
Job hopping helped Silicon Valley thrive. Why do other states restrict it? - molecule
http://www.vox.com/2016/4/12/11349248/noncompetes-silicon-valley-route-128
======
_delirium
The headline kind of has the valence of government activity backwards, though
I agree with its policy proposal.

Other states don't restrict job-hopping, they just stand by and don't
interfere as the free market ends up having the effect of restricting job-
hopping. Employees end up signing restrictive employment contracts, and states
don't prohibit them from doing so. California has made a conscious decision
that the economy overall works better if some kinds of private-sector
contracts are prohibited, so it's restricted what can go into an employment
contract to a greater degree than other states have (every state has _some_
restrictions, e.g. in the modern era you can't sell yourself into indentured
servitude, but some states are more restrictive than others).

~~~
oautholaf
I think your lense of "free market" needs to be supplemented with a little
game theory here. If you're an employer, what's your disincentive for tucking
in a little non-compete in your contract? None at all[1], especially since
many of your prospective employees won't read it or potentially (if you're a
low-wage employee) understand it's implications. Then what's the disincentive
for an entire industry to do this? None at all. And suddenly, there is no free
market for job seekers anymore.

There's a reason why in the US, overwhelmingly contracts are read against the
one who drafts them for example. There's an inherent power imbalance here.
That's where laws and courts come into balance things out.

[1] To point, it's not uncommon for California-based tech companies to insert
non-compete clauses into their contracts, even though they cannot possibly be
enforced unless there is some special compensation.

~~~
DannyBee
" especially since many of your prospective employees won't read it"

Why is this on the employers, exactly?

~~~
Gustomaximus
Both parties have to understand a contract for it to agreed upon. For example
those massive T&C that go with a website sign-up largely mean nothing if the
company hasn't ensured you read and understood them.

~~~
DannyBee
This is an interesting, but completely incorrect view :)

"However, the awareness of a legal obligation is established, not through each
party's subjective understanding of the terms, but on "objective indicators,"
based on what each party said and did"

Your T&C examples are adhesion contracts, subject to a different set of rules.

Here, you have an opportunity to bargain like any other party.

------
entee
This is absolutely an underappreciated feature of SV, and prior to this
article I had also heard it held up as one of the reasons SV has a relatively
more active and larger startup environment than Boston.

Given the nature of startups and the surprisingly high turnover I've seen of
people coming and going at all sorts of companies, it seems impossible to me
to create a vibrant, innovative economy with strong non-competes. This is
particularly true because the most powerful non-competes are signed by the
most senior management, so those with the most experience and best view of a
sector are the least able to start something new after leaving their previous
gig.

~~~
mattmanser
It's weird as well as in the early years of HN there were frequent questions
about non-competes in contracts in ask HN (they might still, ask HN is less
prominent now).

It just shows how much it affects our thinking both as entrepreneurs and
employees.

------
ww520
CA Labor Code section 2870 (you don't give up IP rights to the work you did in
your own time) is also vastly important.

~~~
WalterBright
Whenever I've gotten a job, I'd list on the employment contract all my outside
projects and get buyoff from management that those were my projects, not the
company's. Before I'd start a new outside project, I'd write it up and get
management buyoff on it that it is not part of my job.

The key is full disclosure, in advance.

And I never had any trouble over it.

~~~
_puk
This seems to be good advice.

Additionally, I've found that at the point of employment projects don't need
to be more than an idea; as long as you get them included with the contract, a
simple abstract of what is covered is enough to give you something to play
with whilst employed by said company.

Oh, and make sure to include projects even if you don't deem them to conflict
with the company's area of core business. IME they'll be met with a chuckle
and a 'not sure why these are here', but when the company is subsequently
working out how to jump on the latest buzz bandwagon your side project may
suddenly fall under some random wing of interest. Far easier to get it in
there early.

------
sizzzzlerz
I've worked in SV my entire career and had never even envisioned other states
allowed no-compete contracts in this day and age. Everybody I know and have
worked with has had multiple jobs and wouldn't have it any other way. Yet one
more way CA is far in front of every other state in basic worker rights.

~~~
fooey
The company I used to work for bullied most of the employees into signing a 5
year non-competes. And that was after they'd already been in business for 5
years. My department collectively said no, but it was a huge showdown, and
they immediately started trying to figure out how to make the company less
reliant on us. Every other person in the company except for us signed it.

The lawyer we consulted said it was the most draconian thing he'd ever seen
and that we should all quit on the spot.

~~~
crdoconnor
We really need a public database to track this behavior on a company by
company basis.

~~~
fooey
A couple years later the FTC blew them up so it ended up being moot.

------
simula67
> He was thrilled when he got an offer for an $18-per-hour cleaning job in the
> Seattle area — a big step up from the $15-per-hour job he had taken a few
> months earlier

> After Almeida switched jobs, a lawyer from his old employer, ServiceMaster,
> sent him a letter threatening a lawsuit

> The company told the Seattle Times that the noncompete agreement was
> necessary because ServiceMaster had provided Almeida with valuable training

So require that the employee stay with the company until they recoup the
investment. If the employee leaves before the term is up, charge the employee
the cost of training.

~~~
michaelt
Wouldn't that invite companies to claim internal training is very expensive?

Get the employee to shadow another employee for two weeks, then claim they
were trained for ten days at $1000/day.

~~~
icebraining
Not if they had to justify the cost, i.e., provide evidence that they actually
spent $1000/day (even if in opportunity costs).

------
intrasight
What California used have was worse than non-competes. They had secret
covenants between manor tech companies not to hire each others employees. I
don't know if that has been completely eliminated. As for other states, you
could ask why they have lots of stupid laws. As for California, you could ask
why they have that stupid Proposition 13.

~~~
throwaway_xx9
The Apple/Google/Adobe/et al. non-hire collusion is probably on hold for now
due to the govt. investigations.

The only good thing I can say about that era was that Google had their ass
handed to them by Facebook, which was one of the few non-participants in the
collusion. Google employees had few options but to go to Facebook in droves.

Proposition 13 has nothing to do with tech employment directly. It was created
because politicians just couldn't help themselves from raising real estate
taxes voluntarily.

------
a3n
Non-competes, whether formal and legal, or shady and illegal like Google-
Apple, are restraint of trade, suppression of competition. They drive wages
down. Nothing to back that up, but why else would sandwich makers be subject
to these?

------
eru
> The best argument against noncompetes is about freedom > [...] there should
> be a presumption in favor of preserving people's freedom to join a new
> company or start one of their own.

Alas, as nice as it is to cloth an issue we care about in the language of
moral superiority, banning noncompete agreements does in fact impact the
freedom of contract. (In the same way, but to a lesser extent, than the ban on
being able to sell yourself into slavery.)

Pragmatically this is the right thing to do. But there's no Freedom argument
for it.

~~~
coldtea
> _Alas, as nice as it is to cloth an issue we care about in the language of
> moral superiority, banning noncompete agreements does in fact impact the
> freedom of contract. (In the same way, but to a lesser extent, than the ban
> on being able to sell yourself into slavery.)_

Not allowing consensual slavery agreements, consensual beating people to
death, etc, also limits "freedom of contract".

That's because we value other things more.

There's nothing sacred about "freedom of contract".

And in most pragmatic cases when an enterprise makes a contract with an
employee, there's not much freedom for the side of the employee either.

People always think of star programmers etc who are courted to go to work
somewhere and have tons of choices, which are a tiny minority, instead of
thinking of the hundreds of millions who need a job to pay the bills,
healthcare, etc.

Even when a sector (like IT) does well compared to others, let's see how it
goes if there's a bubble bust.

~~~
anon4
"consensual slavery" is a tautology more ridiculous than anything the Soviet
Union ever wrote in their propaganda. Nobody would sell themselves into
slavery if they had a choice.

Which kind of brings up an interesting angle - if every company is asking for
an NCA, can't you argue that you signed it under duress, i.e. you didn't have
a choice in the matter, and therefore that part of the contract is invalid?

~~~
coldtea
> _" consensual slavery" is a tautology more ridiculous than anything the
> Soviet Union ever wrote in their propaganda. Nobody would sell themselves
> into slavery if they had a choice._

It might seem contradictory but the world is not always nice and tidy.

Consensual here just means "the other person agreed/signed to it".

But what forces pressured them to do so are seldom examined -- and lots of
people assume as long as it's not a "gun to the head" it's OK.

Of course from:

a) "total freedom to evaluate and pick among many options -- or even ignore
them completely" to

b) "tons of factors pressuring enormously for a quick decision, and very
limited options"

there's a huge scale of "consent" before we get to "gun to the head" non-
consent -- but it's seldom acknowledged. In other words, consent is seldom
black and white.

If we want to make the term less ridiculous, consent should only be used when
there's actual and considerable choice on the matter. Not when it's "that or
immediate hunger/homelessness/etc."

Of course long term everybody could be homeless/hungry without a job, but
there's a difference between a person choosing to work for company X after
evaluating what they do, the salary, etc, and a person in some Asian town that
has to go work to the nearby factory or else, or a non-college educated single
mom in Alabama a week away from eviction, that latch-on to whatever they can
get to survive.

------
vasilipupkin
My understanding is, non competes that do not pay you to stay out of the job
market are unenforceable in many states, for example, in Illinois.

~~~
dietrichepp
Since it's a contract, it's often unenforceable unless there is some kind of
consideration. I believe in most states, if an employer asks you to sign a
non-complete after you start work, it's unenforceable.

~~~
Falkon1313
It's not a valid contract if they offer no consideration (they're demanding
something of you but offering nothing in return). But they are a wealthy
corporation with a powerful legal team and you are now unemployed, so they can
count on you not being able to fight it. It's more like a threat than a
contract - that they might be able to convince a court that it's a 'legal'
agreement even if it's not a valid contract.

Noncompetes _should_ be allowed only if the company offers to pay a minimum of
market-rate salary for the duration (either what they were paying you or the
best offer you've received, whichever is higher, to keep up with changes in
market rates after you leave). That would then at least make it a valid
contract.

But no company would want to do that, because then they'd have to pay everyone
who quit or got fired for years afterward. And since the legal system is
mostly controlled by corporations, that's unlikely.

~~~
vasilipupkin
well, companies that have actual secrets to protect that are valuable do do
that, for example, trading companies.

------
jkot
Some countries in Europe allow non-compete clause. But employer has to pay
full salary for duration of that clause.

------
mankash666
In an era of outsourcing and globalization, gig-economy and minimum wages that
don't guarantee a living above the poverty line, it is stunning what
politicians will do for support from rich lobby groups ( read corporations).
About time the federal government intervened and banned what amounts to a non-
free market for job seekers.

------
banku_brougham
Repugnant policies like this are an ongoing evolution of the profit motive.
It's such a simple mechanism: profit motive -> investment in policy support ->
weakened economic standing for the weaker players.

What is the corrective mechanism, the courts?

~~~
ianlevesque
Eligible voters actually voting would help.

~~~
cmdrfred
Vote for whom exactly? Obama has done very little for labor. Do you content
Romney would of done a better job? Or that a 3rd party candidate is viable?
That trend trickles down to the local level in my experience. The US is not a
democracy anymore[0] more drastic action is required.

[0] [http://www.bbc.com/news/blogs-
echochambers-27074746](http://www.bbc.com/news/blogs-echochambers-27074746)

~~~
thaumasiotes
Politicians naturally drift to the issues that people will vote over. If the
electorate cares about an issue, you'll see political action. In this sense,
your parent comment is correct. Obama and hypothetical Romney aren't doing
anything about this _because_ it isn't a voting issue.

~~~
cmdrfred
> If the electorate cares about an issue, you'll see political action.

Read the article I linked above and the study it references. That is
empirically false.

~~~
thaumasiotes
It's also empirically true. It's very easy to observe votes moving
politicians.

Without some argument that this issue is governed by a particular special
circumstance, your comment has no substance.

~~~
imtringued
This is quite an interesting argument because except funding nothing prevents
us from eliminating crime and poverty. The government is simply not interested
in doing these things. They'd rather cater to the needs of their 'sponsors'.

I think it's kind of funny that politicans are not interested in their own
country.

~~~
mdpopescu
Why? I'm not interested in my country either, I'm interested in my own
household. Why would politicians be any different, given that it's not their
country, they're just temporary CEOs? (We know how well the CEO situation
works for large companies.)

An absolute monarch might be interested in _his_ country, because it's
actually his property.

------
wolframarnold
Unenforceability of noncompetes + hot tech job market == free career insurance

------
bluedino
Here's what keeps me from job-hopping:

The 6-12 month gap that's created when I can't participate in a new employers
retirement or healthcare plan. These benefits should start immediately.

Losing accrued vacation time also sucks.

------
Jemaclus
What would happen if an employer in Massachusetts offered me a job and asked
me to sign a non-compete clause, and I said I wouldn't take the job if I had
to sign a non-compete? Do you think they would back down? Or do you think they
would say "too bad" and withdraw the offer?

My gut says that most of the time, they'll back down and take that off the
table. But I guess it depends on whether you have a huge legal team backing
you up...

Personally, I'm not in the habit of signing my rights away in return for a
paycheck. I'll look around for another job, thankyouverymuch.

~~~
Spooky23
For a bigger company, most of the time, they tell you to go away.

~~~
marssaxman
In that case I most likely _want_ to go away.

~~~
Spooky23
As well you should.

That's the evil of these sorts of unconscionable contracts. As a potential
employee, it's easy to be in a predicament that would force you to suck it up
and accept ridiculous terms of employment.

------
sparky_
Here's an honest question. Knowing that non-competes are bogus and
unenforceable in California - why do most employers (including mine) feel the
need to tack them onto offer letters?

Is it a matter of intimidation?

~~~
jedberg
Pretty much. They are hoping you don't know the law. They are also hoping that
by encumbering you with one that a future poacher would know that they might
have to spend money on lawyers to fight for you in case you get sued, even
though they know you will win.

~~~
sparky_
Is this to imply that non-poaching agreements (e.g., "Great, you quit, don't
talk to my employees") are equally void?

~~~
acjacobson
While IANAL, yes, non-solicitation clauses are also not enforceable in
California.

------
stale2002
Here is the thing about non-competes. If you are smart about it, they can be
basically impossible to enforce.

If you've signed a non-compete and jump ship, you can simply NOT tell your old
employer that you got a new job.

What are they going to do? Sue you for working at a company they don't know
about? There is nothing they can do if you are subtle.

~~~
grahamburger
At the last few places I've worked I've found that all I had to do was smile
as they handed me the non-compete and tell them that I would take it home,
read it and return it signed. Then I'd take it home and trash it. The next
time someone asks about it (usually every few months) I say "I'm sorry, I
think I lost it, could you email it to me again?" and start the process over.
I honestly hate to be that passive aggressive about it but I'm not 'rockstar'
enough to just say no and expect to keep my job, and I also don't want to
limit my future options.

~~~
eru
That might not hold up in court. By showing up to work (and getting paid in
return), there's an implicit contract.

I don't know enough about law (and neither do I know your jurisdiction), to
say whether that implicit contract would include the non-compete they
obviously wanted you to sign.

~~~
grahamburger
I'm sure you're right, but I think it would also be difficult for them to
enforce if they couldn't produce a signed contract. If I were planning on,
say, using trade secrets from my current employer to start a direct competitor
stealing their biggest customers, then yeah I'm sure it wouldn't hold up in
court - but I'm not going to do that. It's more a way for me to be able to
honestly tell my next employer - who might be in the same ballpark industry,
but probably not a direct competitor of my current employer - 'no, I did not
sign a non-compete contract with them.'

------
trevor-e
I've always wondered why Boston doesn't have a larger tech scene, seeing as
we're home to MIT and Harvard (and more great colleges). Seems like many of
the big tech companies (Google, Facebook, Microsoft, Amazon, etc) have been
opening offices here lately which is a good start.

------
sgt101
Errm, anyone who thinks the Massachusetts hub didn't work hasn't been to
Boston in the last three years. Wander round Kendall and Cambridge and look at
the vast Biotech labs.

------
kelukelugames
Also bless California for not having the non compete clause.

------
trhway
non-competes also decrease overall employee productivity and efficiency as it
makes employees into drones just keeping their jobs.

------
kempe
Wow, usa really is controlled by the companies instead of the people.

------
baus
It wasn't about the PC vs the minicomputer. Ok Intel is based in Santa Clara,
but the PC story was really about Microsoft.

It was the internet. Sun among others were pushing open standards, TCP/IP, and
the internet while DEC tried to go proprietary with DECNet. It might not have
paid off for Sun in the long term, but the industry in Bay Area was definitely
pointed in the right direction.

