The piece's subtitle/tag line is interesting: "If we’re going to pretend we operate in a free market, we need to at least give labor a fighting chance of flowing as freely as capital does."
There are some posters on here who take offense to the term 'poaching'
This is the first article where I really understood that. Saying a non-compete defends a big corporation from "poaching" (by ensuring a low level employee can't work in the same industry after quitting) shows an almost depraved pro-business bias.
You being too nice even calling the stance 'pro-business'. It's not even pro-business since labor can't flow to the place where they are the most valued.
The non-compete situation is one of those prisoner's dilemma problems. If you're the only one with non-competes then you're better off because you can retain employees for less than their market rate, and if everyone except you uses non-competes then you lose your best talent and can't attract more. Thus the short-sighted decision is to use non-competes.
But if everyone uses non-competes then labor doesn't flow at all, businesses can't attract talent, and then everyone is worse off.
Well its certainly not pro-capitalism as it inhibits a fair market. I just put it under cronyism. Entrenched interests are always a problem unless checked by laws or new technology.
The point of capitalism is return on capital. The ultimate return will be generated by monopolies, duopolies, or cartels. Capitalism is fundamentally antagonistic to free markets.
you seem to be talking about what theseatoms mentioned, because capitalism is nicely summarized by Wikipedia as:
Capitalism is an economic system based on private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment is determined by the owners of the factors of production in financial and capital markets, and prices and the distribution of goods are mainly determined by competition in the market.
Ok, thought you just missed the end. Yep, you are correct as it does favor the owners of the means of production. I wonder what groups would show up if a Representative tried to get a law nationally that mirrored CA's NDA rules?
Hum... Not outright. Non-compete clauses were created because they are useful and important.
Just look what countries that value their own peasants (should I say "democratic" here?) do. Make non-compete invalid unless it causes a transfer of money to the employee that is at least equal to his entire salary for the non-compete period.
Unless the benefit clearly outweighs the harm, I don't see why they should be allowed. And I've seen nothing but vague handwaving about the benefits of them, while the harm is huge and obvious.
I've noticed the same trend in using non-competes on low-level grunts. Every job I've taken in the last decade required one. Only one of those jobs had a legitimate competitive reason for it.
While this contract is currently viewed as unenforceable, it is only enforceable by old conventions I think. We've already seen that it is possible to lose basic inalienable rights by signing a contract you did not read, so why not the ability to have a livelihood?
exactly - even the slightest threat of enforcement can have a chilling effect on employees, who are usually not in a position of power (to negotiate, go to court, risk their livelihood etc)
That's the big thing. When I worked for a small company, if someone came along who had even the most remotely relevant non-compete, the conversation was pretty much over. It was one of the first things we asked before beginning any serious discussion. Just too much potential for cost and risk.
Their were also firms in more or less the same industry who were known for having non-competes that basically said, you couldn't do the same job for a year with any competitor. I know at least one person who wanted to go out on his own and he took a year off rather than trying to fight it.
I don't have an inherent problem with non-competes. I could understand why certain industries would need restrictions along those lines.
The problem is when businesses expect the non-compete agreement when it is not a negotiated item during the hiring process. I recall one instance where I given an offer by a company and we went through the usual salary/benefits/role negotiation process. I accepted the offer and put in notice at current employer. During the new hire paperwork they added an extremely onerous non-compete agreement. Of course I refused to sign it.
The most insulting part was how baffled they acted. Like they just assumed they could add demands like that without any additional consideration. This attitude of 'well we need to protect ourselves, and we can ask for this legally'. Well yes you can ask for anything, but it's not what we agreed as the terms of employment.
That they would just demand it without even negotiating it during the hiring process. Just assuming that I would cripple my career for years to minimize their risk without any compensation in exchange.
"I understand that your feel your business is at risk for poaching/trade secrets etc... But what I don't understand is why you assumed that I would aborb the costs of your risk."
Can confirm how surprised they always seem to act. I've always negotiated it away (or very nearly, but acceptably, in one case) as part of the checking that contract of employment matches offer and interview promises.
A few times they've tried to imply I'm the first not to simply blindly sign everything and how difficult this is going to be. I've never once lost a role or ended up having to sign my life away.
Contracting taught me to read every contract, and every clause is negotiable.
"So you don't really want that provision or expect it to matter, it's just part of the boilerplate? Okay, then let's just scratch it out and continue."
"What's that, your legal department is too busy or too inflexible to approve that tiny change in a timely manner? Should I be concerned about the near-future health of the company?"
The specific issue with the author of this article is that she did not disclose her prior noncompete to the new employer. Of course the new employer did not sign the noncompete with the former employer, so there is no contractual privity and thus no direct basis for the former employer to sue the new one for breach of contract. The only way the former employer can mess with them is to argue that they intentionally interfered with the contract by encouraging the journalist to violate it. The SOP for employers targeted by such claims is to put the employee in question on leave, or on alternative duty if something's available that is unrelated to her prior job and does not risk violation of her covenants. To terminate the employee altogether is a rather extreme move. It's a solid damage mitigation strategy, but I think conveys a total lack of spine, particularly for a journalistic organization. The right thing to do would have been to put her on leave, while attempting to get dismissed from the lawsuit -- which should have been easy enough to do since the new employer apparently had no knowledge of the prior contract.
Much as I'm against non-competes under most circumstances...
>The specific issue with the author of this article is that she did not disclose her prior noncompete to the new employer.
In fact, according to the original WSJ article, "In applying for the job at the Reuters newswire, she checked a box saying she wasn’t subject to any noncompete agreement. Her termination letter from Reuters, which was reviewed by the Journal, said that mistake cost her the job."
I get that she had supposedly forgotten she had signed one but it puts Reuters in a tough situation.
It actually puts Reuters in a great situation! Because they have a piece of evidence that says they had no knowledge of the restrictive covenants. Sure, it's not an accurate disclosure on the part of the employee. But that inaccuracy only strengthens Reuters position in this case.
You could say "ah, but Reuters never would've hired her if the noncompete had been disclosed." Not sure about that, because a fair reading of the noncompete is that under New York law it cannot prevent the employee from practicing her trade of journalism. If I were Reuters HR, and I saw the noncompete, I might not have considered it a problem (aside from the industry practice of filing meritless lawsuits).
I agree with you that the box-checking cost me my job, and the decision was easy for Reuters. But the company now has a blanket policy in place not to hire from my former employer because of the non-compete. So other employees are now prevented from moving there.
Well, it was cited as the reason from what I read. But they could have stood by you without increasing their legal exposure. I would hope to see the AG's office take some action against publishers who use overly broad noncompetes to depress the labor market.
Call me crazy, but there's a huge difference between non-competes in startup-land and non-competes in corporate america.
In a startup, the whole endeavor rides on secrets. The company doesn't more money, talent, or employees than big companies. This applies to a pretty broad definition of startups that includes unicorn and high-growth public companies. The only things that matter to those companies are what they're doing and how they're doing it, and in many startups, every employee has specific knowledge that would be valuable to a bigger company or competitor. [Ironically, the state with most of these companies (CA) doesn't allow non-competes, so it's obviously not death, probably because trying to replicate a startup's success means starting after they've become successful, so it may not matter. The point is, non-competes make sense in a world where knowledge is core to the business.]
In a large company, execution dominates. You can go all the way to factory worker, but anything that looks like "use your trade skills to make this thing" obviously shouldn't be protected by non-compete. Trade skills should cut across companies.
There's ways to argue that, say, developers for CA startups could go either way. React / Ember / Angular / etc. is certainly a trade skill. I'm going to hire somebody eventually to help with munging our data set, plugging into more APIs, and figuring out how to make sense of the data that comes back. If that person went to work for another marketing analytics company, I wouldn't be too happy, because to some extent, our specific mix of APIs to integrate with and what we got from them is proprietary. If an engineer I'd worked with and developed that knowledge with went to somebody trying to solve the same problem as me, I'd be kind of pissed. Analytics the way we do it isn't a trade skill, and I expect an informal agreement that you're not going to go work for one of the ~5 companies in the world doing something really similar.
Everything is a trade skill. Some trades are just very specialized. Telling an API expert they shouldn't practice their trade is bad whether there are five or five hundred companies in the industry. If you want someone not to work, you have to pay them not to work, and you still shouldn't be able to force it on them.
A noncompete is not about protecting secrets, but about preventing employees and former employees from competing "unfairly". The nondisclosure provision of the employee covenants package is what restricts disclosure of secrets. There are also laws that restrict the misappropriation of trade secrets. These separate issues and related legal claims get confused a lot, b/c in employment litigation the claims are often brought at the same time. And of course in CA, employers are not allowed to include certain types of noncompete restrictions in employee covenants, so they lean more heavily on trade secrets claims even when the underlying issue is one of employee loyalty (a term that makes me kind of nauseous). But legally the contractual noncompete, contractual NDA, and legal trade secrets misappropriation claims are separate issues.
I would also point out that if you've ever worked for a large corporation, you would know intuitively that most big boy companies have employees sign extremely punitive and one-sided restrictive covenants. Startups actually tend to place less value on contractually restricting employees, and the mindset of startup entrepreneurs can be less focused on protecting trade secrets / more on execution. (The IP assignment portion of the covenants package is, however, just as important to startups.)
Not even sure where to start on this comment, but I'll try:
> In a startup, the whole endeavor rides on secrets. ... In a large company, execution dominates.
Have you ever worked for a startup? Most likely at least 10 other companies have had the same idea. And 100 people outside those companies. Your ability to (out) execute is all that matters -- regardless of the size company. See also: talk is cheap. And yes, there are trade secrets that can be hugely important, but these are handled by NDAs and other Confidential Information agreements, not non-competes. If those are stolen, you sue under those agreements, not your non-compete.
> If that person went to work for another marketing analytics company, I wouldn't be too happy, because to some extent, our specific mix of APIs to integrate with and what we got from them is proprietary. ... If an engineer I'd worked with and developed that knowledge with went to somebody trying to solve the same problem as me, I'd be kind of pissed.
Then you should give them a reason (ideally, several) to stay. Your employment agreement trades some form of compensation -- typically cash and equity -- for their output. You're getting value, they're getting value. If you don't treat them properly, you don't deserve to keep them, regardless if you "wouldn't be too happy" about it.
I have. Last company I was the first the join, was acquired by a bigger startup, and left at 120 employees. I'm currently starting my own company.
Maybe idea is the wrong word. Vision? Strategic plan? Narrowly-focused execution with an emphasis on coherence? Facebook and MySpace are the same idea, but vastly different companies, no matter when you compared them. Communicating all the things you do differently isn't something that you can do with a website or a quick chat with a single employee. That structure of shared ideas is important, and in small companies, it's basically all that exists. Comparatively, the code and customer base replaceable.
And anybody can leave, at any time, in the same way that I'm allowed to fire anybody or sell the company with a provision to devalue the equity. There's a million ways for us all to screw each other. There needs to be trust in the company, because if you're just after short term cash, there's way better ways to find it than startups.
If all you have are (shared) ideas, you have nothing. Think about it this way: even if you took everything you've planned to do with your NewCo and published it for the world to see, and then encouraged people to copy your plan, you'd have a hell of a hard time convincing anyone to do so. It's also one snapshot in time, for something that evolves rapidly -- if not by the hour then at least by the day.
As an example, even if Facebook published their detailed road map years ago, do you think MySpace would have been able to mimic their success? Of course not. The team you assemble and your ability to lead them through execution is what matters. That's 95% of it, if not more.
> There needs to be trust in the company, because if you're just after short term cash, there's way better ways to find it than startups.
Huh? What point are you trying to make here? Do you have employees joining your startup for short-term cash? If so, they're idiots and should go work for a larger company. I think the word you're looking for is "loyalty" and yes, of course you want to create an institution that promotes mutual loyalty. But you don't get it just by giving someone a job. You get it by valuing their skills, rewarding them for their efforts, and selling them on the idea that you as a leader will make it worth their sacrifice.
Or, you know, you can sign them and not give a shit.
Unless you're working for SuperLargeCo (and according to this article, in most cases even then) nothing bad will happen if you then work for a competitor. As others have pointed out in this thread, there's no potential legal harm to your new employer. And it is incredibly rare for prior employers to enforce noncompetes.
How many of you have had issues with noncompetes? Is my experience totally atypical? I've job hopped pretty frequently both in and out of California and never had any issues.
Some employers will not hire you if you have a non-compete that might impact your work for them. It's never been an issue for me, I've only read stories online. But I have been asked while applying for a job whether I have any non-competes.
It's a risk for you. Even if unlikely, there's a non-zero chance that it could screw up your career and hurt you badly. That risk has very real value attached to it. Just like insurance and out-of-money options have real value to them.
Long ago a company I worked for had to terminate development on an entire product line because an inferior competitor decided to harass its former employees across two different companies, rather than make a better product. One target was a large corp (where I worked), the other was a highly innovative startup. The aggressor had way more money than the startup and killed them with legal fees and discovery costs.
As I wrote elsewhere, I used to work for a small firm and we passed on at least a couple folks we were interested in because they had non-competes that to greater or lesser degrees could have been issues. Our business office considered any non-compete that could even potentially come into play a complete showstopper.
And what if my employer ends up being vindictive and does try to enforce the noncompete?
What you're saying sounds exactly like what I've heard form every purveyor of terrible contract terms. "Oh, that's just a formality." "We don't ever enforce that clause." Well when why do you need me to sign it?!
Assume that every clause of everything you sign is potentially in play. If you don't, you're setting yourself up to be burned hard later on.
I got threats from a former employer about a non compete. They wanted money as compensation, and said they'd sue me if I didn't comply within a week. I try to engage them as adults, but they seemed to be unaware of how to deal with someone that was prepared: All their communication was amateurish at best, maybe hoping for me to admit guilt? Incompetence either way. So I decided to ignore them, and see what happened: I thought they either had no case, or that they couldn't claim real damages.
As it happens, I never got sued, so I guess that they were bluffing, and just hoping for me to give them money, or that they talked to a real attorney, and that said attorney told them their chances of winning were too slim for what they could ever make.
I worked at AWS in Seattle and signed a non-compete that stated what was laid out in the article. Given the things I'd done for Amazon, when it was time to move jobs, it was insinuated that going to Microsoft and working on similar things might be enough to trigger action on the non-compete. While I wasn't interested in going to MS, it was clear that this non-compete was holding my wages down as the company recognized I couldn't easily go elsewhere in the local area. Who knows if it was a bluff or not, but I'm in California now and I don't plan to ever sign a non-compete again.
In my case, at a "startup" (it isn't) I was offered the non-compete, with extremely nasty and broad language that unfortunately is enforceable in Texas, 3 months after I had been working there. You can imagine the coercive effect of that one: sign this or look like you got fired at 3 months. I was able to negotiate some changes to the broad clauses, which by their own admission were cut-and-pasted from somewhere else, but it made for an appalling experience.
Which may explain why the unemployment rate is so low in Texas. Anybody who already lives there is employed if they want to be, and are employable. Texas has trouble attracting talent from outside of the state for the reason you mentioned, and the backward labor laws in the state.
One of the reasons Silicon Valley is so successful is that California not only prohibits non-compete contracts, it prohibits employment contracts which claim that the employer owns technology the employee develops on their own time. Most wannabe competitors of Silicon Valley aren't willing to put that into law.
Which unfortunately gives California the label "business unfriendly". I hope for California's continued growth because of its frequent ability to tell most "job creators" where they can take their pre-Depression-era worker preferences.
I've never been able to take anyone who talks about things being "business friendly" seriously, because it almost always is a policy that makes things worse for everyone else.
The current HN title is "Be careful before you sign a non-compete agreement."
Is there any time when I should ever sign one? OK, perhaps if my family was literally starving and this was the only job I could get. Aside from extreme cases like that, are there any circumstances where a non-compete would be a good idea for me? It seems like there's no point in "being careful," just reject them out of hand. Sort of like you wouldn't say "be careful when handling live wires while standing in a full bathtub."
Sure, like if the non-compete isn't that onerous for you (some are as short as 6 months, and some firms pay your salary for the duration of the non-compete), and you get compensated for it (e.g. a large salary boost).
Also, many firms in finance enforce non-competes as well as many other restrictions, e.g. mandatory approval for trading in personal accounts. So if you want to work in this industry, it's not easy to avoid them without compromising something else.
If someone is going to pay me a chunk of change not to work in my area of expertise for the length of the non-compete, sure.
If the language only covers things I wouldn't do anyway (like reveal employer-specific information, trade secrets, product roadmaps, soliciting customers, and so on).
There are pretty draconian non-competes in the vein of you can't do a similar job for anyone else for 2 years and there are ones that are less draconian.
When a company I was with was acquired, we were all given non-competes to sign and it was pretty clear we could sign them or leave. I left not much later for other reasons but I did sign the non-compete. Its terms were such that they seemed unlikely to affect me. (Basically they enjoined me from taking a senior executive position in a fairly narrow slice of the market for a limited period of time.) So, yes, under those specific circumstances, continuing to get paid seemed a reasonable decision.
[Edit: This was intended to be a reply to the comment asking why one would ever sign a non-compete.]
One simple solution would be to require employers to pay at least the workers' prior base salary for the duration they wish to enforce the non-compete. I've held senior positions where non-competes are to be expected, and that is always a standard term. Of course, the only reason it became a standard term is because people like me are represented by expensive lawyers who consistently demand it, and an Amazon warehouse worker isn't in the position to follow our lead. So the warehouse worker should be given the same protection by statute: if the employer wants to enforce a non-compete, they must do so affirmatively by paying the worker's salary (i.e. if they elect not to pay then the non-compete is automatically null and void).
Of course the odds of something like that making its way through the dysfunctional legislatures of 48 states is vanishingly low. But we can hope.
> One simple solution would be to require employers to pay at least the workers' prior base salary for the duration they wish to enforce the non-compete.
This is pretty much the standard in New Zealand employment law, and it seems crazy to me that people can (effectively) be denied a livelihood because they once worked one job.
Right, the standard contract term is called 'consideration', meaning that for a contract to be valid and enforceable, each side must be giving up something of value as part of the transaction.
This is simply not true. It has nothing to do with at-will employment. It is state law. Some states require consideration separate from salary, some say continued employment is sufficient consideration. 49 out of 50 states recognize the doctrine of at-will employment. Only Montana uses just-cause instead (just like the rest of the developed world coincidentally).
I've seen this so many times. Pay someone low wages "Free Market", that same low wage employee (Me for example, more times that I can count) leaves for a better paying job "What about us? We're the CompanyName family!". It's amazing how fast republican free-market types can become european socialists.
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This is the first article where I really understood that. Saying a non-compete defends a big corporation from "poaching" (by ensuring a low level employee can't work in the same industry after quitting) shows an almost depraved pro-business bias.
The non-compete situation is one of those prisoner's dilemma problems. If you're the only one with non-competes then you're better off because you can retain employees for less than their market rate, and if everyone except you uses non-competes then you lose your best talent and can't attract more. Thus the short-sighted decision is to use non-competes.
But if everyone uses non-competes then labor doesn't flow at all, businesses can't attract talent, and then everyone is worse off.
But that may be too clear to be useful. Not all capital is entrenched.
Of all the delusions about economic system, the one that capitalism loves free markets is the most hilarious.
You can mock it, but that's the whole point
Capitalism is an economic system based on private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment is determined by the owners of the factors of production in financial and capital markets, and prices and the distribution of goods are mainly determined by competition in the market.
Just look what countries that value their own peasants (should I say "democratic" here?) do. Make non-compete invalid unless it causes a transfer of money to the employee that is at least equal to his entire salary for the non-compete period.
Unless the benefit clearly outweighs the harm, I don't see why they should be allowed. And I've seen nothing but vague handwaving about the benefits of them, while the harm is huge and obvious.
To who? Not me. I've never once benefited from a non-compete clause. They've always been used as a tool to threaten.
That's why the company should be required to pay you in order for them to be valid.
Their were also firms in more or less the same industry who were known for having non-competes that basically said, you couldn't do the same job for a year with any competitor. I know at least one person who wanted to go out on his own and he took a year off rather than trying to fight it.
The problem is when businesses expect the non-compete agreement when it is not a negotiated item during the hiring process. I recall one instance where I given an offer by a company and we went through the usual salary/benefits/role negotiation process. I accepted the offer and put in notice at current employer. During the new hire paperwork they added an extremely onerous non-compete agreement. Of course I refused to sign it.
The most insulting part was how baffled they acted. Like they just assumed they could add demands like that without any additional consideration. This attitude of 'well we need to protect ourselves, and we can ask for this legally'. Well yes you can ask for anything, but it's not what we agreed as the terms of employment.
It's true that the world isn't zero-sum, but it's offensive for them to just assume that means you're going to surrender something for nothing.
"I understand that your feel your business is at risk for poaching/trade secrets etc... But what I don't understand is why you assumed that I would aborb the costs of your risk."
A few times they've tried to imply I'm the first not to simply blindly sign everything and how difficult this is going to be. I've never once lost a role or ended up having to sign my life away.
Contracting taught me to read every contract, and every clause is negotiable.
"None of our contracts are valid"
That's all I heard.
"What's that, your legal department is too busy or too inflexible to approve that tiny change in a timely manner? Should I be concerned about the near-future health of the company?"
>The specific issue with the author of this article is that she did not disclose her prior noncompete to the new employer.
In fact, according to the original WSJ article, "In applying for the job at the Reuters newswire, she checked a box saying she wasn’t subject to any noncompete agreement. Her termination letter from Reuters, which was reviewed by the Journal, said that mistake cost her the job."
I get that she had supposedly forgotten she had signed one but it puts Reuters in a tough situation.
You could say "ah, but Reuters never would've hired her if the noncompete had been disclosed." Not sure about that, because a fair reading of the noncompete is that under New York law it cannot prevent the employee from practicing her trade of journalism. If I were Reuters HR, and I saw the noncompete, I might not have considered it a problem (aside from the industry practice of filing meritless lawsuits).
In a startup, the whole endeavor rides on secrets. The company doesn't more money, talent, or employees than big companies. This applies to a pretty broad definition of startups that includes unicorn and high-growth public companies. The only things that matter to those companies are what they're doing and how they're doing it, and in many startups, every employee has specific knowledge that would be valuable to a bigger company or competitor. [Ironically, the state with most of these companies (CA) doesn't allow non-competes, so it's obviously not death, probably because trying to replicate a startup's success means starting after they've become successful, so it may not matter. The point is, non-competes make sense in a world where knowledge is core to the business.]
In a large company, execution dominates. You can go all the way to factory worker, but anything that looks like "use your trade skills to make this thing" obviously shouldn't be protected by non-compete. Trade skills should cut across companies.
There's ways to argue that, say, developers for CA startups could go either way. React / Ember / Angular / etc. is certainly a trade skill. I'm going to hire somebody eventually to help with munging our data set, plugging into more APIs, and figuring out how to make sense of the data that comes back. If that person went to work for another marketing analytics company, I wouldn't be too happy, because to some extent, our specific mix of APIs to integrate with and what we got from them is proprietary. If an engineer I'd worked with and developed that knowledge with went to somebody trying to solve the same problem as me, I'd be kind of pissed. Analytics the way we do it isn't a trade skill, and I expect an informal agreement that you're not going to go work for one of the ~5 companies in the world doing something really similar.
I would also point out that if you've ever worked for a large corporation, you would know intuitively that most big boy companies have employees sign extremely punitive and one-sided restrictive covenants. Startups actually tend to place less value on contractually restricting employees, and the mindset of startup entrepreneurs can be less focused on protecting trade secrets / more on execution. (The IP assignment portion of the covenants package is, however, just as important to startups.)
> In a startup, the whole endeavor rides on secrets. ... In a large company, execution dominates.
Have you ever worked for a startup? Most likely at least 10 other companies have had the same idea. And 100 people outside those companies. Your ability to (out) execute is all that matters -- regardless of the size company. See also: talk is cheap. And yes, there are trade secrets that can be hugely important, but these are handled by NDAs and other Confidential Information agreements, not non-competes. If those are stolen, you sue under those agreements, not your non-compete.
> If that person went to work for another marketing analytics company, I wouldn't be too happy, because to some extent, our specific mix of APIs to integrate with and what we got from them is proprietary. ... If an engineer I'd worked with and developed that knowledge with went to somebody trying to solve the same problem as me, I'd be kind of pissed.
Then you should give them a reason (ideally, several) to stay. Your employment agreement trades some form of compensation -- typically cash and equity -- for their output. You're getting value, they're getting value. If you don't treat them properly, you don't deserve to keep them, regardless if you "wouldn't be too happy" about it.
Maybe idea is the wrong word. Vision? Strategic plan? Narrowly-focused execution with an emphasis on coherence? Facebook and MySpace are the same idea, but vastly different companies, no matter when you compared them. Communicating all the things you do differently isn't something that you can do with a website or a quick chat with a single employee. That structure of shared ideas is important, and in small companies, it's basically all that exists. Comparatively, the code and customer base replaceable.
And anybody can leave, at any time, in the same way that I'm allowed to fire anybody or sell the company with a provision to devalue the equity. There's a million ways for us all to screw each other. There needs to be trust in the company, because if you're just after short term cash, there's way better ways to find it than startups.
As an example, even if Facebook published their detailed road map years ago, do you think MySpace would have been able to mimic their success? Of course not. The team you assemble and your ability to lead them through execution is what matters. That's 95% of it, if not more.
> There needs to be trust in the company, because if you're just after short term cash, there's way better ways to find it than startups.
Huh? What point are you trying to make here? Do you have employees joining your startup for short-term cash? If so, they're idiots and should go work for a larger company. I think the word you're looking for is "loyalty" and yes, of course you want to create an institution that promotes mutual loyalty. But you don't get it just by giving someone a job. You get it by valuing their skills, rewarding them for their efforts, and selling them on the idea that you as a leader will make it worth their sacrifice.
Unless you're working for SuperLargeCo (and according to this article, in most cases even then) nothing bad will happen if you then work for a competitor. As others have pointed out in this thread, there's no potential legal harm to your new employer. And it is incredibly rare for prior employers to enforce noncompetes.
How many of you have had issues with noncompetes? Is my experience totally atypical? I've job hopped pretty frequently both in and out of California and never had any issues.
It's a risk for you. Even if unlikely, there's a non-zero chance that it could screw up your career and hurt you badly. That risk has very real value attached to it. Just like insurance and out-of-money options have real value to them.
What you're saying sounds exactly like what I've heard form every purveyor of terrible contract terms. "Oh, that's just a formality." "We don't ever enforce that clause." Well when why do you need me to sign it?!
Assume that every clause of everything you sign is potentially in play. If you don't, you're setting yourself up to be burned hard later on.
As it happens, I never got sued, so I guess that they were bluffing, and just hoping for me to give them money, or that they talked to a real attorney, and that said attorney told them their chances of winning were too slim for what they could ever make.
hearty laugh
I will not sign a non-compete agreement.
Show me the money.
This seems like something that would be easy to explain during an interview with a different company.
Is there any time when I should ever sign one? OK, perhaps if my family was literally starving and this was the only job I could get. Aside from extreme cases like that, are there any circumstances where a non-compete would be a good idea for me? It seems like there's no point in "being careful," just reject them out of hand. Sort of like you wouldn't say "be careful when handling live wires while standing in a full bathtub."
Also, many firms in finance enforce non-competes as well as many other restrictions, e.g. mandatory approval for trading in personal accounts. So if you want to work in this industry, it's not easy to avoid them without compromising something else.
If someone is going to pay me a chunk of change not to work in my area of expertise for the length of the non-compete, sure.
If the language only covers things I wouldn't do anyway (like reveal employer-specific information, trade secrets, product roadmaps, soliciting customers, and so on).
When a company I was with was acquired, we were all given non-competes to sign and it was pretty clear we could sign them or leave. I left not much later for other reasons but I did sign the non-compete. Its terms were such that they seemed unlikely to affect me. (Basically they enjoined me from taking a senior executive position in a fairly narrow slice of the market for a limited period of time.) So, yes, under those specific circumstances, continuing to get paid seemed a reasonable decision.
[Edit: This was intended to be a reply to the comment asking why one would ever sign a non-compete.]
Of course the odds of something like that making its way through the dysfunctional legislatures of 48 states is vanishingly low. But we can hope.
This is pretty much the standard in New Zealand employment law, and it seems crazy to me that people can (effectively) be denied a livelihood because they once worked one job.
There's a pretty good summary here:
http://www.wolfbaldwin.com/Employment-Articles/Non-Compete-C...
When you enforce one, you are basically trying to take someone's livelihood away.
They're the EULA of of jobs. Sure, make a stand of you really want. But if you don't, there's practically nothing to worry about.
(I feel bad saying that, but TBH I've signed a lot of EULAs.)