I’m surprised it’s taken so long. Companies have abused this practice to an absurd degree. Got a job at a sandwich shop? I guess you are prohibited from getting a different job down the street based on the agreement you signed at the beginning of your employment.
I know here in Colorado they recently passed a law that under a certain pay you cannot be made to sign a noncompete. However it was only like $110k so wasn't going to help many developers.
This is a bigger deal then the title suggests since it appears it would be retroactive and nullify existing non competes
> The commission’s proposal appears to address this issue by requiring employers to withdraw existing noncompetes and to inform workers that they no longer apply. The proposal would also make it illegal for an employer to enter into a noncompete with a worker or to try to do so, or to suggest that a worker is bound by a noncompete when he or she is not.
This is very unclear to me, and seemingly experts, if the FTC has this power, but it would be very far reaching if it were to go into effect. Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC
It's good to let agencies make laws if they make good laws. It's bad to let agencies make laws if they make bad laws. The liberal obsession with process is what lets the far right make inroads everywhere, since they don't share it.
What is good law and what is bad law? This is subjective, and likely shifts with the context of the surrounding society. Law is not morality, even though it may derive from social mores. For this reason, process is crucially important to prevent tyranny.
Yes, it's subjective. The ones I like are good. The ones that help my allies are good. The ones that punish my enemies are good. Pretending that things are any other way is madness.
Lets be honest, the common American does not have the bargaining power to corrupt anyone powerful in their favor unless they move to the third world where their dollars go further and corruption is even more accessible.
This is the point of left IMO: to collectively develop the power to corrupt things in favor of workers. This was the point of Tammany Hall. Some Irish immigrant off the boat in 1890 was not a Democrat because he believed in liberalism, but because his ward healer got his brother a job in the sanitation department. When organized labor is strong, they can get Democrats to pass pro-labor policies. The point of all political economy is to corrupt the system of money and power in your personal favor (including your friends, people with similar class interests, your family, etc.). Sometimes that means "anti-corruption" but it's simply a bad idea (pointless, stupid, naive) to point out that some official is corrupt if they are doing what you want them to instead of what someone else does.
I agree to an extent, but I also think this is kind of kicking the can down the road: how do workers collectively decide what is in their interest and what isn't? The historically successful socialist answers to this question have generally ranged from "something that looks a lot like liberal democracy" to "something that looks a lot like oligarchic despotism".
Sure, that's the tough part of left politics. Capital has it easy, they can just pay people to do what they want. We have to get along and (more or less) agree.
My conservative dad said the exact same thing—almost word for word, just reversed—about liberals and process in 2009. I'm inclined to believe that there are groups of every political persuasion who believe the end justifies the means.
EDIT: To clarify, I mean that my dad said that liberals will do anything to accomplish their goals while conservatives play nice. The same idea but in reverse. This is why I think that what is actually happening is that there's a small group of people in any movement that believe the end justifies the means, but it's hard to see the ones in your own movement because you agree with them.
That's the left's problem IMO. The right knows that their game is to gain power and use it to achieve goals. The liberal left (which is most of it if we're honest) thinks they are just trying to gain enough power to make everyone play by the rules. The problem is that there is not enough power in the world to make your enemies bargain in good faith.
Anyway this derailed from the OP which is about some new rules that might slightly tip the power in the employer-employee relationship in favor of employees. As an employee (leftists like to say "worker" but it means the same thing), this would be good for me.
No, I'm saying that my dad gave me this exact lecture in 2009 but in reverse—he said that the problem with the right is that they play nice while the liberals will do anything it takes to take power and accomplish their goals. Literally the exact same thing that you're saying but in reverse.
I think what it actually is is that there are factions within each group who match your description and it is hard to see the faction in your own group because you agree with them.
I know it will sound like a slight to your dad, but in 2009 many conservative news outlets were pushing this narrative extremely heavily. And, I don't recall any actual evidence to back it up. It was more a weaponized accusation, much as marital infidelity was in the mid/late 90s. Worse, by all evidence since then, the record seems to be far more in the opposite direction. :(
No offense taken: I strongly disagree with my dad on politics, and a big part of the reason why is because of just how bad the conservative media was in those years.
Also, even he was appalled by the turn the Republican party took with Trump. I doubt he would argue the same today. He's a diehard believer in constitutional law, and he projected his ideals onto people who didn't actually hold them.
That said, I do believe the same tendency occurs on the liberal side. It's easy to notice when your opponent cheats, it's much harder to see it when a teammate does.
Agencies do not make laws, full stop. Agencies are empowered by congress via laws to regulate industries. These regulations can be challenged in court as to whether they have overreached the scope of their regulation written in the original law, but they are not making laws.
Agencies should not make laws (in the United States). Even good ones.
They do in all but name. One day a polymer80 frame in a box with a jig is a gun. Another day it is not. The only difference is a letter from an ATF agent.
Lawmakers make laws intentionally vague to hide their nefarious motives, and then let the courts "determine" the agencies can "clarify." Then the lawmakers point their fingers at the evil agencies while secretly laughing it was all in their plan to offload blame for what they planned all along.
That’s not “making” a law. The law already says certain types of firearm are legal and certain are illegal. Now if this law were to be maintained by congress, they’d need, I don’t know, a group of experts who understand firearm and congress will constantly revise and add or remove items from a list. May be they’ll give this group a name at some point and then they’d realise that it’s really hard to manage all this while also having to make new laws. So they’ll hire someone to execute this for them and assign this group of people to that executive.
Title 27, Code of Federal Regulations, section 478.11 defines a
“firearm receiver” as, “[t]hat part of a firearm which provides housing for the hammer, bolt
or breechblock, and firing mechanism, and which is usually threaded at its forward portion
to receive the barrel.”
ATF has "regulated" that an AR-15 lower "receiver" is legally a "firearm receiver." Now show me where the "bolt or breechblock" is housed in the lower receiver. I promise you will not find it. They are basically making law.
Two things: first, are you referring to a regulation and saying that another regulation is inconsistent? It seems that neither is making "law" in the sense of an act of Congress. It would be different if the law had its own definition.
Second, your citation appears to be out of date and the current regulation defines "frame or receiver" differently.
ATF acts are not congress acts. Brilliant statement. No one is saying ATF is congress, so by definition their act is not an act of congress.
>Second, your citation appears to be out of date and the current regulation defines "frame or receiver" differently.
At the time of US v Rowald there were pretty clear inconsistancies. If you're referring to recent changes there's barely been enough time to create a historical record as the judicial process is slow, so it seems kind of silly to constrain to only post-latest change examples.
This would not be a law, and an agency cannot issue laws as it goes directly against the constitution. This would be a regulation, which is specifically the purpose of Federal Agencies. It is onerous, slow, and ineffective to have congress pass small laws for every little thing that needs to be regulated. Instead Congress creates agencies with a charter defining the scope of what they have purview over, and the agency then creates regulations on what it deems fit. These can be challenged in federal court, which is specifically what I've been mentioning
Why shouldn't Congress be able to delegate powers? Congress writes the laws and it seems appropriate that they should be able to write a law that allows a group they delegate to write and enforce regulations on their behalf. Especially when the scope of such laws is so narrowly and explicitly defined.
Do you really expect Congresspeople to have the educational background necessary to regulate agricultural products, automobile emissions, and how medical testing is conducted? Do you really want AoC or MTG deciding which medicine you can take? Remember the ACA/Obamacare debacle? Without agencies, the entire government becomes a series of "let's pass the bill to see what's in it" laws.
The whole point of delegation is that experts make the important decisions, and Congress approves a leader for the department that is accountable to them for oversight. Requiring Congress to bring every decision an agency makes to the floor for a discussion and vote is akin to having the Board of Directors of a company approve and modify every PR it Github.
Unelected entities should not be writing "regulations" (that have the power of law). Particularly when they both write the "regulation" and enforce it with police powers, such as the ATF, creating a dangerous fusion of the separated powers.
Yes, I do expect Congress to either build up that expertise, or hire their own staff yo do the footwork for them. The Library of Congress, in point of fact, was established to fulfill that very need. Congressional research. Also, until Gingrich in the 104th-ish Congress convinced them to shut it down in the 90's, the Legislative branch had their own independent Office of Technology Assessment research arm which to my understanding was a thorn in lobbyists side, because not only did they have a mandate to run down discrepancies (i.e. lobbyist said X, but our research/subpoenaing found Y is the case).
It was nuked because "we should just listen to lobbyists more", and basically the replacement enacted was to take double OTA's yearly budget, and drop that onto the Library of Congress, I suppose with the implication the GOP believes that Congresspeople should do their own research.
The level of follow thru on that is probably just what you'd expect.
If OTA came back, I'd be one of the first to throw my hat in the ring as a researcher/go-for, just because I believe it is such an essential piece of a healthy legislative institution, and we have suffered greatly over the past decades for want of it.
Delegation is essential. There simply isn't enough time to regulate all the various industries that need regulation. Unless you want congress to read even less of what they pass than they do today. Congress can always override regulations that go too far or not far enough.
> Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC
More likely, in the short term it will be challenged in individual arbitration and we'll never hear about it.
I'm not sure that would not be possible given what the article describes. This regulation would retroactively nullify them and bar companies from trying to enact anything like a non compete period
The old common law barred non-compete agreements as contracts in restraint of trade. It was superseded by statutory anti-trust regulation and the creation of government agencies like the FTC. If you think the latter doesn't have power to regulate these matters, we fall back to the old common law and non-competes are still unenforceable.
so maybe regulators should introduce nullifying noncompetes with certain cases, not nullifying them in every circumstance. but still, they serve an obvious purpose, even if you are laid off by that company. the idea is you are given confidential info that you are not supposed to use because that's unfair competition. not that you're likely to care
There are still intellectual property laws in place that could protect the original companies. Non-competes stifle innovators at big companies from being able to leave and pursue their own ideas that are in the same domain as the parent company.
I'm not saying the existing solution is complete, either. But banning noncompetition itself is not the right answer. Why do contract noncompetes clauses exist?
What about the small companies and inventors and IP owners? None of these replies I'm seeing have considered the side effects to the world except what would clearly also benefit giant companies.
If you allow a company to hire someone, then they left their current job, move to another place (worse if it is international and require visa) then the company says sorry but we have to let you fo without this being illegal. Now why this is different?. This at least restore some of the power balance.
In my experience noncompetes aren't enforced, unless you are very high up in the company and even then C-level folks usually get nice incentives to stay away from their competitors.
Noncompete clauses for workers is the most anti-american, anti-free-market policy anyone could pull. If workers aren't free to switch to better jobs and at the same time are left to fend off for themselves them the economic system starts to resemble feudalism.
CA, ND, OK, and DC seem to be the ones of note. A slew of other states have thresholds under which non-competes are invalid, but above which they are. Washington's, as an example, are here: https://lni.wa.gov/workers-rights/workplace-policies/non-com...
Those thresholds mean most software engineers are subject to non-competes.
Aspects of non-competes are not enforceable in some places--and enforcement may require payments to the ex-employee in others (e.g. MA). But some non-compete conditions are generally enforceable even in CA as I understand it (e.g. if you sell a business, you can't set up shop the next street over and contact all your former customers). But they're not illegal as far as I know.
The FTC is specifically proposing a carve-out for selling a business. So it is mentioned. The parent made a blanket statement about non-compete legality.
I go back and forth on that. It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do.
The idea is well known for hundreds of years, but here's a particularly salient quote for your line of thinking.
----
"In so far as the reduction of costs of production and distribution thus achieved is reflected in reduced prices, society as a whole ultimately benefits from the use of standard contracts… The use of contracts has, however, another aspect which has become increasingly important. Standard contracts are typically used by enterprises with strong bargaining power. The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood only in a vague way, if at all."
F Kessler, ‘Contracts of Adhesion--Some thoughts about Freedom of Contract’
Workers have mechanisms to balance that power. E.g., forming a union, which could ensure the contract is more fair. I don't know what to make of the fact that they don't use them.
In your opinion, is there a reason why something like a union couldn't be used to negate or modify non-compete clauses?
You are right, they do. But in practice it doesn't materialize. The other problem with "just create a union" besides the risk involved and inequality of bargaining power in starting a union in the first place is that you typically create a bureaucratic institution which has its own drag on economic efficiency. Banning non-competes has no clear downside, but does have clear upside. It makes sense to allow workers to form unions and to also ban non-competes.
Those are all good points. I would probably push back on the idea that economic efficiency is treated as an end to itself, rather than a means to an end. There's a tipping point where increased economic efficiency isn't necessarily a net good for society overall.
I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to the wayside.
I would agree that treating economic efficiency as an end to itself isn't ideal - that creates lots of obvious problems. It's probably super efficient to have child labor, for example.
> I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to the wayside.
I agree, and it's frustrating not just here but in the political realm as well. I think the Greatest Generation came back from the war and took hold of, and created instutitions: universities, the FDA, the CDC, the FAA, the MacArthur Foundation (just a random thing that came to mind), and importantly unions that protected workers rights and living standards. In the political realm I recently volunteered as a poll worker - it was a ton of fun, truth be told albeit a long day. But many people, friends, family, etc. thought it was a bit weird. We can't have nice things if we don't take care of them or do the hard work of democracy (or unionization, or maintaining valuable institutions) if we don't actually do it.
I'm not sure where this apathy and angst crept in, but I bet suburbanization and social media helped create and subsequently accelerate it to the point where we have some serious problems that need to be addressed.
Basically non-compete negatives for the worker don't outweigh the costs & downsides of forming a union -for just this issue-. Forming a union, negotiating, membership, etc all have transaction costs. Also unions come in a bundle with negative effects too (corruption, forced to go along with decisions where you are in the minority opinion, etc).
So if there was a super light weight union that only focused on non compete, then maybe it could level bargaining power. But since unions have a cost and come with downsides, it's not used in practice today.
They should be legal, but expensive. If it is so valuable to companies that their workers not leave to work for competitors, they should be required to pay 100% salary for the non-compete period.
There are a lot of requirements that need to be met to make non-competes enforceable in MD, eg must meet salary bar, geographic location and duration must be specified, etc.
But I don't think it requires paying the employee during the non-compete time.
> they should be required to pay 100% salary for the non-compete period.
I'd argue that falls way short of being useful and still screws over employees.
People switch jobs because they get better offers, and being forced to not only forego better offers but also get stuck with the same income while your offers get taken away from you hardly seems something that's in the worker's interests. In fact, it looks an awful lot like plain old unemployment benefits.
If you get a written offer from company B while working for company A under a non-compete, A must either:
- Allow you to leave unopposed
- Keep you in your current role by negotiating a more attractive offer
- Pay the value of offer B to put you on gardening leave for the non-compete period or 12 months, whichever is longer, and also compensate B for their recruitment costs
Would never happen, but it would be amusing to watch CEOs pitch a fit about it on Twitter.
Upvoting cause I agree in principal with where you're coming from in the sense that employers and employees should be able to bargain in their contracts and include clauses like non-competes as long as they square with the public policy of the state.
My issue (and probably yours) is the way non-competes get handled by employers
* Every non-compete I've signed has been sprung on me while filing out paperwork on my first day. What am I supposed to? Walk out and be unemployed while I look for a new job?
* What do I actually get for a non-compete clause? Judges routinely rule that continued employment is enough consideration for near-anything including non-competes. But if some companies don't have non-competes, to me that isn't true consideration. Me signing a non-compete that isn't worded in this-for-that like standard contract clauses should be should be treated as a gift on my part by the courts that can be revoked
* Many states have restrictions on non-competes but most non-competes for national companies are boilerplate and often too broad. Combine this with a mandatory arbitration agreement and employers are doing an end-run around state labor laws either through arbitration or just strong arming employees
No. Well at least in capitalism, that is a big no. There are no barriers to entry or exit the market in "real" capitalism (which no one has or has seen). This includes non-competes as it does any other barriers which distort the market.
But none of that matters when most people still don't understand profit vs economic profit.
I agree, absolute freedom doesn't mean a desirable outcome will occur for individuals or society, or that freedom even remains the defacto standard. Free markets are often a vacuum waiting for a bully to fill & exploit.
I don't think that's the free market ideal. Let's switch away from employers vs. employees and ask, "Would an ideal free market allow companies to collude to fix prices? Would an ideal free market allow consortiums of companies to set up exclusivity contracts with vendors to block competition from entering the market? Would an ideal free market allow companies with profits in a monopoly to run other businesses at a steep loss to prevent competition?"
"Freedom from regulations" is a very thorny problem, it rarely leads to what people imagine are "free" markets.
> It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them.
This only works with a robust social safety net where a worker can have no job and still be ok. Otherwise you're usually going to be choosing the lesser of several evils when it comes to employment contracts.
> It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do.
I’ve grown to learn that arguments on labour markets and free market ideals tend to be very simplistic and, knowingly or not, always boil down to victim blaming.
When we’ve unemployed and actively looking for a job, if we have bills to pay and our budget is tight, our goal is to get a source of income as soon as possible. Consequently, we are vulnerable for unscrupulous conditions, such as non-competes. This does not mean that the job market finds them acceptable or encourages them. It just means employees that push these abusive conditions upon their new hires are abusing their dominant position to exploit workers, specially those in vulnerable positions.
One confounding factor: In a true free market(tm), limited liability corporations wouldn't exist in their current form. So employers can be a lot larger, and gain more bargaining power over employees because of a government intervention that protects corporation owners from liability.
It's hard to be a true free market libertarian when the initial conditions aren't really that free...
There are many things that still resemble feudalism. Per capita tax, property tax, conservation easements on deeds, zoning, etc.
I'm not saying these things are necessarily good or bad. Just saying that most laws around income, taxes, and land have their roots in feudalism. And of course the ruling class still make themselves well to do off of the hard work of their subjects, just not to the same degree as kings. And yes, I know, people today have "choices" via voting. Even if those choices are between a shit sandwich and a shit sandwich without the bread.
> There are many things that still resemble feudalism. Per capita tax, property tax, conservation easements on deeds, zoning, etc.
Nonsense. Contributing back to society doesn't even register as a concern when your employer can force you to not have any alternative to work for him under his term, and apply harsh penalties to you and your loved ones if you step out of line. These nonsensical anarchist tropes only come in play to pull the focus away from the one-sided social arrangement between employers and employees in the US which his highly exploitative and outright resembles feudalism.
Your reply is nonsense much more than the one you're replying to. Voluntarily entering a contract with bad terms has a lot less in common with feudalism than heavy handed government does. It's fine that you prefer the authoritarian government, but it doesn't change what feudalism was.
"Voluntarily" is doing a lot of work there. There is a huge power imbalance between employers and unemployed people looking for a job, especially as they may face bankruptcy and homelessness if they go too long without income.
Still less of a power imbalance than talking about the government. Let's not forget that the government is the one who enforces those non-competes. So you're really only talking about one subset of the government authority.
I think non-competes for workers should be banned. But I'm just saying there are other more feudalistic examples (good or bad) that exist.
FWIW, and not meant as a contradiction: while (talking Britain here particularly) many were still literally slaves under Feudalism (not serfs) and others Villiens (serfs tied to a property - the root of the once-classist word villain); there were also a great many free people taking contracts under bad terms, if only because it's easy for Lords to collude re wages for servants, etc, etc.
You're doing a lot of personal attacking and not much explaining.
How is what I said "nonsense"? Do you not see that if the government decides to zone your land as conservation so you can't build on it that is one sided? Or if they use eminent domain. Even if it's in the best interest of society it's certainly one sided for the affected individual. And if they decide not to comply, you can bet the punishments will be much harsher than a non-compete.
You see, in this example society and company can be largely interchangeable - a group of people imposing something on an individual. Yeah, sure, most of the time society is acting in everyone's best interest. However, you have to remember that isn't always the case, such as with salvery or segregation. There are still injustices today.
If you reread my original comment, I never said those activities were good or bad, merely that many of our laws have their historic roots in feudalism. In many cases, those activies can be applied to either good or bad ends. There are examples of eminent domain being abused, and others which have provided benefits to society and generously compensated the owners. The important tie in to feudalism is that in either case the government is the one who owns the land while the "owner" holds the title of deed. You can hold the land as long as you abide by the rule of the government. Violate that rule (not paying taxes, use it for committing criminal activity, violate zoning) and they can take that land back, fine you, imprison you, etc.
In the US, "free market" generally means one of two things...
1 - a fictional market with no externalities and perfect information symmetry. Ayn Rand fans think it's real, but it only exists in an ECON-101 textbook.
2 - code for "rules for thee, not for me" as said by the billionaire class. Or, really anything that keeps them rich and the rest of us beholden to them for basic life necessities.
Edit - I prefer a phrase like "functioning market" to "free markets". Or maybe "fair market"? Not sure. The current labor market in the US is dysfunctional, at least when considering the share of increased productivity seen by the working classes (vs business owners).
Edit2 - changed "perfect information asymmetry" to "perfect information symmetry"
Basically agree, but what we're increasingly facing in the US is growing barriers to entry to compete with behemoths in the form of an increasingly complex tax and regulatory structure which just isn't compatible with free market principles still applying to how those behemoths treat employees.
In short, we have quasi state-sanctioned hegemons that have undue negotiating power.
There are two solutions: nerf the barriers or buff the workers through more targeted regulation. There's no single regulatory body that can do the former, so the only option left is the latter.
Totally agree. If the problem under consideration is "corporate behemoths", then this is just nibbling at the edges. Which is better than nothing, but we can/should do much more.
But, if the problem is the much smaller/simpler "remove barriers to job changes", this is a pretty significant change in policy. Not as significant as divorcing medical coverage from employment, but still pretty big.
Totally agree. “Free market” usually means that the big guys can do whatever they want to do including suppressing competition. “Competitive market”, “Functioning markets” or “fair markets” would be much better goals.
We should especially work on reducing information asymmetry. Big examples are salary negotiation and US healthcare. There we have parties (employers, hospitals, insurances ) that have almost all information and then the employees/patients that have almost no information. The old rule is that whoever has the least information in a negotiation will lose.
I would say that this issue is the lack of consideration for the duration of the non-compete. If a company is willing to pay me my full salary for the entirety of the non-compete, they seem reasonable. That said, it should still be something that’s optional.
Is such a move not one of the purposes of these agencies staffed by (supposedly) experts and run by appointees? Legislature is so dysfunctional that the House can't elect a speaker at this very moment, and who knows if such a measure would even see the light of day in committee let alone get to the floor if the lobbyists got wind of it.
If the lawmakers take issue with the ruling they can issue a mandate to roll it back, no?
The problem is, the courts may decide to kill it off before Congress gets out of its gridlock and approve or deny it, as many other regulations have been. Executive decrees or questionably legal actions of government agencies are fundamentally bad - but have become commonplace and a necessity of life since Congress is fundamentally broken.
And at the core, the problem is that the US' political system unlike everyone else's system does not enforce that the executive has a parliamentary backing. That provides a lot of perverse incentives that historically were only prevented by a basic code of ethics and conduct - but since the Obama days, open obstructionism has become acceptable and a target in itself in politics.
Courts overturning regulations like that is exceedingly rare. The doctrine of chevron deference means that, in the absence of overwhelming evidence to the contrary, it is the prerogative of executive agencies to interpret their own mandate as they wish.
> Executive decrees or questionably legal actions of government agencies are fundamentally bad - but have become commonplace and a necessity of life since Congress is fundamentally broken.
Two wrongs don't make a right. Everyone involved should remember that the US is a federation of fifty states that share sovereignty with the federal government, and that nothing stops the various states from enacting their own noncompete bans in their better-functioning state legislatures. They can even do that in cooperation with other states, in order to accomplish the goal in a harmonious manner; see the Uniform Commercial Code for an example.
I don't see gridlock in Congress as an example of it being fundamentally broken. I see it working as intended, since only few matters have such broad agreement among the people in all fifty states that Congress should decide on it for the whole nation. In fact, the fewer things decided on in that fashion, the better for the country as a whole.
> They can even do that in cooperation with other states
This is actually super interesting in that Article 1. Section 10 suggests this requires Congressional approval.
I'd also that the US is a de jure federation of independently sovereign states, whereas we are a de facto central government with weak provincial governments. States cannot act independently or as a peer to the federal government or with each other, and state sovereignty has been eroded since the ratification of the Constitution.
Debating whether or not Congress or the States should make these laws is purely academic. 250 years of history has shown that the only way for meaningful change to be enacted anywhere is for it to be done everywhere, by Congress, with the support of the Executive, and without a meddling Court to nullify it. If we lived in a country that you're hypothesizing about, we would still be segregated.
> This is actually super interesting in that Article 1. Section 10 suggests this requires Congressional approval.
The UCC is not an interstate compact in the sense of Article 1 Section 10. They're merely the same code that each state chose to adopt, with no legal ability for any other state to question if one state chooses to deviate from it in part or whole. It absolutely does not require Congressional approval. Interstate compacts are more like treaties that states make with each other.
You're absolutely right that state sovereignty has been steadily eroding, and I posit that this is to everyone's disadvantage. As in your example, just because states' rights were once used to champion the evil cause of slavery then later Jim Crow, does not mean that the whole concept of states' rights is wrong.
Besides, tort and contract laws are historically the primary domain of state law. I don't see why the US Congress has to be the one to define it for everyone.
> You're absolutely right that state sovereignty has been steadily eroding, and I posit that this is to everyone's disadvantage.
The evidence suggests otherwise. When states wield their power on rights, it's usually against the interests of their people until the federal government forces them to stop by removing their power to do so. That doesn't mean the federal government is without issue, but it is the entity designed to protect liberties.
I don't think this is a simple case of tort that could or should vary between states. It's about the freedom of individuals to choose who employs them and protecting them from those with power. The existence of this as a state law would only serve to exist in opposition to states that don't, to the detriment of their citizens.
> The evidence suggests otherwise. When states wield their power on rights, it's usually against the interests of their people
States decriminalizing pot, for one, would be an example of state law trying to broaden liberties that federal law restricts. Or Massachusetts legalizing same-sex marriage long before the US Congress did anything about it. Or even at a smaller level, San Francisco city officials doing so before the state of California did.
There's plenty of examples where a more local decision went in furtherance of liberties than a more distant decision, so I'm not sure where you get the idea that politicians become more enlightened and virtuous the higher up in the federation they go.
> The existence of this as a state law would only serve to exist in opposition to states that don't, to the detriment of their citizens.
I'm not sure I follow. I think it's perfectly fine to let the fifty laboratories of democracy play this out, keeping the locus of control as close to the people as possible. The people of California have shown that the lack of noncompetes doesn't necessarily impede commerce or progress; the people of other states may learn from that and follow, or decide otherwise. And if those states that keep enforcing noncompetes do end up doing poorer for their people, they will change the law, or vote with their feet.
no. they have specific laid out bounds with which they can operate in. it's deeply dangerous and disturbing for them to try to exceed that. especially because they aren't elected. they don't get to just exceed those bounds and wait for legislature to issue a ruling to roll it back. it's quite the opposite.
its the equivalent of if the tsa started trying to pat you down before you got in your car. and then saying its okay because congress can just roll it back.
The FTC believes this is part of their congressional mandate as per their interrogation of Section 5 of the FTC act[1]. If I recall correctly they were enforcing this under one legal theory previously that the Supreme Court struck down so I presume they have come up with a new legal theory.
too bad people's brains can't process stuff like that. they can only do a single level of "do i agree with the outcome" and not whether or not its actually legal or sets a bad precedent. or god forbid, think what powers that would give their political opponent when they take power.
student debt was another one. whether or not you agree with forgiving it, it's deeply disturbing for the president to knowingly do something unconstitutional and do an endrun around congress' power of the purse. With the hope that no one has standing to challenge it
IANAL, but the US federal law roughly consists of USC, i.e. US code written by congress, and CFR, code of federal regulations, written by executive branch of the government. They can't write anything they want, only using powers given to them by congress in USC.
I have to believe that some, if not most, Republicans would go for a bill like this. A bill that's "freedom-from", costs nothing, is pro-worker while not being pro-labor, you get free talking points for "see you don't need unions."
Definitely one of those obviously broken things that should be stopped. Whatever legitimate usage they theoretically have in practice the vast majority do not protect against a bona fide company risk.
I understand noncompetes in some fields... but this can be solved in other ways. In my country (slovenia), a noncopete is valid only if you're being financially compensated by some amount while the noncompete lasts.
It's a bit complicated here, but ideally companies wanting noncompetes could be forced to pay the difference between what the worker would've earned if they stayed (+ some safety factor for a potential raise elsewhere, eg 20%) and what they earn now with a noncompete.
So if a worker earned 100k, with the safety factor for a raise that means 120k, and can only earn 50k due to a noncompete, the company would have to pay the difference of 70k to that worker if they wanted to keep the noncompete valid (for a limited amount of time). Company keeps their 'secrets', but has to pay for the secrecy.
I don't understand them in any field. I was forced into signing one for tech that blocks me from working from any competitor for up to 2 years. Depending on how loosely you define competitors that could mean I can't work in tech for 2 years after this job. Unfortunately for me I can't afford a lawyer. Fortunately for me non-competes of this level are generally unenforceable.
You have NDAs already. It's not like you're working for Lockheed with secret stealth aircraft knowledge where a non-compete might be a national security protection. It's a representation of the inequality of bargaining power. If I didn't take the job I would've been out another job for possibly months to reach my payscale (Staff). They are a representation of the scourge of the neo-liberal variety of capitalism. It's not true capitalism, it's actually neo-feudalism, and it's not the only symptom of it.
You will never get anyone in power to agree to make non-competes force payment of a stipend while you're under one. The powers that be have paid off congress. The fact the FTC even wants to look into this after decades of this abuse just demonstrates that fact further.
you're not automatically entitled to use or benefit from the IP developed by others and then disclosed to you just because you signed a paper that promises to pay you for work. maybe it makes more sense where your opponent is a horrible but huge company like facebook but this move can kill development of sensitive or novel tech by underfunded entrepreneurs. it is a mistake for the USA. maybe you guys should downvote me more while you ride around in your teslas powered by slave labor batteries.
What does tesla batteries have anything to do with this? And california has banned them for years but its tech sector seems to be thriving and much, much stronger than anywhere in Europe that actually enforces them. So what are you basing your prediction on?
I think you are confusing non-compete and NDA, IP rights, non solicitation agreements and the like. You can go work for competitor, but it doesn't allow you to use any of your previous employer's IP, poach colleagues, clients etc. Doesn't prevent you from using your expertise and come up with novel things.
And some big companies do care that you don't do it, because they don't want to go into litigations because layers like to target fat cats.
i'm not confusing them. i know what i wrote. humans cannot avoid using IP from previous companies. what's your background ? (are you technical?) and there's more to this than existing big companies and their disposable funding.
I don't think my background is important here. But I'm technical if you need to know.
I had first hand experience of colleagues specifically not working on certain parts of projects because of NDA from their previous employments.
Non-competes make more sense when you're working a highly personal job. It's very common for doctors to sign a non-compete saying they can't set up a practice within 15 miles of their employer for some time so that they don't take all of their clients with them when they leave.
The power imbalance is such that it won’t matter if a non-compete clause is enforceable or not. If it scares former workers from trying, they are in effect despite never actually being enforced. I think this is probably true of most workers which sign them.
> a noncopete is valid only if you're being financially compensated by some amount while the noncompete lasts.
And this is about the only way they hold up in court, otherwise the non-compete would be a one-sided contract.
IANAL, but I was once sued by a former employer over a non-compete (an entry level IT job). The judge basically swept the floor with it.
Also, it made me understand why severance packages exist, it is usually a salary compensation for the non-compete duration. Now when you hear outrage over some bank exec getting a million dollar severance, know that this can be because of a non-compete.
> Now when you hear outrage over some bank exec getting a million dollar severance, know that this can be because of a non-compete.
But, as you pointed out with your story, much of the outrage is still directed at the rank hypocrisy that goes on - companies easily try to force noncompetes with little or no compensation to low level workers, but then automatically know they need to pay execs millions for the same privilege.
The only time I've ever heard of a noncompete being enforced was when an IT worker bid against his employer on a contract renewal he was working on, and won. His newly former employer had sued him and won, and made him unhappy for a long time via the courts. Some things like noncompetes really exist for the worst case scenario, but is threatened in all cases.
> And this is about the only way they hold up in court
I think if your company gets bought and you get stock compensation of the company buying it, both as a founder or an employee, they can also make it hold in court.
Non-Competes being legal is only acceptable I think if the worker will continued being paid for the period of the non-compete. I can see reasons that non-competes exist, but those reasons don't really make sense in a world where patents and trademarks also exist. The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.
Should be reciprocal if it exists. I.e. if the employee leaves, the company would be barred from hiring anyone else for any remotely similar tasks. Make them taste their own medicine and decide if it's worth it.
It is always interesting to me how much 'morality' (in the sense that an individual/corporation 'should' abide by these rules) can be derived from applying symmetry principles.
People aren't particles, though. What symmetry tests are good for with regards to human beings, is to see if something like a principle which claims to be "fundamental" is really fundamental.
I think it's safe to argue that every single thing in a contract is for the benefit of the employer and has zero to do with morality. And it is up to the employee to have their own internal contract that the employer must align to. It's like legal court where the prosecution and defense go full court press not out of morality but because the belief that if both sides pull their hardest then the truth will be found.
I would love to take a short vacation to an alternate universe where all job descriptions say that applicants MUST NOT have any recent experience in the area of employment.
It IS reciprocal. You're welcome to present that "non-comparable hire" contract to the company before accepting your offer, but they no doubt will rescind your offer. You have the same right to reject the offer if you don't like the contract they present.
It's common for executive's lawyers to negotiate contracts with the firm before accepting an offer (including what the firm can or cannot do to the executive without penalties). I wish it were more normalized for ICs.
I guess I'd say that's true to first order. Sure, if a company does something egregious that I don't like it is within the realm of possibility that I can go found another one, double their revenue, and grind them out of existence before doing things my way. I suppose you could say that's reciprocal since that's kind of what they did to me in this hypothetical example. Fortune rarely favors that, though, and if you ask me companies have vastly more economic firepower than independent contributors but haven't adopted the corresponding responsibility.
May as well really be fair. If the employee isn't allowed to work in that industry for 2 years, neither is the company. They'll just have to find some other source of revenue and retool their business for a couple years.
This is the standard I knew from the trading industry. I would say that, while it does initially seem more palatable, it also has some downsides. One that might be particularly relevant to programmers is that it sets up a structure that functions somewhat like a penalty of 1 year's worth of paid vacation for choosing a new job outside the industry.
I don't have the business or economic bonafides to back this up, but it seems likely to me that such an incentive structure would not serve the benefits of society as a whole, and might become quite damaging were it to become widespread. My own sense is that, with the possible exception of the "you can't take your client sheet with you" style of noncompete that sometimes gets applied to salespeople and hairstylists, non-competes are simply anti-capitalist. Not in some sort of ideological sense, just in a very practical, "This is nothing but a tool for retarding GDP by further concentrating wealth in the pockets of the already-wealthy," sort of way.
Even in California, you can get sued for violating an NDA when going to competitor if you bring private technical data, which seems like a reasonable compromise. You can bring your expertise, but no code. Intersecting with this are patents. A company can also protect its IP with patents, but when should choose to disallow, or have more liberal patent laws? It seems there are similar tradeoff between the value to companies, competitors and public interests.
Also no material non-public information even if it's not technically technical.
The standard I'm familiar with is, knowledge you acquired during your time at a previous employer is safe to share with your current one if you can support it with a citation.
> Even in California, you can get sued for violating an NDA when going to competitor if you bring private technical data, which seems like a reasonable compromise. You can bring your expertise, but no code. Intersecting with this are patents. A company can also protect its IP with patents, but when should choose to disallow, or have more liberal patent laws? It seems there are similar tradeoff between the value to companies, competitors and public interests.
What does that have to do with non-competes? What you're describing is IP law and theft; and is illegal pretty much throughout the western world.
Non-competes specifically and only exist in the context of barring employee competition and migration of talent. All via legal labor servitude at the justification of "training investment" and/or "unfair competition".
> The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.
The general rules that most states use for deciding when non-competes are enforceable aren't that bad. E.g. if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year, but it's fine if you do it a couple towns over. That doesn't seem especially crazy to me.
if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year
What if you work at Starbucks and want to open your own coffee shop. Is it reasonable that you should not be able to open a coffee shop within two blocks of any existing Starbucks?
And if Starbucks closes a shop because of unionisation, can the employees reopen it as a co-op? I certainly think that should be possible, and encouraged.
their investment in teaching you their IP -- that's the theory
you trade getting to learn for agreeing not to use it against them for a while -- is the theory
at line worker level i'd argue this is nonsense, at 'how to mill iPhones from a single block of metal' or 'self driving car brain' maybe its real, but there are ndas and patents for that
Yeah, that theory's a load. If the fear is formal IP theft then as you point out there are harder protections for that. If the fear is they'll learn your business practices and use them to compete with you, then you suck and they deserve to win. Because you're the established business with all the advantages and existing customers, even if they have the capital lying around to start a copy-cat business tomorrow you should be able to wipe the floor with them and make sure they never get off the ground.
> their investment in teaching you their IP -- that's the theory
In your example, they cannot claim the skills and basic education that gets you up to the point of "how they mill iphones within a context" (i.e. the milling, operating the machinery, physical properties of the metal, etc)
They are not legally able to include a huge educational backbone of knowledge (that they may have taught you) as their prioptary IP. Again, NCs don't prevent that disemination. That disemination can happen without employment.
I really get a kick out of this thinking, because there's literally no alternative from the employer's point of view. If you want to hire someone to do a job, you have to teach them how to do the job.
To impose punitive measures after-the-fact because someone taught you how to do a job that they needed you to do seems hilarious even on the face of it.
To be clear, saying "You're not allowed to use our IP or our machinery or our supplies" is totally reasonable; if I quit Starbucks, then of course I won't have Starbucks machines or merch. To say that you're not allowed to do something because they happened to be the ones to train you seems just silly.
I get very strong middle-school vibes, where you introduce your friend-from-another-school to your group, then get mad when they become better friends with someone else than they are with you.
That seems crazy to me. Why should I have to move to start a business? If I can start a new bakery with no following and run the old out of business, then it seems like the industry was ripe for competition anyway.
I do think it is reasonable for the competes to include not stealing recipes or IP or other capital from the business. Contacts are harder to legislate but there is a difference between remembering your best contacts and contacting them via LinkedIn vs exporting a contact list from your company's Salesforce and using that.
This example seems extra crazy. The only entities it protects are large companies. The biggest threat to a local bakery is not their employee leaving and starting their own bakery, but a large bakery chain coming in and undercutting their prices. No non-compete will help with that. Meanwhile, the large bakery chain does benefit from being able to stop you from baking for someone else if you leave their employ. At a minimum it helps them suppress wages.
Uh, how does that make any sense? What if the local bakery sucks? Why is the bakery you work at immune to competition but the bakery a couple of towns over isn't?
How are you examining these rules that it "doesn't seem especially crazy?", what's the rationale?
Capitalism requires competition to produce positive outcomes, the only reason to limit or ban competition is in the edge cases where the model doesn't work (patents, utilities, etc). Frankly we have too many regulatory moats as it is IMO.
My understanding is that this arrangement is common in finance. However the worker is not given benefits or bonuses during this time. Since private health insurance is massively expensive and bonus comp can be a significant fraction of one's pay in the field, it can still be onerous.
In some cases the total comp is less than 50% salary. Might be fine for some quant PhD to go from $1M to $250k, but if this "workaround" to enforcing non-competes becomes more popular and spreads to different fields you could see positions that go from (say) $80k + benefits to $40k without, with furlough enforced for a year. That would be devastating for a family with children.
But the people you are concerned with are not paid 40k plus 40k bonus that can be clawed away they are paid 80k.
Bonuses are like options being worthwhile in that they are mostly out of your control. When I see a position pays 140,000 plus bonus which was almost 40,000 last year I know I can only count on 140,000 this year and if 40,000 happens to be awarded great.
This wouldn't be a widespread practice outside of fields with proprietary data, relationships, or trade secrets, which tend to have better compensation. The costs of having a non-working employee on the payroll, even at the $40k-level need to be worth it. It isn't going to be the case for a random grocery store manager or whatever that they are worth the costs.
IMO it should be full compensation of your last years' w2. In finance they pay you garden leave but only base pay. So they are only out a small portion of your actual cost.
But even that has major drawbacks -- if you're not actually working, then you're not building your resume, you're not getting promotions, you're not advancing. And if you find your work meaningful and satisfying, that meaning and satisfaction is gone. Not to mention who determines how much "being paid" means, when compensation isn't just base salary but also variable things like company bonuses, individual performance bonuses, stock compensation -- plus the increased compensation you'd get from potential raises.
I too can see the reasons that non-competes exist, but I see more reasons why they shouldn't exist. And even if a company thinks it's worth it to pay someone's salary for a year or two to enforce a non-compete, is this really what's best for the economy overall? Motivated, highly skilled people excluded from the job market?
There's a big difference. Paid gardening leave means that the employer actually has skin in the game. I'd bet that 9 times out of 10 they won't actually enforce these non-competes if they actually have to bear some cost (certain industries might be exceptions). The problem with the status quo is that an employer will have the non-compete in play regardless of whether the "competition" would really hurt them.
When I look at the last decade of my employment, my base salary is less than 10% of my overall comp. Maybe even 5%.
For high demand folks (the kind we read about in executive emails between Apple and Google and so on) it seems very possible that a company would opt to pay 10% of the employee's comp to deny them from the competition.
That can be solved by setting the payment terms to match some minimum % of total compensation of some period before the paid leave.
eg, you get full benefits plus no less than 80% of all compensation of the previous 12mo. Non-cash compensation (eg equity) may be replaced with equivalent cash.
That's an offer, not a solution. What if the offer isn't reasonable? What if the employee is leaving because the equity vesting has dropped off? (eg: leaving after 4 years)
> "Non-cash compensation (eg equity) may be replaced with equivalent cash. "
What's the equivalent cash value of options? The variability here is huge. Seems better to just ban these schemes entirely, especially considering there's seemingly zero upside to allowing them.
Remember: California has never allowed noncompetes and we're doing just fine in the tech department. Better plan would be for the rest of the country to follow our lead.
What if you allow the new employer to buy out the non compete? So if your old employer low-balls you, the new employer can buy it out on your behalf. If your knowledge is really worth it, that provides an incentive to make the pay worthwhile. Doesn’t help in all cases, so I’d couple that with stronger restrictions on what a company can call a competitor. If there’s a cut for the state, that will provide incentive for them to enforce.
But really the right move here is either no non-competes or employees getting to set their own prices for them. Being on the wrong side of a power asymmetry forces behavior changes.
> the kind we read about in executive emails between Apple and Google and so on
In other words, the kind of person who is actually in a position to negotiate the terms of their contract. What bugs me most about the current situation is the ubiquity of non-competes for low salary employees, who have the least amount of leverage to negotiate contracts. I'm much less concerned about staff engineers at tech companies and portfolio managers at hedge funds, although I'd prefer to see non-competes banned altogether (except perhaps for non-competes for owners selling a company... I think it's fair that if I buy your ice cream shop, we can agree that you can't open one up across the street the next day).
> Well if all companies are doing it, employees will have no option other than to agree.
If all employees rejected them, companies would have no option but to disband them.
The issue is that when one enters into a non-compete without equivalent compensation the government loses potential tax revenue. Income tax is maximized when workers are working most productively, so there is a strong incentive for the government to keep workers working productively. Similar reason for why we have minimum wage.
If non-competes provide sufficient "garden leave" then the tax revenue should not be impacted, so there is no reason for the government to care. The productivity is still captured. The government isn't in the business of spotting bad deals for individuals – you are quite free to make all kinds of boneheaded financial decisions – only bad deals for itself.
Granted, execution and enforcement can be a challenge. Say you enter into a non-compete with "garden leave" of $1. Is that sufficient compensation with respect to the intent of allowing "garden leave"? Now you need a tribunal to make the call and all the complexities to go along with it. And so, when drafting laws, it may be more practical to prohibit "garden leave" as well.
> I would agree these are system-wide less efficient, but shouldn't paid "garden leave" be legal if parties agree upfront?
“Garden leave” is basically just being in paid employment with no duties.
Neither the FTC action nor state policies like those in California generally prohibit noncompetes while employed.
However, if the compensation for such a contracted “garden leave” was substantially less than normal full-time comp for the employee, and agreed prior to employment rather than as a separate independent agreement at the end of the employment-with-duties, I can imagine the FTC still seeing it as an unfair competition practice, and state courts, limiting recovery for breach to any “garden leave” compensation for the time in breach.
> Neither the FTC action nor state policies like those in California generally prohibit noncompetes while employed.
Where did you get that idea? In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
From the actual case law of application of the prohibition by state courts, etc.
> In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
This both a misuse of the phrase “carte blanche” and inaccurate in its substantive message. Prohibition on competing work while employed is a well-documented exception to both California’s general policy against non-competes and its general policy against employer prohibitions against moonlighting; your employer can’t stop you from working for someone else who doesn’t compete with in your spare time while you are employed by them, and can't stop you from competing with them when you are no longer employed by them, but they can prohibit competing work while you are employed:
I assume Garden Leave would remain legal even if noncompetes were struck down nationally. You can pay people not to compete with you, without a noncompete; that's what a job offer is.
Some will, for sure. But plenty of others will struggle severely or even enter into depression.
Productive work is a major factor in psychological well-being. And a lot of people have spent their career being a highly specialized expert in one thing.
Expecting them to abandon that for a year or more in order to instead contribute "entry-level skills" at something else can be difficult. It's already known how retirement can lead to depression and a painful feeling of emptiness -- imagine how much worse that can be in the prime middle of your career.
It's not about the money or whether GDP measures something or not. It's about the ability to contribute what you're best at, where your excellence lies, or having that ability taken away. For many people, there isn't any kind of easy substitute for their primary area of expertise.
I don't buy the "plenty of others" -- where are you pulling this? No offense but it sounds like projection.
2 years of non-compete aka 2 years of compensation to not work sounds WONDERFUL. Like, it means you're so good at your job we're willing to pay you to not do jack shit. You musta been working on something so cool that it's worthwhile to have you sit at home then let someone get even a whiff of it. It's the best possible compliment.
There are PLENTY of ways to do productive work -- take a class, work on a certification, work on a side gig, or take a job in a different industry for a spell. Volunteer at the YMCA and do an AWS cert while sleeping in until 10am every morning.
"entry level skills" is also simply untrue -- plenty of non-entry level stuff you can crank away at. Start a Master's degree, or shoot for the high end Cisco certs, etc. etc.
You can contribute to where where you're best at in a ton of different ways. You need to ditch this hustle culture mentality, there are plenty of ways to generate excellence and they don't require full-time, ass-kissing jobs.
Whenever asked why there's a gap in my resume, I take insult, laugh, and say I didn't feel like working. I am compensated handsomely for my skills and that offers me the opportunity to be away from FTE as I so desire. I also have this and that side project I worked on because I'm obsessed with this coding shit. And then I ask them why is there no break in their resume? What are they afraid of? Are they not good at saving $? Have no desire to see the world outside of work? Never seen the-- you get the point.
It's a single-sentence answer: "there was a compensated non-compete"
Have something to show for your time, like you took an online class or something, but it's not a huge surprise. You didn't pop on multiple DUIs and spend 2 years in the slammer.
To a lot of us, career growth and the knowledge thereof is a requirement; we seek to be onward and upward whether in skillset, enjoyment, pay, etc. I have learnt in recent HN thread that this is not as common as I thought [0].
Non-competes are stupid period and thankfully in California are not enforceable. It's similar to a prenuptial agreement in marriage except who the f is marrying their employer?? A good employer wants to keep you, will compensate you to do so, and if they can't, they are proud of you and wish you well, _even if that means a stronger competitor_ .
You are also not making a higher salary you would have made at the competitor depressing tax revenue and wages (especially until that minimum profits tax passed companies were paying 0% income taxes anyway).
The trade secret argument the poster above you alluded to is very unlikely. Usually a competitor is hiring you because you are already somewhat trained and up to speed in their field... and perhaps the competitor can slow your company's operations by hiring you away.
In the end, many companies only pay you what they have to keep their operations stable and feel more than free to pay the very top of management more than what they deserve, and keep those executive compensations while laying off people in operations quite freely when times are bad. Noncompetes only for the company, not the worker, during good times.
Now there's an idea - a fair noncompete. Employee can't use their knowledge/skills for 2 years after they leave, but also the company can't hire anyone with any industry knowledge or related skills for 2 years after they leave either. Wonder how many companies would like that idea?
> The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.
That's no argument. Parasites work as organism taxon, doesn't mean all life can become so.
If they pay me close to my salary for doing nothing I’m all in. I can always side hustle something completely different on the side or just take the money and focus more on my kids. Please do enforce the agreement :D
Non-competes do not protect an organization against IP theft or trade sceret dismenination. Those are portected by NDAs, confidentiality agreements, copyrights, patents, etc.
Non-competes limit where your staff can go to. Without proper compensation for the time period in which they apply for, they're a very one sided (and in some cases illegal [NCs are legal in IL unless they assert an economic hardship]) way to prevent employees leaving. The claims for them is "training cost is expensive and it's to limit staff from training at one company and leaving" (which as we know.. companies generally don't do training in house)
> Those are protected by NDAs, confidentiality agreements, copyrights, patents, etc.
This gets thrown around HN a lot but I don't think it matches reality. Say I work in machine learning algorithms for show recommendations at Netflix. Amazon hires me to work on their machine learning algorithm recommender on Prime Video. Sure, I might have NDAs to protect what I learned at Netflix, but how does Netflix realistically show whether or not I disseminated that knowledge at Amazon? It's not like they can just ask to see Amazon's code to see if the knowledge has been ported over to there. The only way to really show that I infringed an NDA is for someone to rat me out, which is probably pretty rare. To that end, I understand why companies want non-competes (I'm not saying they should be allowed to have them... I'm just saying that there are reasons that they exist beyond "we don't want employees to leave). In finance, it's very common to get a paid non-compete where you get your full salary for as long as the company wants to enforce the non-compete. Companies aren't paying these high salaries just because "training cost is expensive and it's to limit staff from training at one company and leaving". They are doing it because they actually fear the consequences of the employee's new firm competing with them based on the knowledge that the employee has. For this reason, it's also pretty common for companies in finance to not pay out gardening leave when they aren't worried about the employee's new company directly competing.
> It's not like they can just ask to see Amazon's code to see if the knowledge has been ported over to there.
Probably not, but I would imagine that in cases like this there would be a third party given access to both sides, and charged with determining if theft has occurred.
> Sure, I might have NDAs to protect what I learned at Netflix, but how does Netflix realistically show whether or not I disseminated that knowledge at Amazon?
Personal integrity. If you have it, you are valuable. If you do not any value you have is short lived.
Cuts both ways. Does Amazon have the integrity to not expect the violation of your agreement with NF?
The legality, and even the exact definition, of IP is not black and white and comes up all the time in copyright discussions. If we want to say that the NDA states that your brain while at this company is ours and must be wiped if you leave, uh what? I think the spirit of an NDA is more that you don't release private information about the company.
I look forward to the day I can add inventions to that one field that asks for them upon being hired!
Violations are determined via a legal complaint and review/investigation. Violations are not termined by company A hiring a person from company B.
Non-competes (non-paid out) only put time between companies (in some states it might be beyond the lifetime of the person under a NC). To put that, and not fully pay out at the current salary, puts a uneven pressure on the individual who was pressured into agreeing to it for (unguarenteed) employment.
Additionally, non-competes survive termination by the company.
One of the biggest problems I see with non competes is that "competition" can be subjective, especially in a world of large employers with extremely diversified business interests.
Eg. If you move from one big tech co to another, you may be technically moving to a competitor, but the subject matter of your work could be unrelated.
My current client had a non-compete in their contract specifying I would not be allowed to work for one of their customers, or something like that. This client is one of the big four accountancy firms; their customers can really include everyone, and I have no way to tell who is or isn't their customer.
And my work doesn't even include any contact with their customers! What they really wanted was that I wouldn't do for, or even share with, the other big accountancy firms what I was going to do for them, because it's something unusual that's their idea and they think it gives them an advantage. That's completely fine of course. The original reading was ridiculous.
I don't think they changed it in the contract, but they did explain it by email.
That sounds like it might be an audit restriction. Those places have very strict rules separating who they do accounting or consulting for vs who they audit, for obvious reasons. So it might be that they’re saying you can’t do work for them in one capacity and then go work for somebody they audit.
> but those reasons don't really make sense in a world where patents and trademarks also exist.
Trademarks don’t really help with this. The bigger issue is trade secrets. You can’t make someone forget how your as-yet unreleased prototype is designed, and proving that their subsequent work for a competitor draws on that knowledge is expensive and time consuming. Not to say that non competes are a good idea, just saying trademarks are irrelevant to the conversation, and trade secrets are a more complicated issue than patents.
"The fact that they are essentially illegal in California, and California's economy works shows that are unnecessary and also don't hinder technological development."
If there were another US state where noncompete agreements were "essentially legal" whose economy "worked" what would that show.
Are there any other factors one should consider that affect whether a state's economy "works".
Is it possible to work for a competitor of one's former employer without violating the former employer's intellectual property rights.
I mean, if you want the counter example; we already have it. Texas and Massachusetts both had much more developed and supported engineering industries + talent pools in the first half+ of the 1900s. Talent specifically moved to California to be able to innovate without the encumbrances of current legislation in those states.
Sure, it's more complex than that and there are other reasons. But ultimately, a single piece of legislation had a huge hand in turning California into the preeminent global leader in the vast span of technology industries.
That'll still hurt you because entitled employers will want to know why you didn't just take another job and will worry that if you sign their non-compete, they might have to pay out your salary + benefits for a year or more when you decide to leave.
Pay shouldn't just continue, it should increase exponentially at a rate that outpaces inflation by enough to disincentivize maintaining it. Make it compound monthly at 200% APR.
Might be worth 3 years of pay to keep someone silent and idle for 2 years in some exceptional cases, but 7 years for 3 years would be exceedingly rare and 15 for 4 would be unheard of.
I'd be happy to sink all my time in my hobbies for 200% APR exponentially growing pay as long as anyone would like.
I think noncompete clauses have their uses so rather than see them eliminated completely you make a company pay the employee under a noncompete the equivalent salary for the duration. Company wants you to sign a noncompete for five years after you leave? They can pay for you five more years.
Companies that truly need the protections will shell out for it. The ones that include it in their employment contracts because that's just what they do, won't.
Garden leave isn't a panacea. For example, in Massachusetts, there's a relatively recent requirement that employers have to pay at least half of an ex-employee's salary for up to a 12 month non-compete coverage.
Better than nothing I guess. And it does put some skin in the game for the employer.
But while that might look like a good deal for some people who are in a position to just travel, start a project of some sort, etc. it isn't for everyone. Someone with a mortgage, kids in college, or other financial obligations might not think that dropping to half their base pay--to say nothing of just taking a year off mid-career--is so great.
And, depending upon how specialized they are, there may not be a role open to them which is a good match with their experience and skills.
But in MA, the "reform" doesn't apply to existing employment contracts, only ones signed after it went into effect.
The MA law was watered down after some lobbying by large Hopkinton MA based company(s) that had taken A.I.M. at non-compete reform in the state. In fact the reforms that did pass, I think only did after of a certain acquisition that occurred involving said company(s).
Yeah. EMC was one of the big blockers. I had to sign upon being acquired in 1999 although it didn't affect me (and was actually reasonably scoped). And I left after a few months.
In Germany we have non-competes, however, the employer has to continue paying the ex-employee (a part of) their salary for the non-compete to have any effect.
Imagine that the employer does not have a non-compete in place with her current employees. In the US, she may offer a single, token amount in exchange for signing an agreement containing a non-compete clause. This could, for example, be described by the employer as a "bonus". It does not have to be reasonably-based on the amounts the employee might gain from working for a competitor. It could be much lower. The employer could make signing the agreement a prerequisite to continued employment. Arguably the purpose of such a "bonus" is primarily to protect the employer against challenges to the enforceability of the agreement, not as an incentive or reward to current employees.
You can always turn it down. Contracts have whats called consideration.
I've seen companies try to get away with NCA/NDA by tying severance to signing one. I would have to be truly desperate to take the money over the health of my career, yet that is exactly what a lot of companies rely on.
In the US, I have never seen a severence agreement that did not include confidentiality provisions. However (IMO) the inclusion of non-compete provisions has become more common across all levels of employment and all job categories. The vast majority of US workers will sign these agreements. That cultural trend makes it (a) easier for employers' legal counsel to manage any issues raised by the minority and (b) more difficult, if not impossible, for the minority to negotiate.
Yeah, having been in that situation, my thought is that negotiation is worth a go, but the real response is having a good BATNA. Yet another reason to have savings at the 6-months-of-expenses level.
Even that seems too much in favor of non-competes. Instead it should simply be treated like another job that I can quit at-will.
If you don't want me to work for a competitor, pay me some amount of money we negotiate like a salary. It's up to you if you think it's worth enough to pay me not to work, and me to be paid enough not to advance my career how I choose during that time.
Yes, exactly. As it should be. If you don't want me to work elsewhere but also don't want me to work, that's on you to figure out. Compensate me adequately to do nothing or let me be. If companies are unwilling to do that, perhaps it's not a real concern.
Agreed, but how is that different from what the person you replied to said? I assume they can't pay someone for their silence against their will. Or maybe I'm wrong.
If non-competes are enforceable by the German style listed above, the employee forced silent by the non-compete, even after they are done working, but the company is also forced to pay them.
However, in that case, the company has two options: Forced non-compete with whatever percentage of salary is forced by law, or don't do a non-compete at all. While the employee has only one option: Whatever the employer chooses. Similar to most of the US (barring a few states) except US employees don't even get compensated.
Meanwhile, if employees aren't forced to accept non-competes, the employee and employer can work out a deal or not. Given that as far as I know, California employers don't regularly pay people their TC not to work after they quit, it seems that non-competes are more of a threat against employees than something actually necessary to prevent trade secrets or whatever.
Although even outside of California, I don't know anyone personally who had a non-compete enforced after quitting a job (unless this happened and they didn't tell me).
To be honest, this always made the most sense to me. If they want a non-compete, fine, but it should have money attached because it has value they should pay for.
How much pay is given for this?
This doesn't really give the desired effect unless the payout amount is guaranteed to be a substantial portion of salary. If a company can just pay $1/year for a non-compete then it is as good as nothing. In theory an employee can negotiate their contract but in practice it is much harder to do this since it involves lawyers and the power balance of the relationship is fundamentally unequal. Having a blanket ban on non-competes or requiring a significant percentage of compensation is needed to make this work.
For some reason I jumped to hoping the title also implied that union-only anti-compete clauses in government contracting were also banned. But that was too optimistic.
Uncompensated non-compete clauses have been pretty much unenforceable anyway given the cost of enforcement and the actual value to the enforcer (usually less than 6 figures). It's a good step to ban these given that all they do is make people afraid to work somewhere else.
Compensated non-competes are a totally different story, and probably better to hold on to.
This has been my experience. One employer tried. With the help of a labor attorney, I told them that if they wanted to enforce the clause then I would voluntarily withdraw my acceptance of a new job offer and then avail myself of the courts.
Burned a bridge, of course, but it took them about 20 minutes to decide I wasn't worth the hassle.
This is obviously great for workers and competition. It's actually good for companies too, even if they are too short sighted to realize it. See: silicon valley.
What you're missing is that most wealthy decision makers have highly concentrated holdings, so a general raise in national wealth doesn't necessarily provide them with a net benefit.
Ending non-competes would be good for GDP growth and the US economy writ large. But it's not necessarily for any particular company. See: all the businesses killed off by silicon valley.
Similar to how rent collection is a massive drag on economic productivity but fixing the housing crisis would be terrible for certain rent extractors in particular.
It's a way of establishing an "intellectual property" claim inside your skull. I put that in quotes because a limited term government grant of monopoly, which is what patents and copyrights actually are, are not "property." There is no property right in that grant of a monopoly. Congress could reset the term of patents and copyrights at any moment, on any terms. That's a much weaker thing than actual property rights.
No. A bill setting patent or copyright terms to less than what they are now is constitutional. Some might argue the opposite side of that, but I don't think anyone can deny the Framers were wary of the kinds of monopolies monarchs granted, much less did they think a patent is property.
My point is all ownership is a legal concept. Congress can abridge many property rights, including real estate, and the only thing keeping them from going further is the custom enshrined in our Constitution.
It's more than "custom." Since we have judicial review, courts can strike down an unconstitutional taking of property. It goes back to WWKGD? ("What would King George do?") ...and doing the opposite. So we have constitutional protections against seizing private property, but arbitrary terms, except they must be limited terms, for grants of monopoly.
Not perfectly observed of course. The Mouse always stretches the definition of "limited term." But the intent is there for anyone to see.
> more than "custom." Since we have judicial review, courts can strike down an unconstitutional taking of property
The custom cited is the power of the Constitution. The point is all property is an invented construct.
This isn’t some neo-Marxist hot take. It’s reflecting that IP is simply a novel form of e.g. drawing lines on a map and calling them deeds. One is older and more precedented. That’s a huge advantage. But neither is more “fake” than the other.
That's all true. Likewise I am just pointing out the underlying reasons why property deeds get more protection than stuff that the people writing the constitution thought was less worthy of protection.
Where we stand now is that courts are less likely to say that congress has no right to shorten patent and copyright terms, than to allow congress to take land without compensation based on market value.
And, in the case of non-competes, that may say even existing contracts cannot lay a proprietary claim to something between your ears.
> Congress could reset the term of patents and copyrights at any moment, on any terms. That's a much weaker thing than actual property rights.
Property comes in many forms. There's real estate, and movable property, in the most basic sense of property. But there is also intangible property. You can own a licence for use of part of the radio spectrum in a region. This is a valuable thing and you can sell it or buy it from another licensee. Radio regulation is basically all created by government legislation, and it could probably be changed at any moment, too. There are also financial assets, such as shares or bonds. Corporations themselves are legal fictions, and might be modified by legislation, with associated impacts on the property.
I strictly avoid the term "intellectual property" myself. Because conflating all these senses of property is highly confusing. A car is not a steel mill, which is not a patent, which is not a taxi licence, which is not a share in a corporation, which is not land. We need to carefully distinguish these, in most cases. But in a political science sense, they are property: legally recognized rights, usually transferrable, that claim exclusivity to something, tangible or intangible.
When it comes to startups, arent most noncompetes basically in the form of stock compensation? It would be hard to work for somebody while being invested in a competitor, or am I completely off base?
This is a big deal if they can pull this off and I'm very impressed with the FTC being proactive and doing something about it.
Noncompetes are a huge incentive for companies to prevent employees from being paid their true market value for their skills, especially true for those who are very specialized and only few employers can make use of their skills.
Would be interesting to see how contracts in HFT are going to change. From what I heard, when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge. Garden leave helps to mitigate this effect.
If non-competes are banned, then TCs are (probably) going to rise even more.
Probably just as well. Garden leave can be a pretty unsatisfactory mitigation, especially if it's not 100% of salary or if a lot of total comp is in bonus or equity. And even money aside, some people may not want to put their career on hold for a year.
Essentially garden leave is a compromise that's better than nothing and will make companies think twice about trying to enforce a non-compete. However, non-competes still raise flags for potential employers as well. (I used to work for a very small company and we wouldn't touch anyone who had a non-compete in place.)
> when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge.
So without the employee the firm can't compete? If that's really true, then that employee should be able to extract as much blood as they want. They are literally the keystone of the business.
The good news is that the FTC rule would allow the firm to enforce a non-compete by giving the employee a 25% equity stake. That seems like a fair trade in exchange for with-holding such incredibly valuable specialized knowledge from the market.
It's less that and more that once you see the inside here you can pass that on to the other place. Knowledge is everything. And it turns out you don't have to be the one to make something in order to memorize it.
Is it harder to come up a new idea for a trading strategy or is it harder to actually implement the system to perform those trades?
Not being in that industry, to me it seems like the easiest part is coming up with a new trading idea. The hardest part would seem to be actually implementing it without bugs. Therefore, I'm not sure if noncompete clauses really provide a super-significant amount of value. Even if you left a firm with a super good trading strategy today and wanted to implement it elsewhere, you're still going to have to perfectly re-build it, which is probably not trivial.
Both. If one is on a competitive exchange or a latency-sensitive asset class, need to be both smart and fast.
Also, strategies change all the time and are mostly the domain of quants and traders. What they did a year ago, could very well be history at the firm they worked at.
I'd say an idea that generates alpha is tougher. I have seen firms like XR have great technology, but sucky ideas. They were fast, not smart and hence they didn't make a killing like their competitors did, due to all the volatility in the last three years.
I work at an HFT. I am expecting most of the major firms, especially Citadel Securities, lobby hard against this.
While non-competes on our side are paid, they're a pain in the ass to navigate if one is a visa worker (my case). So, I am praying for this to pass. If it does, I am starting interviewing with competitors the very next day.
Congress is rapidly becoming a failed institution. They have gradually outsourced their duties to various administrative authorities (such as the FTC) to the point that the only thing they must do to keep the US running is pass the annual budget and raise the debt ceiling.
I think any time an administrative authority or, even better, the courts do something that a legislator wants done, they breathe a sigh of relief that they don't need to spend any of their valuable political capital trying to do it themselves. The fact that what someone else does, they can also undo, never seems to play into their calculus.
One example:
Well after Democrats were established as the pro-choice party, there were periods in which both chambers and the presidency were all controlled by the Democratic party. So obviously, with pro-life activists agitating to get pro-life justices appointed, congress spent nearly zero time passing any pro-choice laws.
> congress spent nearly zero time passing any pro-choice laws.
What pro-choice federal law do you imagine would have substantive effect in the face of what would be (and was) necessary for Roe to fall:!a Supreme Court that is (1) so dismissive of well-established precedent as to strike down the cases establishing abortion as a 14th Amendment right (thereby both removing the independent bar to state anti-abortion law and removing the enforcement clause of the 14th Amendment as a basis for federal law), (2) from a faction also opposed to expansive readings of the Commerce Clause (thus rendering abortion protection grounded in the Commerce Clause unviable).
This isn’t like same-sex marriage where Congress has a separate, less factionally controversial in bounds, Constitutional grant of power (in the Full Faith and Credit clause) to act under.
Throwing out a simple "states may not restrict abortion except in the following ways" federal codification passed by Congress (in e.g. 2009) would have taken a lot more justification than overruling a previous court decision. The latter was a "whoops we changed our minds" and the former would have been more of a "only one branch of government counts and legislative ain't it!" Perhaps there are five ethically bankrupt justices serving now, but I can only count three, and it would have been good to uncover the others sooner rather than later.
Besides, if you truly have so little faith in our institutions (congratulations on paying attention!), why bother working with them at all? It soon will be time to do something else.
I've seen over and over this harm friends in frustrating ways. Tech aside, non-competes in other industries are completely insane. My wife is an optometrist and all local shops have draconic noncompetes you are forced to sign. If you leave the shop you can't work within 30 miles (or more!) of that location.
I've had friends move entire cities just so they can get out of a terrible work situation. Worse, I've had friends stay in bad situations because their noncomplete would force them to move or drive way too far for work.
And since everyone does it, they're resigned to "it's just the way it is" and nobody wants to risk being sued.
IMO the primary concern at an office like that is having access to patient data and then enticing them to go elsewhere. If the person wants to go work elsewhere, totally fine. The concern is trying to take customers or other staff with them.
I know somebody that happened to. Company opened a branch office and one of the senior staff rented an office around the corner, took half the staff and patients. Stuck them with multi year lease agreements, after the business already bore the entire startup cost of paying people while building up a patient load, marketing, etc.
I understand the opposition to draconian non-competes but there’s a flip side of this to protect an investment that is very valid.
There are usually non-solicitation clauses as well that prevent you from actively recruiting former co-workers and clients/customers. That's different than a non-compete.
>If you leave the shop you can't work within 30 miles
I know one person who worked in sales and was banned from selling in an entire region of the country. She was completely open about this when being recruited by another employer. That new employer appeared completely willing to work around the non-compete clause to bring her onboard.
That was, until she was actually hired and she was almost immediately pressured to sell throughout the forbidden area. When she said she was willing to, but only if the new employer would sign an agreement to cover any of her associated legal fees, they eventually backed off on the demands.
These situations always seem to push the risk to the employee to the benefit of the employer.
In normal countries these are only valid when the previous employer pays for the time you are not allowed to work.
If I work at a bank as a developer then I can go straight to the next one, if the previous employer doesn't keep paying me a compensation for not working at the next bank.
Not being able to 'in sales' as sibling commenter says here is just insane, and should not hold in court anywhere.
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[ 2.9 ms ] story [ 324 ms ] thread> The commission’s proposal appears to address this issue by requiring employers to withdraw existing noncompetes and to inform workers that they no longer apply. The proposal would also make it illegal for an employer to enter into a noncompete with a worker or to try to do so, or to suggest that a worker is bound by a noncompete when he or she is not.
This is very unclear to me, and seemingly experts, if the FTC has this power, but it would be very far reaching if it were to go into effect. Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC
Maybe it's overreach by federal agencies when they create their own law.
There is a distinction between authorizing an agency to figure out how to get something done and letting one make new law.
Dramatically limiting the power of agencies to make up their own new laws seems like a good thing.
EDIT: To clarify, I mean that my dad said that liberals will do anything to accomplish their goals while conservatives play nice. The same idea but in reverse. This is why I think that what is actually happening is that there's a small group of people in any movement that believe the end justifies the means, but it's hard to see the ones in your own movement because you agree with them.
Anyway this derailed from the OP which is about some new rules that might slightly tip the power in the employer-employee relationship in favor of employees. As an employee (leftists like to say "worker" but it means the same thing), this would be good for me.
I think what it actually is is that there are factions within each group who match your description and it is hard to see the faction in your own group because you agree with them.
Also, even he was appalled by the turn the Republican party took with Trump. I doubt he would argue the same today. He's a diehard believer in constitutional law, and he projected his ideals onto people who didn't actually hold them.
That said, I do believe the same tendency occurs on the liberal side. It's easy to notice when your opponent cheats, it's much harder to see it when a teammate does.
Agencies should not make laws (in the United States). Even good ones.
Lawmakers make laws intentionally vague to hide their nefarious motives, and then let the courts "determine" the agencies can "clarify." Then the lawmakers point their fingers at the evil agencies while secretly laughing it was all in their plan to offload blame for what they planned all along.
ATF has "regulated" that an AR-15 lower "receiver" is legally a "firearm receiver." Now show me where the "bolt or breechblock" is housed in the lower receiver. I promise you will not find it. They are basically making law.
Second, your citation appears to be out of date and the current regulation defines "frame or receiver" differently.
>Second, your citation appears to be out of date and the current regulation defines "frame or receiver" differently.
At the time of US v Rowald there were pretty clear inconsistancies. If you're referring to recent changes there's barely been enough time to create a historical record as the judicial process is slow, so it seems kind of silly to constrain to only post-latest change examples.
Do you really expect Congresspeople to have the educational background necessary to regulate agricultural products, automobile emissions, and how medical testing is conducted? Do you really want AoC or MTG deciding which medicine you can take? Remember the ACA/Obamacare debacle? Without agencies, the entire government becomes a series of "let's pass the bill to see what's in it" laws.
The whole point of delegation is that experts make the important decisions, and Congress approves a leader for the department that is accountable to them for oversight. Requiring Congress to bring every decision an agency makes to the floor for a discussion and vote is akin to having the Board of Directors of a company approve and modify every PR it Github.
It was nuked because "we should just listen to lobbyists more", and basically the replacement enacted was to take double OTA's yearly budget, and drop that onto the Library of Congress, I suppose with the implication the GOP believes that Congresspeople should do their own research.
The level of follow thru on that is probably just what you'd expect.
If OTA came back, I'd be one of the first to throw my hat in the ring as a researcher/go-for, just because I believe it is such an essential piece of a healthy legislative institution, and we have suffered greatly over the past decades for want of it.
More likely, in the short term it will be challenged in individual arbitration and we'll never hear about it.
Perhaps, but it is unusual for humans to be aware that they're protected from such.
This proposal does not nullify NDAs (Non disclosure agreements), from the FTC press release:
"The proposed rule would generally not apply to other types of employment restrictions, like non-disclosure agreements."
There are also exceptions to partners and owners selling a business.
And if you think the primary purpose of non-competes is to prevent or mitigate corporate espionage, I've got a bridge to sell you.
Those thresholds mean most software engineers are subject to non-competes.
The article as about non-compete for workers. Non-competes for M&As are not mentioned.
I go back and forth on that. It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do.
It certainly hasn't panned out that way though.
Especially since health care is tied to employment.
It's a privileged position if you can 'just say no' to a company that has non compete clauses - the majority of workers cannot.
The idea is well known for hundreds of years, but here's a particularly salient quote for your line of thinking.
----
"In so far as the reduction of costs of production and distribution thus achieved is reflected in reduced prices, society as a whole ultimately benefits from the use of standard contracts… The use of contracts has, however, another aspect which has become increasingly important. Standard contracts are typically used by enterprises with strong bargaining power. The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood only in a vague way, if at all."
F Kessler, ‘Contracts of Adhesion--Some thoughts about Freedom of Contract’
In your opinion, is there a reason why something like a union couldn't be used to negate or modify non-compete clauses?
I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to the wayside.
> I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to the wayside.
I agree, and it's frustrating not just here but in the political realm as well. I think the Greatest Generation came back from the war and took hold of, and created instutitions: universities, the FDA, the CDC, the FAA, the MacArthur Foundation (just a random thing that came to mind), and importantly unions that protected workers rights and living standards. In the political realm I recently volunteered as a poll worker - it was a ton of fun, truth be told albeit a long day. But many people, friends, family, etc. thought it was a bit weird. We can't have nice things if we don't take care of them or do the hard work of democracy (or unionization, or maintaining valuable institutions) if we don't actually do it.
I'm not sure where this apathy and angst crept in, but I bet suburbanization and social media helped create and subsequently accelerate it to the point where we have some serious problems that need to be addressed.
This is interesting. Can you expand on the how you think this changed the overall sentiment of civic responsibility?
I sure hope there is parking at the protest
Basically non-compete negatives for the worker don't outweigh the costs & downsides of forming a union -for just this issue-. Forming a union, negotiating, membership, etc all have transaction costs. Also unions come in a bundle with negative effects too (corruption, forced to go along with decisions where you are in the minority opinion, etc).
So if there was a super light weight union that only focused on non compete, then maybe it could level bargaining power. But since unions have a cost and come with downsides, it's not used in practice today.
But I don't think it requires paying the employee during the non-compete time.
I'd argue that falls way short of being useful and still screws over employees.
People switch jobs because they get better offers, and being forced to not only forego better offers but also get stuck with the same income while your offers get taken away from you hardly seems something that's in the worker's interests. In fact, it looks an awful lot like plain old unemployment benefits.
If you get a written offer from company B while working for company A under a non-compete, A must either:
- Allow you to leave unopposed
- Keep you in your current role by negotiating a more attractive offer
- Pay the value of offer B to put you on gardening leave for the non-compete period or 12 months, whichever is longer, and also compensate B for their recruitment costs
Would never happen, but it would be amusing to watch CEOs pitch a fit about it on Twitter.
> No one telling anyone what to do.
Sounds like a good way to get mafia.
My issue (and probably yours) is the way non-competes get handled by employers * Every non-compete I've signed has been sprung on me while filing out paperwork on my first day. What am I supposed to? Walk out and be unemployed while I look for a new job? * What do I actually get for a non-compete clause? Judges routinely rule that continued employment is enough consideration for near-anything including non-competes. But if some companies don't have non-competes, to me that isn't true consideration. Me signing a non-compete that isn't worded in this-for-that like standard contract clauses should be should be treated as a gift on my part by the courts that can be revoked * Many states have restrictions on non-competes but most non-competes for national companies are boilerplate and often too broad. Combine this with a mandatory arbitration agreement and employers are doing an end-run around state labor laws either through arbitration or just strong arming employees
But none of that matters when most people still don't understand profit vs economic profit.
I don't think that's the free market ideal. Let's switch away from employers vs. employees and ask, "Would an ideal free market allow companies to collude to fix prices? Would an ideal free market allow consortiums of companies to set up exclusivity contracts with vendors to block competition from entering the market? Would an ideal free market allow companies with profits in a monopoly to run other businesses at a steep loss to prevent competition?"
"Freedom from regulations" is a very thorny problem, it rarely leads to what people imagine are "free" markets.
This only works with a robust social safety net where a worker can have no job and still be ok. Otherwise you're usually going to be choosing the lesser of several evils when it comes to employment contracts.
I’ve grown to learn that arguments on labour markets and free market ideals tend to be very simplistic and, knowingly or not, always boil down to victim blaming.
When we’ve unemployed and actively looking for a job, if we have bills to pay and our budget is tight, our goal is to get a source of income as soon as possible. Consequently, we are vulnerable for unscrupulous conditions, such as non-competes. This does not mean that the job market finds them acceptable or encourages them. It just means employees that push these abusive conditions upon their new hires are abusing their dominant position to exploit workers, specially those in vulnerable positions.
It's hard to be a true free market libertarian when the initial conditions aren't really that free...
I'm not saying these things are necessarily good or bad. Just saying that most laws around income, taxes, and land have their roots in feudalism. And of course the ruling class still make themselves well to do off of the hard work of their subjects, just not to the same degree as kings. And yes, I know, people today have "choices" via voting. Even if those choices are between a shit sandwich and a shit sandwich without the bread.
Nonsense. Contributing back to society doesn't even register as a concern when your employer can force you to not have any alternative to work for him under his term, and apply harsh penalties to you and your loved ones if you step out of line. These nonsensical anarchist tropes only come in play to pull the focus away from the one-sided social arrangement between employers and employees in the US which his highly exploitative and outright resembles feudalism.
I think non-competes for workers should be banned. But I'm just saying there are other more feudalistic examples (good or bad) that exist.
How is what I said "nonsense"? Do you not see that if the government decides to zone your land as conservation so you can't build on it that is one sided? Or if they use eminent domain. Even if it's in the best interest of society it's certainly one sided for the affected individual. And if they decide not to comply, you can bet the punishments will be much harsher than a non-compete.
You see, in this example society and company can be largely interchangeable - a group of people imposing something on an individual. Yeah, sure, most of the time society is acting in everyone's best interest. However, you have to remember that isn't always the case, such as with salvery or segregation. There are still injustices today.
If you reread my original comment, I never said those activities were good or bad, merely that many of our laws have their historic roots in feudalism. In many cases, those activies can be applied to either good or bad ends. There are examples of eminent domain being abused, and others which have provided benefits to society and generously compensated the owners. The important tie in to feudalism is that in either case the government is the one who owns the land while the "owner" holds the title of deed. You can hold the land as long as you abide by the rule of the government. Violate that rule (not paying taxes, use it for committing criminal activity, violate zoning) and they can take that land back, fine you, imprison you, etc.
I dunno, they seem pretty spot on for the US.
In the US, "free market" generally means one of two things... 1 - a fictional market with no externalities and perfect information symmetry. Ayn Rand fans think it's real, but it only exists in an ECON-101 textbook.
2 - code for "rules for thee, not for me" as said by the billionaire class. Or, really anything that keeps them rich and the rest of us beholden to them for basic life necessities.
Edit - I prefer a phrase like "functioning market" to "free markets". Or maybe "fair market"? Not sure. The current labor market in the US is dysfunctional, at least when considering the share of increased productivity seen by the working classes (vs business owners).
Edit2 - changed "perfect information asymmetry" to "perfect information symmetry"
FTFY. I believe that is what you meant to see or
> perfect, no information asymmetry
In short, we have quasi state-sanctioned hegemons that have undue negotiating power.
There are two solutions: nerf the barriers or buff the workers through more targeted regulation. There's no single regulatory body that can do the former, so the only option left is the latter.
But, if the problem is the much smaller/simpler "remove barriers to job changes", this is a pretty significant change in policy. Not as significant as divorcing medical coverage from employment, but still pretty big.
We should especially work on reducing information asymmetry. Big examples are salary negotiation and US healthcare. There we have parties (employers, hospitals, insurances ) that have almost all information and then the employees/patients that have almost no information. The old rule is that whoever has the least information in a negotiation will lose.
I've long been a proponent that capitalism is not just about the economy but is instead a larger force more akin to feudalism.
If the lawmakers take issue with the ruling they can issue a mandate to roll it back, no?
And at the core, the problem is that the US' political system unlike everyone else's system does not enforce that the executive has a parliamentary backing. That provides a lot of perverse incentives that historically were only prevented by a basic code of ethics and conduct - but since the Obama days, open obstructionism has become acceptable and a target in itself in politics.
Two wrongs don't make a right. Everyone involved should remember that the US is a federation of fifty states that share sovereignty with the federal government, and that nothing stops the various states from enacting their own noncompete bans in their better-functioning state legislatures. They can even do that in cooperation with other states, in order to accomplish the goal in a harmonious manner; see the Uniform Commercial Code for an example.
I don't see gridlock in Congress as an example of it being fundamentally broken. I see it working as intended, since only few matters have such broad agreement among the people in all fifty states that Congress should decide on it for the whole nation. In fact, the fewer things decided on in that fashion, the better for the country as a whole.
This is actually super interesting in that Article 1. Section 10 suggests this requires Congressional approval.
I'd also that the US is a de jure federation of independently sovereign states, whereas we are a de facto central government with weak provincial governments. States cannot act independently or as a peer to the federal government or with each other, and state sovereignty has been eroded since the ratification of the Constitution.
Debating whether or not Congress or the States should make these laws is purely academic. 250 years of history has shown that the only way for meaningful change to be enacted anywhere is for it to be done everywhere, by Congress, with the support of the Executive, and without a meddling Court to nullify it. If we lived in a country that you're hypothesizing about, we would still be segregated.
The UCC is not an interstate compact in the sense of Article 1 Section 10. They're merely the same code that each state chose to adopt, with no legal ability for any other state to question if one state chooses to deviate from it in part or whole. It absolutely does not require Congressional approval. Interstate compacts are more like treaties that states make with each other.
You're absolutely right that state sovereignty has been steadily eroding, and I posit that this is to everyone's disadvantage. As in your example, just because states' rights were once used to champion the evil cause of slavery then later Jim Crow, does not mean that the whole concept of states' rights is wrong.
Besides, tort and contract laws are historically the primary domain of state law. I don't see why the US Congress has to be the one to define it for everyone.
The evidence suggests otherwise. When states wield their power on rights, it's usually against the interests of their people until the federal government forces them to stop by removing their power to do so. That doesn't mean the federal government is without issue, but it is the entity designed to protect liberties.
I don't think this is a simple case of tort that could or should vary between states. It's about the freedom of individuals to choose who employs them and protecting them from those with power. The existence of this as a state law would only serve to exist in opposition to states that don't, to the detriment of their citizens.
States decriminalizing pot, for one, would be an example of state law trying to broaden liberties that federal law restricts. Or Massachusetts legalizing same-sex marriage long before the US Congress did anything about it. Or even at a smaller level, San Francisco city officials doing so before the state of California did.
There's plenty of examples where a more local decision went in furtherance of liberties than a more distant decision, so I'm not sure where you get the idea that politicians become more enlightened and virtuous the higher up in the federation they go.
> The existence of this as a state law would only serve to exist in opposition to states that don't, to the detriment of their citizens.
I'm not sure I follow. I think it's perfectly fine to let the fifty laboratories of democracy play this out, keeping the locus of control as close to the people as possible. The people of California have shown that the lack of noncompetes doesn't necessarily impede commerce or progress; the people of other states may learn from that and follow, or decide otherwise. And if those states that keep enforcing noncompetes do end up doing poorer for their people, they will change the law, or vote with their feet.
its the equivalent of if the tsa started trying to pat you down before you got in your car. and then saying its okay because congress can just roll it back.
[1] https://www.federalreserve.gov/boarddocs/supmanual/cch/20080...
student debt was another one. whether or not you agree with forgiving it, it's deeply disturbing for the president to knowingly do something unconstitutional and do an endrun around congress' power of the purse. With the hope that no one has standing to challenge it
The FTC claims non competes undermine competition, which is within their mandate, and honestly not that tough of an argument to make.
1) The process gets stalled from rollout until 2024, at which point a Republican comes into power, appoints new FTC head, and they roll it back.
2) Companies sue, and SCOTUS rules that this exceeds FTC authority.
But I'll freely concede that there is no way such a bill would ever make it through Congress.
It's a bit complicated here, but ideally companies wanting noncompetes could be forced to pay the difference between what the worker would've earned if they stayed (+ some safety factor for a potential raise elsewhere, eg 20%) and what they earn now with a noncompete.
So if a worker earned 100k, with the safety factor for a raise that means 120k, and can only earn 50k due to a noncompete, the company would have to pay the difference of 70k to that worker if they wanted to keep the noncompete valid (for a limited amount of time). Company keeps their 'secrets', but has to pay for the secrecy.
You have NDAs already. It's not like you're working for Lockheed with secret stealth aircraft knowledge where a non-compete might be a national security protection. It's a representation of the inequality of bargaining power. If I didn't take the job I would've been out another job for possibly months to reach my payscale (Staff). They are a representation of the scourge of the neo-liberal variety of capitalism. It's not true capitalism, it's actually neo-feudalism, and it's not the only symptom of it.
You will never get anyone in power to agree to make non-competes force payment of a stipend while you're under one. The powers that be have paid off congress. The fact the FTC even wants to look into this after decades of this abuse just demonstrates that fact further.
And this is about the only way they hold up in court, otherwise the non-compete would be a one-sided contract.
IANAL, but I was once sued by a former employer over a non-compete (an entry level IT job). The judge basically swept the floor with it.
Also, it made me understand why severance packages exist, it is usually a salary compensation for the non-compete duration. Now when you hear outrage over some bank exec getting a million dollar severance, know that this can be because of a non-compete.
But, as you pointed out with your story, much of the outrage is still directed at the rank hypocrisy that goes on - companies easily try to force noncompetes with little or no compensation to low level workers, but then automatically know they need to pay execs millions for the same privilege.
I think if your company gets bought and you get stock compensation of the company buying it, both as a founder or an employee, they can also make it hold in court.
Only do unto others that which you wish others to do unto you (or something like that, you get the idea).
It's common for executive's lawyers to negotiate contracts with the firm before accepting an offer (including what the firm can or cannot do to the executive without penalties). I wish it were more normalized for ICs.
I don't have the business or economic bonafides to back this up, but it seems likely to me that such an incentive structure would not serve the benefits of society as a whole, and might become quite damaging were it to become widespread. My own sense is that, with the possible exception of the "you can't take your client sheet with you" style of noncompete that sometimes gets applied to salespeople and hairstylists, non-competes are simply anti-capitalist. Not in some sort of ideological sense, just in a very practical, "This is nothing but a tool for retarding GDP by further concentrating wealth in the pockets of the already-wealthy," sort of way.
The standard I'm familiar with is, knowledge you acquired during your time at a previous employer is safe to share with your current one if you can support it with a citation.
What does that have to do with non-competes? What you're describing is IP law and theft; and is illegal pretty much throughout the western world.
Non-competes specifically and only exist in the context of barring employee competition and migration of talent. All via legal labor servitude at the justification of "training investment" and/or "unfair competition".
The general rules that most states use for deciding when non-competes are enforceable aren't that bad. E.g. if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year, but it's fine if you do it a couple towns over. That doesn't seem especially crazy to me.
What if you work at Starbucks and want to open your own coffee shop. Is it reasonable that you should not be able to open a coffee shop within two blocks of any existing Starbucks?
you trade getting to learn for agreeing not to use it against them for a while -- is the theory
at line worker level i'd argue this is nonsense, at 'how to mill iPhones from a single block of metal' or 'self driving car brain' maybe its real, but there are ndas and patents for that
In your example, they cannot claim the skills and basic education that gets you up to the point of "how they mill iphones within a context" (i.e. the milling, operating the machinery, physical properties of the metal, etc)
They are not legally able to include a huge educational backbone of knowledge (that they may have taught you) as their prioptary IP. Again, NCs don't prevent that disemination. That disemination can happen without employment.
https://beneinstein.medium.com/no-you-cant-manufacture-that-...
To impose punitive measures after-the-fact because someone taught you how to do a job that they needed you to do seems hilarious even on the face of it.
To be clear, saying "You're not allowed to use our IP or our machinery or our supplies" is totally reasonable; if I quit Starbucks, then of course I won't have Starbucks machines or merch. To say that you're not allowed to do something because they happened to be the ones to train you seems just silly.
I get very strong middle-school vibes, where you introduce your friend-from-another-school to your group, then get mad when they become better friends with someone else than they are with you.
I do think it is reasonable for the competes to include not stealing recipes or IP or other capital from the business. Contacts are harder to legislate but there is a difference between remembering your best contacts and contacting them via LinkedIn vs exporting a contact list from your company's Salesforce and using that.
How are you examining these rules that it "doesn't seem especially crazy?", what's the rationale?
Capitalism requires competition to produce positive outcomes, the only reason to limit or ban competition is in the edge cases where the model doesn't work (patents, utilities, etc). Frankly we have too many regulatory moats as it is IMO.
Sure you get paid less than you are used to but you are still getting more than 95% of the population to do literally nothing.
Bonuses are like options being worthwhile in that they are mostly out of your control. When I see a position pays 140,000 plus bonus which was almost 40,000 last year I know I can only count on 140,000 this year and if 40,000 happens to be awarded great.
I too can see the reasons that non-competes exist, but I see more reasons why they shouldn't exist. And even if a company thinks it's worth it to pay someone's salary for a year or two to enforce a non-compete, is this really what's best for the economy overall? Motivated, highly skilled people excluded from the job market?
For high demand folks (the kind we read about in executive emails between Apple and Google and so on) it seems very possible that a company would opt to pay 10% of the employee's comp to deny them from the competition.
eg, you get full benefits plus no less than 80% of all compensation of the previous 12mo. Non-cash compensation (eg equity) may be replaced with equivalent cash.
> "Non-cash compensation (eg equity) may be replaced with equivalent cash. "
What's the equivalent cash value of options? The variability here is huge. Seems better to just ban these schemes entirely, especially considering there's seemingly zero upside to allowing them.
Remember: California has never allowed noncompetes and we're doing just fine in the tech department. Better plan would be for the rest of the country to follow our lead.
But really the right move here is either no non-competes or employees getting to set their own prices for them. Being on the wrong side of a power asymmetry forces behavior changes.
In other words, the kind of person who is actually in a position to negotiate the terms of their contract. What bugs me most about the current situation is the ubiquity of non-competes for low salary employees, who have the least amount of leverage to negotiate contracts. I'm much less concerned about staff engineers at tech companies and portfolio managers at hedge funds, although I'd prefer to see non-competes banned altogether (except perhaps for non-competes for owners selling a company... I think it's fair that if I buy your ice cream shop, we can agree that you can't open one up across the street the next day).
If all employees rejected them, companies would have no option but to disband them.
The issue is that when one enters into a non-compete without equivalent compensation the government loses potential tax revenue. Income tax is maximized when workers are working most productively, so there is a strong incentive for the government to keep workers working productively. Similar reason for why we have minimum wage.
If non-competes provide sufficient "garden leave" then the tax revenue should not be impacted, so there is no reason for the government to care. The productivity is still captured. The government isn't in the business of spotting bad deals for individuals – you are quite free to make all kinds of boneheaded financial decisions – only bad deals for itself.
Granted, execution and enforcement can be a challenge. Say you enter into a non-compete with "garden leave" of $1. Is that sufficient compensation with respect to the intent of allowing "garden leave"? Now you need a tribunal to make the call and all the complexities to go along with it. And so, when drafting laws, it may be more practical to prohibit "garden leave" as well.
“Garden leave” is basically just being in paid employment with no duties.
Neither the FTC action nor state policies like those in California generally prohibit noncompetes while employed.
However, if the compensation for such a contracted “garden leave” was substantially less than normal full-time comp for the employee, and agreed prior to employment rather than as a separate independent agreement at the end of the employment-with-duties, I can imagine the FTC still seeing it as an unfair competition practice, and state courts, limiting recovery for breach to any “garden leave” compensation for the time in breach.
Where did you get that idea? In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
From the actual case law of application of the prohibition by state courts, etc.
> In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
This both a misuse of the phrase “carte blanche” and inaccurate in its substantive message. Prohibition on competing work while employed is a well-documented exception to both California’s general policy against non-competes and its general policy against employer prohibitions against moonlighting; your employer can’t stop you from working for someone else who doesn’t compete with in your spare time while you are employed by them, and can't stop you from competing with them when you are no longer employed by them, but they can prohibit competing work while you are employed:
https://www.dwt.com/blogs/employment-labor-and-benefits/2020...
https://www.mossbollinger.com/blog/2020/december/my-employer...
Productive work is a major factor in psychological well-being. And a lot of people have spent their career being a highly specialized expert in one thing.
Expecting them to abandon that for a year or more in order to instead contribute "entry-level skills" at something else can be difficult. It's already known how retirement can lead to depression and a painful feeling of emptiness -- imagine how much worse that can be in the prime middle of your career.
It's not about the money or whether GDP measures something or not. It's about the ability to contribute what you're best at, where your excellence lies, or having that ability taken away. For many people, there isn't any kind of easy substitute for their primary area of expertise.
2 years of non-compete aka 2 years of compensation to not work sounds WONDERFUL. Like, it means you're so good at your job we're willing to pay you to not do jack shit. You musta been working on something so cool that it's worthwhile to have you sit at home then let someone get even a whiff of it. It's the best possible compliment.
There are PLENTY of ways to do productive work -- take a class, work on a certification, work on a side gig, or take a job in a different industry for a spell. Volunteer at the YMCA and do an AWS cert while sleeping in until 10am every morning.
"entry level skills" is also simply untrue -- plenty of non-entry level stuff you can crank away at. Start a Master's degree, or shoot for the high end Cisco certs, etc. etc.
You can contribute to where where you're best at in a ton of different ways. You need to ditch this hustle culture mentality, there are plenty of ways to generate excellence and they don't require full-time, ass-kissing jobs.
Have something to show for your time, like you took an online class or something, but it's not a huge surprise. You didn't pop on multiple DUIs and spend 2 years in the slammer.
Non-competes are stupid period and thankfully in California are not enforceable. It's similar to a prenuptial agreement in marriage except who the f is marrying their employer?? A good employer wants to keep you, will compensate you to do so, and if they can't, they are proud of you and wish you well, _even if that means a stronger competitor_ .
[0] https://news.ycombinator.com/item?id=34257325
The trade secret argument the poster above you alluded to is very unlikely. Usually a competitor is hiring you because you are already somewhat trained and up to speed in their field... and perhaps the competitor can slow your company's operations by hiring you away.
In the end, many companies only pay you what they have to keep their operations stable and feel more than free to pay the very top of management more than what they deserve, and keep those executive compensations while laying off people in operations quite freely when times are bad. Noncompetes only for the company, not the worker, during good times.
Now there's an idea - a fair noncompete. Employee can't use their knowledge/skills for 2 years after they leave, but also the company can't hire anyone with any industry knowledge or related skills for 2 years after they leave either. Wonder how many companies would like that idea?
That's no argument. Parasites work as organism taxon, doesn't mean all life can become so.
An example of an economy outputting businesses at the highest levels of performance while barring non competes is an argument.
Non-competes limit where your staff can go to. Without proper compensation for the time period in which they apply for, they're a very one sided (and in some cases illegal [NCs are legal in IL unless they assert an economic hardship]) way to prevent employees leaving. The claims for them is "training cost is expensive and it's to limit staff from training at one company and leaving" (which as we know.. companies generally don't do training in house)
This gets thrown around HN a lot but I don't think it matches reality. Say I work in machine learning algorithms for show recommendations at Netflix. Amazon hires me to work on their machine learning algorithm recommender on Prime Video. Sure, I might have NDAs to protect what I learned at Netflix, but how does Netflix realistically show whether or not I disseminated that knowledge at Amazon? It's not like they can just ask to see Amazon's code to see if the knowledge has been ported over to there. The only way to really show that I infringed an NDA is for someone to rat me out, which is probably pretty rare. To that end, I understand why companies want non-competes (I'm not saying they should be allowed to have them... I'm just saying that there are reasons that they exist beyond "we don't want employees to leave). In finance, it's very common to get a paid non-compete where you get your full salary for as long as the company wants to enforce the non-compete. Companies aren't paying these high salaries just because "training cost is expensive and it's to limit staff from training at one company and leaving". They are doing it because they actually fear the consequences of the employee's new firm competing with them based on the knowledge that the employee has. For this reason, it's also pretty common for companies in finance to not pay out gardening leave when they aren't worried about the employee's new company directly competing.
Probably not, but I would imagine that in cases like this there would be a third party given access to both sides, and charged with determining if theft has occurred.
Personal integrity. If you have it, you are valuable. If you do not any value you have is short lived.
Cuts both ways. Does Amazon have the integrity to not expect the violation of your agreement with NF?
Life is simpler with honesty
I look forward to the day I can add inventions to that one field that asks for them upon being hired!
If they can get enough evidence to make it through the pleading stage of a lawsuit, then they can ask exactly that during discovery.
Non-competes (non-paid out) only put time between companies (in some states it might be beyond the lifetime of the person under a NC). To put that, and not fully pay out at the current salary, puts a uneven pressure on the individual who was pressured into agreeing to it for (unguarenteed) employment.
Additionally, non-competes survive termination by the company.
Eg. If you move from one big tech co to another, you may be technically moving to a competitor, but the subject matter of your work could be unrelated.
This is probably true of other industries too.
And my work doesn't even include any contact with their customers! What they really wanted was that I wouldn't do for, or even share with, the other big accountancy firms what I was going to do for them, because it's something unusual that's their idea and they think it gives them an advantage. That's completely fine of course. The original reading was ridiculous.
I don't think they changed it in the contract, but they did explain it by email.
Trademarks don’t really help with this. The bigger issue is trade secrets. You can’t make someone forget how your as-yet unreleased prototype is designed, and proving that their subsequent work for a competitor draws on that knowledge is expensive and time consuming. Not to say that non competes are a good idea, just saying trademarks are irrelevant to the conversation, and trade secrets are a more complicated issue than patents.
If there were another US state where noncompete agreements were "essentially legal" whose economy "worked" what would that show.
Are there any other factors one should consider that affect whether a state's economy "works".
Is it possible to work for a competitor of one's former employer without violating the former employer's intellectual property rights.
(NB. I am in favour of regulating non-competes.)
It works!
Sure, it's more complex than that and there are other reasons. But ultimately, a single piece of legislation had a huge hand in turning California into the preeminent global leader in the vast span of technology industries.
Might be worth 3 years of pay to keep someone silent and idle for 2 years in some exceptional cases, but 7 years for 3 years would be exceedingly rare and 15 for 4 would be unheard of.
I'd be happy to sink all my time in my hobbies for 200% APR exponentially growing pay as long as anyone would like.
Companies that truly need the protections will shell out for it. The ones that include it in their employment contracts because that's just what they do, won't.
Better than nothing I guess. And it does put some skin in the game for the employer.
But while that might look like a good deal for some people who are in a position to just travel, start a project of some sort, etc. it isn't for everyone. Someone with a mortgage, kids in college, or other financial obligations might not think that dropping to half their base pay--to say nothing of just taking a year off mid-career--is so great.
And, depending upon how specialized they are, there may not be a role open to them which is a good match with their experience and skills.
The MA law was watered down after some lobbying by large Hopkinton MA based company(s) that had taken A.I.M. at non-compete reform in the state. In fact the reforms that did pass, I think only did after of a certain acquisition that occurred involving said company(s).
https://www.telegram.com/story/business/columns/2016/07/10/p...
https://aimnet.org/non-compete-agreements-protect-innovation...
I've seen companies try to get away with NCA/NDA by tying severance to signing one. I would have to be truly desperate to take the money over the health of my career, yet that is exactly what a lot of companies rely on.
I don’t think this would ever be implemented here.
If you don't want me to work for a competitor, pay me some amount of money we negotiate like a salary. It's up to you if you think it's worth enough to pay me not to work, and me to be paid enough not to advance my career how I choose during that time.
However, in that case, the company has two options: Forced non-compete with whatever percentage of salary is forced by law, or don't do a non-compete at all. While the employee has only one option: Whatever the employer chooses. Similar to most of the US (barring a few states) except US employees don't even get compensated.
Meanwhile, if employees aren't forced to accept non-competes, the employee and employer can work out a deal or not. Given that as far as I know, California employers don't regularly pay people their TC not to work after they quit, it seems that non-competes are more of a threat against employees than something actually necessary to prevent trade secrets or whatever.
Although even outside of California, I don't know anyone personally who had a non-compete enforced after quitting a job (unless this happened and they didn't tell me).
Compensated non-competes are a totally different story, and probably better to hold on to.
Burned a bridge, of course, but it took them about 20 minutes to decide I wasn't worth the hassle.
Ending non-competes would be good for GDP growth and the US economy writ large. But it's not necessarily for any particular company. See: all the businesses killed off by silicon valley.
Similar to how rent collection is a massive drag on economic productivity but fixing the housing crisis would be terrible for certain rent extractors in particular.
Isn’t it?
Not perfectly observed of course. The Mouse always stretches the definition of "limited term." But the intent is there for anyone to see.
The custom cited is the power of the Constitution. The point is all property is an invented construct.
This isn’t some neo-Marxist hot take. It’s reflecting that IP is simply a novel form of e.g. drawing lines on a map and calling them deeds. One is older and more precedented. That’s a huge advantage. But neither is more “fake” than the other.
Where we stand now is that courts are less likely to say that congress has no right to shorten patent and copyright terms, than to allow congress to take land without compensation based on market value.
And, in the case of non-competes, that may say even existing contracts cannot lay a proprietary claim to something between your ears.
Now map this attitude to intellectual property and you see the problem.
Property comes in many forms. There's real estate, and movable property, in the most basic sense of property. But there is also intangible property. You can own a licence for use of part of the radio spectrum in a region. This is a valuable thing and you can sell it or buy it from another licensee. Radio regulation is basically all created by government legislation, and it could probably be changed at any moment, too. There are also financial assets, such as shares or bonds. Corporations themselves are legal fictions, and might be modified by legislation, with associated impacts on the property.
I strictly avoid the term "intellectual property" myself. Because conflating all these senses of property is highly confusing. A car is not a steel mill, which is not a patent, which is not a taxi licence, which is not a share in a corporation, which is not land. We need to carefully distinguish these, in most cases. But in a political science sense, they are property: legally recognized rights, usually transferrable, that claim exclusivity to something, tangible or intangible.
Noncompetes are a huge incentive for companies to prevent employees from being paid their true market value for their skills, especially true for those who are very specialized and only few employers can make use of their skills.
If non-competes are banned, then TCs are (probably) going to rise even more.
Essentially garden leave is a compromise that's better than nothing and will make companies think twice about trying to enforce a non-compete. However, non-competes still raise flags for potential employers as well. (I used to work for a very small company and we wouldn't touch anyone who had a non-compete in place.)
So without the employee the firm can't compete? If that's really true, then that employee should be able to extract as much blood as they want. They are literally the keystone of the business.
The good news is that the FTC rule would allow the firm to enforce a non-compete by giving the employee a 25% equity stake. That seems like a fair trade in exchange for with-holding such incredibly valuable specialized knowledge from the market.
Not being in that industry, to me it seems like the easiest part is coming up with a new trading idea. The hardest part would seem to be actually implementing it without bugs. Therefore, I'm not sure if noncompete clauses really provide a super-significant amount of value. Even if you left a firm with a super good trading strategy today and wanted to implement it elsewhere, you're still going to have to perfectly re-build it, which is probably not trivial.
Also, strategies change all the time and are mostly the domain of quants and traders. What they did a year ago, could very well be history at the firm they worked at.
I'd say an idea that generates alpha is tougher. I have seen firms like XR have great technology, but sucky ideas. They were fast, not smart and hence they didn't make a killing like their competitors did, due to all the volatility in the last three years.
While non-competes on our side are paid, they're a pain in the ass to navigate if one is a visa worker (my case). So, I am praying for this to pass. If it does, I am starting interviewing with competitors the very next day.
I think any time an administrative authority or, even better, the courts do something that a legislator wants done, they breathe a sigh of relief that they don't need to spend any of their valuable political capital trying to do it themselves. The fact that what someone else does, they can also undo, never seems to play into their calculus.
One example:
Well after Democrats were established as the pro-choice party, there were periods in which both chambers and the presidency were all controlled by the Democratic party. So obviously, with pro-life activists agitating to get pro-life justices appointed, congress spent nearly zero time passing any pro-choice laws.
What pro-choice federal law do you imagine would have substantive effect in the face of what would be (and was) necessary for Roe to fall:!a Supreme Court that is (1) so dismissive of well-established precedent as to strike down the cases establishing abortion as a 14th Amendment right (thereby both removing the independent bar to state anti-abortion law and removing the enforcement clause of the 14th Amendment as a basis for federal law), (2) from a faction also opposed to expansive readings of the Commerce Clause (thus rendering abortion protection grounded in the Commerce Clause unviable).
This isn’t like same-sex marriage where Congress has a separate, less factionally controversial in bounds, Constitutional grant of power (in the Full Faith and Credit clause) to act under.
Besides, if you truly have so little faith in our institutions (congratulations on paying attention!), why bother working with them at all? It soon will be time to do something else.
I've seen over and over this harm friends in frustrating ways. Tech aside, non-competes in other industries are completely insane. My wife is an optometrist and all local shops have draconic noncompetes you are forced to sign. If you leave the shop you can't work within 30 miles (or more!) of that location.
I've had friends move entire cities just so they can get out of a terrible work situation. Worse, I've had friends stay in bad situations because their noncomplete would force them to move or drive way too far for work.
And since everyone does it, they're resigned to "it's just the way it is" and nobody wants to risk being sued.
I know somebody that happened to. Company opened a branch office and one of the senior staff rented an office around the corner, took half the staff and patients. Stuck them with multi year lease agreements, after the business already bore the entire startup cost of paying people while building up a patient load, marketing, etc.
I understand the opposition to draconian non-competes but there’s a flip side of this to protect an investment that is very valid.
What they are generally used for is to limit competition or depress wages both of which are economically harmful.
I know one person who worked in sales and was banned from selling in an entire region of the country. She was completely open about this when being recruited by another employer. That new employer appeared completely willing to work around the non-compete clause to bring her onboard.
That was, until she was actually hired and she was almost immediately pressured to sell throughout the forbidden area. When she said she was willing to, but only if the new employer would sign an agreement to cover any of her associated legal fees, they eventually backed off on the demands.
These situations always seem to push the risk to the employee to the benefit of the employer.
If I work at a bank as a developer then I can go straight to the next one, if the previous employer doesn't keep paying me a compensation for not working at the next bank.
Not being able to 'in sales' as sibling commenter says here is just insane, and should not hold in court anywhere.