... as long as it pays me for my downtime.
You think the information in my head is so valuable that you don't want me working for a competitor for three years after I leave? OK, pay me for three years.
It's not worth that much to you? Well, how much is it worth?
You think the information in my head is so valuable that you don't want me working for a competitor for three years after I leave? OK, pay me for three years.
It's not worth that much to you? Well, how much is it worth?
How would you determine the cost of your downtime?
If you're assuming that all you're going to do after you leave a company is become a wage slave at another one, then getting paid the same wage for a few years might be enough to compensate you. However, if you really aspire to start your own company that might become hugely successful (e.g. the next Facebook or Google), how would you be compensated for that?
The point is that even if you're paid for the time when the NDA is in force, you are still being harmed, because your freedom to invest your time is restricted.
If you're assuming that all you're going to do after you leave a company is become a wage slave at another one, then getting paid the same wage for a few years might be enough to compensate you. However, if you really aspire to start your own company that might become hugely successful (e.g. the next Facebook or Google), how would you be compensated for that?
The point is that even if you're paid for the time when the NDA is in force, you are still being harmed, because your freedom to invest your time is restricted.
Not to mention the opportunity cost for wage slaves.
If you're a programmer and are prevented from getting a new job right now, when it's a seller's market for talent, then you might be in a much worse situation in a year if the market changes.
Even getting 100% of your wage for that year could be a terrible deal.
If you're a programmer and are prevented from getting a new job right now, when it's a seller's market for talent, then you might be in a much worse situation in a year if the market changes.
Even getting 100% of your wage for that year could be a terrible deal.
There's a coffee shop in our town that makes barristas sign a non-compete i.e. no working at other coffee shops in town. This is beyond mind-blowingly stupid.
Jimmy John's the sandwich shop made their employees sign non-compete contracts too. [1]
[1] http://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compete...
[1] http://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compete...
I just signed one of these ridiculous clauses because pretty much everyone is just slapping this into their contracts now.
Law needs to catch up on this one and fast. I like the idea of making non-compete enforceable only if you can prove malicious intent. Similar to how tax works. If onus is on the tax payer to prove that if you buy something and sell it at profit you must prove that the _intention_ was not to turn a profit if you want to pay capital gains tax and not income tax on the profit.
Except the burden on proof must be skewed in favor of the employee and the proof of intent needs to sit with the employer if they want to enforce. E.g. If I go to market and get an offer (say at some competitor), you have first right of refusal to give me a counter. If you refuse to counter you cannot enforce your non-compete. This is fair imho. Lots of problems regarding "trade secrets" etc. but the law should be highly weighted towards the idea of "innocent by until proven guilty" for the employee.
Law needs to catch up on this one and fast. I like the idea of making non-compete enforceable only if you can prove malicious intent. Similar to how tax works. If onus is on the tax payer to prove that if you buy something and sell it at profit you must prove that the _intention_ was not to turn a profit if you want to pay capital gains tax and not income tax on the profit.
Except the burden on proof must be skewed in favor of the employee and the proof of intent needs to sit with the employer if they want to enforce. E.g. If I go to market and get an offer (say at some competitor), you have first right of refusal to give me a counter. If you refuse to counter you cannot enforce your non-compete. This is fair imho. Lots of problems regarding "trade secrets" etc. but the law should be highly weighted towards the idea of "innocent by until proven guilty" for the employee.
Move to California, or draw a line through it and see what happens.
You should have refused to sign it.
It is now standard for unskilled workers too as it is included in most job application / offers.
A $12 / hr. part time Walmart worker can not work at another retailer or online company or Amazon warehouse. The scope is defined by the company.
It is used as a threat.
Besides, if someone wants to steal company secrets they will regardless of a signed paper.
In the '80s worked with a Chinese C/unix contractor that ported all code to China. It was comm type work. No NDA would prevent a criminal.
A $12 / hr. part time Walmart worker can not work at another retailer or online company or Amazon warehouse. The scope is defined by the company.
It is used as a threat.
Besides, if someone wants to steal company secrets they will regardless of a signed paper.
In the '80s worked with a Chinese C/unix contractor that ported all code to China. It was comm type work. No NDA would prevent a criminal.
simple solution: all workers must be paid full salary and benefits for the entire term of the non-compete agreement.
Law in Belgium allows an anti competition clause only in certain cases. When it does apply, the employer still has to pay half of the salary for the length of anti compete clause. There's still a limit on the length (12 months), various limitations on when it applies, etc.
See http://nl.workpocket.be/2/3/het-concurrentiebeding/
Netherlands also has various limitations on anti compete clauses. Generally, they're not valid: http://www.lbv.nl/actueel/wet-en-regelgeving/146-het-concurr.... Since 2015 they only apply to full time employees and there should be a very good business reason. Meaning: it should not apply to everyone, at most a limited amount of people.
See http://nl.workpocket.be/2/3/het-concurrentiebeding/
Netherlands also has various limitations on anti compete clauses. Generally, they're not valid: http://www.lbv.nl/actueel/wet-en-regelgeving/146-het-concurr.... Since 2015 they only apply to full time employees and there should be a very good business reason. Meaning: it should not apply to everyone, at most a limited amount of people.
I've heard of two or three people in my lifetime that had a company try to enforce a non-compete. Two were during a Microsoft/Google fight, and one was in the late 60s with a scientist.
Has anybody around here been sued after leaving a company due to a non-compete clause?
Has anybody around here been sued after leaving a company due to a non-compete clause?
I have a good story on non-compete agreement!
I worked for a company based in New Mexico while I lived in California. When we both got sick of each other, at the exit interview the HR personnel on the phone from New Mexico told me I could not work in IT for the next 2 years as I signed a non-compete agreement. I just started laughing at them and told them I lived in California and good luck with enforcing that contract. End of conversation and I was out in the parking lot 5 minutes later, still laughing.
I worked for a company based in New Mexico while I lived in California. When we both got sick of each other, at the exit interview the HR personnel on the phone from New Mexico told me I could not work in IT for the next 2 years as I signed a non-compete agreement. I just started laughing at them and told them I lived in California and good luck with enforcing that contract. End of conversation and I was out in the parking lot 5 minutes later, still laughing.
Non-competes are usually enforced indirectly. Most companies will ask if you have a non-compete, and a lot of them will just refuse to hire you if you do.
I know someone who was threatened with a lawsuit over a non-compete contract by a web development contracting company. He consulted with a lawyer in the state the contract was signed, and ended up settling with his original employer for a series of cash payments. It led some people (including myself) to quit the company that sued, but it has also resulted in a number of employees deciding that looking for new employment was too risky. I'm posting under a throwaway for obvious reasons.
This comes one week after - and in contrast to - Donald Trump promising in his first 100 days in office a five-year ban on White House officials and Congressman from becoming lobbyists, and a lifetime ban on White House lobbyists from lobbying on behalf of foreign governments.
https://www.google.com/amp/s/www.washingtonpost.com/amphtml/...
https://www.google.com/amp/s/www.washingtonpost.com/amphtml/...
This, yet again, demonstrates that Trump does not understand how the US Government works. The President does not make laws, Congress does. You think the very people who signed up for a job so they can get rich later are really going to pass a law that limits their ability to get rich later?
Which is a good idea. If you showed someone from 30 years ago how lobbying worked today, they'd declare it was straight-up bribery.
a) How is this article in any way related to lobbying?
b) Even if we assume Trump somehow managed to implement his plan, how is it not going to be struck down immediately as a violation of the first amendment? Campaign finance and lobbying are incredibly broken right now, but they currently exist because of a legal framework that can only be changed by a constitutional amendment that (partially) exempts political speech from the promises of the first amendment.
b) Even if we assume Trump somehow managed to implement his plan, how is it not going to be struck down immediately as a violation of the first amendment? Campaign finance and lobbying are incredibly broken right now, but they currently exist because of a legal framework that can only be changed by a constitutional amendment that (partially) exempts political speech from the promises of the first amendment.
This seems to explicitly not include workers who are privvy to trade secrets based on a quick skim, so I guess all of us tech workers wouldn't have anything changed sadly.
^ My thoughts exactly.
> The Obama administration on Tuesday also urged states to ban non-compete agreements that are not proposed before a job offer or promotion is accepted and said employers should not be able to enforce the agreements when workers are laid off.
It's unclear to me if the empathized part was meant to be a general statement, so that could affect tech workers.
> The Obama administration on Tuesday also urged states to ban non-compete agreements that are not proposed before a job offer or promotion is accepted and said employers should not be able to enforce the agreements when workers are laid off.
It's unclear to me if the empathized part was meant to be a general statement, so that could affect tech workers.
A business owner could claim that trade secrets are involved in almost every sector. I've seen companies treating their (very basic) plans for Facebook ads as if it was classified information, putting a guy with a USB stick on a plane to transmit the "trade secret" from one office to another safely.
IANAL but my understanding is that non-competes are essentially unenforceable in Texas.
I live in Texas and I'm interested to know if this is actually true. Asking for a friend.
I also live in Texas and recently signed a non-compete after talking to my attorney.
The general gist is that, yes, they are enforceable. The legislature keeps pushing for them, and the courts have, at various times, pushed back against them. There are limitations on them, but you'd have to talk to an attorney to figure out what they are -- I don't remember exactly what my attorney said. I do know that my attorney said my fairly typical non-compete probably would hold up in court.
While I signed this one, I've just flat out refused to sign them in the past. People seem to have the idea that the employment agreement is set in stone. For some companies it might be, but I've had some success pushing back against clauses I didn't like.
The general gist is that, yes, they are enforceable. The legislature keeps pushing for them, and the courts have, at various times, pushed back against them. There are limitations on them, but you'd have to talk to an attorney to figure out what they are -- I don't remember exactly what my attorney said. I do know that my attorney said my fairly typical non-compete probably would hold up in court.
While I signed this one, I've just flat out refused to sign them in the past. People seem to have the idea that the employment agreement is set in stone. For some companies it might be, but I've had some success pushing back against clauses I didn't like.
What is most surprising to me about these stories today is how uncommon NDAs are. I read somewhere that 20% of workers in the US have signed one.
I don't know if this is a common experience, but my employer recently began putting NDAs in place and, in retrospect, I feel they took advantage of the ignorance of most of the employees (including me). They insisted that the NDA was "standard," managers told us that there was no room for negotiation and pushed to have us sign immediately (eventually relented to having it signed by end of the following day).
I don't know if this is a common experience, but my employer recently began putting NDAs in place and, in retrospect, I feel they took advantage of the ignorance of most of the employees (including me). They insisted that the NDA was "standard," managers told us that there was no room for negotiation and pushed to have us sign immediately (eventually relented to having it signed by end of the following day).
Great! ...as long as this doesn't just mean nonsensically narrow rules like the new Illinois law, which only applies to low wage workers (< $13/hour).
Most laws are a reaction to something stupid, and in this particular case it's a reaction against sandwich shops requiring low-wage workers to sign non-competes.
Really? Those sandwiches must be something special for sure.
It actually seems borderline malicious and evil to me. Modern day slavery.
It actually seems borderline malicious and evil to me. Modern day slavery.
A ban seems heavy-handed. Since a noncompete essentially ties up an employee for a period, I'd prefer to see that tie-up treated by law as a continuation of employment at the existing salary. Surely companies must value their precious IP more than a single employee's salary for a year or two — and if they don't, perhaps it isn't that valuable after all.
This seems to miss how companies will react if enacted. If there's a freer flow on the talent side, corporations will want a freer flow as well. I would expect this to accelerate the current trend of converting more and more positions to contract or temporary positions rather than employment.
I think that's a good thing.
I'm not sure the White House would agree.
I think that's a good thing.
I'm not sure the White House would agree.
Ban-ing things is like writing explanatory code comments instead of working out why that code was confusing/hacky in the first place.
Unfortunately, people would rather welcome big brother govt into their lives than work on fixing the real problem.
Unfortunately, people would rather welcome big brother govt into their lives than work on fixing the real problem.
California is one of the few states that doesn't honor out of state non-competes.
Anyone know how these work in practice in Japan? The constitution here guarantees the right to work where you want yet I've witnessed people being asked to sign them upon leaving a job.
Thank the lord, non-competes are a criminal waste of productivity.
> The Obama administration on Tuesday also urged states to ban non-compete agreements that are not proposed before a job offer or promotion is accepted and said employers should not be able to enforce the agreements when workers are laid off.
Won't this just move the non-compete to be included in the job offer instead of the formal employment contract? That's a slight improvement at best.
Won't this just move the non-compete to be included in the job offer instead of the formal employment contract? That's a slight improvement at best.
If this gets any traction, I might consider giving BHO a C+ grade for his administration.
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While I don't agree with non-competes, I don't understand how it's even slightly ok to allow a government to decide private business policies.
Typically to prevent abuse of employees, who often have far less power than a company does. That is unless they are organized as a group to heighten their bargaining power.
I agree, lets only hire heterosexual, white, Christian males under 35 years old, and exclude all other candidates if we want to! </sarcasm>
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I like how anyone even mentioning IP is downvoted to hell. It really shows you what market Ycombinator is really in. Every single comment is either someone's personal narrative, or a ridiculous troll where "OMG WHY" is the only thing they say in each sentence. Wow, I wonder how this ever became law when YCombinator commentators are so opposed to it?
I wonder what a principled position on this matter would be.
On one hand everyone is free to trade freedoms for gains (usually monetary - every contract restricts both parties freedom), but on the other hand you can't trade certain freedoms away that we view as fundamental.
Even though I am certainly no proponent of non-compete agreements I cautiously tend towards viewing such contracts as acceptable and valid.
You usually do limit selling your services already the moment you accept a position as an employee, at least for the time you stay employed there. Contractually expanding it for a mutually agreed upon period doesn't strike me as that much different, at least as long as there was no coercion involved and both sides fully understood the consequences.
On one hand everyone is free to trade freedoms for gains (usually monetary - every contract restricts both parties freedom), but on the other hand you can't trade certain freedoms away that we view as fundamental.
Even though I am certainly no proponent of non-compete agreements I cautiously tend towards viewing such contracts as acceptable and valid.
You usually do limit selling your services already the moment you accept a position as an employee, at least for the time you stay employed there. Contractually expanding it for a mutually agreed upon period doesn't strike me as that much different, at least as long as there was no coercion involved and both sides fully understood the consequences.
It's not a fair negotiating position. If a company wants everyone on a non-compete, they'll be able to do so without providing any benefit for almost all employees.
I've had a company try and add a non-compete to a contract. They're generally not valid where I live, but it is always a hassle between having rights and getting that right. So I crossed it out of the contract (legal thing to do). That was a first for that HR, but it was accepted.
Note: talking in general. There might be exceptions in certain situations. E.g. CEO/strategic level functions or in case the salary is continued for the length of the non-compete period in case of not being able to find work (Belgium law ensures half of the salary).
I've had a company try and add a non-compete to a contract. They're generally not valid where I live, but it is always a hassle between having rights and getting that right. So I crossed it out of the contract (legal thing to do). That was a first for that HR, but it was accepted.
Note: talking in general. There might be exceptions in certain situations. E.g. CEO/strategic level functions or in case the salary is continued for the length of the non-compete period in case of not being able to find work (Belgium law ensures half of the salary).
The coercion is usually that you don't know about the non-compete until you walk in and sign your employment contract on day 1.
>Contractually expanding it for a mutually agreed upon period doesn't strike me as that much different
As long as I'm compensated for that period (a normal wage) then I think it's fair.
>Contractually expanding it for a mutually agreed upon period doesn't strike me as that much different
As long as I'm compensated for that period (a normal wage) then I think it's fair.
> The coercion is usually that you don't know about the non-compete until you walk in and sign your employment contract on day 1.
Okay this is really bad, in the EU country where I live you usually first negotiate and sign the contract, then start working.
But the drawback is that it is really just done this way because the government requires that the business notifies it about your employment before you start working, which is a privacy issue.
I think I'd still prefer it the US way. I'd ask about this before starting to work. (if this isn't a no go)
Okay this is really bad, in the EU country where I live you usually first negotiate and sign the contract, then start working.
But the drawback is that it is really just done this way because the government requires that the business notifies it about your employment before you start working, which is a privacy issue.
I think I'd still prefer it the US way. I'd ask about this before starting to work. (if this isn't a no go)
Yep, they spring it on you by giving you your 'Employee Handbook' or something on your first day, after you accepted the offer and relocated and whatever else you wanted to do, then sit down to sign paperwork on your first day and.... yep, there it is, that sneaky little non-compete. You ask HR about it and they'll probably just say "It's standard legalese, everyone here signed it, it's no big deal, just sign the damn thing, or you can walk."
You have to bring it up in the interview if you don't want to be bound by one. But even just asking could spook out the interviewees and get them to pass on you "Is this guy a Snowden? Is he going to steal and leak all our preeeeecious 'secrets'?"
You have to bring it up in the interview if you don't want to be bound by one. But even just asking could spook out the interviewees and get them to pass on you "Is this guy a Snowden? Is he going to steal and leak all our preeeeecious 'secrets'?"
Tragic story of a business. You decide if it was stolen. Happened a few years ago to a client friend.
Husband wife owns a florist. Has for decades in a county fourth highes per capita income in us.
Built a nice life but it was time to retire and sell the business.
They did not own their building.
New landlord buys building ( shop in nice main street area.) raises rent to outrageous amount. Too much to run the business.
Husband wife team can't sell florist before New lease starts and they do not sign lease.
The very Next week !!!! Next week - building owner puts up new sign for a new florist.
The owners lost everything. They owned some things like coolers - and got $$ for those.
Husband wife owns a florist. Has for decades in a county fourth highes per capita income in us.
Built a nice life but it was time to retire and sell the business.
They did not own their building.
New landlord buys building ( shop in nice main street area.) raises rent to outrageous amount. Too much to run the business.
Husband wife team can't sell florist before New lease starts and they do not sign lease.
The very Next week !!!! Next week - building owner puts up new sign for a new florist.
The owners lost everything. They owned some things like coolers - and got $$ for those.
In other words, a landlord decided not to renew a lease and opened their own business.
On the one hand, it's a bit sleazy to attempt to cash in on the previous shop's customer relationships. But I have trouble calling this "stolen." Presumably, if it were a Starbucks that were opened instead, it wouldn't be so objectionable even though the net effect on the previous store owners is largely the same.
On the one hand, it's a bit sleazy to attempt to cash in on the previous shop's customer relationships. But I have trouble calling this "stolen." Presumably, if it were a Starbucks that were opened instead, it wouldn't be so objectionable even though the net effect on the previous store owners is largely the same.
The couple is devastated.
I call it sleazy. But wonder why someone didn't let them see that outcome could happen.
I call it sleazy. But wonder why someone didn't let them see that outcome could happen.
I agree the thing carries something of a smell and is unfortunate. On the other hand, I'm not sure how much salable value there is in a typical florist (or indeed in many retail businesses) even if it's throwing off a reasonable income stream for the owners that would lead someone to buy an existing business, rather than just starting fresh.
I'm a bit confused on how this is relevant? would a employee signing a non-compete agreement have prevented this? Even if there was one with the previous lanlord, would that have applied in the case of a sale?
Well. Nda protects the company from losses.
Ultimate loss is the loss of the business.
Thus my example.
No, not really an NDA issue but I shared because I was interested and also signed many a NDA in my lifetime.
Ultimate loss is the loss of the business.
Thus my example.
No, not really an NDA issue but I shared because I was interested and also signed many a NDA in my lifetime.
Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements
Client lists, contract terms, sales strategies, reported metrics, financials: covered by NDA and in some cases SEC regulations about insider trading.
Etc.
The only thing a non-compete does is say that Employee A cannot work in their chosen field for some period of time after they are fired or quit. In doing so it offers no consideration or compensation typically in the contract.
So your employer underpays you by 40% and treats you badly? You want to leave for greener pastures at that hip new startup that offered you a Senior Engineer gig? Well, sorry to say you have a mortgage, a wife, and 2 kids and that non-compete says you are only legally allowed to be a burger flipper for two years after quitting, that software engineering is verboten.
Totally fair right?
If you don't sit on the board of a Fortune 500 company, you have literally no incentive to support non-competes. There is no rational basis to argue in their favor. Please learn the difference between NDAs, IP assignment agreements, and non-competes before lending non-competes some mystical powers they don't have.