The case for banning non-competes(slowboring.com)
slowboring.com
The case for banning non-competes
https://www.slowboring.com/p/the-case-for-banning-non-competes
337 comments
But my employer does everything. There is no field that my employer is not involved in, somehow. You can guess who they are, probably, or just read my profile. And they say "You cannot do anything that competes with anything we do". Which is everything. Want to make a Sudoku app? That's a game, we do games. Want to do some open source ML library work? We do ML, you can't do ML outside of work (I asked legal that one). And that's ignoring the who-knows-how-many secret un-released projects that might relate.
I'm in a US state that allows non-competes. I recently turned down a job because I wasn't comfortable with the non-compete I was compelled to sign expressly because the company's opinion of its own market was so broad. They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
And even if they are true to their word, what happens when they sell the company to someone else that exploits the leverage the non-compete provides?
A friend of mine was sued by their ex-employer over the violation of a non-compete. He lawyered up and fought it. And he won! But it was a Pyrrhic victory that resulted in a significant expensive of time (the judge granted an injunction that forced him out of business until the case was resolved - which was around 18 months) and money (he was granted no financial judgement). I am convinced the plaintiff's lawyer knew they'd lose, but to the suing party the process was punishment and that became their goal.
His should be a cautionary tale - even if you're advised that the non-compete isn't enforceable, it can still hurt you.
I'm in a US state that allows non-competes. I recently turned down a job because I wasn't comfortable with the non-compete I was compelled to sign expressly because the company's opinion of its own market was so broad. They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
And even if they are true to their word, what happens when they sell the company to someone else that exploits the leverage the non-compete provides?
A friend of mine was sued by their ex-employer over the violation of a non-compete. He lawyered up and fought it. And he won! But it was a Pyrrhic victory that resulted in a significant expensive of time (the judge granted an injunction that forced him out of business until the case was resolved - which was around 18 months) and money (he was granted no financial judgement). I am convinced the plaintiff's lawyer knew they'd lose, but to the suing party the process was punishment and that became their goal.
His should be a cautionary tale - even if you're advised that the non-compete isn't enforceable, it can still hurt you.
Also the people claiming (and believing) that they have no intention of suing are not the people who make the decision to sue or not (unless it's an extremely small company, or you are an important enough hire to be discussing this with the CEO and General Counsel). Even if they have the best intentions, some random recruiter or manager really has no insight into this.
Absolutely -- very early in my career, a startup I worked at had non-compete language in my original employment contract (naming very specific places I couldn't be poached to take a job at) and even though the company was very small and the person who made me the job offer was the COO (and they assured me they would never actually excise the non-compete), I still refused to sign until that language was taken out.
I also got language put into my contract to specifically allow for some of my moonlighting activities that could possibly be seen as a conflict. Both wound up being useful when the company expanded and they attempted to enforce different rules on me. Because my contract said what it said, I was able to get the HR person to back-off and didn't have any fear when I did eventually leave for a competitor. And because of my moonlighting clause, I was able to have side-projects when other employees were often discouraged from doing the same thing (part of me felt bad for having different rules, but if I was capable of getting those clauses put in my contract when I was 24, others were too).
It is true that employees, especially lower-level employees, don't always have the leverage to change the contracts they sign (especially at larger companies), but I would personally never sign a non-compete unless there were very specific scenarios involved (i.e. it was either incredibly, incredibly narrow or the company would pay me while I waited out the non-compete), no matter what HR or the recruiter says. You don't need to be adversarial when discussing language or making changes -- most places are reasonable. And if a place isn't reasonable but refuses to remove non-compete language from a contract, even though they swear they will never exercise it, well, that's a giant red flag.
I also got language put into my contract to specifically allow for some of my moonlighting activities that could possibly be seen as a conflict. Both wound up being useful when the company expanded and they attempted to enforce different rules on me. Because my contract said what it said, I was able to get the HR person to back-off and didn't have any fear when I did eventually leave for a competitor. And because of my moonlighting clause, I was able to have side-projects when other employees were often discouraged from doing the same thing (part of me felt bad for having different rules, but if I was capable of getting those clauses put in my contract when I was 24, others were too).
It is true that employees, especially lower-level employees, don't always have the leverage to change the contracts they sign (especially at larger companies), but I would personally never sign a non-compete unless there were very specific scenarios involved (i.e. it was either incredibly, incredibly narrow or the company would pay me while I waited out the non-compete), no matter what HR or the recruiter says. You don't need to be adversarial when discussing language or making changes -- most places are reasonable. And if a place isn't reasonable but refuses to remove non-compete language from a contract, even though they swear they will never exercise it, well, that's a giant red flag.
> if I was capable of getting those clauses put in my contract when I was 24, others were too)
> It is true that employees, especially lower-level employees, don't always have the leverage to change the contracts they sign (especially at larger companies)
Confused, so do you think this is practical for people or no? There are only so many 3-person startups to go around that would change any terms for anybody...
> It is true that employees, especially lower-level employees, don't always have the leverage to change the contracts they sign (especially at larger companies)
Confused, so do you think this is practical for people or no? There are only so many 3-person startups to go around that would change any terms for anybody...
It was 10 person, but my point is people can still negotiate, even when they are young. And there is still a big gulf between a 300 person company (the startup I was at at its peak) and a 150,000+ person FAANG (where you will have less leverage as a non exec hire).
> There are only so many 3-person startups to go around that would change any terms for anybody...
This depends entirely on their terms, how many potential hires read and care about their terms, what sort of talent they are looking for, and how attractive the position is.
Sure it's a hassle for the 3-person startup, but I imagine this is much harder with Big Co. where the hiring manager may ask legal to make changes for a great potential hire and legal tells them to take a hike.
This depends entirely on their terms, how many potential hires read and care about their terms, what sort of talent they are looking for, and how attractive the position is.
Sure it's a hassle for the 3-person startup, but I imagine this is much harder with Big Co. where the hiring manager may ask legal to make changes for a great potential hire and legal tells them to take a hike.
> They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
Exactly. 'That's great; we can resolve that issue easily. Let's just skip the non-compete - you're not using it anyway and I'm not comfortable with it.'
EDIT: A non-lawyer's suggestion (talk to a lawyer before you do this): Skip signing or edit documents (cross out and initial sections you don't like, add words - and initial each change) and then sign and send it back. Don't say a thing; leave it to them to bring it up - most people won't bother disputing it with you.
Exactly. 'That's great; we can resolve that issue easily. Let's just skip the non-compete - you're not using it anyway and I'm not comfortable with it.'
EDIT: A non-lawyer's suggestion (talk to a lawyer before you do this): Skip signing or edit documents (cross out and initial sections you don't like, add words - and initial each change) and then sign and send it back. Don't say a thing; leave it to them to bring it up - most people won't bother disputing it with you.
Well we have never had to sue anyone because no one has ever actually called our bluff when we send them a threatening demand/cease and desist letter from our lawyers.
So if you decide to call our bluff in the future just know we won’t sue you…because we don’t have to sue, our agreement makes you waive your right to have the case heard by a court in lieu of mediation by a mediator of our choosing, from a mediation company we send all our cases to.
So if you decide to call our bluff in the future just know we won’t sue you…because we don’t have to sue, our agreement makes you waive your right to have the case heard by a court in lieu of mediation by a mediator of our choosing, from a mediation company we send all our cases to.
> makes you waive your right to have the case heard by a court in lieu of mediation by a mediator of our choosing
This really should be made explicitly illegal. It should not be possible for an individual to surrender the right to bring a dispute in front of the court.
This really should be made explicitly illegal. It should not be possible for an individual to surrender the right to bring a dispute in front of the court.
Who contributes most to politicians - individuals, or corporations and PACs funded by non-listed corps?
And actually, who writes a significant part of new bills, some of which become laws? Yes, corps. It's not surprising then that the legal system has some extra benefits for the corporations.
And actually, who writes a significant part of new bills, some of which become laws? Yes, corps. It's not surprising then that the legal system has some extra benefits for the corporations.
This is something that's truly atrocious about the move to digital-only copies. On paper, I can mark things up, initial them, send them back. The digital copies let me sign, and that's it. There's no in-band way to indicate that a section should be changed, no way to clarify wording. It's a system designed for contracts of adhesion, and nothing else. Heck, most of them will automatically scroll to the next place for a signature, implying that you shouldn't actually read what you're signing.
The existence of the automatic scroll feature should void the contract. They are actively trying to discourage reading the contract. There is no meeting of the minds.
My offer letter explicitly stated that starting work (and accepting the stated pay) constituted agreeing to all the docs sent over, unless explicitly agreed upon otherwise.
I can't wait to have enough savings to quit and move to california where the employee protections are so much higher.
I can't wait to have enough savings to quit and move to california where the employee protections are so much higher.
It's interesting to hear you say that, moments after coming from a thread where people were explaining why California is so terrible.
I feel like the symbol of the 2020s is Chesterton's Fence[1], people chafing against restrictions and then having to reinvent them. I'm sure that some people are indeed fleeing California, and will then immediately start reinventing it.
Not that that's necessarily a bad thing. The reinvention could be like a clean-sheet reimplementation that's better than maintaining a smelly old code base. But that only works if you know all of the reason those code smells are there, and don't simply re-start the same process to recreate the same bugs.
[1] https://wiki.lesswrong.com/wiki/Chesterton%27s_Fence
I feel like the symbol of the 2020s is Chesterton's Fence[1], people chafing against restrictions and then having to reinvent them. I'm sure that some people are indeed fleeing California, and will then immediately start reinventing it.
Not that that's necessarily a bad thing. The reinvention could be like a clean-sheet reimplementation that's better than maintaining a smelly old code base. But that only works if you know all of the reason those code smells are there, and don't simply re-start the same process to recreate the same bugs.
[1] https://wiki.lesswrong.com/wiki/Chesterton%27s_Fence
What's strange to me is how people, particularly those in California, think that banning non-competes were somehow a California idea or that CA is the only state that does that. Yes banning non-competes is one of the things CA got right. People who complain are concerned about the things it got wrong. The idea that if you want non-competes then you must also accept insane regulatory burdens isn't really tenable when you look at the other states that ban non-competes and don't suffer from the same problems as California. There are low-regulation red states like Montana, Oklahoma, and North Dakota that have the same non-compete bans that CA has and many other states such as Utah and Texas place severe limits on them, whereas there are high-regulation states such as Massachusetts that allow non-competes.
Please don't try to turn the non-compete issue into a california good-or-bad issue because it's just not a california thing.
Please don't try to turn the non-compete issue into a california good-or-bad issue because it's just not a california thing.
Note that MA somewhat recently passed legislation that more tightly limits the power of non-compete agreement: https://www.laboremploymentlawblog.com/2018/08/articles/non-...
I didn't know that -- it's good news. From a free market point of view, you obviously don't want to restrain trade, so that is the right-wing justification for bans. The left wing justification would be about increasing the power of labor. For both right and left leaning states, there seems to be an ongoing battle about non-compete agreements, and there is no reason for the pro-compete side to frame this as purely a left or right issue as there are allies to be had on from all sides of the political spectrum.
It's perpetually curious to me when people blame CA problems on a lack of upzoning and then ... move to much less dense places with plenty of NIMBYism.
Sure, you're getting away from the problem, but not because anyone there has a solution - just because they haven't been hit by the same problem to the same extent yet, because "sprawl outwards" works for a long time when you have less geographical boundaries.
Sure, you're getting away from the problem, but not because anyone there has a solution - just because they haven't been hit by the same problem to the same extent yet, because "sprawl outwards" works for a long time when you have less geographical boundaries.
Those people probably either (or both) of do not understand the nature of the issue(s) and/or are just as happy being somewhere where they won't be issue(s) for a long time as somewhere that's managed to prevent them in perpetuity.
That doesn’t seem odd to me. People do what’s best for them, and even if they underatand the dysfunction of North American urban planning well they’re not in a position to fix it.
> People do what’s best for them
People have many motives, including themselves, their communities, their businesses, their countries, their co-workers and neighbors, strangers on the street, etc. If they only acted selfishly, there would be no community, country, business, etc.
People have many motives, including themselves, their communities, their businesses, their countries, their co-workers and neighbors, strangers on the street, etc. If they only acted selfishly, there would be no community, country, business, etc.
Perhaps “people need a place to live” would have been a better way to phrase that.
Any solutions to North America’s urban planning woes will take decades, if they happen at all. I don’t fault anyone who can’t wait that long.
Any solutions to North America’s urban planning woes will take decades, if they happen at all. I don’t fault anyone who can’t wait that long.
Because you don't need (though it can still be good) upzoning if the population is low and housing cheap.
Maybe we could keep the protections for labor and drop the many additional protections for landowners.
I wonder if that would be necessary. San Francisco is kind of a special case as a small peninsula. That puts limits on the ways it can grow. You could probably build more housing units but you'll rapidly run into limits on streets, utilities, schools, etc.
I don't know how much the issue is with the rest of Silicon Valley. There used to be a lot of undeveloped area not too far from Palo Alto.
Texas may want to avoid the wrong kind of over-dense housing, since they've got plenty of land, though there are also reasons to encourage people not to commute multiple dozens of miles per day.
I don't know how much the issue is with the rest of Silicon Valley. There used to be a lot of undeveloped area not too far from Palo Alto.
Texas may want to avoid the wrong kind of over-dense housing, since they've got plenty of land, though there are also reasons to encourage people not to commute multiple dozens of miles per day.
>I wonder if that would be necessary. San Francisco is kind of a special case as a small peninsula. That puts limits on the ways it can grow. You could probably build more housing units but you'll rapidly run into limits on streets, utilities, schools, etc.
I'm going to push back on this. Manhattan is less than half the size of San Francisco and has nearly four times the population density. The Bronx is roughly the same size and has double the population density. It isn't that San Francisco can't expand, it is that it doesn't want to.
I'm going to push back on this. Manhattan is less than half the size of San Francisco and has nearly four times the population density. The Bronx is roughly the same size and has double the population density. It isn't that San Francisco can't expand, it is that it doesn't want to.
You know what Manhattan has that SF doesn't.
Subways[1].
Sure developers would love to build more chicken coops for tech bros. But they absolutely don't want to kick down coin to pay for the subway system needed to support that density.
[1] Oh yea SF has BART which was built 50 years ago and not expanded since. And the central subway which is 1.7 miles long, not open yet after ten years of construction and 20 years after it got the green light.
Subways[1].
Sure developers would love to build more chicken coops for tech bros. But they absolutely don't want to kick down coin to pay for the subway system needed to support that density.
[1] Oh yea SF has BART which was built 50 years ago and not expanded since. And the central subway which is 1.7 miles long, not open yet after ten years of construction and 20 years after it got the green light.
The famous legend of NYC is that they had the vision to build infrastructure beyond current needs.
Now, it's trendy to view any investment by democratic government as wasteful, and to reduce the taxes by which the community makes that investment to nothing.
What will happen to future generations, who have us as their forbears rather than the visionary New Yorkers.
Now, it's trendy to view any investment by democratic government as wasteful, and to reduce the taxes by which the community makes that investment to nothing.
What will happen to future generations, who have us as their forbears rather than the visionary New Yorkers.
There's plenty of investments. It's called suburban sprawl, and some people even think it's a tax ponzi scheme.
2 of the 3 subway systems in NYC were built by private companies.
It was only later that all were merged into one publicly-managed one.
It was only later that all were merged into one publicly-managed one.
That was also when expansion basically stopped.
I agree, which is my underlying point: they don’t want to expand! The lack of public transit is a problem plenty of people have been yelling about for decades, as you mentioned. Developers, citizens, and the city council have all proven over the years they are unwilling to do what needs to be done to make expansion possible.
> You know what Manhattan has that SF doesn't. Subways.
Well, yes. And deep bedrock and fairly stable geology that makes them possible.
Well, yes. And deep bedrock and fairly stable geology that makes them possible.
If Japan (earthquakes) and the Netherlands (built on swamp) and Shanghai (swamp) can do it so can San Francisco.
Well and there is also the old Bart tunnel and more modern Central Subway. And then there are the subway tunnels they have built/building in Los Angeles.
Snippets I've read over the years seem to say that subway tunnels and deep foundations don't tend to fail in earthquakes because they to move with the ground around them. And because they are already structurally strong.
Basically the lack of mass transit to support higher density is because of lack of willingness to pay for it. Unwillingness to pay for public infrastructure is due American economic ideology. Not anything specific to San Francisco.
Snippets I've read over the years seem to say that subway tunnels and deep foundations don't tend to fail in earthquakes because they to move with the ground around them. And because they are already structurally strong.
Basically the lack of mass transit to support higher density is because of lack of willingness to pay for it. Unwillingness to pay for public infrastructure is due American economic ideology. Not anything specific to San Francisco.
Shitty soil and earthquakes in combination is a bad combo.
https://www.businessinsider.com.au/earthquake-expert-san-fra...
https://www.businessinsider.com.au/earthquake-expert-san-fra...
California is really great in a lot of ways, but the issue that really drives people away from it is cost.
> EDIT: A non-lawyer's suggestion (talk to a lawyer before you do this): Skip signing or edit documents (cross out and initial sections you don't like, add words - and initial each change) and then sign and send it back. Don't say a thing; leave it to them to bring it up - most people won't bother disputing it with you.
My actual lawyer's advice is that doing this can be viewed by a court as "fraud" if it looks like the intention was for the counter-party to miss the changes. It's their problem if they miss changes, but it's your problem if you used deception to cause them to miss it. This exact thing that you suggested is what he told me I shouldn't do if I want it to hold up in court.
I ended up signing a contract that said "cannot work for any customers, competitors, or suppliers for twelve months" of a global company that worked with every industry and most companies. I went the route of hiding my next jobs in LinkedIn after I left.
My actual lawyer's advice is that doing this can be viewed by a court as "fraud" if it looks like the intention was for the counter-party to miss the changes. It's their problem if they miss changes, but it's your problem if you used deception to cause them to miss it. This exact thing that you suggested is what he told me I shouldn't do if I want it to hold up in court.
I ended up signing a contract that said "cannot work for any customers, competitors, or suppliers for twelve months" of a global company that worked with every industry and most companies. I went the route of hiding my next jobs in LinkedIn after I left.
> It's their problem if they miss changes, but it's your problem if you used deception to cause them to miss it. This exact thing that you suggested is what he told me I shouldn't do if I want it to hold up in court.
I did not at all suggest trying to cause them to miss the changes. I suggested (with the caveat of asking a lawyer), "Don't say a thing; leave it to them to bring it up". That's a common negotiating tactic, even in amateur or interpersonal negotiations. I'm not imaging they won't see it, I'm imagining they won't want to create problems for themselves by bringing it up.
I did not at all suggest trying to cause them to miss the changes. I suggested (with the caveat of asking a lawyer), "Don't say a thing; leave it to them to bring it up". That's a common negotiating tactic, even in amateur or interpersonal negotiations. I'm not imaging they won't see it, I'm imagining they won't want to create problems for themselves by bringing it up.
> I'm not imagining they won't see it
As my lawyer put it, if the communication goes like this:
Employer: "Okay great! Just sign these and you can start."
Candidate: *edits documents*
Candidate: *signs documents*
Candidate: "Okay great! Here I've signed 'em. Can't wait to start!"
That _might_ be fraud, regardless of your intent. Because there was no reasonable expectation that there was any negotiation even going on in the first place where any changes could have been expected to have been made. It sounded like different courts might have different opinions on the matter, but he strongly recommended against it.
As long as there was some version of negotiation going on "hey here's the changed document feel free to sign it and get it back to me" then you don't really need to tell them every little thing that changed, if they miss something it'll be much more likely to still bind in court.
As my lawyer put it, if the communication goes like this:
Employer: "Okay great! Just sign these and you can start."
Candidate: *edits documents*
Candidate: *signs documents*
Candidate: "Okay great! Here I've signed 'em. Can't wait to start!"
That _might_ be fraud, regardless of your intent. Because there was no reasonable expectation that there was any negotiation even going on in the first place where any changes could have been expected to have been made. It sounded like different courts might have different opinions on the matter, but he strongly recommended against it.
As long as there was some version of negotiation going on "hey here's the changed document feel free to sign it and get it back to me" then you don't really need to tell them every little thing that changed, if they miss something it'll be much more likely to still bind in court.
If one party edits a legal document before signing it, and then the other party doesn't read it before accepting it, then that is on the receiver. This tactic is used by lawyers on each other all the time. It's not fraud.
I'd hesitate to rely on your advice here. Here's a relevant story:
https://a16z.com/2014/02/06/why-i-did-not-go-to-jail/
More specifically to this exact discussion, see California Civil Code 3399:
> When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.
This would allow an employer to seek reformation. It's not clear to me as a layperson if this reformation could apply retroactively or not.
Or this interpretation of the consequences of a recent case in Virginia: https://www.virginiabusinesslitigationlawyer.com/when-negoti...
The actual decision: https://www.virginiabusinesslitigationlawyer.com/wp-content/...
The facts of this case do not mirror exactly what we're talking about here, so I'm definitely not trying to give legal advice. Maybe this wouldn't apply -- reading through it, it's a bit more egregious than what we're talking about here.
https://a16z.com/2014/02/06/why-i-did-not-go-to-jail/
More specifically to this exact discussion, see California Civil Code 3399:
> When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.
This would allow an employer to seek reformation. It's not clear to me as a layperson if this reformation could apply retroactively or not.
Or this interpretation of the consequences of a recent case in Virginia: https://www.virginiabusinesslitigationlawyer.com/when-negoti...
The actual decision: https://www.virginiabusinesslitigationlawyer.com/wp-content/...
The facts of this case do not mirror exactly what we're talking about here, so I'm definitely not trying to give legal advice. Maybe this wouldn't apply -- reading through it, it's a bit more egregious than what we're talking about here.
It's pretty eye opening how comments like this gets down voted.
Is providing legal information with authoritative sources in a thread like this somehow offensive?
(I've wised up personally, never try to do that myself again lol)
Is providing legal information with authoritative sources in a thread like this somehow offensive?
(I've wised up personally, never try to do that myself again lol)
They are not using it but just imagine that company gets acquired by people who do those kind of things.
Contract with company is not contract with current management only. I don't know who will be there in 2 years in charge.
My current company was acquired by a bigger company like a year ago, fast forward one year - even bigger company is now owner of our parent company.
Contract with company is not contract with current management only. I don't know who will be there in 2 years in charge.
My current company was acquired by a bigger company like a year ago, fast forward one year - even bigger company is now owner of our parent company.
Not to mention that the person making the assurances -- hiring manager, or even worse, recruiter (who may not even be an employee!) -- is not likely the person who makes the decision to enforce the clause.
That's a pretty good idea for emailed PDF documents. Typically, I have received a link to a signing service, and editing is not enabled by their UIs of course.
In that case, you simply need to email back before signing with the changes you need made. The company will do that to you if they get something wrong (wrong start date, incorrect pay or bonus percentage), so it is completely reasonable to have a conversation about what adjustments you need made to your contract. The worst they can say is no. And if they say no, that's a sign that you should really think about what you are signing.
A fundamental of negotiations (and human relationships) is not wanting to create problems or appear to be a 'trouble-maker'.
In a recent personal situation, it was obvious serious mistakes were being made and it was obvious what the solution was - painful, but certainly better than the alternative. However, we hadn't yet experienced the consequences, and predictably another other party railed at me for making things unnecessarily complicated.
Employees at businesses don't want to be seen as trouble-makers and have their offers rescinded.
A (manipulative) trick to negotiations is to put the other person in the position of being the trouble-maker.
In a recent personal situation, it was obvious serious mistakes were being made and it was obvious what the solution was - painful, but certainly better than the alternative. However, we hadn't yet experienced the consequences, and predictably another other party railed at me for making things unnecessarily complicated.
Employees at businesses don't want to be seen as trouble-makers and have their offers rescinded.
A (manipulative) trick to negotiations is to put the other person in the position of being the trouble-maker.
How do you do this when contracts are signed digitally nowadays?
> I'm in a US state that allows non-competes and recently turned down a job because I wasn't comfortable with the non-compete expressly because the company's opinion of its own market was so broad. They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
FWIW you can try editing the contract, removing the NCC clause, or tacking on steep consideration for exercising the NCC (as well as hard limit on it).
If they never sued anyone and have no intention to, they don't need an NCC clause, strike it out and ask them to sigh the updated contract.
FWIW you can try editing the contract, removing the NCC clause, or tacking on steep consideration for exercising the NCC (as well as hard limit on it).
If they never sued anyone and have no intention to, they don't need an NCC clause, strike it out and ask them to sigh the updated contract.
> tacking on steep consideration for exercising the NCC (as well as hard limit on it)
Now I'm mid-career, employers want to hire me for my experience.
If presented with a non-complete clause, I first strike it out, saying it isn't fair that you stop me working in my core area of expertise, when you're hiring me for exactly that reason.
If that gets refused, I instead add a clause that says any period where the non-compete is enforced will be paid at my full salary.
In practice, there ends up being a short discussion with HR, some thinking behind the scenes, and that clause is allowed. And when I eventually leave, the non-compete period ends up being waived.
Now I'm mid-career, employers want to hire me for my experience.
If presented with a non-complete clause, I first strike it out, saying it isn't fair that you stop me working in my core area of expertise, when you're hiring me for exactly that reason.
If that gets refused, I instead add a clause that says any period where the non-compete is enforced will be paid at my full salary.
In practice, there ends up being a short discussion with HR, some thinking behind the scenes, and that clause is allowed. And when I eventually leave, the non-compete period ends up being waived.
> If that gets refused, I instead add a clause that says any period where the non-compete is enforced will be paid at my full salary.
I believe employment NCs should be illegal, but this is the minimum standard a non compete should require to be legal. The fact that companies can essentially force you to stop working for years, without paying, is ridiculous in my opinion.
I believe employment NCs should be illegal, but this is the minimum standard a non compete should require to be legal. The fact that companies can essentially force you to stop working for years, without paying, is ridiculous in my opinion.
They don't even need to sign it. You've only signed the edited version, so they can either use the edited version or not have a non-compete. If you're comfortable with the edited version it doesn't really matter which one they choose.
If the non-compete is just a part of the overall employment contract, that means you are working without a contract. That can be problematic if the contract establishes benefits for you, like your salary, your bonus, your vacation, etc., etc.
Good point that I definitely overlooked. I was assuming the NC was a distinct document.
> They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that.
It doesn't matter what they believe, because a company does not have the same consistency of goals and actions as a person, and even a person can't be entirely trusted on things (even family sometimes turns on each other if the circumstances are sure enough). A company? Their entire board and management might change over time, or they might be bought out and have another entity with different goals.
Put another way, when considering and NDA during hiring, you should consider whether you would work for Oracle under the same NDA. Because what would happen if Oracle bought (or bought a controlling interest) in that company tomorrow? Do you still think you could go on past behavior with regard to legal action?
This is the exact same with privacy, and that's where I usually bring this up. It doesn't matter that I think Google is unlikely to do anything bad with the private info they have about me right now. I'm more worried about the Google (or whoever ends up with the data) five, ten or fifteen years from now.
It doesn't matter what they believe, because a company does not have the same consistency of goals and actions as a person, and even a person can't be entirely trusted on things (even family sometimes turns on each other if the circumstances are sure enough). A company? Their entire board and management might change over time, or they might be bought out and have another entity with different goals.
Put another way, when considering and NDA during hiring, you should consider whether you would work for Oracle under the same NDA. Because what would happen if Oracle bought (or bought a controlling interest) in that company tomorrow? Do you still think you could go on past behavior with regard to legal action?
This is the exact same with privacy, and that's where I usually bring this up. It doesn't matter that I think Google is unlikely to do anything bad with the private info they have about me right now. I'm more worried about the Google (or whoever ends up with the data) five, ten or fifteen years from now.
> They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
I feel like I'm yelling at a brick wall when I make a fuss of this, but this happens every time I see a doctor too. I'm asked to sign forms acknowledging I've read and understood long legal documents that they don't have a copy of to show me.
"It doesn't matter". Well I can't see the doctor without signing it. It only matters if they don't get their way. The same is true of the non-compete: it's because it only benefits them.
I feel like I'm yelling at a brick wall when I make a fuss of this, but this happens every time I see a doctor too. I'm asked to sign forms acknowledging I've read and understood long legal documents that they don't have a copy of to show me.
"It doesn't matter". Well I can't see the doctor without signing it. It only matters if they don't get their way. The same is true of the non-compete: it's because it only benefits them.
Don't make a fuss yourself. Just cross out the bit that says you've read some other mystery documents and sign the truthful version. Let the receptionist be the one to make a fuss.
I had an employer hit me with an even more egregious non-compete. It said I couldn't work for 12 months for anyone in a market they were in, or in any market their competitors worked in.
Our little sub-$1million startup was selling devices that competed with devices from a bunch of mega players like Dell, IBM and Amazon. Who's left to work for if you can't work for anyone who competes with Amazon?
Our little sub-$1million startup was selling devices that competed with devices from a bunch of mega players like Dell, IBM and Amazon. Who's left to work for if you can't work for anyone who competes with Amazon?
I have seen multiple small companies that contribute to the CNCF demand their employees sign noncompete agreements like this.
Even working a retail job would violate this agreement, as that is a market their competitors are in (despite it having no relation to cloud tooling!)
Even working a retail job would violate this agreement, as that is a market their competitors are in (despite it having no relation to cloud tooling!)
That is the US justice system in a nut shell. Its really just a threat for large companies to bleed people until they cannot afford to fight anymore. They dont need to win, they just need to stay solvent longer than you can.
> They implored me to trust that they had "never sued anyone" and "have no intentions to",...
For me, I have basically the same thing, but when I brought that up they straight up told me it'd be non-enforcable for the most part [1], along with that they put it there, because they had some people who started there just to get access to some expensive training, then left for a competitor/started their own company.
[1] which is actually the case
For me, I have basically the same thing, but when I brought that up they straight up told me it'd be non-enforcable for the most part [1], along with that they put it there, because they had some people who started there just to get access to some expensive training, then left for a competitor/started their own company.
[1] which is actually the case
When I worked in California I would sign any non-compete you want. They are thrown out anyway.
According to the California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In other words, non-compete agreements are not enforceable in California.
According to the California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In other words, non-compete agreements are not enforceable in California.
What happens if you leave California for a couple days and do a bit of work in another state without a similar clause?
> They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all?
Great answer BTW!
Great answer BTW!
You did the right thing. It’s totally possible that they come back to you and say “alright, we’ll drop the non-compete.” Especially if the feds appear to be heading towards voiding them all anyway.
> There are two kinds of non-competes, and both have problems.
There are more kinds of non-competes. Neither of the kinds you're listing is blanket-legal anywhere in Europe, as far as I can tell, but there are still NCC/NCAs.
Generally speaking, in Europe, NCC/NCAs must:
* show a reasonable business interest, mere competition does not ever qualify
* be geographically limited
* be temporally limited (rarely more than two years)
* be financially compensated (significantly, usually on the order of 50% gross salary for the entire period)
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
No it's not obvious at all. In fact I'd say that on its face it's obviously not true.
Unless the employer can justify of a super secret sauce which would be endangered by this there's no reason why you could not. You could work as a dev of a stock trading app, be passionate about stock trading applications, disagree with the company's ideas on the subject, and want to realise your own ideas.
There are more kinds of non-competes. Neither of the kinds you're listing is blanket-legal anywhere in Europe, as far as I can tell, but there are still NCC/NCAs.
Generally speaking, in Europe, NCC/NCAs must:
* show a reasonable business interest, mere competition does not ever qualify
* be geographically limited
* be temporally limited (rarely more than two years)
* be financially compensated (significantly, usually on the order of 50% gross salary for the entire period)
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
No it's not obvious at all. In fact I'd say that on its face it's obviously not true.
Unless the employer can justify of a super secret sauce which would be endangered by this there's no reason why you could not. You could work as a dev of a stock trading app, be passionate about stock trading applications, disagree with the company's ideas on the subject, and want to realise your own ideas.
> be financially compensated (significantly, usually on the order of 50% gross salary for the entire period)
I think this is the most important protection that's needed in the US. NCCs for high-level executives with golden parachute clauses actually makes a lot of sense. If their former company is essentially paying them (usually a lot!) after they leave during the NCC period, that is unlikely to get abused and overused.
For anyone who's knowledge and connections is not important enough to those kinds of payouts offered to C-suite execs, NCCs are just a way to bully employees into not leaving.
I think this is the most important protection that's needed in the US. NCCs for high-level executives with golden parachute clauses actually makes a lot of sense. If their former company is essentially paying them (usually a lot!) after they leave during the NCC period, that is unlikely to get abused and overused.
For anyone who's knowledge and connections is not important enough to those kinds of payouts offered to C-suite execs, NCCs are just a way to bully employees into not leaving.
For C-suite execs, I can definitely see it being a reasonable thing. And, honestly, at that level especially in large companies, skills are far more transferable to even totally different industries.
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As another comment said, and I can confirm from personal experience, just the fact that you need these to enforce a non-compete is no panacea. There is usually enough probable cause, or whatever legalese name it has, to take an employee to court and cause them enormous havoc and expense (UK anyway, but the rest of your post reads consistent with UK laws).
Additionally, if you think you are small fry for a firm to sue you, not necessarily. Enforcement of non-competes is just as much aimed at deterring others from trying as it is at affecting you personally, if you spread the cost for the company over the 10-20 employees who are deterred, it suddenly looks cheap.
Even if against the odds of going against a large corporation with deep pockets you eke out a win in court, you are almost certainly not getting all your money back, and none of your time and stress either.
Additionally, if you think you are small fry for a firm to sue you, not necessarily. Enforcement of non-competes is just as much aimed at deterring others from trying as it is at affecting you personally, if you spread the cost for the company over the 10-20 employees who are deterred, it suddenly looks cheap.
Even if against the odds of going against a large corporation with deep pockets you eke out a win in court, you are almost certainly not getting all your money back, and none of your time and stress either.
Those NCC/NCAs are unenforceable in California (outside some very specific exclusions, like C-level/founders), and California thrives, arguably because of it! I don't want my employer to be able to bully me into a contract where I can't switch to whatever job I want (even for "max 2 years" and half my previous pay...). A blanket ban clearly works and removes some of the employee/employer power imbalance. Should be the end of discussion.
Honestly I think that just requiring that NCAs be financially compensated like that would be enough to prevent them from being a problem.
Apparently in the UK non-compete are enforceable even when non remunerated, although your other points might stand: the non-compete must be in pursuit of a business need (i.e. not just a punishment because you left), and as should not extend in time and space more than required to fulfill that need (non-compete more than 6 months are rarely enforced).
And normally in the UK and a believe Europe the more senior you are the more likely a NC would be valid.
Which tracks: the higher in the food chain the more you’d be privy to strategic information and to-be-disclosed deals (e.g. bug contracts) allowing severely undermining or kneecapping the company.
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
Why is that obvious? If I work as a studio musician can I also be working on my own album after hours?
Why is that obvious? If I work as a studio musician can I also be working on my own album after hours?
If you're using melodies and samples from work hours, then maybe not. And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work.
> If you're using melodies and samples from work hours, then maybe not.
That would not be a question of competition, but of IP theft.
> And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work.
How is that of any relevance? I can have ideas about a better way to wipe my ass at work, is my novel ass-wiping implement competing with the company?
And even if it were, mere competition should not be enough for NCCs to trigger. NCCs should be about unfair advantage owing to the exploitation of sensitive or confidential information.
That would not be a question of competition, but of IP theft.
> And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work.
How is that of any relevance? I can have ideas about a better way to wipe my ass at work, is my novel ass-wiping implement competing with the company?
And even if it were, mere competition should not be enough for NCCs to trigger. NCCs should be about unfair advantage owing to the exploitation of sensitive or confidential information.
This depends. You're drawing a very restricted form of noncompete, one which is that a noncompete is only valid if for example I walk away with, say information about customer priorities and take them to a competitor.
But there is a broader though still imo legitimate view that a company, paying a knowledge worker to solve a particular class of problems, has a right to the result of that work. An extreme example would be a company giving you a lab and research assistants, you working there a year and then parenting the results yourself and licensing them to a different company. It might not have required any insider info, and all the IP is ostensibly yours, but that feels abusive.
Granted we're overlapping into IP assignment and moonlighting clauses, but they're all closely related.
But there is a broader though still imo legitimate view that a company, paying a knowledge worker to solve a particular class of problems, has a right to the result of that work. An extreme example would be a company giving you a lab and research assistants, you working there a year and then parenting the results yourself and licensing them to a different company. It might not have required any insider info, and all the IP is ostensibly yours, but that feels abusive.
Granted we're overlapping into IP assignment and moonlighting clauses, but they're all closely related.
> And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work.
And that your at-work trading app code would be influenced by ideas you have at home.
You're a craftsman making trading apps, some for an employer, some for yourself, it's what you do. It's strange for an employer to be allowed to force you to stop doing the others without compensating you for it.
And that your at-work trading app code would be influenced by ideas you have at home.
You're a craftsman making trading apps, some for an employer, some for yourself, it's what you do. It's strange for an employer to be allowed to force you to stop doing the others without compensating you for it.
There's a difference in competition and compensation between a craftsman who constructs products and an inventor who generates ideas. The problem is that the world is not black and white, there's a little of each in every career, and obviously companies want the best of both.
If you were a carpenter who worked in an old-time furniture store, turning chair legs on a duplicating lathe at work and turning toy spinning tops on a treadle lathe at home, there's no harm to your employer if you use some related skills at home. If you're not making parts that match their requirements, those parts are of no value to them. The company might as well pay you per unit, rather than hourly or as a salary.
If you worked at a think tank or research institution, your job might be to generate one particularly brilliant concept that was by itself worth your annual salary. You might spend your days testing ideas and improving your understanding of the problem domain while your subconscious mulls over everything at night. A musician is an interesting career in context - are they paid to move samples around in Pro Tools or think about and try a huge variety of riffs until they find the next Top 40 sound? If you had a great idea in your sleep, it was probably because you've taken a paycheck for the last 6 months at work generating no useful output, the only thing you built was the thought patterns in your brain. The company wants to own your brain, the thought patterns therein, and everything you think of.
Technology and automation is making ideas more scalable all the time, the industrial era where workers were paid to pull a lever repeatedly is in the past. I think we're only seeing the beginning of non-competes.
If you were a carpenter who worked in an old-time furniture store, turning chair legs on a duplicating lathe at work and turning toy spinning tops on a treadle lathe at home, there's no harm to your employer if you use some related skills at home. If you're not making parts that match their requirements, those parts are of no value to them. The company might as well pay you per unit, rather than hourly or as a salary.
If you worked at a think tank or research institution, your job might be to generate one particularly brilliant concept that was by itself worth your annual salary. You might spend your days testing ideas and improving your understanding of the problem domain while your subconscious mulls over everything at night. A musician is an interesting career in context - are they paid to move samples around in Pro Tools or think about and try a huge variety of riffs until they find the next Top 40 sound? If you had a great idea in your sleep, it was probably because you've taken a paycheck for the last 6 months at work generating no useful output, the only thing you built was the thought patterns in your brain. The company wants to own your brain, the thought patterns therein, and everything you think of.
Technology and automation is making ideas more scalable all the time, the industrial era where workers were paid to pull a lever repeatedly is in the past. I think we're only seeing the beginning of non-competes.
>And that your at-work trading app code would be influenced by ideas you have at home.
Which is an issue legally. Who owns the code? Who needs the license to use it?
Which is an issue legally. Who owns the code? Who needs the license to use it?
This being an issue seems weird. Surely your employment contract could include an extremely permissive license grant to your employer for any code you've written that you use at work, regardless of whether you own it or they do. That's much less intrusive than a noncompete.
That seems like a strange clause I would want to include. I have (?) lines of code, as well as other IP. Why would hiring me for a year give them access to free license of all my IP?
I saw something in Theranos's employee contract about granting a perpetual license to all the patents of the employees. I have no idea why that would be reasonable.
I saw something in Theranos's employee contract about granting a perpetual license to all the patents of the employees. I have no idea why that would be reasonable.
The code that you used at work. If you make something outside work, and never actually use it in your employer's codebases, they don't get a license. Whatever you do use in your work at your employer, they do get a license to. Which seems fair IMO, and avoids the pitfall of "wait when did you write this and can we use it?"
I'd much prefer this to a noncompete.
I'd much prefer this to a noncompete.
I understand what you're saying. But again, it seems strange to me that previously existing code/patents/IP would default to the company if you were directed to include it. It doesn't avoid the pitfall you suggested, it moves it so that it now becomes "think about it every time you are asked to do something at work" instead of "one time while signing a contract"
And the Theranos contract had no such limitations (that I could see) of opting in to using it in the company. Just "we can use any of your patents you had at the time you worked here, thanks".
And the Theranos contract had no such limitations (that I could see) of opting in to using it in the company. Just "we can use any of your patents you had at the time you worked here, thanks".
There is no protection for ideas, only for authorship.
So what you write at work is your work's, what you write elsewhere is not, by default.
So what you write at work is your work's, what you write elsewhere is not, by default.
> And that your at-work trading app code would be influenced by ideas you have at home.
Umm, but you are also taking money from your employer so you can't say that in reverse.
Umm, but you are also taking money from your employer so you can't say that in reverse.
It just depends on your agreement with the company. There's no reason that by default they own everything you do, beyond the fact that business has normalized it (and many other practices with the magic words 'it's just business').
Umm, but your employer is also taking time from you so you definitely can say that in reverse.
In fact, your employer is taking your a fragment of your life, and human life is worth more than currency, so actually, it's really quite inappropriate if your employer was found accidentally using ideas that you had while you were in the shower at home when they weren't paying you. (internet you-can't-hear-my-voice disclaimer: this is obviously hyperbole meant to really drive home the point.)
I'm generally a fan of market-based methods of structuring economic activity, but this sort of implicit assertion that the owner of capital is just obviously more important than the owner of labor really puts the "ism" is Capitalism.
Labor is a market, and markets are determined by both the players and the rules under which the players compete. Companies use the force of law to coerce laborers (see: every other post in this tread where supposedly free people worry about being sued). It's completely fair game for labor-force participants to turn around are use that same force to coerce employers.
In fact, your employer is taking your a fragment of your life, and human life is worth more than currency, so actually, it's really quite inappropriate if your employer was found accidentally using ideas that you had while you were in the shower at home when they weren't paying you. (internet you-can't-hear-my-voice disclaimer: this is obviously hyperbole meant to really drive home the point.)
I'm generally a fan of market-based methods of structuring economic activity, but this sort of implicit assertion that the owner of capital is just obviously more important than the owner of labor really puts the "ism" is Capitalism.
Labor is a market, and markets are determined by both the players and the rules under which the players compete. Companies use the force of law to coerce laborers (see: every other post in this tread where supposedly free people worry about being sued). It's completely fair game for labor-force participants to turn around are use that same force to coerce employers.
True, but you can’t use the studio’s IP regardless of whether you work for the studio.
Laws should be written to increase long-term production, and protect the weak. I do not see how this law does either. It's classic bullying.
You know, you're right?
I've been so indoctrinated in how non-competes work that I didn't even see that this wasn't obvious. Gah.
I've been so indoctrinated in how non-competes work that I didn't even see that this wasn't obvious. Gah.
> If I work as a studio musician can I also be working on my own album after hours?
Yes.
> Why is that obvious?
Just because there's a law somewhere that covers both a part of making music and part of making software, and just because some programmers make music and some musicians write software, and both are sometimes creative, doesn't mean they have much in common.
Yes.
> Why is that obvious?
Just because there's a law somewhere that covers both a part of making music and part of making software, and just because some programmers make music and some musicians write software, and both are sometimes creative, doesn't mean they have much in common.
Why is that obvious?
Because it creates a clear conflict of interest; stock trading apps compete with each other much more directly than do music albums.
Because it creates a clear conflict of interest; stock trading apps compete with each other much more directly than do music albums.
> Because it creates a clear conflict of interest
If you're not doing your job anymore, or are sabotaging your dayjob, then it's an employment issue. NCCs have no reason whatsoever to enter the equation before or after.
If you're not doing your job anymore, or are sabotaging your dayjob, then it's an employment issue. NCCs have no reason whatsoever to enter the equation before or after.
The implication isn't that you can't work in the same field, but that you could use inside knowledge trusted to you as an employee to get a leg up, which would be more analogues to taking licks and ideas from a hit album and using them in your own.
What if that recording studio considered inside knowledge of the publishing industry gained from your employment with them as getting a leg up? That is more-or-less analogous to what a family member was told when asked to sign a non-compete for a job as a grocery store clerk. (To be specific, the company viewed knowing who their supplies were as reason for a non-compete.)
For the most part artists signed to songwriting or publishing deals as well as run if the mill record deals sign over the rights to everything they produce during the covered period.
Yes that's a totally different employment relationship - you could be sued for plagiarism though.
You have a good idea for improving the product at 10 am. You think about it between 10 am and 4 pm. At 4 pm you discard the idea, not gonna work or sth. At 6 pm you type it into your app at home.
Of course most people wouldn’t, but this is one narrow area where I think it is reasonable to limit employees.
Of course most people wouldn’t, but this is one narrow area where I think it is reasonable to limit employees.
I share your concern but modulate the concern with two factors (you may not agree):
1 - if you work at a company like that (faang, basically) you probably have a choice of working elsewhere and they are paying you handsomely to give up the ability to have almost any software or electronics side projects (my gf wants me to go work at one of them and I have decided it’s not worth the money, though I can understand why others can reasonably think otherwise).
The first section of the article talks about this: US labor law is pretty firmly rooted in freedom of contract doctrine even though for most people there’s such extreme asymmetry of power that any “freedom” in this area is illusory. But if you’re a FAANG developer you aren’t one of those people — you have a choice.
2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement. Of course the new employer can disagree with the choices (“ARM CPU designs? That’s what we’re hiring you to do!”) but again, if that were you, you pretty much would have freedom to negotiate. I think such an objection would be pretty fair for an employer to have in that situation.
Also if you decide later you want to write a stock app but hadn’t listed it, well, c’est la vie.
1 - if you work at a company like that (faang, basically) you probably have a choice of working elsewhere and they are paying you handsomely to give up the ability to have almost any software or electronics side projects (my gf wants me to go work at one of them and I have decided it’s not worth the money, though I can understand why others can reasonably think otherwise).
The first section of the article talks about this: US labor law is pretty firmly rooted in freedom of contract doctrine even though for most people there’s such extreme asymmetry of power that any “freedom” in this area is illusory. But if you’re a FAANG developer you aren’t one of those people — you have a choice.
2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement. Of course the new employer can disagree with the choices (“ARM CPU designs? That’s what we’re hiring you to do!”) but again, if that were you, you pretty much would have freedom to negotiate. I think such an objection would be pretty fair for an employer to have in that situation.
Also if you decide later you want to write a stock app but hadn’t listed it, well, c’est la vie.
> if you work at a company like that (faang, basically) you probably have a choice of working elsewhere
Heh. I advise early career students from my alma mater. One of them took a job with a mom-and-pop web dev + IT firm. Super mom and pop. Like, maintaining word press and similar installs for maybe a few hundred clients and then bundling that with generic IT services (computer repair, maintenance, blah blah blah). Basically, as boring as you could possibly get.
That employer told my advisee that because the company develops software, their non-compete covers all software.
Are they correctly interpreting state law? Absolutely not. Does that matter to a 2x-year-old making 80K worried about losing their job, being sued, being blackballed in their small regional labor market (which they don't want to leave for family reasons)? Also no.
> 2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement.
Wait, are you sure that list works how you think it does?
The vast majority of employers won't even talk to you about the scope of their non-compete.
At the outset, you are supposed to white-list things when you start employment. But then anything non on that white-list (which includes every idea you have after the moment you fill it out!!!) has to be assumed to be covered under the NDA, unless you're willing to risk a court battle and an enemy.
Heh. I advise early career students from my alma mater. One of them took a job with a mom-and-pop web dev + IT firm. Super mom and pop. Like, maintaining word press and similar installs for maybe a few hundred clients and then bundling that with generic IT services (computer repair, maintenance, blah blah blah). Basically, as boring as you could possibly get.
That employer told my advisee that because the company develops software, their non-compete covers all software.
Are they correctly interpreting state law? Absolutely not. Does that matter to a 2x-year-old making 80K worried about losing their job, being sued, being blackballed in their small regional labor market (which they don't want to leave for family reasons)? Also no.
> 2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement.
Wait, are you sure that list works how you think it does?
The vast majority of employers won't even talk to you about the scope of their non-compete.
At the outset, you are supposed to white-list things when you start employment. But then anything non on that white-list (which includes every idea you have after the moment you fill it out!!!) has to be assumed to be covered under the NDA, unless you're willing to risk a court battle and an enemy.
Yeah, Junior devs are in the majority who don't have a symmetrical relationship with the employer. In California such a broad remit would not be enforceable.
FWIW court battles are rare. But better to get rid of the noncompetes regardless.
> > 2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement.
> Wait, are you sure that list works how you think it does?
Yes, that's the whole point of that list and the language is very clear.
FWIW I've mostly been the employer, not the employee and I always scrutinize those lists carefully (if someone writes anything there I have to approve it before the agreement can be signed). Not because I care what people do in their free time, but to see if there's anything there that could cause a disagreement, especially if it would be an innocent disagreement. And I have never seen anyone write something that seemed unreasonable there. TBH most people leave that blank.
These docs always go with the employment offer; if the employee doesn't see them until their first day what kind of negotiation is there then? The whole point is to have someone join us and be happy to work with us, not to take advantage of them.
FWIW court battles are rare. But better to get rid of the noncompetes regardless.
> > 2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement.
> Wait, are you sure that list works how you think it does?
Yes, that's the whole point of that list and the language is very clear.
FWIW I've mostly been the employer, not the employee and I always scrutinize those lists carefully (if someone writes anything there I have to approve it before the agreement can be signed). Not because I care what people do in their free time, but to see if there's anything there that could cause a disagreement, especially if it would be an innocent disagreement. And I have never seen anyone write something that seemed unreasonable there. TBH most people leave that blank.
These docs always go with the employment offer; if the employee doesn't see them until their first day what kind of negotiation is there then? The whole point is to have someone join us and be happy to work with us, not to take advantage of them.
> We do ML, you can't do ML outside of work (I asked legal that one).
Keep in mind the legal department represents your company, not you. They will tell you the interpretation of the non-compete most favorable to their client. It doesn’t mean it is correct or even enforceable.
Keep in mind the legal department represents your company, not you. They will tell you the interpretation of the non-compete most favorable to their client. It doesn’t mean it is correct or even enforceable.
Sure — but if they use that interpretation to decide whether to pursue a lawsuit, then it's relevant to you even if it turns out to be unenforceable. (See the last couple paragraphs of this comment: https://news.ycombinator.com/item?id=27857407)
Yeah especially in the US, if a large corporation wants to pursue legal action against you, this can be enough to destroy your life. In lots of places, the loser of a lawsuit has to pay the legal fees of the winner, but that's not generally true in the US. That means a large law firm or legal team can file a dubious lawsuit in such a way as to tie up years of your life, and cost you a significant portion of your wealth.
Bullshit clauses like this are exactly why I was reluctant to get a job in ML.
My reaction would be "Fuck you, I do ML, I'll do ML outside of work if I damn well please" and then quit.
(Posting this down here since it's not really toplevel reply worthy and is admittedly a rant, but I do feel the need to express that somewhere. It's tiresome that companies think they own you.)
My reaction would be "Fuck you, I do ML, I'll do ML outside of work if I damn well please" and then quit.
(Posting this down here since it's not really toplevel reply worthy and is admittedly a rant, but I do feel the need to express that somewhere. It's tiresome that companies think they own you.)
Problematically though, in most of the US ridiculously broad NCCs are enforceable. The only place where you're safe is California, where the only way for an NCC to stick is related to business (co)-ownership (selling the business, dissolving a partnership, or dissolving an LLC). Out-of-state NCCs are also un-enforceable in California.
You made a very general statement! They are enforceable because usually the violator is doing something ridiculously broad. Like going to work for McDonalds R&D after leaving Burger King as the VP of product design.
My anecdotal experience:
I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.
Another time, I was threatened to not use any IP from a startup I helped start. I specifically asked early on for an agreement to share the rights to my code. On my last day this agreement was terminated and the non-compete took precedence. Consulting with several lawyers (not in california) told me that it would be an uphill battle for the business to win against me as the optics of a large corp suing an individual doesn't bode well for the plantiff. Unless you started a multi-million dollar revenue generating project, which in that case I was advised to settle as a peace offering.
My anecdotal experience:
I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.
Another time, I was threatened to not use any IP from a startup I helped start. I specifically asked early on for an agreement to share the rights to my code. On my last day this agreement was terminated and the non-compete took precedence. Consulting with several lawyers (not in california) told me that it would be an uphill battle for the business to win against me as the optics of a large corp suing an individual doesn't bode well for the plantiff. Unless you started a multi-million dollar revenue generating project, which in that case I was advised to settle as a peace offering.
> Like going to work for McDonalds R&D after leaving Burger King as the VP of product design.
Don't rightly see why there would be any issue with that. If you bring McD IP to BK, then that's an IP theft issue.
> I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.
And I would argue a non-compete should be 100% non-enforceable here. "I learned shit on my previous job" doesn't mean you should not be able to work in the field anymore.
Don't rightly see why there would be any issue with that. If you bring McD IP to BK, then that's an IP theft issue.
> I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.
And I would argue a non-compete should be 100% non-enforceable here. "I learned shit on my previous job" doesn't mean you should not be able to work in the field anymore.
At what point does an explanation like this turn into "here's an inside look at exactly how their platform outcompetes you in area X"? Where does one draw the line?
> Where does one draw the line?
https://en.wikipedia.org/wiki/Trade_secret
https://en.wikipedia.org/wiki/Trade_secret
If a company doesn't know exactly why and where their competitors are better then them, they are not long for this world.
> I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.
This is what non-disclosure agreements are for. A non-compete would basically have prevented him from getting this new job.
This is what non-disclosure agreements are for. A non-compete would basically have prevented him from getting this new job.
But I don’t think this is nearly as true as you think it is. In Massachusetts, for example, if you were laid off your non-compete may be completely void and unenforceable. In some states the clause is only enforceable if the employee is given consideration for entering into the agreement and continued employment is, by law, not valid consideration. Other states have specific rules about how the non-compete clause must be written or provided to the employee: given X days before signing, notifying of right to counsel, etc. In large multinational corporations with standardized employment documents it’s hard to keep up with all of the changes to local law so the provision in your agreement might be invalid in your jurisdiction on its face.
There are so many factors to consider but so often people just assume defeat and don’t even bother to seek out legal advice. And that’s only to management’s benefit.
There are so many factors to consider but so often people just assume defeat and don’t even bother to seek out legal advice. And that’s only to management’s benefit.
I would like to understand whether there are any states that even occasionally backs the employer in non-competes for the general layperson. In my experience, courts tend to side with someone who's willing to work over employers.
This is why non-competes are a joke in the US. Courts aren't going to enforce them. Almost every state has an industry where moving between companies, or starting companies to compete with existing companies, exist (midwest auto industry, New York financial industry, Texas energy, etc).
It's great that California is so explicit. I wish other states would follow suit. But the only times I've ever seen a court uphold a non-compete is for highly (8 figures) compensated employees.
This is why non-competes are a joke in the US. Courts aren't going to enforce them. Almost every state has an industry where moving between companies, or starting companies to compete with existing companies, exist (midwest auto industry, New York financial industry, Texas energy, etc).
It's great that California is so explicit. I wish other states would follow suit. But the only times I've ever seen a court uphold a non-compete is for highly (8 figures) compensated employees.
Can you elaborate on this? Are you a lawyer? Do you follow cases? Not being sarcastic, genuinely want to know.
I think that Massachusetts takes the anti-California approach. The medical and pharmaceutical industries have really pushed for string enforceable NCC
Companies like EMC also pushed for them.
But changes in the law in 2018 weakened them considerably and made them more expensive to enforce via garden leave or alternative consideration. The only time I've had a non-compete in MA (small sample to be sure) was when EMC acquired my employer. The terms were actually fairly reasonable and didn't affect me when I left six months later.
But changes in the law in 2018 weakened them considerably and made them more expensive to enforce via garden leave or alternative consideration. The only time I've had a non-compete in MA (small sample to be sure) was when EMC acquired my employer. The terms were actually fairly reasonable and didn't affect me when I left six months later.
> "do you have a github account?". No, I've been highly motivated not to.
That is a shame, and given the extent to which most businesses and groups are built on Open Source, the fact that your situation is not in any way unique (to your employer or at large) is what makes it IMHO much worse.
I ran into technical limitations with my testing framework at one point where I realized that it was going to make my work 10x more complicated if I couldn't simply take some of the common libraries that I had factored out of my apps, and make them public.
You know what I'm saying, the CI machine can't run without a machine account if "bundle install" requires a valid SSH account. Getting the SSH account inside of a Docker container was an exercise of Rube Goldberg proportions, I eventually did it, but doubt strongly I would have ever been able to get anyone else to understand how or why that solution worked.
So I did the rational thing and published a few libraries to simplify the stack. 6 months later, we received a message from the head of InfoSec who was "very disappointed" after looking at our GitHub account.
Nobody competes with us. There was no risk of helping the competition. We're not in the business of software development (though we had an entire department of folks whose job title was Application Developer, so figure that one out...)
Their concern wasn't that it was against an NDA or that we hadn't gotten it approved, it was that threat-actors will take any signal they can about our internal stuff and turn it into an attack vector. Given what specifically it was that we had published, this was beyond irrational. I told them "it's 2020 and this is a backwards position to be holding in 2020." Shine a light, get more eyes on it.
There is no danger and I'm glad that someone looked at my code, I said, even if only for a few minutes – which I know would not have happened at all if we kept the repo internal.
Yeah, I don't work there anymore (not specifically because of this incident, but it was a contributing factor to me leaving voluntarily, without a doubt.)
That is a shame, and given the extent to which most businesses and groups are built on Open Source, the fact that your situation is not in any way unique (to your employer or at large) is what makes it IMHO much worse.
I ran into technical limitations with my testing framework at one point where I realized that it was going to make my work 10x more complicated if I couldn't simply take some of the common libraries that I had factored out of my apps, and make them public.
You know what I'm saying, the CI machine can't run without a machine account if "bundle install" requires a valid SSH account. Getting the SSH account inside of a Docker container was an exercise of Rube Goldberg proportions, I eventually did it, but doubt strongly I would have ever been able to get anyone else to understand how or why that solution worked.
So I did the rational thing and published a few libraries to simplify the stack. 6 months later, we received a message from the head of InfoSec who was "very disappointed" after looking at our GitHub account.
Nobody competes with us. There was no risk of helping the competition. We're not in the business of software development (though we had an entire department of folks whose job title was Application Developer, so figure that one out...)
Their concern wasn't that it was against an NDA or that we hadn't gotten it approved, it was that threat-actors will take any signal they can about our internal stuff and turn it into an attack vector. Given what specifically it was that we had published, this was beyond irrational. I told them "it's 2020 and this is a backwards position to be holding in 2020." Shine a light, get more eyes on it.
There is no danger and I'm glad that someone looked at my code, I said, even if only for a few minutes – which I know would not have happened at all if we kept the repo internal.
Yeah, I don't work there anymore (not specifically because of this incident, but it was a contributing factor to me leaving voluntarily, without a doubt.)
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
A lot of siblings have pointed out that this isn't the case (I'd agree), so it's maybe worth digging into why you (and likely many people) think this should be the case.
My guess is it's to do with IP and trade-secrets, but that's clearly already covered by IP law and absolutely doesn't need extra provisions in employment contracts to protect company interests there.
If I create a competing stock app, I need to be able to demonstrate novelty. If I can do that, I don't see an issue. My employer still has a lot of advantages in the market (first-to-market network effect, funding, etc.) so if I'm able to compete with them without stealing IP, I must have (tangible/intangible) assets unique to me as an individual to do so: my employment contract should not sign over those assets outside of my working hours.
If I'm actively weakening my employer's product during my working hours to benefit my own that's easily a firing offence without the need for non-competes.
What other reasons are there?
A lot of siblings have pointed out that this isn't the case (I'd agree), so it's maybe worth digging into why you (and likely many people) think this should be the case.
My guess is it's to do with IP and trade-secrets, but that's clearly already covered by IP law and absolutely doesn't need extra provisions in employment contracts to protect company interests there.
If I create a competing stock app, I need to be able to demonstrate novelty. If I can do that, I don't see an issue. My employer still has a lot of advantages in the market (first-to-market network effect, funding, etc.) so if I'm able to compete with them without stealing IP, I must have (tangible/intangible) assets unique to me as an individual to do so: my employment contract should not sign over those assets outside of my working hours.
If I'm actively weakening my employer's product during my working hours to benefit my own that's easily a firing offence without the need for non-competes.
What other reasons are there?
I suppose enforcability? It's easier to tell when someone has created a completing application vs whether they were purposely doing bad work (or are just incompetent)
I just assumed that was a big part of what big tech is paying for when they over-pay developers. They are buying you off so you don't work for competitors, or someday become a competitor. It's a bit of a gilded cage.
Agreed on the first kind. It kind of sort of makes sense in the original context: say I run a bakery. I put it up for sale. You think it's a pretty good deal, so we agree and I sell the bakery to you. Then I take the money you paid me to renovate the building across the street, hire your employees out from under you. Customers quickly learn that the "original" moved across the street, and I'm laughing all the way to the bank. A noncompete that says, "I promise not to open a bakery within 40 miles in in the next 3 years" is pretty reasonable. However, the concept deteriorates with the internet, where there's no reasonable equivalent of a 40 mile radius, so the terms become "just don't use your expertise for X years".
Noncompetes for employees are much more dubious. If my head chef wants to try and pull the same trick on me, it's his investment at risk... If he's really that motivated to undercut me, maybe I should think long and hard about why. The only variant I could see being okay with is if the term starts at the start of the employment. That is, if you leave after 2 months, you can't compete for 22 months, but if you stay the full 2 years, nothing stops you. (I still don't like that, but it's tolerable).
I'm not sure about the second type of noncompete. Is it the problem, or is the problem that your employer does everything? I suspect both, and a fairer version would restrict the noncompete to "stuff that you work on directly". Or maybe the noncompete should have to specify the bounds and wouldn't be enforceable if they're too broad, similar to patents... on second thought, never mind. In any case, I'd first like to see whether it's still overly restrictive if companies were capped to some reasonable size.
Noncompetes for employees are much more dubious. If my head chef wants to try and pull the same trick on me, it's his investment at risk... If he's really that motivated to undercut me, maybe I should think long and hard about why. The only variant I could see being okay with is if the term starts at the start of the employment. That is, if you leave after 2 months, you can't compete for 22 months, but if you stay the full 2 years, nothing stops you. (I still don't like that, but it's tolerable).
I'm not sure about the second type of noncompete. Is it the problem, or is the problem that your employer does everything? I suspect both, and a fairer version would restrict the noncompete to "stuff that you work on directly". Or maybe the noncompete should have to specify the bounds and wouldn't be enforceable if they're too broad, similar to patents... on second thought, never mind. In any case, I'd first like to see whether it's still overly restrictive if companies were capped to some reasonable size.
But the NCC would be for the baker to not work for another bakery within a 40 miles radius and that is terrible, they would not be able to exercise their profession.
The second one is worse than that. You’re a line cook and due to businesses not wanting to pay benefits. You can only find part time gigs. Forced to sign a non compete now limits your options for a second job.
Line cook is an extreme example but it happens to other professions like personal trainers. There has been cases where non competes were forced on restaurant workers.
Line cook is an extreme example but it happens to other professions like personal trainers. There has been cases where non competes were forced on restaurant workers.
> but it happens to other professions like personal trainers
Funny enough, this exact issue caused me to lose a personal trainer.
See, he opened a gym that competed with the gym he trained me at. Like, he was the owner and manager of that other gym. While also being an employed personal trainer at my gym. And did not hide this fact from anyone.
When the gym told him he had to quit or be fired, even he was of the "I'm surprised it took this long" perspective and understood their reasoning.
Funny enough, this exact issue caused me to lose a personal trainer.
See, he opened a gym that competed with the gym he trained me at. Like, he was the owner and manager of that other gym. While also being an employed personal trainer at my gym. And did not hide this fact from anyone.
When the gym told him he had to quit or be fired, even he was of the "I'm surprised it took this long" perspective and understood their reasoning.
The first one is absolutely problematic, and I've been personally negatively affected by other people's non-competes a couple of times, but there's some nuance there, I think.
I would like to live in a world where companies invest heavily in educating and training their employees and where there's a lot of transparency within companies. One of the reasons you don't get that is because of the fear of an employee getting seduced by a tiny pay increase and losing a bunch of competitive edge / trade secrets / investment.
There are other ways to address that than non-competes, granted, but we're not doing those things either. In place of more nuanced non-competes you just get more companies expecting you to take on the risk of buying your own education to be trained in a job, bureaucracy and lack of trust in employees, etc.
I would like to live in a world where companies invest heavily in educating and training their employees and where there's a lot of transparency within companies. One of the reasons you don't get that is because of the fear of an employee getting seduced by a tiny pay increase and losing a bunch of competitive edge / trade secrets / investment.
There are other ways to address that than non-competes, granted, but we're not doing those things either. In place of more nuanced non-competes you just get more companies expecting you to take on the risk of buying your own education to be trained in a job, bureaucracy and lack of trust in employees, etc.
The second kind is "You can't compete with us while you work here".
It's just semantics, but these restrictions are usually not covered by "non-compete agreements". They are more often called something like an "IP assignment agreement", where you agree that anything you produce in your employer's area of work while you are employed there, the IP belongs to your employer.
In practice, many employees simply ignore these agreements, and it usually works out fine. The FAANG companies aren't in the business of suing small companies started by ex-employees. Asking legal is pointless, they will just tell you that everything is forbidden. So just ignore your legal department and work on your side project.
It's just semantics, but these restrictions are usually not covered by "non-compete agreements". They are more often called something like an "IP assignment agreement", where you agree that anything you produce in your employer's area of work while you are employed there, the IP belongs to your employer.
In practice, many employees simply ignore these agreements, and it usually works out fine. The FAANG companies aren't in the business of suing small companies started by ex-employees. Asking legal is pointless, they will just tell you that everything is forbidden. So just ignore your legal department and work on your side project.
Yeah that would be solved by NDAs and trade secrets.
Then if you write a stock trading app... Did you have any contact with the team that was writing the companies stock trading app, did you sign any NDAs about that, did you receive any information about that, did you have any trade secrets? No? Then they shouldn't have any claim.
IP assignment and non-competes should be eliminated for non-managerial employees.
Or for IP assignment it needs to be whittled down to narrowly apply only to what the employee actually worked on, not anything the business does.
Then if you write a stock trading app... Did you have any contact with the team that was writing the companies stock trading app, did you sign any NDAs about that, did you receive any information about that, did you have any trade secrets? No? Then they shouldn't have any claim.
IP assignment and non-competes should be eliminated for non-managerial employees.
Or for IP assignment it needs to be whittled down to narrowly apply only to what the employee actually worked on, not anything the business does.
NDAs and trade secrets are difficult to enforce in practice for many types of ip that can't go in a patent, like market and product strategy.
That is not a good reason for every software engineer at the company to be under overly-broad non-competes.
> So just ignore your legal department and work on your side project.
Nah, I just quit, and in my exit interview I told them why.
Nah, I just quit, and in my exit interview I told them why.
It’s a good reason to keep quiet. :-)
What’s interesting about the first case you cite is those types of NDAs help individual companies but hurt the ecosystem.
Wherever there’s a large grouping of world class firms, they benefit in aggregate from cross-pollination. Think NYC for banking and advertising, CA and Seattle for tech, Houston for energy, Etc. One reason people can chase the best ideas in CA is non-competes aren’t enforceable. But in any individual case someone leaving hurts the firm they were previous employed at. So firms still push for non-competes.
What’s interesting about the first case you cite is those types of NDAs help individual companies but hurt the ecosystem.
Wherever there’s a large grouping of world class firms, they benefit in aggregate from cross-pollination. Think NYC for banking and advertising, CA and Seattle for tech, Houston for energy, Etc. One reason people can chase the best ideas in CA is non-competes aren’t enforceable. But in any individual case someone leaving hurts the firm they were previous employed at. So firms still push for non-competes.
> And that's ignoring the who-knows-how-many secret un-released projects that might relate.
Most software businesses exist on a tenuous information asymmetry turbocharged by capital (dumping, to reduce prices). The noncompete is about protecting well-capitalized customers from doing the stuff they're buying from Amazon themselves - not because they poach an employee who knows how, but because they find out that a piece of free, open source software is the secret to it all.
Most software businesses exist on a tenuous information asymmetry turbocharged by capital (dumping, to reduce prices). The noncompete is about protecting well-capitalized customers from doing the stuff they're buying from Amazon themselves - not because they poach an employee who knows how, but because they find out that a piece of free, open source software is the secret to it all.
There is a third kind which bars people working for professional services companies from taking clients directly or going to another company and taking clients.
> they ask "do you have a github account?". No, I've been highly motivated not to.
I release all my projects under a fake name and fake Github for this reason. Ethically dubious, but I still get to contribute code and I have something to send a prospective employer.
When they ask why it's pseudonymous, I say "non-competes" and they nod in understanding.
I release all my projects under a fake name and fake Github for this reason. Ethically dubious, but I still get to contribute code and I have something to send a prospective employer.
When they ask why it's pseudonymous, I say "non-competes" and they nod in understanding.
In the UK, there's Unfair Contracts.The US is the same, I would imagine. Here's what
https://www.lawdepot.co.uk/contracts/non-compete-agreement/
says:
"Employers can create a Non-Compete Agreement for as long as they wish. Having said that, if a Non-Compete Agreement limits a former employee for too long, it’s unlikely that a court will enforce the document.
Judges will likely consider a period of six months to a year to be a reasonable amount of time. The time period you choose should reasonably protect your company and make sense in your industry. As a result, there isn’t a standard time period for a Non-Compete Agreement."
So, tricky, but anything longer than a year is likely to be deemed unreasonable. There may be exceptions, such as when a business owner sells a business, and the sale contains a non-compete. In that case, a non-compete is likely to hold up.
The article goes on: "Courts may not enforce a non-compete clause in the UK if:
* The effect could be harmful to the public (if it restricts commerce and depresses the local economy) * The scope is broader than necessary to protect the employer * The restriction would cause undue hardship on the employee (too difficult for the employee to find a new job) * The agreement has unreasonable time or geographic restrictions"
In late 2020, the UK gov't sought feedback on "Measures to reform post-termination non-compete clauses in contracts of employment " here: https://www.gov.uk/government/consultations/measures-to-refo... The outcome has not yet been published.
"The purpose of the consultation is to seek views on:
* proposals to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause, and whether this could be complemented by additional transparency measures and statutory limits on the length of non-compete clauses
* an alternative proposal to make post-termination, non-compete clauses in contracts of employment unenforceable"
This seems to be heading in the right direction. I am against non-competes in general.
Judges will likely consider a period of six months to a year to be a reasonable amount of time. The time period you choose should reasonably protect your company and make sense in your industry. As a result, there isn’t a standard time period for a Non-Compete Agreement."
So, tricky, but anything longer than a year is likely to be deemed unreasonable. There may be exceptions, such as when a business owner sells a business, and the sale contains a non-compete. In that case, a non-compete is likely to hold up.
The article goes on: "Courts may not enforce a non-compete clause in the UK if:
* The effect could be harmful to the public (if it restricts commerce and depresses the local economy) * The scope is broader than necessary to protect the employer * The restriction would cause undue hardship on the employee (too difficult for the employee to find a new job) * The agreement has unreasonable time or geographic restrictions"
In late 2020, the UK gov't sought feedback on "Measures to reform post-termination non-compete clauses in contracts of employment " here: https://www.gov.uk/government/consultations/measures-to-refo... The outcome has not yet been published.
"The purpose of the consultation is to seek views on:
* proposals to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause, and whether this could be complemented by additional transparency measures and statutory limits on the length of non-compete clauses
* an alternative proposal to make post-termination, non-compete clauses in contracts of employment unenforceable"
This seems to be heading in the right direction. I am against non-competes in general.
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
For rank-and-file employees, I don't think this is so obvious. It presents a potential conflict of interest, sure, but if I'm fulfilling my job responsibilities and not holding anything back or stealing nonpublic info/trade secrets/whatever then what's the problem? It shouldn't be the mere possibility of competition--we like competition, remember?
In America we default to the corporation's rights taking precedence over the individual's rights. We say the mere risk that an employee's side projects might step on their employer's (poorly defined) rights in some way is enough to preemptively assign ownership of all the employee's work to their employer, just in case. From the viewpoint of the corporate masters and the lifelong-conditioned wage-slave masses, that seems good and right; in a vacuum, IMO, it seems completely backwards. We should be trying to nucleate innovation, not stifle it. Why should an employee with a good idea, who is not paid to have ideas in that scope, jump through whatever hoops it takes to get their employer to notice it--probably at the cost of their own time, uncompensated--and let said employer reap the lion's share of the rewards?
Even for employees who are literally paid to generate ideas, for product design or strategy or whatever else, the onus should be on the employer to provide a good value proposition for employees to share their ideas (the original contents of their own minds) rather than hold onto them. In reality I see plenty of cases where this does happen, so while the "shower idea" argument is compelling enough, I don't think it's an effect that stands to substantially threaten corporate success regardless of whatever rote legalese appears in employment agreements.
At the very least, even if (the general) you don't agree with me, you should take a step back and consider whether your personal ethic of capitalism is giving employers more moral weight than they are really due.
For rank-and-file employees, I don't think this is so obvious. It presents a potential conflict of interest, sure, but if I'm fulfilling my job responsibilities and not holding anything back or stealing nonpublic info/trade secrets/whatever then what's the problem? It shouldn't be the mere possibility of competition--we like competition, remember?
In America we default to the corporation's rights taking precedence over the individual's rights. We say the mere risk that an employee's side projects might step on their employer's (poorly defined) rights in some way is enough to preemptively assign ownership of all the employee's work to their employer, just in case. From the viewpoint of the corporate masters and the lifelong-conditioned wage-slave masses, that seems good and right; in a vacuum, IMO, it seems completely backwards. We should be trying to nucleate innovation, not stifle it. Why should an employee with a good idea, who is not paid to have ideas in that scope, jump through whatever hoops it takes to get their employer to notice it--probably at the cost of their own time, uncompensated--and let said employer reap the lion's share of the rewards?
Even for employees who are literally paid to generate ideas, for product design or strategy or whatever else, the onus should be on the employer to provide a good value proposition for employees to share their ideas (the original contents of their own minds) rather than hold onto them. In reality I see plenty of cases where this does happen, so while the "shower idea" argument is compelling enough, I don't think it's an effect that stands to substantially threaten corporate success regardless of whatever rote legalese appears in employment agreements.
At the very least, even if (the general) you don't agree with me, you should take a step back and consider whether your personal ethic of capitalism is giving employers more moral weight than they are really due.
It presents a potential conflict of interest, sure, but if I'm fulfilling my job responsibilities and not holding anything back or stealing nonpublic info/trade secrets/whatever then what's the problem?
This is a bit like "sure I'm dating one of my direct reports, but as long as I don't show them any special treatment what's the problem?". In both cases even if you genuinely believe what you're saying, it causes your incentives to be very much misaligned with your employer's.
This is a bit like "sure I'm dating one of my direct reports, but as long as I don't show them any special treatment what's the problem?". In both cases even if you genuinely believe what you're saying, it causes your incentives to be very much misaligned with your employer's.
My incentives are never going to be in perfect alignment with my employer: I work for them to build my own wealth, and they employ me to build theirs. The foundation of the employer-employee relationship is that each provides the other with a means to realize their incentive in a way that's mutually satisfactory, if asymmetric. If this relationship is out of balance, either party is free to engage in negotiations or terminate the relationship.
Employers have concrete strategies available to them for maintaining their position in this negotiated relationship. Typically they will have a performance review process, which should have no problem determining whether they're getting what they're paying me for. Separately, the legal system we're both subject to protects legitimate intellectual property perfectly well without overbearing noncompetes and invention assignments; cases of physical property theft, etc., are also covered.
So what's the problem? Why should employers have additional rights to make sure that, if the situation is ever remotely muddy, it goes their way by default?
(I say should in the moral sense, and the broader sense of socioeconomic utility. In a might-makes-right frame, obviously they should have it simply because they are strong enough to take it. That is what we have right now, in practice.)
Employers have concrete strategies available to them for maintaining their position in this negotiated relationship. Typically they will have a performance review process, which should have no problem determining whether they're getting what they're paying me for. Separately, the legal system we're both subject to protects legitimate intellectual property perfectly well without overbearing noncompetes and invention assignments; cases of physical property theft, etc., are also covered.
So what's the problem? Why should employers have additional rights to make sure that, if the situation is ever remotely muddy, it goes their way by default?
(I say should in the moral sense, and the broader sense of socioeconomic utility. In a might-makes-right frame, obviously they should have it simply because they are strong enough to take it. That is what we have right now, in practice.)
Had a non-compete (consulting). Employer was cool at my old workplace. We didn't have any super-proprietary knowledge or book of business to walk off with - so generally they weren't enforced. But they needed it to protect the business and I can understand that.
In my state, by law the contract can't cause 'undue difficulties'. You could prob make the case that were I to leave, it prevents me from working in my industry - I'd call that a good enough argument to go before a judge with, esp in a blue state.
In my state, by law the contract can't cause 'undue difficulties'. You could prob make the case that were I to leave, it prevents me from working in my industry - I'd call that a good enough argument to go before a judge with, esp in a blue state.
The problem is that if there's any chance an employer will win, there's a cost that the employee needs to consider. If it's not clear that non competes are going to fail immediately, people are going to get bullied by letigious employers, and less letigious employers will actually benefit from the will-he-won't-he of it too.
Also note that there's a fair bit of legal myths floating around society, so if it's not made clear some people will end up backing out when they would have won.
Also note that there's a fair bit of legal myths floating around society, so if it's not made clear some people will end up backing out when they would have won.
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
How is that obvious?
If a single person, regardless of where they work, can produce a stock trading app that would actually compete against what a company is producing, why shouldn't they do it?
People are starting to learn how much power they really have (see the current low wage revolt), perhaps programmers will realize it someday and stop allowing companies to steamroll them.
How is that obvious?
If a single person, regardless of where they work, can produce a stock trading app that would actually compete against what a company is producing, why shouldn't they do it?
People are starting to learn how much power they really have (see the current low wage revolt), perhaps programmers will realize it someday and stop allowing companies to steamroll them.
> The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
Why not? If a single developer can compete with the company that employs them, by only using their spare time, it sounds like that company could really use some competition..
Why not? If a single developer can compete with the company that employs them, by only using their spare time, it sounds like that company could really use some competition..
> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
As long as you're not using resources from your employer, including things like IP or trade secrets, then it's not so obvious to me.
What you do on your own time with your own resources is your own business. If that's seen as competition, then that's just too bad. This is how free markets work.
As long as you're not using resources from your employer, including things like IP or trade secrets, then it's not so obvious to me.
What you do on your own time with your own resources is your own business. If that's seen as competition, then that's just too bad. This is how free markets work.
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If your side project is at least a two man operation, say that all the work is done by your buddy, while you only have ownership rights. Or say your buddy hired a cheap noname outsourcing firm or even a freelancer who did the work and vanished. At the end of the day, software is too complex and it's unprovable that you did any of it.
I think not competing with any area in which the company works is a convenient test. But I suspect the ultimate legal test is actually more constrained. One more like: do not compete with an area for which you directly work in or are exposed to information about for the company.
Wow, yeah thanks for this. I never have time to study for code challenges...
(I am a math/physics/optimization programmer - no code challenge prep background)
looks like an order of magnitude more reason not to bother.
There are more.
I have some that state, I can't work directly with clients of my clients.
I have some that state, I can't work directly with clients of my clients.
Shouldn't be a problem if they paid adequately. Employee that has 10x salary unlikely is going to look for his or hers own way.
When I was on a low pay I always had side projects.
> Edit: eesh, this was a bit of a rant, wasn't it?
Not at all. I'm slightly surprised at the quality of the comments here as a whole, as many show a sentiment that employers would like.
Not at all. I'm slightly surprised at the quality of the comments here as a whole, as many show a sentiment that employers would like.
Go ahead and make a Sudoku app. No one at Amazon will care. Contribute to the ML library. The worst that will happen in practice is they ask you to stop, but even that seems unlikely.
I know the former are illegal in California, but are the latter illegal as well?
Actually.
Why shouldn't you be able to make a stock trading app after hours?
Why shouldn't you be able to make a stock trading app after hours?
It was a good rant
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I lived in Alabama for 4 years or so and at least at the time (I have no idea if it's changed since I left), their non-compete situation was garbage.
They were valid and enforceable even if you got laid off or fired. One of my friends' mother got laid off in the 2008 financial crisis from Bellsouth (or AT&T, I don't recall if the (re)merger was finished yet). She was told she couldn't work for any other telecom in the state for at least 18 months. She ended up going to stay with family in another state for that time so she could find another job, even though her husband and her son were in AL. It was a hard period for them.
I've had a hatred of non-competes since for the most part. If you (a company) are afraid of losing key talent, maybe you should actively try to retain it rather than turning your company into a prison.
They were valid and enforceable even if you got laid off or fired. One of my friends' mother got laid off in the 2008 financial crisis from Bellsouth (or AT&T, I don't recall if the (re)merger was finished yet). She was told she couldn't work for any other telecom in the state for at least 18 months. She ended up going to stay with family in another state for that time so she could find another job, even though her husband and her son were in AL. It was a hard period for them.
I've had a hatred of non-competes since for the most part. If you (a company) are afraid of losing key talent, maybe you should actively try to retain it rather than turning your company into a prison.
Unless I were really a big deal, I probably would have just gone to another telecom anyway. They have to notice you're at the other company, then go through the trouble of suing you. For relatively low-level workers, I doubt it'd be worth the trouble.
I am not a lawyer and this is not legal advice.
I am not a lawyer and this is not legal advice.
> They have to notice you're at the other company, then go through the trouble of suing you. For relatively low-level workers, I doubt it'd be worth the trouble.
IIRC, No, they just let the other company know about the non-compete, then suggest that once the new employer has that notice, continuing to employ you constitutes tortious interference for which the old employer might sue the new one. Then the new company decides whether you are worth a possible lawsuit. For relatively low-level workers, it's usually not worth the trouble — for the new employer.
IIRC, No, they just let the other company know about the non-compete, then suggest that once the new employer has that notice, continuing to employ you constitutes tortious interference for which the old employer might sue the new one. Then the new company decides whether you are worth a possible lawsuit. For relatively low-level workers, it's usually not worth the trouble — for the new employer.
In right to work states, non-competes can’t prevent you from earning a living.
De jure, maybe, but de facto it most certainly can, as the OP's anecdote attests to.
My business law professor said to just ignore non-competes. Everyone knows the judge will toss it if it's preventing you from earning a living. Any state that allows non-competes has statutory provisions for earning a living. If not, this is part of the common law in every jurisdiction. Non-competes cannot conflict with the public policy. Except for very few instances in which the previous company must show that the competition produces actual harm, they are completely unenforceable. Moreover, they must be geographically limited.
The Alabama, entire state ban, is likely overly large. A citizen of Alabama has a right to work in Alabama. Maybe they can't work in Birmingham for a year or two. But they must be able to work elsewhere in the state. This one could safely be ignored.
One thing I will note is that some companies want you to sign a contract upon leaving not to compete. Usually these are for some amount of money. These can be enforceable. However, they can't required for you to leave (although the bonus can be conditional on it). Don't sign these. They're dumb.
Companies know this too. As do hiring companies. For some reason though (and companies don't want you wisening up), many employees fear their old employer and choose not to apply, get scared, and run away. This is toxic, and it ought to be prosecuted IMO, but in the meantime, you should ignore it.
Source: https://www.bradley.com/insights/publications/2021/03/everyt...
The Alabama, entire state ban, is likely overly large. A citizen of Alabama has a right to work in Alabama. Maybe they can't work in Birmingham for a year or two. But they must be able to work elsewhere in the state. This one could safely be ignored.
One thing I will note is that some companies want you to sign a contract upon leaving not to compete. Usually these are for some amount of money. These can be enforceable. However, they can't required for you to leave (although the bonus can be conditional on it). Don't sign these. They're dumb.
Companies know this too. As do hiring companies. For some reason though (and companies don't want you wisening up), many employees fear their old employer and choose not to apply, get scared, and run away. This is toxic, and it ought to be prosecuted IMO, but in the meantime, you should ignore it.
Source: https://www.bradley.com/insights/publications/2021/03/everyt...
> Maybe they can't work in Birmingham for a year or two. But they must be able to work elsewhere in the state.
You're arguing that noncompetes are no big deal, but then you're saying you might have to move to an entirely different city to be able to find a job? That seems like a pretty big deal if it's enforceable even to that level.
You're arguing that noncompetes are no big deal, but then you're saying you might have to move to an entirely different city to be able to find a job? That seems like a pretty big deal if it's enforceable even to that level.
that's the most it's enforceable to, in the worst possible case, for high-level employees. The vast majority of employees should ignore non-competes.
> My business law professor said to just ignore non-competes. Everyone knows the judge will toss it if it's preventing you from earning a living.
'earning a living' may be a bit ambiguous. What does that actually mean? Would a judge be able to uphold the noncompete just because you would be technically able to take a job at the Amazon warehouse and earn minimum wage - hence 'a living'? Which is bullshit, btw. But just asking.
'earning a living' may be a bit ambiguous. What does that actually mean? Would a judge be able to uphold the noncompete just because you would be technically able to take a job at the Amazon warehouse and earn minimum wage - hence 'a living'? Which is bullshit, btw. But just asking.
No. It has to be in your same profession. So if you are fired from being a software engineer and that's how you make a living, the company cannot prevent you from doing software engineering wholesale. They can't even prevent you from working in their particular vertical, unless it is highly restricted in geographic area.
However, if you're a software engineer for vertical X and that's how you make your living, then they can't prevent you from taking a job in that vertical.
Things change a bit if you know trade secrets.
However, if you're a software engineer for vertical X and that's how you make your living, then they can't prevent you from taking a job in that vertical.
Things change a bit if you know trade secrets.
That's not what "right to work" means. "Right to work" laws prevent unions and employers from forming a contract where the employer agrees to only employ members of the union.
Non-competes undermine one of the main ideas underpinning capitalism: the free flow of labor. Otherwise, you're just a damned serf.
I wonder if the "I have read the Terms and Conditions" checkbox has some responsibility for this.
I'm constantly amazed at how many people don't seem to understand that a contract is a negotiation. Most people wouldn't dream of taking a job that didn't pay enough financially, but agree to jobs with awful terms and conditions because they didn't read. We are all used to contracts that are too long to understand.
I'm constantly amazed at how many people don't seem to understand that a contract is a negotiation. Most people wouldn't dream of taking a job that didn't pay enough financially, but agree to jobs with awful terms and conditions because they didn't read. We are all used to contracts that are too long to understand.
Libertarians would permit people to sell themselves into slavery by contract. Another reason why libertarianism take too far is pure madness, and infantile fantasy.
That’s a feature, not a bug.
My state has severely limited non-compete agreements to the point that they’re only narrowly enforceable, if at all.
That didn’t stop one of my previous employers from using non-compete scare tactics against employees. Many of us left in a large exodus when benefits and bonuses were cut and management made a number of other bad decisions.
The company responded by sending remaining employees an e-mail with a list of competitors that they said would be covered by our non-compete agreement. The e-mail implied that if we wanted to leave for one of those companies we needed to get approval from the legal team before we moved, otherwise we might be at risk of being sued.
My lawyer rolled his eyes when I showed it to him and explained that they wouldn’t win due to my state’s laws, but they could try to make my life difficult with legal proceedings if they wanted.
The tactic worked enough to scare some of my old coworkers away from taking job offers at competitors, though. Some others also went into hiding and lied on their LinkedIn profiles to prevent their old employer from finding out they went to competitors.
Having some clear, national guidelines that make non-competes a non-issue would do wonders for situations like this.
That didn’t stop one of my previous employers from using non-compete scare tactics against employees. Many of us left in a large exodus when benefits and bonuses were cut and management made a number of other bad decisions.
The company responded by sending remaining employees an e-mail with a list of competitors that they said would be covered by our non-compete agreement. The e-mail implied that if we wanted to leave for one of those companies we needed to get approval from the legal team before we moved, otherwise we might be at risk of being sued.
My lawyer rolled his eyes when I showed it to him and explained that they wouldn’t win due to my state’s laws, but they could try to make my life difficult with legal proceedings if they wanted.
The tactic worked enough to scare some of my old coworkers away from taking job offers at competitors, though. Some others also went into hiding and lied on their LinkedIn profiles to prevent their old employer from finding out they went to competitors.
Having some clear, national guidelines that make non-competes a non-issue would do wonders for situations like this.
My experience is that (1) Most threats like this aren't legally credible (2) That doesn't stop employers from filing (and losing, if not settled) lawsuits.
For most employees, a lost lawsuit means you lose 2 years of your life, get PTSD, and go bankrupt. You might recover legal fees after you've lost the house. Yay!
If you've got a megabuck, you're okay. If you live paycheck to paycheck, you're SOL. If you're a high-income / low-savings immigrant from a low-income country, you're SOL too. You settle. It doesn't matter if they have no case. You settle.
As a footnote, this dynamic does play out re: grad students versus elite universities, under NDA. Source: I know MIT does this from first-hand knowledge, and I have suspicions about a few peer schools.
For most employees, a lost lawsuit means you lose 2 years of your life, get PTSD, and go bankrupt. You might recover legal fees after you've lost the house. Yay!
If you've got a megabuck, you're okay. If you live paycheck to paycheck, you're SOL. If you're a high-income / low-savings immigrant from a low-income country, you're SOL too. You settle. It doesn't matter if they have no case. You settle.
As a footnote, this dynamic does play out re: grad students versus elite universities, under NDA. Source: I know MIT does this from first-hand knowledge, and I have suspicions about a few peer schools.
The very existence of a non-compete will also scare off some employers. I worked for a very small company for a number of years and we basically wouldn't even talk to anyone who had a non-compete even if it seemed low risk. Just wasn't worth it--especially if they were from a client.
Can you elaborate on the grad student NDAs?
I'm surprised, because this seems like it would undercut the whole point of grad school (i.e., publishing) and it's very different from my experience (NDAs limited to patient data, etc).
I'm surprised, because this seems like it would undercut the whole point of grad school (i.e., publishing) and it's very different from my experience (NDAs limited to patient data, etc).
> re: grad students versus elite universities, under NDA.
I think it is important to not conflate NDA and non-compete, NDAs have a validate place, and are likely what should be used instead of non-competes in most situations.
I think it is important to not conflate NDA and non-compete, NDAs have a validate place, and are likely what should be used instead of non-competes in most situations.
> might be at risk of being sued.
Being alive puts you at risk of being sued. The question is whether they have a case. As you said, an actual attorney would roll their eyes, but people still get scared.
I've said it before, and I'll keep saying it - don't let lawyers bully you. If they have no case, that is the end of the story. If they do have a case, it gets more nuanced. But most of the time, lawyers are just sending out letters as scare tactics, with no bite to them.
Especially when it comes to non-competes, each jurisdiction is quite different. Where you live has a large impact on whether or not a lawyers pursuing a non-compete agreement actually have a case. Educate yourself on your local laws, ask an attorney, but don't let anyone bully you into holding back your own career moves.
Being alive puts you at risk of being sued. The question is whether they have a case. As you said, an actual attorney would roll their eyes, but people still get scared.
I've said it before, and I'll keep saying it - don't let lawyers bully you. If they have no case, that is the end of the story. If they do have a case, it gets more nuanced. But most of the time, lawyers are just sending out letters as scare tactics, with no bite to them.
Especially when it comes to non-competes, each jurisdiction is quite different. Where you live has a large impact on whether or not a lawyers pursuing a non-compete agreement actually have a case. Educate yourself on your local laws, ask an attorney, but don't let anyone bully you into holding back your own career moves.
> My state has severely limited non-compete agreements to the point that they’re only narrowly enforceable, if at all.
Same here, but that does not stop the former employer from filing suit and causing havoc for the newly hired employee and their employer. Every time it's happened to someone I've hired, it is a former manager or business owner who is personally angry at the former employee and is trying to harm them. Seems pretty pointless.
Same here, but that does not stop the former employer from filing suit and causing havoc for the newly hired employee and their employer. Every time it's happened to someone I've hired, it is a former manager or business owner who is personally angry at the former employee and is trying to harm them. Seems pretty pointless.
> Some others also went into hiding and lied on their LinkedIn profiles to prevent their old employer from finding out they went to competitors.
I avoid telling my employer where I'm going when I leave. There's simply no advantage to me to reveal that information. You can just say your quiting to take some personal time and deal with burnout. Perhaps that personal time is a 2 day weekend before your next job begins.
I avoid telling my employer where I'm going when I leave. There's simply no advantage to me to reveal that information. You can just say your quiting to take some personal time and deal with burnout. Perhaps that personal time is a 2 day weekend before your next job begins.
You don’t even need to say that. My three lines I’ve used for every job are:
The resignation letter simply reads: “Effective today’s date I hereby notify my employer of my intent to resign my position of position on date two weeks from today”. Signed and dated with nothing else.
If asked why, the answer is “I’ve decided to seek opportunities elsewhere”.
If asked where, the answer is “I’d rather not say at this time”.
As you say, there’s almost no benefits and only drawbacks to divulging any other information than that in most cases.
The resignation letter simply reads: “Effective today’s date I hereby notify my employer of my intent to resign my position of position on date two weeks from today”. Signed and dated with nothing else.
If asked why, the answer is “I’ve decided to seek opportunities elsewhere”.
If asked where, the answer is “I’d rather not say at this time”.
As you say, there’s almost no benefits and only drawbacks to divulging any other information than that in most cases.
There should be a phone number you can call that basically tells you the answer as to whether you should apply for a job and ignore the non-compete. It could just be a pre-recorded message saying "Yes".
No state is going to want to protect monopolies over the employability of its citizens. No one wants you to become dependent on the government dole.
The vast majority of non-competes are unenforceable. If you're unlucky enough to actually be in an enforceable one, the chances are you already have a relationship with a lawyer.
Seriously, why do employees worry about this.
No state is going to want to protect monopolies over the employability of its citizens. No one wants you to become dependent on the government dole.
The vast majority of non-competes are unenforceable. If you're unlucky enough to actually be in an enforceable one, the chances are you already have a relationship with a lawyer.
Seriously, why do employees worry about this.
Something like this happened to people who left my first job in the industry.
They didn't have to win the lawsuit. The competitor that the employee went to fired the employee after they started. Presumably, it was because they didn't want any problems from the employee's previous employer, or just didn't want the headache at all.
They didn't have to win the lawsuit. The competitor that the employee went to fired the employee after they started. Presumably, it was because they didn't want any problems from the employee's previous employer, or just didn't want the headache at all.
Isn't that simply a harassment? I would report employer to the police and ask for an injunction.
If the employee told the employer to stop contacting them, then yes, it would be harassment.
What state is this?
This is a decent state-by-state overview of the enforceability of non-competes: https://www.wonder.legal/us/guide/what-is-the-enforceability...
California, in all likelihood.
California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
Probably not california, NCC applicability / legality is so restricted that I don't see how
> they could try to make my life difficult with legal proceedings if they wanted.
could work, the first judge involved would throw the entire thing out and threaten the company for wasting the court's time.
> they could try to make my life difficult with legal proceedings if they wanted.
could work, the first judge involved would throw the entire thing out and threaten the company for wasting the court's time.
Somebody downthread made what I thought was a joke about Jimmy John's requiring employees to sign non compete agreements.
Apparently it wasn't a joke: https://www.reuters.com/article/us-jimmyjohns-settlement-idU...
>The Jimmy John’s agreement prohibited employees during their employment and for two years afterward from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within 2 miles of any Jimmy John’s shop in the United States
This is absolutely absurd. I worked on JJ's when I was in college. I honestly had no idea that this was a thing.
These companies know that these contracts are almost certainly unenforceable, but they also know that their employees won't have the money to fight them. No acceptable.
Apparently it wasn't a joke: https://www.reuters.com/article/us-jimmyjohns-settlement-idU...
>The Jimmy John’s agreement prohibited employees during their employment and for two years afterward from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within 2 miles of any Jimmy John’s shop in the United States
This is absolutely absurd. I worked on JJ's when I was in college. I honestly had no idea that this was a thing.
These companies know that these contracts are almost certainly unenforceable, but they also know that their employees won't have the money to fight them. No acceptable.
Had a fun one just happen to me in the last few days. I got contacted by an agent out of the blue.
"Hey Sean we've got a role that you seem perfect for, just sign this NDA so we can talk." I look at the NDA and it includes a noncompete for the duration of the project + 12 months after. The nda is also not mutual so the noncompete and nondisclosure is only binding on me not the other party. In fact I don't even know who the other party is or what they do. Only if I sign this then for an undisclosed period of the project + 12 months _whether or not I get the job_ I can't compete with them whatever they do.
I get back to the agent and say there's no way I can sign a noncompete until I know what it is I'm committing not to compete with.
The guy spends several days trying various desperate negotiating tactics "I spoke to my boss and he says there really is no risk to you if you sign this, it's totally standard"... "I spoke with our CFO and you have to sign for us to proceed"....(That's great for your boss and CFO but I'm the one on the hook here if I sign, not them) "The noncompete really doesn't commit you to anything, but you have to sign..." (if it doesn't commit me to anything there's no downside to you removing it) ... "The client is so secretive and the project such a big deal we can't risk it leaking..." etc. At each point I just held firm and said there's no way I can sign a noncompete unless I know what I'm committing not to compete with.
After one more go of "there's no way we can go ahead without an NDA in place" (even though I've already said I'm happy with the NDA as long as they strike the noncompete clause) I said "OK well in that case it's 'no thanks' from me".
24 hours later they get back to me with "What about if we tell you who the client is, will you sign then?". I'm just letting them marinade for now...
"Hey Sean we've got a role that you seem perfect for, just sign this NDA so we can talk." I look at the NDA and it includes a noncompete for the duration of the project + 12 months after. The nda is also not mutual so the noncompete and nondisclosure is only binding on me not the other party. In fact I don't even know who the other party is or what they do. Only if I sign this then for an undisclosed period of the project + 12 months _whether or not I get the job_ I can't compete with them whatever they do.
I get back to the agent and say there's no way I can sign a noncompete until I know what it is I'm committing not to compete with.
The guy spends several days trying various desperate negotiating tactics "I spoke to my boss and he says there really is no risk to you if you sign this, it's totally standard"... "I spoke with our CFO and you have to sign for us to proceed"....(That's great for your boss and CFO but I'm the one on the hook here if I sign, not them) "The noncompete really doesn't commit you to anything, but you have to sign..." (if it doesn't commit me to anything there's no downside to you removing it) ... "The client is so secretive and the project such a big deal we can't risk it leaking..." etc. At each point I just held firm and said there's no way I can sign a noncompete unless I know what I'm committing not to compete with.
After one more go of "there's no way we can go ahead without an NDA in place" (even though I've already said I'm happy with the NDA as long as they strike the noncompete clause) I said "OK well in that case it's 'no thanks' from me".
24 hours later they get back to me with "What about if we tell you who the client is, will you sign then?". I'm just letting them marinade for now...
This behavior by recruiters is wildly frustrating to me even without NDAs involved. I can't count the number of times I've actually been looking for jobs and gotten a coy "I have a role you'd be perfect for" message from a recruiter, then when I ask who the company is they outright refuse to tell me til I get on the phone with them.
For the couple of times I've played ball with this in the past, they've told me who the client is on the phone, so why the secrecy when it's over an asynchronous messaging platform? I don't owe you synchronous time and it'd save us both a lot of headache if you'd just be upfront with who you're pitching.
For the couple of times I've played ball with this in the past, they've told me who the client is on the phone, so why the secrecy when it's over an asynchronous messaging platform? I don't owe you synchronous time and it'd save us both a lot of headache if you'd just be upfront with who you're pitching.
Metrics/KPIs. They're probably judged on how many people they manage to get on the phone.
I used to freelance in the past, and I always charged extra for signing NDAs other than my standard one. Usually it turned out that my standard one was good enough after all, but sometimes I actually got paid for signing the client's "special" NDA.
I've never seen any one that egregious, though. I'd charge quite a lot to sign that.
I've never seen any one that egregious, though. I'd charge quite a lot to sign that.
May I ask how much you charged extra for signing the NDA? And was it a one time fee, or a different rate or was it a recurring fee while the NDA was in effect?
I think it was about $200, but it's been like 10 years, so I'm not certain. It was something in that ballpark, though. Basically just enough that I could run it past a lawyer if anything seemed questionable to me.
It was a one-time fee.
It was a one-time fee.
That's a steal, I charge a 500/mo fee for my current (and I'm still employed with them, there's no provision for continuing the NDA after employment)
Quote them a rate that's 5x what you normally go for and see if they bite. Add a clause where you need to be compensated for the complete duration of the non-compete too. See if they respond.
An Amazon subsidiary used to, probably still does, require NDAs for every candidate they'd invite for an in-house interview.
I went though pretty much the same crap you described. They even went as far as to say the NDA is there to protect me. Good thing that conversation wasn't on the phone, because I let out a pretty good belly laugh over that one.
I went though pretty much the same crap you described. They even went as far as to say the NDA is there to protect me. Good thing that conversation wasn't on the phone, because I let out a pretty good belly laugh over that one.
Well since you didn't sign the NDA... care to divulge who was making this preposterous "offer"? ;)
I currently don't know. Just dealt with a random agency who was representing them.
You don’t exactly need to ban them, but the employees should be compensated during the non-compete period and limit the lenght of the non-compete contract.
In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS, but you can go to Twitter.
In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS, but you can go to Twitter.
In Norway it's 100% pay up to some relative high amount. And the non-compete has to be very specifically towards me and my role at the company, not some generic "we do a little bit of x, y and z, therefore everything is considered a competitor".
Actually my union, Tekna, was a big player in getting the laws much better in 2016. Unions work, and can be useful even for us techies even if in high demand.
Actually my union, Tekna, was a big player in getting the laws much better in 2016. Unions work, and can be useful even for us techies even if in high demand.
Though if you get a new job during the period the non-compete is valid, the amount can be reduced down to 50%, depending on your income. The company also can't enforce the non-compete if they fire you. The Norwegian way of handling this is good, I think.
This sounds good in theory, and I was once presented with a job opportunity with something similar to this. Except much of the compensation was not in salary. So while salary goes down 60%, total comp goes down way more -- all the non-salary components goes to zero.
This is definitely a problem, especially because industries who frequently utilize the paid non-compete (e.g. finance) often have a significant percent of comp from non-salary (bonuses etc).
But you could fix this with craftier legislation instead of banning non-competes, e.g. maybe you have to pay the persons last years total compensation instead of just their salary
But you could fix this with craftier legislation instead of banning non-competes, e.g. maybe you have to pay the persons last years total compensation instead of just their salary
> In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS
You probably can tho, unless they're justifying that you're privy to some super important stuff which endangers the company if you go work for Apple. Which… seems like something you'd have a hard time convincing the labour court of.
You probably can tho, unless they're justifying that you're privy to some super important stuff which endangers the company if you go work for Apple. Which… seems like something you'd have a hard time convincing the labour court of.
You’re correct, you cannot enforce a non-compete on your average engineer, it has to be some specialist function.
Honestly I think it should be 200% of your last year's compensation.
I think everyone wins - easier to enforce, but will only be enforced against people where it's really worth it.
I think everyone wins - easier to enforce, but will only be enforced against people where it's really worth it.
Should be a requirement that, to be enforceable, a non-compete must pay the agreeing employee his salary for the duration of the agreement.
I'd still rather they be banned.
Say you start as a junior at 80k , next year you get an offer for 150k , but you can't take it. You'd end up with a large 1 year resume gap, and losing 70k.
The year of career stagnation wouldn't be worth it.
Say you start as a junior at 80k , next year you get an offer for 150k , but you can't take it. You'd end up with a large 1 year resume gap, and losing 70k.
The year of career stagnation wouldn't be worth it.
Or, you take a year to:
- Get a Master's degree
- Travel and see the world
- Do consulting
- Take a job in Indonasia
- Teach
- Develop a new open source project
- Etc.
The resume gap / career stagnation is a choice. It's rare that you can have a gap year like this. I totally don't feel bad about paid non-competes.
- Get a Master's degree
- Travel and see the world
- Do consulting
- Take a job in Indonasia
- Teach
- Develop a new open source project
- Etc.
The resume gap / career stagnation is a choice. It's rare that you can have a gap year like this. I totally don't feel bad about paid non-competes.
What if you have kids to provide for ?
You'd might rather have more money. If you desperately need to increase your income even paid non competes are a bad deal
You'd might rather have more money. If you desperately need to increase your income even paid non competes are a bad deal
In Germany, a non-compete can only be enforced for up to two years and pays 50% of the last salary (by law).
This feels like it starts to get to the heart of the matter. If you want to compel someone's activities, especially if it involves restricting their employment, seems pretty fair to compensate them throughout the period in which it applies.
Why not 100%?
It looks like it is "at least 50%" according to the law.
You don't think there should be any consideration for the fact the person is not performing any labor? They are still able to pursue employment in non competing fields.
In a world where non-competes were funded 100% it seems like it should be the GOAL of every employee to be fired from a position where a non-compete needs to be enforced in order to secure extended paid vacations.
In a world where non-competes were funded 100% it seems like it should be the GOAL of every employee to be fired from a position where a non-compete needs to be enforced in order to secure extended paid vacations.
Society wants people to contribute productively. Stopping someone from working to protect business secrets is antisocial and bad for society.
Really, companies should have to pay >100% salary as a disincentive to idling valuable labor.
Really, companies should have to pay >100% salary as a disincentive to idling valuable labor.
Some people might think that was a good deal to travel the world but not everyone. So you're at the peak of your career and you need to take a couple years off at significantly lower total comp (because no bonus/equity).
This would mean that you can then also work in a related but not competing industry at the same time. It's not a no-work afterwords contract, but don't compete with us. that won't affect your total compensation then, or your career trajectory usually either. The idea is that a non-compete should only be used for someone it will actually matter to the business the, and not all the low level employees that don't have any impact on anything like that. right now you have tech support and call center employees with year long non-competes that prevents the, from working in another similar role at a new company, https://www.protocol.com/policy/tech-non-compete
> This would mean that you can then also work in a related but not competing industry at the same time.
If they're going to do it at all, and limit cruelty in the equation as much as possible, it should be very limited to directly comparable and competing products (Windows vs MacOS; Google Search vs Bing; consumer desktop operating systems and consumer search as narrow categories), rather than the industry broadly. Most people have a narrow labor specialization and spend their work years building up expertise and reputation in an industry. Any denial of work potential and opportunity that targets an entire industry is akin to labor cruelty and should be viewed as a human rights violation.
If they're going to do it at all, and limit cruelty in the equation as much as possible, it should be very limited to directly comparable and competing products (Windows vs MacOS; Google Search vs Bing; consumer desktop operating systems and consumer search as narrow categories), rather than the industry broadly. Most people have a narrow labor specialization and spend their work years building up expertise and reputation in an industry. Any denial of work potential and opportunity that targets an entire industry is akin to labor cruelty and should be viewed as a human rights violation.
So I'm a senior scientist at a pharma company. I want a new job. Cool. I can't take another pharma or biotech job but maybe I can go to coding camp and get a job mining people's data.
In the current system you will never get wealthy from salary and bonuses, because companies are being taxed through workers by proxy and the pressure is for keeping salaries as low as possible. Only way to break through is to start own business and become lucky. Big companies keep lobbying for more red tape to keep new competition at bay.
But a non-compete doesn't mean that you have to take that time off. It means that you can't work for a competitor.
Sure, but depending on employer or industry, that could be many/all other employers.
Biologist/chemist working on novel drugs - pretty limited field.
Developer at Amazon - Amazon does a bit of everything, I bet their legal team would prefer you didn't work elsewhere.
As noted elsewhere, it's not even so much about an NDA/non-compete is enforceable - just the threat of legal action is enough to stop employees moving or stop other employers hiring people.
Biologist/chemist working on novel drugs - pretty limited field.
Developer at Amazon - Amazon does a bit of everything, I bet their legal team would prefer you didn't work elsewhere.
As noted elsewhere, it's not even so much about an NDA/non-compete is enforceable - just the threat of legal action is enough to stop employees moving or stop other employers hiring people.
Start a new career, start an unrelated company, do non profit work, do research, etc...
I imagine these people have money, so what's making potentially an extra 200k? You make that in a year.
I imagine these people have money, so what's making potentially an extra 200k? You make that in a year.
You live in a serious bubble if you think the typical person can shrug, say "what's $200K," and casually leave or take a break from the field they've been earning a living in.
We are talking about people who's company actually used the non compete.
These are not typical people.
These are not typical people.
You really underestimate. Even standard entry-level developers are under NCAs, and I've had a former colleague (who was certainly "typical", and an additional $200k would have been life changing for them) who was hit with one. I have many other colleagues (again, just "typical" people) who lost out on job offers because the new company didn't even want to deal with the threat of an NCA.
I had a non-compete when I was making $50k
And did the company invoke it?
If they didn't want to invoke it, they wouldn't have put it in the contract.
Would you sign a contract that says I have the right to point a gun at you at all times, with only my unofficial assurances that I won't pull the trigger?
Would you sign a contract that says I have the right to point a gun at you at all times, with only my unofficial assurances that I won't pull the trigger?
There is absolutely no guarantee of this.
That's how it usually works in finance/fintech with non-competes that extend beyond the period of employment (and not just for traders/analysts, it is the case for a good number of engineers and quants as well).
You might not be getting the annual bonus (which is a major chunk of pay in finance), but you still get the full salary for the duration of the non-compete (usually 12-18mo). They also usually have a clause that it applies only to jobs in the same industry, so if you go from a finance shop to a FAANG company or another tech startup, then the non-compete is void, and you are welcome to pursue that opportunity without any 12-18mo timeouts (but your non-compete pay stops).
That seems to be a reasonable compromise, because if you really want to continue working in finance, you are welcome to wait for 1-1.5 years while getting paid full salary (minus the annual bonus) for doing nothing. And if you want to start working again immediately, you are welcome to do so, as long as it is in an industry other than finance, and the non-compete pay stops (because non-compete at this point becomes void).
You might not be getting the annual bonus (which is a major chunk of pay in finance), but you still get the full salary for the duration of the non-compete (usually 12-18mo). They also usually have a clause that it applies only to jobs in the same industry, so if you go from a finance shop to a FAANG company or another tech startup, then the non-compete is void, and you are welcome to pursue that opportunity without any 12-18mo timeouts (but your non-compete pay stops).
That seems to be a reasonable compromise, because if you really want to continue working in finance, you are welcome to wait for 1-1.5 years while getting paid full salary (minus the annual bonus) for doing nothing. And if you want to start working again immediately, you are welcome to do so, as long as it is in an industry other than finance, and the non-compete pay stops (because non-compete at this point becomes void).
This kind of leave really doesn't exist outside of finance, and even then most companies would rather let you go unless you actually know some critical secret sauce.
Yeah the good old garden leave. I wish.
My 3 months in the garden was some of the best time of my life.
Consultant/freelancers frequently deal with:
Client: "you can't work with competitors"
Consultant: "ok, how do you define competitor?"
Client: "Anyone that might compete with a line-of-business we have or plan to have"
Consultant: "ok, can you list those lines of businesses?"
Client: "no... some are in R&D phases... many won't even work out"
Consultant: "can you just give us a list of competitors?"
Client: "not really, because who knows what kind of company we'll be in 3 years!"
Client: "you can't work with competitors"
Consultant: "ok, how do you define competitor?"
Client: "Anyone that might compete with a line-of-business we have or plan to have"
Consultant: "ok, can you list those lines of businesses?"
Client: "no... some are in R&D phases... many won't even work out"
Consultant: "can you just give us a list of competitors?"
Client: "not really, because who knows what kind of company we'll be in 3 years!"
The absurd part of non-competes is that they want a guarantee of exclusivity on you without a guarantee of paying you for that period of exclusivity.
My feeling has always been that non-competes are ok as long as it is an entirely separate agreement from employment. For example, you can sign a contract for $100,000 that you won’t work in field x for 2 years. If you decide to work in the field, you give up that money.
The unfair thing is making it just a part of the standard employment contract.
The unfair thing is making it just a part of the standard employment contract.
I have never heard of an employer detaching a noncompete from the terms of employment, much less offering anything like $100k as a carrot. If some employers do this, then cool, but I don’t find a lot of merit in arguing about whether it’s OK to do something that almost nobody does.
Many many employers attach noncompetes to the terms of employment, won’t modify them for anyone and have the leverage to make even developers sign it (the job market’s good, but it’s not that good). That’s a bad state of affairs, and it really seems like employers won’t drop this unless compelled to, we aren’t going to be able to negotiate them into the deal you’re describing.
Many many employers attach noncompetes to the terms of employment, won’t modify them for anyone and have the leverage to make even developers sign it (the job market’s good, but it’s not that good). That’s a bad state of affairs, and it really seems like employers won’t drop this unless compelled to, we aren’t going to be able to negotiate them into the deal you’re describing.
My point is that I think the law should only honor non-competes that are in that form.
This is how California's law actually works.... non-competes are only allowed if they are paid in this way.
This is how California's law actually works.... non-competes are only allowed if they are paid in this way.
> sign a contract for $100,000 that you won’t work in field x for 2 years
Wow, sign me up!
Wow, sign me up!
It could be a really bad deal if you're basically throwing away 2 years of your career when you have maximum bargaining power
Most people are not in the position to take a couple years off for $100K or to work, for almost certainly lower pay, in an unrelated field assuming they can find a professional job.
If it isn't worth it to the company to pay, then they should let the person work for a competitor.
I'm in this pickle right now. It's a scare tactic. New employer would not take a bet, and that's understandable. Current employer responds with the most vague legalese possible to my straight up question "are you going to enforce?". The choices are: a) take a gamble against an entity that has so much more to fund their legal team than I will ever dream of or b) suck it up. Take a guess what most people pick, even if "most likely outcome" of enforcing non-compete is very slim. It's in UK btw.
So let's differentiate between conflicts and noncompetes.
Conflicts arise when you do work for someone else while employed by a company that may compromise your ability to effectively work for that company or may be detrimental to that company's business. This is an employment condition that is common and reasonable burt with large companies may exclude pretty much everything because large companies compete everywhere.
Often companies will have a blanket rule on such things. This could be as simple as "this is your full time job, you can't have another" but it shouldn't exclude running a restaurant if your company is a food delivery app.
Noncompetes apply after the end of employment. There are a very few high-level employees for which this makes sense. If someone can leave a company and take all that company's clients then that's a problem. But again noncompetes are used for normal employees that make no sense.
We don't need to ban them. We need to force companies to pay for the privilege.
Courts generally uphold the principle that a company can't deny you the reasonable ability to earn a living. So if you're a plumber and your noncompete says you can't work for another plumber within the same state then that's likely not enforceable.
Rather than this interpretation, how about we force companies to say "we will pay you a year's salary upon termination and you agree not to work for X".
I think you'll see a whole lot less noncompetes.
Conflicts arise when you do work for someone else while employed by a company that may compromise your ability to effectively work for that company or may be detrimental to that company's business. This is an employment condition that is common and reasonable burt with large companies may exclude pretty much everything because large companies compete everywhere.
Often companies will have a blanket rule on such things. This could be as simple as "this is your full time job, you can't have another" but it shouldn't exclude running a restaurant if your company is a food delivery app.
Noncompetes apply after the end of employment. There are a very few high-level employees for which this makes sense. If someone can leave a company and take all that company's clients then that's a problem. But again noncompetes are used for normal employees that make no sense.
We don't need to ban them. We need to force companies to pay for the privilege.
Courts generally uphold the principle that a company can't deny you the reasonable ability to earn a living. So if you're a plumber and your noncompete says you can't work for another plumber within the same state then that's likely not enforceable.
Rather than this interpretation, how about we force companies to say "we will pay you a year's salary upon termination and you agree not to work for X".
I think you'll see a whole lot less noncompetes.
There's so much wrong here.
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off.
> But suppose instead that innovation is difficult. Lukas Walton has a net worth of $22 billion because his grandfather founded Walmart. If he decided he really only needs $5 billion in life and is going to plow the other $17 billion into a massive R&D effort, how much innovation will he really generate?
A huge amount. Plenty of people set up research institutes or new departments at universities that make giant leaps forward. See Paul Allen for example.
> To a considerable extent, this hinges on poaching. Silicon Valley was a good place to grow Facebook because fast-growing Facebook could poach from older tech companies.
I wish people would stop with this anti-labor language. Poaching? That's ridiculous. It starts by offering people a better place to work, with a better mission, better people, and more money. That's not "poaching".
> And Silicon Valley is a good place to launch a startup today because you can poach from Facebook.
That's funny. FB and other companies offer far more money than most startups can afford. That's not why the Valley is a good place to launch a startup.
> One of the big, overarching problems of our time is that productivity growth has slowed down sharply from where it was during the post-WWII decades.
The overarching problem of our time is that productivity no longer means higher salary and higher quality of life. Productivity keeps going up, but salaries stagnate. What's the incentive to be more productive?
> In the early days of the computer industry, Silicon Valley was rivaled by the Route 128 corridor (this is a road through the Boston suburbs) in Massachusetts as a hub of innovation. But California won out decisively here, and many people think the lack of non-compete agreements in the Golden State is part of the reason.
There's a lot of debate about this. And now we're running the decisive experiment! MA just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography). Let's see if the biotech industry stays.
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off.
> But suppose instead that innovation is difficult. Lukas Walton has a net worth of $22 billion because his grandfather founded Walmart. If he decided he really only needs $5 billion in life and is going to plow the other $17 billion into a massive R&D effort, how much innovation will he really generate?
A huge amount. Plenty of people set up research institutes or new departments at universities that make giant leaps forward. See Paul Allen for example.
> To a considerable extent, this hinges on poaching. Silicon Valley was a good place to grow Facebook because fast-growing Facebook could poach from older tech companies.
I wish people would stop with this anti-labor language. Poaching? That's ridiculous. It starts by offering people a better place to work, with a better mission, better people, and more money. That's not "poaching".
> And Silicon Valley is a good place to launch a startup today because you can poach from Facebook.
That's funny. FB and other companies offer far more money than most startups can afford. That's not why the Valley is a good place to launch a startup.
> One of the big, overarching problems of our time is that productivity growth has slowed down sharply from where it was during the post-WWII decades.
The overarching problem of our time is that productivity no longer means higher salary and higher quality of life. Productivity keeps going up, but salaries stagnate. What's the incentive to be more productive?
> In the early days of the computer industry, Silicon Valley was rivaled by the Route 128 corridor (this is a road through the Boston suburbs) in Massachusetts as a hub of innovation. But California won out decisively here, and many people think the lack of non-compete agreements in the Golden State is part of the reason.
There's a lot of debate about this. And now we're running the decisive experiment! MA just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography). Let's see if the biotech industry stays.
>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
> No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off.
The author is presenting the standard business argument, i.e. trade secrets are good for business and society generally because they generate wealth, non-competes protect trade secrets, so without non-competes trade secrets would be revealed and business and society would be poorer, so everyone would be worse off. The author isn't agreeing with this pov (and neither do you or I), they want to ban non-competes.
> No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off.
The author is presenting the standard business argument, i.e. trade secrets are good for business and society generally because they generate wealth, non-competes protect trade secrets, so without non-competes trade secrets would be revealed and business and society would be poorer, so everyone would be worse off. The author isn't agreeing with this pov (and neither do you or I), they want to ban non-competes.
> A just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography).
That hardly seems like killed-off. In my experience, this exact sort of thing has been what I have been able to get, AT BEST, companies that required non-competes to change to, and even THEN, they were hugely disruptive. It's one of the reasons that I have nearly three decades of experience and almost never any two companies in a row in the same vertical.
This is categorically not killing off non-competes. It's barely even impacting them. It's just politically-correct "non-compete killing theater."
That hardly seems like killed-off. In my experience, this exact sort of thing has been what I have been able to get, AT BEST, companies that required non-competes to change to, and even THEN, they were hugely disruptive. It's one of the reasons that I have nearly three decades of experience and almost never any two companies in a row in the same vertical.
This is categorically not killing off non-competes. It's barely even impacting them. It's just politically-correct "non-compete killing theater."
This is where the U.K’s “try not to be a dick” approach to law wins out.
A former employer has to show the court that they will suffer genuine damage if the clause is not enforced and even then the court won’t enforce it unless it is reasonable. The case law on that is pretty tight.
If you’re setting up in direct competition and trying to poach clients and staff the courts will favour the former employer. If you’re just moving to another job then courts will likely favour you.
The courts recognise that there is an imbalance of power between employer and employer in the job market. Although each case turns on the specifics the English concept of reasonableness runs through its resolution.
A former employer has to show the court that they will suffer genuine damage if the clause is not enforced and even then the court won’t enforce it unless it is reasonable. The case law on that is pretty tight.
If you’re setting up in direct competition and trying to poach clients and staff the courts will favour the former employer. If you’re just moving to another job then courts will likely favour you.
The courts recognise that there is an imbalance of power between employer and employer in the job market. Although each case turns on the specifics the English concept of reasonableness runs through its resolution.
I believe non-competes and claiming the IP of what employees do in their own time is ridiculous and way out of line. Employers do not own the people who work for them.
No one owns anyone. IP assignment is contractual agreement in exchange for money. Just remember that when imputing your hourly pay and passive income opportunity.
I think that non-competes can be valid in very narrow, very specific scopes. One of my friends has a job that involves evaluating companies and allocating millions of dollars of funding towards them. His contract states that he cannot go and work for the companies that he's evaluating for two years.
IMO, non-competes should always include cash payments to the former employee. For example, if your employer doesn't want you to go to a competitor for a year then they should pay you full salary plus the value of whatever benefits you had for that year to not work in your field.
Agreed. A multiple of the total compensation of the competitor is warranted.
I strongly agree with the case against non-competes, and think almost all of them should be unenforceable. That said, is there any reason for this to be undertaken at the national level instead of the state level? Generally, I prefer state level interventions because they are easier to undo/avoid, less removed from the people they are serving, and less catastrophic if they are flawed (essentially, I agree with "laboratories of democracy" conception).
The fact that Silicon Valley thrives without non-competes proves that they are unnecessary. It’s just a way for employers to put their claws in employees. If non-competes came with guaranteed 100% salary during the non-compete time, that would be more palatable.
Any type of non-compete agreement is ridiculous and the fact that it is so widespread in what was supposed to be the most free country in the world makes you guys look like a joke.
>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
I don't agree. I think the non-compete is more an acknowledgement that certain people have a higher degree of mastery and understanding of a subject and that the company doesn't want to lose that. Having a competitor pick that up is probably a secondary concern to losing it.
Also, it does not follow that anyone would pay lower salaries. I'd think higher compensation or better working environment would be used to retain those key people. This would lead to companies needing to have a better understanding of employee value (but that's another topic entirely) rather than just limiting their mobility.
I don't agree. I think the non-compete is more an acknowledgement that certain people have a higher degree of mastery and understanding of a subject and that the company doesn't want to lose that. Having a competitor pick that up is probably a secondary concern to losing it.
Also, it does not follow that anyone would pay lower salaries. I'd think higher compensation or better working environment would be used to retain those key people. This would lead to companies needing to have a better understanding of employee value (but that's another topic entirely) rather than just limiting their mobility.
> Also, it does not follow that anyone would pay lower salaries.
Bullshit. If you could fuck off to any of a dozen companies doing similar work, your employee would have to pay you well and give you raises and treat you well in order to compel you to stay, otherwise you would leave.
If employers had a magic button they could press to make it so that those dozen employers are too scared to hire you, or to make it so that you're worried about getting sued if you leave, then you will be more likely to stay at your employee, even if they treat you poorly and never give you a raise.
The non-compete agreement is that button, and making you feel like you're captive and can't do anything about it is the real reason why companies like to mash it. They like being able to mistreat you with impunity.
Bullshit. If you could fuck off to any of a dozen companies doing similar work, your employee would have to pay you well and give you raises and treat you well in order to compel you to stay, otherwise you would leave.
If employers had a magic button they could press to make it so that those dozen employers are too scared to hire you, or to make it so that you're worried about getting sued if you leave, then you will be more likely to stay at your employee, even if they treat you poorly and never give you a raise.
The non-compete agreement is that button, and making you feel like you're captive and can't do anything about it is the real reason why companies like to mash it. They like being able to mistreat you with impunity.
As a professional services company we have had a few people over the years shop their contract or try to go direct with the client.
They essentially split our gross margin with the client. The client reduces their cost and the employee gets paid more.
Our non-compete mainly is focused on not taking our clients.
They essentially split our gross margin with the client. The client reduces their cost and the employee gets paid more.
Our non-compete mainly is focused on not taking our clients.
I've heard those called non-solicitation agreements which seem perfectly reasonable.
This is why it’s a little ridiculous to think there could be a “tech hub” outside California. Sure maybe you have a lot of tech jobs in the same place, but that is of no consequence to the people who work them, since they’re all in binding non competes.
The idea that everyone who isn't in California is subject to draconian non-competes is California exceptionalism nonsense.
This is a bit out of date, but - https://www.beckreedriden.com/wp-content/uploads/2019/01/Non...
There are three states where non competes are essentially not permitted. California, Oklahoma, and North Dakota.
Now, certainly, it's up to the company whether or not it imposes a non-compete, and to what it covers/applies to. It might be that you never took a job with one. But I've been subject to them at every place I've worked outside of California. While they haven't had any particularly large effect on me, I've definitely had to go back and read the fine print when considering a job change once or twice (not to mention when it came to hiring past colleagues).
There are three states where non competes are essentially not permitted. California, Oklahoma, and North Dakota.
Now, certainly, it's up to the company whether or not it imposes a non-compete, and to what it covers/applies to. It might be that you never took a job with one. But I've been subject to them at every place I've worked outside of California. While they haven't had any particularly large effect on me, I've definitely had to go back and read the fine print when considering a job change once or twice (not to mention when it came to hiring past colleagues).
I've never had one in LA, MA, or NH except for one time when EMC (who was one of the big players who resisted the non-compete changes that MA finally put in place) acquired the company I was at. The non-compete was reasonably narrow in scope--couldn't take a senior exec position at a storage vendor--but they were also very clear this wasn't negotiable.
But I've certainly been aware of non-compete enforcement by the big companies in a certain category of consultants that basically meant anyone leaving couldn't do the same type of job anywhere for a couple years. My point though is that it's hardly universal even if not rare.
But I've certainly been aware of non-compete enforcement by the big companies in a certain category of consultants that basically meant anyone leaving couldn't do the same type of job anywhere for a couple years. My point though is that it's hardly universal even if not rare.
Certainly; I don't think anyone is claiming they're universal. Just that enough players do it that it's a concern; you can't easily name and shame the companies that do have them, as an employee, because most companies do. And that they're net negatives, and shouldn't be legal (at least, not in the form many are in).
I appreciate the gist of the article but IMO the CA/MA dichotomy (which is often mentioned--though MA significantly restricted non-competes a few years back) is facile.
It's true that a lot of the new Internet/Web companies came out of California. And Apple is of course there as well.
But the Route 128 companies mentioned in the article certainly traded employees, although in general employee tenures tended to be much longer than today. Data General, for example, was founded by a Digital engineer. Similarly there is a massive biotech/pharma cluster of companies in Kendall Square in Cambridge today.
It's true that a lot of the new Internet/Web companies came out of California. And Apple is of course there as well.
But the Route 128 companies mentioned in the article certainly traded employees, although in general employee tenures tended to be much longer than today. Data General, for example, was founded by a Digital engineer. Similarly there is a massive biotech/pharma cluster of companies in Kendall Square in Cambridge today.
The more nuanced take is that different IP and employment laws benefit different industries.
Software benefits from no patents, limited-term copyrights, no NDAs, no non-competes, due to low cost-of-entry. Innovation is cheap but hard.
Pharma benefits from strong IP, NDAs, non-competes, etc. due to high capital investment levels. Innovation is easy but expensive.
Hardware varies.
Software benefits from no patents, limited-term copyrights, no NDAs, no non-competes, due to low cost-of-entry. Innovation is cheap but hard.
Pharma benefits from strong IP, NDAs, non-competes, etc. due to high capital investment levels. Innovation is easy but expensive.
Hardware varies.
Interesting anecdata: the automotive industry does not actively enforce any of this on engineering talent. Per one of the other comments, I am prevented from attempting to create a competitive product on my own time during my employment, but that's mostly an IP assignment clause and not directly non-compete. Honestly, they'd love for me to do a bunch of unpaid work that they'll assert ownership over, I'm sure. But, when I quit one of the Big 3 and moved to another (for better career movement, thank god), I didn't even have to live out my 2 weeks because I might steal IP, nevermind that I created a bunch of it, and no non-compete was mentioned. Similarly, lots of engineers move up and down from OEM to supplier and back again, so there's nothing directly tied to that either.
The only example that I'm aware of in the industry at large was when Ford partnered with Argo AI, there was an agreement with Argo that they would not hire Ford engineers beyond the initial group going over as part of the partnership. My understanding, having no direct access to any agreements, was that this was fairly time limited, but did prevent me from applying at the time, though in retrospect, I'm grateful since Argo has a bad reputation for chewing up engineers.
Final note: I'm curious if some rule along these lines would encourage more actions like the Google/Apple deal that wound up costing them in lawsuits later on -- specifically, would that kind of deal get more enforcement action and more scrutiny because it would be the last refuge after the non-compete if they were severely limited or banned?
The only example that I'm aware of in the industry at large was when Ford partnered with Argo AI, there was an agreement with Argo that they would not hire Ford engineers beyond the initial group going over as part of the partnership. My understanding, having no direct access to any agreements, was that this was fairly time limited, but did prevent me from applying at the time, though in retrospect, I'm grateful since Argo has a bad reputation for chewing up engineers.
Final note: I'm curious if some rule along these lines would encourage more actions like the Google/Apple deal that wound up costing them in lawsuits later on -- specifically, would that kind of deal get more enforcement action and more scrutiny because it would be the last refuge after the non-compete if they were severely limited or banned?
In a world that is constantly touting competition drives innovation, it seems strange to me that this was ever legal.
Restricting the industry a person can work in, or the ability to switch between companies at will only serves to harm the employee and their ability to negotiate their compensation.
I've only signed one non compete, and where I am they are only enforceable in the county they are signed in, and even then it started the relationship with the employer off on the wrong foot, I didn't stay long.
Restricting the industry a person can work in, or the ability to switch between companies at will only serves to harm the employee and their ability to negotiate their compensation.
I've only signed one non compete, and where I am they are only enforceable in the county they are signed in, and even then it started the relationship with the employer off on the wrong foot, I didn't stay long.
I don't get the following quote:
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
If employers lack such "protections" (i.e. non-competes), wouldn't they need to pay a higher salary, so that their workers are not poached by rival companies?
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
If employers lack such "protections" (i.e. non-competes), wouldn't they need to pay a higher salary, so that their workers are not poached by rival companies?
This is misinformation 101, state a detailed premise, tie it in with some cause and effect that sounds plausible, make no attempt to back up the synthesis.
Also, the correct method for preventing disclosure of trade secrets is NDA, not Non-Compete.
> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.
Anyone else confused by this statement? How do you make the leap from non-competes to higher salaries, or conversely, that a ban on non-competes would result in lower salaries?
I mean I think I can see the author's intent (that the company would need to divert funds from wages to somewhere else to protect their IP), but it seems like the rest of the article disagrees; namely, linking the Californian ban on NCAs to the innovative success in that state (and high salaries) would suggest that banning NCAs might foster higher wages. Intuitively, it feels like, in absence of a non-compete, a higher salary is the biggest deterrent to losing trade-secrets to other companies via poaching.
Anyone else confused by this statement? How do you make the leap from non-competes to higher salaries, or conversely, that a ban on non-competes would result in lower salaries?
I mean I think I can see the author's intent (that the company would need to divert funds from wages to somewhere else to protect their IP), but it seems like the rest of the article disagrees; namely, linking the Californian ban on NCAs to the innovative success in that state (and high salaries) would suggest that banning NCAs might foster higher wages. Intuitively, it feels like, in absence of a non-compete, a higher salary is the biggest deterrent to losing trade-secrets to other companies via poaching.
I think the idea is that the non-compete increases your value to the company, and that your salary is strongly tied to your value to the company. Both of those are pretty questionable.
I am intrigued by the framing of the 'banning' of non-competes as regulatory intervention. It seems to me like we would be asking the court to refuse to enforce a contract. But this refusal manifests as a distinct lack of intervention on the part of regulators.
I.E. prior to this 'intervention' you could be hauled to court and/or jail for failure to meet a contractual obligation. Post 'intervention' nothing happens and you simply continue to search for a new job as you always had.
I understand that in our given legal framework every change must be some kind of positive action, but it seems odd to me to frame it in conversation (as this article did) as a positive action rather than negative one which is how it actually manifests.
I'll just finish by saying that I agree with the sentiment that non-competes should be unenforceable. If you do have company secrets an NDA has long standing precedent and is less intrusive.
I.E. prior to this 'intervention' you could be hauled to court and/or jail for failure to meet a contractual obligation. Post 'intervention' nothing happens and you simply continue to search for a new job as you always had.
I understand that in our given legal framework every change must be some kind of positive action, but it seems odd to me to frame it in conversation (as this article did) as a positive action rather than negative one which is how it actually manifests.
I'll just finish by saying that I agree with the sentiment that non-competes should be unenforceable. If you do have company secrets an NDA has long standing precedent and is less intrusive.
>The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies.
I don't think this is quite right. The main idea is that hiring and developing employees is hard and expensive, and companies want to have a claim on the future labor of the employee because of the investment they made.
In the tech industry, recruiting fees of 25% of the first year salary are common, which is an enormous amount of money and shows how valuable anything that accelerates the hiring process is.
Banning non-competes is a good idea for essentially the same reason a low unemployment rate is good: companies have to compete against each other to be the best place to work, which improves compensation and conditions for workers. It's easier when your only competition is poverty and unemployment, but that's not a good outcome for society at large.
I don't think this is quite right. The main idea is that hiring and developing employees is hard and expensive, and companies want to have a claim on the future labor of the employee because of the investment they made.
In the tech industry, recruiting fees of 25% of the first year salary are common, which is an enormous amount of money and shows how valuable anything that accelerates the hiring process is.
Banning non-competes is a good idea for essentially the same reason a low unemployment rate is good: companies have to compete against each other to be the best place to work, which improves compensation and conditions for workers. It's easier when your only competition is poverty and unemployment, but that's not a good outcome for society at large.
I have never encountered a non-compete in my home state of Texas, so I looked this up:
https://www.texasnoncompetelaw.com/articles/noncompete-agree...
It appears in Texas non-competes are a thing, but only to restrict the direct transfer of business/market responsibility to a competing business, which I imagine generally applies to only senior executives and sales agents.
It seems at one point almost all of the travel industry, except Expedia, was located in my area and people were bouncing between competing employers all the time without any limitation. People were even leaving their employers to found competing businesses without limitation.
As somebody who has never had to deal with this madness it seems strange that any state would want to wound its own economy by restricting employee mobility.
https://www.texasnoncompetelaw.com/articles/noncompete-agree...
It appears in Texas non-competes are a thing, but only to restrict the direct transfer of business/market responsibility to a competing business, which I imagine generally applies to only senior executives and sales agents.
It seems at one point almost all of the travel industry, except Expedia, was located in my area and people were bouncing between competing employers all the time without any limitation. People were even leaving their employers to found competing businesses without limitation.
As somebody who has never had to deal with this madness it seems strange that any state would want to wound its own economy by restricting employee mobility.
> it seems strange that any state would want to wound its own economy by restricting employee mobility.
That's because you think the goal is to maximize the state's overall revenue/economy. It's not. It's to maximize the income to specific well connected individuals and their investments.
That's because you think the goal is to maximize the state's overall revenue/economy. It's not. It's to maximize the income to specific well connected individuals and their investments.
Good to know; I got a rather broader non-compete from an Austin startup recently, though they have an overseas HQ. To their credit, they removed it upon my request, though I ultimately accepted a different role.
> it seems strange that any state would want to wound its own economy by restricting employee mobility
It seems strange that a state would make laws that serve the interests of the wealthy and powerful?
It seems strange that a state would make laws that serve the interests of the wealthy and powerful?
Non-competes are pretty much banned in the only place that matters for tech (California). It's one of the factor that drove the emergence of Silicon Valley.
If your local state/country doesn't have California like laws, maybe it's an indicator it's time to jump ship!
If your local state/country doesn't have California like laws, maybe it's an indicator it's time to jump ship!
Non-competes jumped the shark when Jimmy Johns started requiring their Sandwich Artists to sign them.
I had a non-compete at a previous employer that prevented me working in tech altogether for a year after quitting. Fortunately I managed to get out of that when they made me redundant. I doubt it'd stand up in court, but it's pretty shocking all the same.
Noncompetes should be illegal. Competition is good. Noncompetes are only harmful.
I think the issue with non competes is that it was taken from the world of highly paid executives and some companies tried ( https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compet... ) to apply those to rank and file employees. Needless to say, that sort of non-compete should be outright banned.
I do have some mixed feelings about them the higher you go in the company hierarchy.
I do have some mixed feelings about them the higher you go in the company hierarchy.
I have never signed a non-compete. An employer sent me home with an envelope full of employment paperwork once, and it included a non-compete. I shredded it, and returned everything else signed. They never noticed until they attempted to enforce it against me when I found a new job, and then they had nothing to stand on.
It's one of the first questions I ask when interviewing now, and I treat it as an absolute deal-breaker.
It's one of the first questions I ask when interviewing now, and I treat it as an absolute deal-breaker.
In California they are already illegal except at an executive level. As is working on your own as long as your use your own time, materials and resources, while working for a company.
I think these are some of the few things the California does right; they definitely hit it out of the ball park. This dates back to the 1960s though, so there's no attribution to the current residents or government - I'd guess they'd love to get rid of it these days.
I think these are some of the few things the California does right; they definitely hit it out of the ball park. This dates back to the 1960s though, so there's no attribution to the current residents or government - I'd guess they'd love to get rid of it these days.
Signing non-competes in australia is pretty standard. Understanding that non-competes are almost always unenforcable in australia is also pretty standard.
I once spent a week in a foreign country under an assumed name because of an unenforcable non-compete - it wasn't because we thought I had a problem it was because of some ongoing acrimonious lawyering between the two companies which we didn't want me to contribute to.
I once spent a week in a foreign country under an assumed name because of an unenforcable non-compete - it wasn't because we thought I had a problem it was because of some ongoing acrimonious lawyering between the two companies which we didn't want me to contribute to.
Non-competes in France are regulated by law. If you put one in the contract, it means that you have to compensate me (70% of total compensation if memory serves me right) during the time it is enforced.
Since there is no way for me company to know where I am going, it may mean 70% of salary for free, if I go to a non competitor.
It is rarely enforced, though.
The second non compete (while working at a company) is very muddy waters though.
Since there is no way for me company to know where I am going, it may mean 70% of salary for free, if I go to a non competitor.
It is rarely enforced, though.
The second non compete (while working at a company) is very muddy waters though.
Garden leave vs non-competes are very different.
A noob question: how can a small business get to keep the secret ingredient of their success if employees are allowed to jump ship as they wish?
From the employee perspective banning non-competes are ofc the best thing. But this feels terrible if it means that secret sauces of small startups will get copied easily (potentially by bigger players).
From the employee perspective banning non-competes are ofc the best thing. But this feels terrible if it means that secret sauces of small startups will get copied easily (potentially by bigger players).
Patents if they are really secret sauce. If your startup fails because someone finds out what you are working on then you are already doomed.
I don't feel this is the right answer. Patents are very time-consuming. Lawsuits (esp against big players) are something most startups can't afford.
This is the right answer, and it has implications for the development of patent law: folks cheering the restrictions on NDAs should anticipate that doing so will tend to increase pressure on lawmakers to strengthen patent rights, as those investing in R&D lobby for other ways to protect their investments. Not saying we shouldn't weaken NDAs, though. The amazing last century of technical innovation emanating from California, which has relatively strong limits on NDAs, would suggest it's a good idea.
The fact is that "secret sauces" are basically worthless. Every successful business is 99% execution (& luck). A startup, especially in tech, will never be able to base its value on something simple enough for an employee to smuggle out legally (i.e. in their brain).
This is a very biased view IMO. Plenty of businesses are based on patented secret sauces. Even for the type of companies that rely on execution, there will be important lessons learned, which ultimately become the "secret sauces". And you don't fear a random employee who might fit your secrets in their brain. You fear a set of experienced employees who can replicate your businesses somewhere else if they want to.
>Plenty of businesses are based on patented secret sauces.
Secret sauces are, by definition, unpatented - if a business has patented an idea, it is no longer secret, and the success of that company is then partially enforced by the exclusivity of the patent. You don't need a non-compete if your employees have access to patented content, because they aren't legally allowed to reproduce it anyways.
>Even for the type of companies that rely on execution, there will be important lessons learned, which ultimately become the "secret sauces"
Can you give an example of this? I think it's unlikely that specific "lessons learned" could be so valuable. Sure, companies are afraid of losing their experienced employees - but all companies are afraid of that anyways. It has little to do with the idea of a "secret sauce", and everything to do with simple experience.
Secret sauces are, by definition, unpatented - if a business has patented an idea, it is no longer secret, and the success of that company is then partially enforced by the exclusivity of the patent. You don't need a non-compete if your employees have access to patented content, because they aren't legally allowed to reproduce it anyways.
>Even for the type of companies that rely on execution, there will be important lessons learned, which ultimately become the "secret sauces"
Can you give an example of this? I think it's unlikely that specific "lessons learned" could be so valuable. Sure, companies are afraid of losing their experienced employees - but all companies are afraid of that anyways. It has little to do with the idea of a "secret sauce", and everything to do with simple experience.
This is entirely different from garden leave (a non-compete period where you remain on payroll but are not working), correct? This seems like a fair version, where if a company thinks their trade secrets are that important (often true in finance), they have to pay you your salary for the period of the non-compete.
One argument in favor of non-competes in the consulting world is that they avoid a situation where Company B undercuts Company A during a recompete, and then poaches all of Company A's employees to staff the project (likely at lower salaries since they put in a lower bid on the contract).
There are a lot of things you could do to let the labour market behave more like a free market, like for instance mandatory wage ranges on job postings.
The problem is that a lot of people in power would lose from this and manage to prevent it from happening.
The problem is that a lot of people in power would lose from this and manage to prevent it from happening.
I am an employer with 180 employees and we absolutely should ban non competes. Doing so would increase competition throughout the market and the to better products for consumers and much better work lives for workers.
hopefully they die sooner, rather than later. ive never signed one, never will.
literally walked away from business deals and job contracts because of this.
try to restrict me into the future beyond our agreement and you are not worth my time. don't tell me i cant feed my kids the best way i know how and we can always come to a deal, otherwise you are not my friend. i aint that desperate to make others wealthy. :X
literally walked away from business deals and job contracts because of this.
try to restrict me into the future beyond our agreement and you are not worth my time. don't tell me i cant feed my kids the best way i know how and we can always come to a deal, otherwise you are not my friend. i aint that desperate to make others wealthy. :X
A ban would be wildly exaggerated. As an employee you get privileged access to a wealth of trade secrets, so a compromise on your liberty to act upon these is needed.
What they need is regulation; non compete need monetary compensation, if not during the time of employment, at least for the entire period they remain enforced after employment, with a regulated minimum compensation proportional to a significant fraction of what was the employment salary
What they need is regulation; non compete need monetary compensation, if not during the time of employment, at least for the entire period they remain enforced after employment, with a regulated minimum compensation proportional to a significant fraction of what was the employment salary
Require companies to pay employees some percentage of their former salary (e.g. 20%) for the period of a non-compete, otherwise it is unenforceable.
That would ensure that companies only bother to enforce non-competes when the stakes are high and it's serious, and prevent them from basically IP-trolling former employees by making such a thing unprofitable.
That would ensure that companies only bother to enforce non-competes when the stakes are high and it's serious, and prevent them from basically IP-trolling former employees by making such a thing unprofitable.
I have a very hard time with anything less than 100%. You're talking about preventing people from using their main skills to put food on the table.
And frankly, even 100% discounts the professional development that comes in the natural course of employment. You will have missed opportunities for skill advancement and networking.
After 2 years not working because of the non-compete, how are interviews for the next position going to go? You'll be rusty at best. Side projects are not, in general, a fair substitute: what does an Amazon SRE do on hardware at home that compares to what's on the job? Even for an individual developer, there's a world of difference hacking on your own web app and working on a team with large numbers of actual customers.
And frankly, even 100% discounts the professional development that comes in the natural course of employment. You will have missed opportunities for skill advancement and networking.
After 2 years not working because of the non-compete, how are interviews for the next position going to go? You'll be rusty at best. Side projects are not, in general, a fair substitute: what does an Amazon SRE do on hardware at home that compares to what's on the job? Even for an individual developer, there's a world of difference hacking on your own web app and working on a team with large numbers of actual customers.
If that becomes the norm, attitudes towards it will change, because then you won't be perceived by hiring people as at a disadvantage, since everyone will be going through this.
Of course, right now it sounds ridiculous, as the percentage of your current candidates with 1-2 year working gaps is a minority.
The reason I believe this will work is because that's how it works in finance right now. 1.5-2 year long non-competes, you get paid full salary for those periods (minus the annual bonus). And you can make the same point, what are they gonna do in terms of personal projects? Kind of difficult to imagine someone trading hundreds of millions in some specialty equities for a hedge fund and then going back home for 2 years and doing the same kind of a "side project" there. Nothing they can do by themselves at home is comparable to what they could at the job. And yet, this is literally the norm now, and those people don't have any issues interviewing and getting jobs afterwards at competing finance shops.
Of course, right now it sounds ridiculous, as the percentage of your current candidates with 1-2 year working gaps is a minority.
The reason I believe this will work is because that's how it works in finance right now. 1.5-2 year long non-competes, you get paid full salary for those periods (minus the annual bonus). And you can make the same point, what are they gonna do in terms of personal projects? Kind of difficult to imagine someone trading hundreds of millions in some specialty equities for a hedge fund and then going back home for 2 years and doing the same kind of a "side project" there. Nothing they can do by themselves at home is comparable to what they could at the job. And yet, this is literally the norm now, and those people don't have any issues interviewing and getting jobs afterwards at competing finance shops.
Cartman Voice: "Whatever! I compete with whoever I want!".
https://www.youtube.com/watch?v=IpF9O0R873I
https://www.youtube.com/watch?v=IpF9O0R873I
Related article/discussion on Biden's recent executive order on non-competes:
https://news.ycombinator.com/item?id=27855855
https://news.ycombinator.com/item?id=27855855
> Joe Biden says he’s going to ask the Federal Trade Commission to try to ban non-compete agreements
In the United States the Executive branch can't write their own law, even if it is to ban non-compete agreements.
In the United States the Executive branch can't write their own law, even if it is to ban non-compete agreements.
1789 called, they want their naive interpretation of the Constitution back.
Congress has the power to delegate regulatory authority to federal agencies. This precedent was established by the 2nd law Congress ever passed.
Congress has the power to delegate regulatory authority to federal agencies. This precedent was established by the 2nd law Congress ever passed.
EDIT: I have completely went off on the wrong thought path. As noted, despite reading the article and comments, somehow my mind got latched onto NDAs instead of NCAs. Sorry.
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I will be the contrarian.
For those who insist on no NDA, what prevents ex-employees from spilling secrets to be hired at a competitor?
I understand the concerns with NDAs. I was under one which limited my work in a radius, and within a very broad field. Imagine having to leave the country to practice in my field. The owner threatened me when I left (with tiny droplets of spittle on my face from his screaming). This kind of NDA is horrible.
That said, NDAs are there to protect a company from ex-employees sharing competitive knowledge about a product or service, damaging or even shuttering a the company.
I will ask you to sign an NDA if you want to work for me. You are not going to directly compete against me in a specific sub-industry, you are not taking my clients, and you are not poaching my employees for a reasonable period. This NDA is presented prior you taking the job. Not all NDAs are "out to get the little guy".
Maybe NDAs need some precedent cases where overly broad NDAs are struck down.
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I will be the contrarian.
For those who insist on no NDA, what prevents ex-employees from spilling secrets to be hired at a competitor?
I understand the concerns with NDAs. I was under one which limited my work in a radius, and within a very broad field. Imagine having to leave the country to practice in my field. The owner threatened me when I left (with tiny droplets of spittle on my face from his screaming). This kind of NDA is horrible.
That said, NDAs are there to protect a company from ex-employees sharing competitive knowledge about a product or service, damaging or even shuttering a the company.
I will ask you to sign an NDA if you want to work for me. You are not going to directly compete against me in a specific sub-industry, you are not taking my clients, and you are not poaching my employees for a reasonable period. This NDA is presented prior you taking the job. Not all NDAs are "out to get the little guy".
Maybe NDAs need some precedent cases where overly broad NDAs are struck down.
It's interesting how we celebrate that capitalism instills competition that leads to global improvement for everyone, yet we like to hand-pick the segments of capitalism where we want competition and the segments we don't want competition. An NDA is one case of this, as are non-compete agreements, and many behaviors within cartels, say when Apple et al conspired to not hire each others labor.
Usually, this hand-picking is performed by those succeeding the most in the given system because they have resources and leverage to dictate such terms and force them on others, yet another anticompetitive behavior. The fact is that most people just celebrate capitalism when it benefits them and reject it when it doesn't.
Personally, I think any such agreements should be illegal. If we had more labor unions where the labor force organized and created their own anticompetitive behaviors to counter balance the leverage of large capital holders, then I'd be far more sympathetic. Such is not the case and the labor force is on a near Darwinian level of competitiveness so I have no sympathy for any sort of anticompetitive behaviors from businesses.
To be clear, I understand how this perspective blows up many business models, but it has also blown up the livelihoods of many of us in the labor force on this push to commoditize labor for the goodness of whatever. I say, why don't we commoditize these business secrets for the same unknown goodness? Why is it we keep picking and choosing who gets breaks on competition and who doesn't. Let the markets decide.
Usually, this hand-picking is performed by those succeeding the most in the given system because they have resources and leverage to dictate such terms and force them on others, yet another anticompetitive behavior. The fact is that most people just celebrate capitalism when it benefits them and reject it when it doesn't.
Personally, I think any such agreements should be illegal. If we had more labor unions where the labor force organized and created their own anticompetitive behaviors to counter balance the leverage of large capital holders, then I'd be far more sympathetic. Such is not the case and the labor force is on a near Darwinian level of competitiveness so I have no sympathy for any sort of anticompetitive behaviors from businesses.
To be clear, I understand how this perspective blows up many business models, but it has also blown up the livelihoods of many of us in the labor force on this push to commoditize labor for the goodness of whatever. I say, why don't we commoditize these business secrets for the same unknown goodness? Why is it we keep picking and choosing who gets breaks on competition and who doesn't. Let the markets decide.
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Arguing for the status quo is not contrarian.
the topic is NCA, not NDA.
First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that.
The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.
But my employer does everything. There is no field that my employer is not involved in, somehow. You can guess who they are, probably, or just read my profile. And they say "You cannot do anything that competes with anything we do". Which is everything. Want to make a Sudoku app? That's a game, we do games. Want to do some open source ML library work? We do ML, you can't do ML outside of work (I asked legal that one). And that's ignoring the who-knows-how-many secret un-released projects that might relate.
They don't even tell us "no" anymore. They just say "read the non-compete agreement and do what it says". Basically "do what you like, but if we ever feel like it wasn't right, you're fired and maybe sued".
And when I apply to other companies, they ask "do you have a github account?". No, I've been highly motivated not to.
Edit: eesh, this was a bit of a rant, wasn't it? Apologies for that. But maybe folks have ideas on what to do about it, apart from the obvious.