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Send Noncompete Agreements Back to the Middle Ages (bloomberg.com)
443 points by adventured 3 months ago | hide | past | web | favorite | 240 comments

I've had non competes at my last 3 jobs (all in web hosting)

The first, a darling "startup" adored by investors and customers alike sued me twice, sent a process server to my door at 6am on a saturday and tried to call me in for a deposition the afternoon of Christmas eve. They regularly win company culture awards and receive undeserved praise for being a place people can grow. I had a chance to grow from IC to VP and they did everything they could legally do to stop me.

The second, a publicly traded hosting company that has battled negative public perception for years had an EVP handle it wherein he basically said "sounds like you are leaving for a great opportunity. We wish you and your family well and you'll always be 'one of us.'"

The third company voluntarily and without my asking remover the non compete from my separation paperwork.

Non competes are a disaster and always will be. But how companies enforce them is the real culprit.

I don't get why people sign contracts that have broad non-competes in the language. I always have and always will scrub those out of a contract before I even contemplate signing it. No company that thinks it's okay to prevent me working is a company I want to work for. If they want me badly enough, they'll agree to a fair and balanced contract and that includes removal of any contract that seeks to infringe on my ability to fairly support my family.

I have NEVER had a company balk at this when I do it. I tell them exactly why I'm removing it and why I will never agree to a contract that includes it.

I've never had any company bat an eyelid at this. They've all thought my reasons were perfectly fair and valid.

There are places for noncompetes. And that is only when you are dealing with very, very high compensation. If you are paying someone enough money that they could live on for the rest of their life comfortably, then you can reasonably expect them to sign a non-compete.

But don't have the gall to expect someone to sign a non-compete for a market wage.

But even a non-compete for a sufficiently high compensation needs to be sufficiently limited that it only prevents infringement of company specific intellectual property.

You couldn't reasonably expect me as VP of a specific type of eCommerce company to not jump ship and go be the VP of a different type of eCommerce company.

For example: Would it be fair to prevent the CTO/CIO of Google jumping ship and going to be CTO/CIO of for argument's sake Facebook?

Both of these companies are technology companies in the advertising space, both have hugely different approaches and business models for their revenue streams.

Given the language of some of the non-compete clauses I routinely scrub out of contracts, a VP would be expected to sign away their right to be able to leave and still find a meaningful job in their field while there being little, if any, risk of damage to Google by this switch - I mean, aside from having to replace their CTO/CIO.

Would it be fair for me to jump ship from say Bluejeans knowing all their trade secrets that give them their edge in their specific market and running off to Skype and taking all that knowledge and putting up a product that directly takes business from Bluejeans? Well, probably not. I would say a non-compete for companies that could be considered direct competitors is absolutely fair.

Disclaimer: I picked arbitrary company names out of the air, I'm not meaning to insinuate these companies have any such language in their contracts.

If you pay me $100 million to sign an agreement to never work in another job in my field, I could live with that and would have no right to complain otherwise if I signed it.

I think to be fair, if you paid me $100 million never to work again, period, I'd probably consider it. I'm pretty sure I could invest it well enough that my descendants would have to spend fairly minimal effort to never have to work again.

But how companies enforce them is the real culprit.

This is a failure of our legal system. You can challenge a non compete in court and, depending on a few factors most heavily weighted towards if you can afford a good lawyer, you have a real shot at a win. However, this means you and only you are free from the shackles of this non compete.

Other people who signed a contract with this same exact illegal clause in it are still beholden to it, unless they have the resources to fight it (legal knowledge, time for a court battle, money to pay for lawyers). The threat of a lawsuit is enough to dissuade most people, who lack these resources, to back down from a winnable case.

I actually negotiated this in when I left company 1 for company 2. The language said company two would pay (pay, not reimburse) my legal fees as well as compensate me in the event a TRO was filed (and it was) keeping me from starting my official job.

So ban them, at least in most cases. That's what we do in California.

I'm glad that you had a good experience with GoDaddy; I also used to work there, I think they've done a really good job of turning the culture around and making the place better.

It's a wonderful place to work.

Why not name and shame? I agree that you fear retaliation from another company thinking "what if he blows the whistle on us at some point?" and not hiring you, but I don't know, is that a company you'd like to work for in the first place?

> I've had non competes at my last 3 jobs

Wouldn't it be more precise to say: "I've signed non competes" instead of having them?

What does the process server say? They are so glamorized in TV shows, lime Suits where they deliver a Chinese takeaway!

He said "I'm sorry, I know this is disruptive" as my two small children cried behind me, unsure why someone had banged on the door so early in the morning.

As someone who did this for a few years, I can tell you it's all very ho hum, and not once did I need to pretend I was delivering Chinese food.

Thank god the german law requires a NC clause to have a compensation directly mentioned in the contract that is not allowed to be less than 60% the person earned in the company in the last year she worked there. If the compensation is missing or too low, the NC is against the law. In other words: if a company wants me to not compete, they need to pay me for the time the NC is active. Its also limited to a maximum of 1 year.

60%? Forget that. Why should anyone give up their right to work for a little over half of their market value?

There is no excuse for allowing less than 100% compensation, and that should include not just salary, but projected bonuses.

> 60%? Forget that. Why should anyone give up their right to work for a little over half of their market value?

Well, you could take the American option where you're not allowed to work in that field, so you get 0% of your salary... (California excluded, if I understand correctly)

The German dev gets paid 25% of the US dev salary though.

+ pension + healthcare + mandatory 20 vacation days + max. 48h workweeks + mandatory 30 days notice period + better social security net

and i dont need a gofundme page in case someone in my family gets cancer ...

You forgot +$400,000 per kid for university education - not to mention public school quality.

Only the most expensive private universities would cost that much.

You are kind of making my point: comparing working in 2 countries has a lot of factors. Non compete might be a minor thing to a lot of people. Disclosure I neither live or work in the US or Germany.

Ain't that 24 days, 2 days per month) plus public holidays? just wondering. Confirming the rest.

24 days if you work 6 days/week + holidays

20 days if you work 5 days/week + holidays

16 days if you work 4 days/week + holidays

Ah, thanks for the clarification. thank god most employers go above the bare legal minimum, I never had anything less than 28 days. Once I even had the luck of being under a "naked" payment contract: 35 hour work week, unlimited overtime to be taken of whenever it was possible, 30 days of vacation and 12 weeks of continued pay in case of sickness (6 more weeks than mandatory). Ah, I miss these days...

Time to turn this the other way around: compared to the rest of the world, american developers (can) get an insane salary.

And of that 50% are grabbed by the taxman.

The tax rate in the US gets pretty close to 50% when all the municipalities take their cut. If you're in Silicon Valley, most devs are going to be paying a 41%-44% tax rate just from federal and California income tax. Then you've got any local taxes, land taxes, etc that add onto that

But the service you get from German government is so much better, healthcare is a good example here.

Self employed consultants are pushed into private healthcare, which will ruin you when you retire (you have to keep paying >>$1000 per month until you die).

That's paid on top of tax. Otherwise, I agree.

The 50% that most people note includes healthcare, or at least it did from 2009 to 2011.

Still does include healthcare as the other response stated (I'm not able to directly reply).

60% is a nice balance that leaves both sides unhappy. Which means that non-competes will be used sparingly; only in cases where it really means something.

Sounds pretty smart to me.

If a wolf and a sheep are having a discussion over what to eat, is letting the wolf eat only 1 or 2 legs a nice balance because both sides are unhappy?

Should one side be made happy when they have an unreasonable ask?

If companies do not want you to work for competitors, they should be paying your salary for that time. Employees still lose out on things like keeping their skills sharp through work, or career growth, but they are at least getting compensated for the job

I think you're missing the point: it is a ban.

When poliicians pass laws though, there are often unintended consequences. Good politicians will intentionally create loopholes out of humility, realizing that they don't understand the entire issue and how it will affect everyone.

If the loopholes are too big, then thr policy will be ineffective and they will either need to tighten the loophole later, or scrap the whole policy as unworkable.

Do you think the ban is ineffective? Are there hordes of unhappy German citizens drawing 60% of their salary because they are unable to find better work without violating the non-compete? And tons of greedy companies making zillions of euros by paying people to not work?

>it is a ban

It literally is not a ban since it is allowed, and for less than the full compensation the employee would receive by working.

I am not discussing the efficacy as I haven't seen any numbers on how many non-competes are in effect in Germany. I am discussing the ethics of it

I am making a practical argument and you are making an ethical/moral argument of it.

But for your argument to be complete I think you need at least some example of someone doing something unethical or wrong because of the policy. The policy exists today so hypothetical arguments fall a bit flat.

To illistrate my point, consider that it is legal (as far as I can tell -- not a lawyer) to walk around in California with a sword as long as it's neither concealed nor being brandished. But it doesn't make sense to argue that the lack of a law against carrying a sword is unethical because of what people might do. Theoretically people might do horrible things while carrying a sword; but empirically they do not, because few people even have swords, fewer still walk around with them, and approximately zero deaths result from it.

There are people on non competes that are not being compensated with the full salary they would have been getting. To me that is unethical.

It is not a hypothetical situation, unless you are trying to claim that no company anywhere is using a non compete, in which case I just need to pull up the associated paperwork for pretty much every offer letter I've gotten. Alternatively I can go and poll just my social circle and compile the list of non competes.

Anything less than the full salary is unethical to me, and I'm partial to arguments that it should be more as the employee under the non compete is losing out on career growth and raises

> There are people on non competes that are not being compensated with the full salary they would have been getting. To me that is unethical.

They are also making that money while doing nothing.

They are not making money while doing nothing. They are making money by not using their knowledge, so that their previous employer can prevent other entrants into their market from benefiting from said employees skills.

Well, it practically serves the prupose of limiting the actual use of non-competes. So it does serve the purpose pretty well IMHO. Enforcing those in Germany is really difficult by the way.

It doesn't serve the purpose of actually compensating people, but it is much better than America's free for all

> 60%? Forget that. Why should anyone give up their right to work for a little over half of their market value?

They don't. They very specifically can not ask an employee to "give up their right to work", only in the US does that shit happen.

German law (and most european law around NCC in various fashion) requires that the NCC ne limited in time and not have "unreasonable clauses" e.g. can't prevent working in the field throughout the country.

As a result enforceable NCCs are extremely rare and only happen for actual business interest reasons, it's not a sword over the employee's head as it is in the US.

Also it's at least 50% of gross, so closer to 65~70% of net.

To add to that, it's very rare that companies deny employees to work on side projects (or rather claim all work an employee did in their free time for themselves). That's typically done by American companies.

Yes, I don't know how anyone would agree on such a clause. Hobby projects are none of the employer's business.

It's not like the specific job is the only thing you can do - there are other jobs that don't break the NC. 100% is too high, and 50% is too low. But the amount should be negotiable for each person.

You are most valuable in a position that leverages your existing skills and expertise. Those positions are the most likely to be covered by NCAs.

Not only is 100% not too much, but it’s the minimum that should be required. The cost of requiring a NCA should be high; that ensures they are only used when they are really worth it to the employer.

> You are most valuable in a position that leverages your existing skills and expertise.

Exactly. So per the non-compete, you'd have to take a position where you are only 40% as valuable as you could be—and the 60% noncompete makes up the difference.

What about the opportunity loss that results from taking a less relevant job with worse career prospects?

That sounds like a bad idea, but you could also take it as an opportunity to develop in a new direction and build some experience there.

It's probably a bad deal for people who are extremely specialised and want to stay that way, but it'd be a pretty good deal for people like me, who love an excuse to learn something new.

So what, I’m only expected to bring 40% of my abilities to my next job? That makes mathematical sense, but it’s impossible in practice. It would be like trying to use 40% of your arms.

If an honest engineer sees a problem which is exactly the same as one she solved at a previous company, and it is still the best solution, she will solve it in the same way. This has nothing to do with company secrets, it’s basic tradecraft. But it’s covered in many of these agreements. They’ve got to go, plain and simple.

You're expected to do your best at your next job—but because it's not the most appropriate job for you, you're actual performance is probably some percentage less than what it could be elsewhere. This can in turn be an opportunity to diversify your overall skillset.

(I was of course being a bit facetious with the 40% metric—real life isn't quite so simple—but saying the noncompete should have 100% compensation is silly. That would only make sense if your ability to work was being completely taken away)

How is 100% compensation silly? Non-compete agreements restrict your ability to freely practice your craft. They are prone to being improperly applied or outright abused (see Jimmy John's audacious non-compete clause). This has happened so often that California practically outlawed them. The root of the problem is that a boiler plate non-compete clause in every employee contract costs nothing. The company can pick and choose when to enforce it, so why not include it? Requiring 100% compensation forces companies to justify the non-compete with their pocket book. This is a powerful feedback mechanism that balances restricting a person's basic rights with legitimate business needs.

Why exactly would I choose a company which will professionally handicap me for the rest of my career, locking 60% of my income potential at what it is now and leaving me to sort through how to have a career without getting sued? Ain’t gonna happen. Not going to sign the agreement. Like I said, it may sound mathematically right, but it’s absolutely absurd.

> You are most valuable in a position that leverages your existing skills and expertise.

For me the key word here is "most". I interpreted the previous comment as implying that previous employers should pay for the opportunity cost of you not maximizing your value.

Unless you are prevented from getting job that leverages _any_ of your previous experience...such as requiring a new career shift. In that case 100% compensation could be merited. Otherwise 100% is not likely to equal the opportunity cost to the employee.

Not being able to work a job on your career path freezes it in place, while your physical body continues to age at the same rate. Thus, there is even a case to be made for > 100% compensation.

If you don't choose to retire a year later, the year you sit out is costing you what you would have been making in the last year of your career.

To explain in more detail, starting with the year you return to a career job, your pay may be reduced by a differential representing one year less experience, for every year until the end of your career. You miss out on the pay for the year you didn't work, plus all the raises between years, and the one raise you never got, because your career was one year shorter. All that adds up to the pay you would have otherwise received in the last year of your career.

It should probably be more than 100%. You don’t just miss out on salary. You miss out on raises and promotions, which might put you behind. You miss out on opportunities that may be gone with the NC period is over. Depending on the work, keeping your skills honed might be impossible from home.

The problem is that 60% is not about making you whole. It’s about discouraging NCs in general.

That doesn't stop companies from asserting that their non-compete is more broad than it is. Once they do, no other company is going to risk having you work for them while that illegally-broad non-compete is in effect.

You can sue but it's so expensive you probably won't and the company knows it.

That can happen even without a formal noncompete agreement.

But many countries ban people being allowed to ply their trade which is why non competes to be enforceable have to be narrowly drawn.

that's disingenuous, it's very hard to find a job that doesn't look exactly like the 5 last jobs you had. If you want to fix that you gotta fix the labor market and hiring practices first, which is wishful thinking. 60% is low.

> it's very hard to find a job that doesn't look exactly like the 5 last jobs you had

That's funny, I've never had a job that was exactly like any of the other jobs I've had. Depending on how picky you are, I've never had a job that was even particularly similar to any of my previous ones.

I was thinking the same because I am a programmer and it’s quite easy to find programming job in another area. But then I thought about other industries, dor example if I’m researcher about LED lights for 20 years, then my other options for another non-LED related job is very limited. So I’m confident that there are many example as this which can prove your logic (and my initial thinking too) wrong.

Really? All of your jobs have been for competitors of each other? I don't think that is the case for most people.

Most non-competes are usually imposed on very specialized professions like market analysts and accountants at global firms for example. If you're barred from working for another financial firm for 2 years, what are you going to do?

I'm surprised to see such a narrow view about this issue on this forum.

One area of non-competes I'm somewhat familiar with is consultants/analysts for a particular market. If they leave, sure, they can go work for a vendor or other participant in a different side of the market. Which is a very different job. But they basically can't do their role with another firm or independently. And my understanding is that these non-competes are regularly enforced.

A company I worked for had something like this, basically along the lines of, "you can't poach customers or other employees for a year." You likely could still work on your own as a consultant in the same field, but what it appeared to disallow was trying to take your clients with you.

The company was acquired, (and that in turn), when the new parent tried rolling out new contracts per employee, with a short turnaround to sign. Among other things, the new version basically would have prevented me from working in my field for a year.

I told them I needed time to have it reviewed by my lawyer, and I did too. Sure, the backlash had them rolling back the demand forthwith, but it convinced me that the ideal time to leave was immediately, under my old contract.

I'm surprised to see such a narrow view about this issue on this forum.

This forum oddly has some anti-labor sentiment. It is seen in this thread and also in threads related to unions, where the tone is quite obviously anti-union.

What's odd about being anti-union? Depending, I guess, on how exactly you define "anti-union".

Me, I'm very anti-union in that I never want to be part of one, but OTOH, I fully support their right to exist as simply the collective extension to the individual members' right to bargain.

60% for a year off? And you can return to 100% afterwards... Many americans would love that offer.

If they are living well within their means and can afford it...

I love non-competes that pay me compensation and will happily (more than happily) sign one. But, yeah, 100% or it's no deal. If they want to pay 60% then they can easily cut the time be the same factor ;-)

Personally, I won't negotiate for bonuses, or equity equivalent, though... just salary. I'm happy to use that time to invest in myself. It gets too complicated otherwise. I tend to negotiate for max salary anyway, as I don't trust bonuses or equity. YMMV.

I think I've only ever had one company actually pay me NC compensation, though. Usually they realise that they are paying for nothing and strike it from the contract.

If it’s not based on total compensation, employers will just use that as a loophole. Compensation will shift even more heavily away from salaries to “additional” income.

60% of salary with no duties? Perfect opportunity to create that Theranos for consumer goods logistics startup you've always dreamed of.

That'd be competing. Given any company can pivot to do anything. Yoga instructor? Cough non-compete!

> That'd be competing. Given any company can pivot to do anything.

That bullshit would not fly for a single second in germany. The NCC couldn't even prevent working for a direct competitor.

Just wondering, how can a German defend oneself from such bullshit?

The first line of defence is the trade union. The second one is the labour courts system (Arbeitsgerichte).

Is it feasible in Germany for a trade worker to take a huge corporation to court? I mean, in terms of affording a lawyer, time off from work, etc.

In Germany, unions routinely sit on the board: https://en.wikipedia.org/wiki/Codetermination_in_Germany

Well, practically the best is to do a yearly around the world traveling sabbatical sponsored by your previous employer. No hurt for CV, cash is fine. win-win

Until you do pivot, you are not competing.

> german law requires a NC clause to have a compensation directly mentioned in the contract

same in Italy. a contract that has no reciprocity is easily nullable hence non compete are separate from employment contracts and include a monetary compensation. they also have to be restricted in scope to actual competition (ie.e same customers or exact market), because you can't contract away the constitutional right to work from people.

there are some interesting side effects too: it's good for the employer because this allows non compete to extend longer than employment, and good it's for the employee because you get payed for all the time the non compete is valid even if no longer employed at the company.

I don't see how it's good for society that smart people are being paid to do nothing. The article pointed out that the danger of NCAs is a lack of innovation and thus economic growth. It made no point about the individual incomes of the workers.

But that's the great thing about economic incentives. By requiring a minimum compensation for employees who sign an NCA, you're incentivizing the company to only push for NCAs in situations where the benefit to the company outweighs the cost to society.

(And I think it's unlikely that most people would choose to sit on their butts and collect their 60% salary, as opposed to taking that compensation and also finding a new job that doesn't directly compete with their old one. So the overall harm to society doesn't seem that severe.)

Yes! this is exactly how it should be! No free option!

NC are antithetical to natural rights because they are slavery. If there is payment contingent on performance, than there isn't slavery. Given payment is required, firms that would ask for NC go way down.

Random thing I found out was a lot of serfs became serfs through debt bondage. And this involved a contract/oath that bound the serf and his progeny in perpetuity.

Other place serf originally were peasants farming communal property who had they're rights taken away bit by bit over hundreds of years until they were bound to the land and had no rights.

If a particular NC is creating financial hardship can you still negotiate out of it? (I'm assuming while forfeiting the compensation)

Basically, "This NC is so burdensome I can't pay my mortgage if I obey it. I'm petitioning the court to release me from it and cease payment so I am not forced into foreclosure."

Non-competes under U.S. law are neither all good nor all bad. They have their legitimate uses but these are the narrow cases and not the norm.

For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair.

So too if you exit a professional practice and get bought out. Same principle. You get paid for the goodwill value and you should not be able to capitalize on the payment and simultaneously raid the goodwill of your former practice by competing against it. Fair and reasonable even though it restricts you in your livelihood.

Thus, even states like California, which basically ban the use of non-competes in an employment context, will fully enforce them in the situations noted above.

On the bad side, non-competes tend to operate unfairly and to burden ex-employees by preventing them from engaging in their normal livelihood even when they have been paid nothing for the privilege. Many jurisdictions do enforce them in that context and the only way to challenge them is to argue that they are unreasonably broad, which (if fought out) takes a tidy six-figure sum to prove in court.

So, yeah, all jurisdictions should adopt the California rule that largely bans non-competes in an employment context. But I don't see this happening anytime soon.

In the meantime, as an employee, you should try to avoid these if you can, negotiate to be paid for any non-compete if you have the leverage, or, if you have no choice, live with them as best you can until the law comes to a better place. As long as the law enforces them, you are sometimes just stuck.

There are many incentives available to prevent the seller of a company (and the employees) to not run out and start a competitor. You can give them shares that vest over time. You can offer them employment in the new company. You can make various offers contingent on the performance of the sold company.

Given that these NCs are generally negotiated as part of the sale of the company I don't really see a problem. If what you're being offered isn't worth agreeing not to compete then keep negotiating or walk away.

> For example, you sell a business to someone who pays you a big premium for your goodwill value usually tied to the value of the customer base. It is entirely fair that, having taken the money in exchange for the sale of your goodwill interest, you not be able to turn around the day after the close and effectively steal it back from your buyer by setting up a competing business and conducting raids to get back your old customers. A reasonable restriction on your ability to compete in that case makes eminent sense and is not in any way unfair.

During the sale the customer information and contacts can be (and by default usually are IIRC) considered an asset of the company, as such the seller reusing contacts can be considered a form of corporate espionage and can be prosecuted in that manner.

This holds just as clearly for departing employees, making unauthorized use of a company's assets after leaving a company is illegal whether it's sneaking in and using your old office or continuing to use contacts, just because in one of those cases the data might be in your phone doesn't change the legality.

But! This sort of corporate espionage is rather common and hard to prove. This brings us back to the commonly known point that sales people have a habit of ruining it for everyone else /s

> You get paid for the goodwill value and you should not be able to capitalize on the payment and simultaneously raid the goodwill of your former practice by competing against it.

No, employees don't get paid for "goodwill value" - whatever that means - they get paid for work they do in the course of their employment. If a company stands to lose if one of their employees changes jobs and works for a competitor, then the employer should be sure to give them generous raises and compensate them for the fair market value of their labor - not by relying on legal threats. I'm baffled by how widespread this belief that employees have some moral responsibility to sacrifice opportunities to the benefit of their current employer. Be a rational actor in the labor market, doing otherwise is an easy way to get taken advantage of.

> No, employees don't get paid for "goodwill value"

The passage you quoted and replied to wasn't about employees, it was one of two examples GP raised to argue that that non-competes can make sense outside of an employment context.

> Thus, even states like California, which basically ban the use of non-competes in an employment context, will fully enforce them in the situations noted above.

From the original comment

> So too if you exit a professional practice and get bought out. Same principle. You get paid for the goodwill value and you should not be able to capitalize on the payment and simultaneously raid the goodwill of your former practice by competing against it. Fair and reasonable even though it restricts you in your livelihood.

Unless "professional practice" specifically refers to something like being the partner of a law firm it does sound like it's saying that the spirit of non-competes should apply between employee-employer relationships.

Even then it seems like a bad thing you advocate. If I am at a law firm and I think I would be better served to go form my own practice, I shouldn't refrain from doing so out of some sense of goodwill on part of my previous practice. Sure, it may be a bad idea to burn bridges - but that's done out of a desire to maintain good relations and reputation, not because it's immoral to compete withy past employer.

There is a "get bought out." mention in the text you quote.

If you get a fair compensation to end your job then a NC is justifiable.

One of the most insidious portions of non-competes IMO is that they are often non-enforceable. Depending on how wide or restricted the target of the non-compete is it can be ruled invalid. A lot of the more questioning people have probably discovered this but consider that there are probably janitors laid off by amazon who read their non-competes as the word of law and end up suffering hardships because of it.

Also, as an aside, a non-compete is not required to prevent corporate espionage, it's just easier to prove violation of. A lot of the sales teams worried about losing leads when team members departed could have pursued them with law suits focusing on the theft of corporate resources, it's regrettable non-competes have even gotten this far.

From the perspective of any normal employee, "non-enforceable" doesn't matter. That I can eventually win in court doesn't matter if I can't afford the time, money, and stress to get that ruling.

Exactly the goal, I'm sure, of the people writing up these agreements.

Yes, but if there is any question, keep a really low profile. I know people who directly violated crazy non-competes and took jobs with direct competitors basically working the same position.

Skip the usual conferences for a year or two, fail to update linked-in in any meaningful way. Keep your mouth closed, and it becomes really hard for a company to toss cease and desist letters if they aren't even sure where your working. Going dark may not be a perfect defense, but lack of evidence makes it a lot harder.

If its not justiciable you can just ignore them

And they can just sue you anyway.

Yes, exactly. My first lawyer explained it well: "The question isn't whether you'll win. It's whether you can afford to win."

Land of the free

This is the case everywhere including the most developed EU countries. Justice machine is rusted and wins the one who oils it with money.

It should be "Land of the Free"

- terms and conditions apply

From the perspective of the normal employee they should understand they pretty much won't be enforced. The threat will be made. And then no follow up.

Maybe. Or maybe they're willing to go to court, make you get a lawyer, drag you through discovery, depose you, set a court date to force you to prep for trial, and then offer to settle at the last minute.

For a large company, that's a small amount of money and a modest amount of time. For the normal employee, it's a lot of unexpected expense, a great deal of stress for months, and the risk of owing a shit-ton of money at the end of it.

If you really think there's no risk to ignoring non-competes, presumably you should be willing to guarantee the legal expenses for someone who wants to try. But my guess is that you won't offer.

Sure. But it a company wants to sue you just for the hell of it, then whether or not you signed a non-compete is irrelevant. Maybe you negotiated this out of your contract, but they decide to sue you anyway.

The better solution to all of this is not to "ignore" the non compete risk, it is instead be to simply lie to your former employer.

What are they going to do? Hire a private investigator to track down all ex employees, to see if they have another job? Probably not.

It is pretty easy to get away with this stuff if an employee really feels like it.

The notion is not that you get sued for the hell of it. It's that you get sued for commercial advantage. You get sued to make an example of somebody, so that all the employees know they'll ruin somebody if they find out they're working for a competitor.

That somebody has decent odds of getting away with something is only relevant if the punishment not terrible. But a 95% chance of not getting sued is not great if when you are sued it's $100k in expenses and two years of incredible stress.

Will some people do it anyhow? Sure. But most people won't, and that's what bullshit noncompetes are after.

In most cases, yes, it is an empty threat. However, the possibility is there. The company (or, individuals in the company who dislike you) can selectively use it against you to make your life harder. Or, if you whistleblow, they can use it to retaliate.

A curious parallel to this is a lot of company's "no reference" policies. Due to the fact that a negative reference can have legal ramifications in a lot of jurisdictions a number of companies have adopted a policy where they publicly state that no reference will be given to leaving employees. I've known several companies like this that will then inform employees that are leaving privately that they'll be happy to give them a positive reference.

Some parts of society can be really weird and distorting and I have no idea how we'd go about solving them.

I've always given individuals as references, not companies. Not sure the degree to which anyone's ever checked.

I have always given specific individuals as references as well. The companies I was referencing were ones where the management had a policy of agreeing not to give references.

Again this is super weird because the only thing that is an issue is giving a negative reference so a lack of a positive reference could be interpreted as a negative reference... thus, not giving everyone a positive reference should be a similar issue.

That entire law is sort of silly in most cases though, but the cases where it isn't (ex. a malicious boss for stupid reasons) are serious enough that I understand why it's around while being sad that we need it.

I've always expected company references would be in the vein of "Yeah, they worked here those dates," i.e. they didn't just make shit up on their resume. The idea that companies (as opposed to individuals speaking on their own behalf) would provide more than that seems pretty archaic outside, possibly, of cases of serious misconduct. Which I suppose is mostly where the question comes up.

Good luck suing, if you would get a negative reference, why are you using them as a reference, that shows an incredible lack of awareness.

Companies are just copping out with hyper sensitive HR departments. I would give a glowing review but I am not afraid of detailing why someone else is an idiot and we canned him/her. I would even go so far as saying "you're making a mistake if you hire this person". I won't be sued, that fear just simply doesn't reflect reality.

I've known a few people who were pursued for NCs, I think you'd be surprised, it happens more frequently then you think.

The problem with things being non-enforceable is that they're often enforced anyway, with intimidation and legal actions that are more relatively costly for the individual than the company.

Non-competes are illegal for physicians in my state, but I know of a case in which the clinic dragged the case out so much with various technicalities that eventually the Dr. settled. Now, in a subsequent case with a different defendant, lawyers are refusing to take the case for that reason. So the doctor in question is waiting for the non-compete to expire before retrying opening a private practice anywhere near their home again.

It's not enforceable legally, but they're doing so via other means.

And they have a chilling effect even when they're probably not going to be invoked or are unenforceable. I worked for a very small consulting firm for a number of years and we passed on pretty much anyone who had a non-compete. Management wasn't willing to take even a relatively small risk that we might get involved in a lawsuit.

Q: I'm willing to pay you $100,000 to sign a non-compete to work on the project with my company. If I don't pay, the non-compete isn't valid. Okay?

A: No.

Q: $500,000?

A: No.

Q: $1m?

A: No.

Q: $10m?

A: Yes.

The point being... the problem is NOT non-competes. The problem is the exchange of value. They serve a useful purpose in support of business risk-taking and investment.

Make them fair, not unenforceable.

Terms become unenforceable when it's recognized by the courts that one party has so much negotiating power that true negotiations are impossible. A software engineer in the middle of SV might be able to demand $100k to sign a noncompete, but who else?

A candidate demanding another $100k on top of a fair offer, whether to sign a non-compete or for any other reason, is not going to get the offer.

There's a myth that SV engineers can demand whatever they want and get it. No, they can't. If I get an offer for $200k, and that's actually my market value, and I demand another $100k for any reason whatsoever - I won't get them, period.

NCAs aren't legal in California, but if they were, and some smartass decided to demand another $100k cash to sign them, I guarantee he'd just get a pass, and someone less smartass would get the job instead.

It's interesting that you use the pejorative "smartass" and imply the demand is unreasonable. This couldn't be a clearer example of the low social status engineers have.

I'm actually an engineer :-)

I used "smartass" because it's a move that superficially seems clever, but is actually completely futile when you look at the broad picture - as my comment shows.

I don't know if us engineers have "low social status", but we certainly don't have as much negotiating power as some of us may fancy, certainly not against a huge mega-corporation.

All other things being equal, businesses will hire the candidate that they can potentially abuse before the one that may righteously push back. So if you are one who would negotiate the terms of a non-compete, you will not even get the opportunity until all those who will just blindly sign it have been given the chance to do so.

The smart-ass part is signaling that you're less-abusable before the decision is made on hiring you.

The devious move would be to play dumb in the domain of HR paperwork, and delay signing anything. Just say you need to review it in private and make a copy, pocket the paper, and never give it back, or even bring it up again. Or mark up the document to completely pull its teeth, sign that, and turn it in with a stack of other paperwork. HR will probably just file it and tick their checkbox for it, without even flagging it for review by legal.

When I was given an nca, it was on my first day and I was put in an empty room with the materials and told I can't take them from the room. I tell you, when you're needing the job to provide for your family, there isn't much you can do there.

EDIT: fortunately, the company made a very niche product so it would be hard to argue anywhere was competing with them.

If you ever tell a judge that the company refused to let you negotiate terms, review the documents with professional legal counsel, or make a copy for your own reference, I'm sure that will go over well in court for the company trying to pretend that they represent contracts~ Then you can discuss whether you actually received anything of value specifically for signing any particular document.

Smartass or not, if you are asked to sign anything that you are not allowed to show to a lawyer, the company is trying to abuse you, so feel free to mark it up a bit. Cross out single words that completely change the meaning of clauses that would put an obligation on you. Likely candidates are "not", "must", "shall", and "but". Write on it "This is not a contract" in small, hard-to-read print above your signature. Photograph it with your phone. Anonymously let other people know the company is doing this.

Chances are, if you asked any question at all about non-competes during the interview, you never would have made it to the empty room where they showed theirs to you.

I recognize the ideal there, but as stated, I had to support my family and I needed the income. I was not exactly in a place where I could argue. I realize this would likely get thrown out in court, but that people get put in this position at all is ridiculous.

So many things already have to be going wrong for these to exist, that no single individual can possibly fight them.

- The legislature has to not care about laborers.

- The laborers can have no effective means of cartelizing amongst themselves.

- The businesses have to employ people who think it is okay to require uncompensated non-competes.

- They also have to be willing to sue ex-employees.

- The court/arbitration system has to side with the employer in some of the cases.

The devious move would be to play dumb in the domain of HR paperwork, and delay signing anything. Just say you need to review it in private and make a copy, pocket the paper, and never give it back, or even bring it up again.

I did exactly that at a smallish company ~20 years ago. It actually worked, and caused quite a ruckus a few years later when they discovered it. At that point they didn't really have any leverage because I wasn't working for them.

I seriously doubt this would work anywhere that isn't 30-80 employees. Small enough to not have an completely automated HR system, but large enough for things to slip through the cracks.

The main contract may have a clause it's only valid, if you also sign the NCA and NSA agreements. At least mine had.

I am not a lawyer, but I'm pretty sure that any good one would advise you not to agree to anything you haven't read first.

This is why you show contracts to lawyers before signing. You have to avoid unnecessary warranties, contingent agreements, hidden addendums, and other traps for the unwary. The contract should be the whole agreement, and ideally should also say that it is the whole agreement.

Just cross that clause out with your pen, and if questioned, say that you haven't seen the documents they were trying to incorporate by reference. If they are contract terms, they can appear as clauses in the contract, and you should be able to negotiate reasonable compensation for them.

Few companies have ever tried such trickery with me, but then again they have operated almost entirely without lengthy contracts--basically, just starting date, starting rate of pay, and the "at will" clause. Those that did push documents at me early enough got to see my editing pen. But my smartass resistance to their dubious documents never got me to an offer or a real negotiation, either.

I am especially fond of crossing out the part of a background check clause that allows them to keep the 3rd-party report secret from me, while also sharing it with any other parties they please. Ordinarily, I'd just walk out, but I figure that crossing that part out puts the ball back in their court.

Not sure why you jumped to trickery. I got them handed at the same time, actually in the same DocuSign pdf. They were basically an addendum mentioned in the contract that required a separate signature, even though the signing was required by the main work contract and non-optional. I guess it's just a way to create a better overview like we split stuff in multiple files in programming.

The thing is you don't have much way to negotiate this stuff with companies of a certain size. It's done by their lawyer and everyone gets the same stuff. Just changing we wording on the relocation and signing bonus (because the original wording made absolutely no sense in my case) took over a week of mailing stuff between lawyers and the headquarters in a different country. It's take it or leave it. Crossing stuff out with your pen or not handing in some documents might even get you sued for deception.

Sure this is different for small companies without a big HR department that is hiring on a daily basis and without complicated legal department processes. There is a good chance they just skip the NDA/NSA if you object (seen it happen), when they think you are the best man for the job.

Trickery is negotiation by other means.

These would not be an issue in the first place if we had a union, or a state legislature that cared about workers, or business managers with strong ethics. So many things already have to be going wrong for uncompensated non-competes to be common, that it hardly even matters what you do with them. If you really want/need the job, you just sign what they put in front of you, and then hope they don't find out when you inevitably reneg.

How do you do this when the signature happens online rather than on paper?

I hated how Zenefits made my employment contract like a click through software license agreement. It's not like I'm accepting the iTunes terms of service here -- this is a crucial document and much more likely to have life-altering consequences.

Try sending them physical documents? Maybe they have a fax machine.

If they don't have a fax, they still have a mailing address. If you can print out the document, you can alter it before sending it back. But going outside the normal workflow invites human scrutiny, so anything you do there has to be above-board.

You could always add some words to your digital signature, like "this is not a contract", or "I refuse these terms", if that's the only way you could otherwise edit the document. If it's an automated system, it's likely that there is no human review until the documents are actually needed for some legal reason. By that time, you'll already have your money.

You could also try hacking the document system. The worst that could happen is that you don't get to work there. Second worst is that months or years into your new job, some HR person notices a discrepancy, and wants you to sign a fresh copy, or you're fired immediately. Try sending back a document that has lorem ipsum generated text or Markov chain text with the appropriate paragraph lengths? They're probably counting on you just clicking the buttons, maybe typing out your full legal name, and automatically filling the checkboxes with green checkmarks. Putting all of it into an automated system is already a means of cutting corners on legal paperwork. You can easily outsmart the computer, if there's no human helping it.

Even then, the person with enough clout to negotiate a $100k is way better/more valuable/in demand than $100k.

Consulting. Know of 250k for junior partner and up from there. Has to be enough to essentially be a “salary” while you are sidelined. Most companies tend to get away with less than that. Sadly many may not negotiate a proper value.

Unless you also add mandatory binding arbitration, then the courts are barred from deciding how enforceable the non-compete terms are.

> Make them fair, not unenforceable.

Nice idea. How do you do that in practice?

How does the judicial system decide what NCA is "fair"?

The cost of the NCA to the employee can be heavy. How do you "fairly" value it?

In reality you'll get what you have right now, where entire industries (and certainly entire companies) simply mandate NCAs in all their contracts and there's no way to remove it or get compensated for it. Don't like it? Decline the offer. Oh, and good luck getting an offer that doesn't require it - they all do.

> > Make them fair, not unenforceable.

> Nice idea. How do you do that in practice?

Require them to be reciprocal; if I am prohibited from working for anyone else but you in some kind of work for a set term, without your sign-off, then you are also prohibited from employing anyone else in that field, directly or indirectly, for the same term, without my sign-off.

As the saying goes, two wrongs don't make a right.

Full pay for the length of the non-compete + insurance to cover the company going insolvent. Otherwise it's illegal to even put it in the contract

Not a bad attempt, but what's "full pay"? For most senior engineers, the base salary is just a part of the compensation package. What about bonus?

Also, most employees move for a better opportunity, which often means a much better base comp + potential for much higher bonus. If I'm not going to be compensated for that, how is that "fair"?

Finally, my resume and likely my skillset will take a hit for sitting 1-2 years at home. Where's the compensation for that?

Full pay would be your tax return saying what the full amount of compensation you got from the employer. Stock rewards, bonuses, etc are all reported from specific employers. Your highest year in your previous years of employment with the employer is the year I would chose. And add other benefits like health insurance and such. Basically your still 'employed' on garden leave with the company until the non-compete period runs out.

By making table stakes very expensive, the likelihood of companies even putting them into contracts will reduce to a small minority. The problem with non-competes right now is they are free and easy to put into contracts, and in practice the vast majority of employees do not refuse employment over it due to power asymmetry. They further more create chilling effects for employees to switch companies and thus make employees cheaper to hire due to the liquidity reduction.

The other objections you bring up you can negotiate for yourself :) . If they were willing to put up the table stakes, you're probably an important hire to put that in for and thus probably have negotiation power.

OK, I think full taxable income is a nice suggestion. But it will require legislation, i.e. probably will never happen.

Moreover, the point of the article is that NCAs are a long-term drag on the economy. If the main reason there's SV in California and not near Boston, is the lack of NCAs, then that seems like a huge cost and a drag on the economy as a whole.

It’s not a huge cost because if “full taxable income” became law, every non compete would instantly disappear overnight.

No, they (the parliament) would make noncompetes mandatory like they made arbiters mandatory (as in, courts will statutorily turn you down if you skip the arbiter; this is way worse than, for example, alienable right to sue in the US, as you cannot contractually leave this out) in Turkey (OK, not in all cases; but employment, insolvency and customer issues are not small problems). Expect way worse in liberal jurisdictions such as US. And no one would object even if it were obviously unconstitutional (right to sue is inalienable here).

Real question: if the company one has an NCA with goes insolvent, does the NCA matter? Who would enforce it? Presumably, if somebody picks up the employees in a buyout, those would now be said company's employees and the company would be on the hook for the "Pay for the length of the non-compete" bit.

> Real question: if the company one has an NCA with goes insolvent, does the NCA matter?

Yes, an insolvent company still exists.

If it is dissolved and it's interest in the NCA wasn't transferred (either because noone wanted it or it wasn't legally transferrable), then it doesn't matter, but mere insolvency isn't the same (in fact, if it can collect money for violations, insolvency may lead it to be more aggressive.)

> Who would enforce it?

The insolvent firm itself, which may be effectively run by (or for the benefit of) its creditors.

You could put that too, the non-compete goes away if the firm goes insolvent / can't pay in liu of insurance.

IANAL, is there a legal distinction between unenforceable and not enforced as a matter of policy? The second could encompass a contract clause that is enforceable as a practical matter, but not considered desirable. The first could include things that are desirable, but impossible for a court to enforce as a practical matter.

I'm inclined to think that non-competes are both undesirable and unenforceable as a practical matter, though I understand many states to enforce them. The reason I focus on the unenforceable as a practical matter is 1) that jobs so often aren't what they are advertised to be, and 2) courts, as a practical concern, don't see a realistic role for themselves as long term regulators over who is allowed to work where on a practical level.

I can see this working perhaps in extremely limited conditions, but that goes into undesirable - to enforce these, you're asking the courts to rule that the employer upheld its side of the contract where it came to a job, determine specifically that the new job falls within the contract, becomes an enforcer over some worker's life determining where and how he/she is allowed to work... and all for what?

This wouldn't be realistic even if non-competes were perfectly enforceable at low cost. An enforceable non-compete does not raise an employee's value to the employer, and anyways they would not be able to afford exorbitant salaries. Non-competes really do cost employees (who mostly act as though they are enforceable), and they seem to put up with it, and since they put up with this then in a sense it is already the case that the cost of non-competes is priced into labor costs. Now, yes, the fact that employees are accepting such low compensation for non-competes is a cultural mistake, but it can't be fixed easily, and your suggestion that they negotiate better isn't going to fix it.

Non-competes are so vague that nobody knows how much to demand even if they were possible to negotiate (which they aren't).

A friend of mine received two offers for almost the exact same compensation. One had a non-compete clause buried deep in the employment contract. Most candidates probably wouldn't even find it.

He asked what the non-compete means. They told him it's almost never enforced. As in, by the mere language, they could sue pretty much any employee who switched jobs.

So ask an independent lawyer to get an answer, right?

The lawyer told him it basically depends on the judge and the judicial climate if it ever goes to trial. Sometimes these cases get dismissed. Other times, the NCA is enforced.

Even if he wanted to negotiate, he couldn't. He doesn't know how much the clause is going to cost him. All the key information is missing, such as whether the company will actually sue, whether the "judicial climate" is right for the judge to side with the plaintiff or summarily dismiss the suit, etc.

It's the perfect example of "negotiations" being useless, especially for a weak uninformed party like a job candidate.

What if you judge the cost of a NC agreement to be the cost in lawyer fees to fight it?

Ask for that, and if you ever get sued over it, well...the fees are covered...

Assuming non-competes are perfectly valid and fair (which I disagree with but that's a separate point) is this scenario fair if a large portion of the employee pool is unaware of the ramifications of their non-compete on signing?

I am quite thankful non-competes are unenforceable because I believe they (and much other contract legalese) are a soft form of classism that creates an unequal information state between the majority of employers and employees. The end result is that these sorts of inequalities distort the free market.

In states that presently discourage non-competes, employers could easily offer parting employees a "stay at home" wage of say one third salary, yet they do not. Which implies they do not value non-competition anywhere near what the employee does.

In general it's impossible to put a price on an unworkable concept. Attempting to do so just adds token compensation as a fictional justification for the existing problems.

Massachusetts now has 50% garden leave. But it’s not a panacea. Some see that and go where can I sign up. But the reality is that, for a lot of people, hanging out and maybe doing some side stuff for a year for half their former base pay isn’t a great or even practical option.

I threw out one third as some middle of the road attempt, but yeah in reality that number is going to be much closer to the full salary [0] and that's precisely my point.

Market based incentives only work if there's a clearing price.

[0] Or even higher if a new position would be a significant raise!

Garden leave is better than nothing because it at least puts a cost on an employer but it's very situational.

For some people, at some points in their lives/careers, a one year sabbatical at half salary is manna from the gods. For others, they were planning to shift towards a significantly different role anyway. For still others, it's a big speed bump in their careers and, anyway, how are they going to pay their mortgage and their kid's college?

Sadly, it doesn't apply to NCAs signed before the new law.

One problem here is the differential in power between employers and employee. An employee needs a job, as they need income. An employer probably has multiple applicants. If it's beneficial for all employers to have NCs (as it helps retain employees) it's not exactly a fair negotiation.

In 2016, there was a White House initiative to ban non-compete agreements. The comment thread there from my parent is still the most active comment thread I've participated in on HN. It may be worth reading for a re-hashing of all the various sides of the debate. https://news.ycombinator.com/item?id=12795119

Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made.

I pointed out that a couple of the phrases in the contract, when combined, indicated they would have IP rights to EVERYTHING I did not just work they paid me for.

They moved on to another candidate.

> Hah. I interviewed for a [growing in popularity and market share] top 20 cryptocoin. They had some curious choice of words in their "freelance" contract, notably that it would use German copyright law to transfer rights of all inventions I ever made.

IANAL but I really doubt that would be legal under german IR/IP laws.

Things like this motivate me to stay in California and work for small companies for the rest of my life, so that California Labor Code § 2870 applies and I get to keep the rights to independent inventions if I'm careful.

I would love to see a spoof where a middle age serf is going to move to a new farm, but his current lord forces him to sign a contract which precludes the serf from using his wheat farming skills for the new lord who is the current lords political competition.

nice try but serves were attached to the land by nature.

Well, tying your labor force to the land should be no basis for a free economy!

Imagine, just shackling your primary economic labor force to an arbitrary plot of land and demanding taxes and work of them?! How ghastly.

Next thing you know, you'll be claiming right to their innovations in the advancement of farming technology. Ill have you know that I shall not be sharing MY designs for soil improvement through the addition of various rock powders and animal droppings for a greater yield in the annual barley production with this stingy, short-sighted lord. That's for sure.

And don't get me started on Johnson's idea about switching out the types of crops grown between plots. There is no way I am going to share THAT idea with a lord who limits MY ability to migrate between estates!

Who cares, the lord will be gone at the next reversal of alliance.

If you haven't already watched it, I would expect you would like the spoof on "Vikings" called "Norsemen" on Netflix.

This is correct but it's serfs not serves

English be hard, I tried to follow some kind of rule :(

Odd that Right to Work laws don't ban non-competes. </sarcasm>

Edit: Added tags, just in case.

So-called "right to work" laws are not intended to benefit workers, so it's not particularly surprising.

I don't see the connection. Right to Work laws say that workers can't be forced to join a union. They don't say that workers can't voluntarily join a union; so why should they say that workers can't voluntarily sign a non-compete?

Why should laws say employers can't voluntarily sign a union security agreement [0]?

There's no force involved in either case - workers can choose not to work at a union shop, just like they can choose* not to work under a non-compete.

*Until it becomes impossible to find a place without a non-compete.

[0] https://en.wikipedia.org/wiki/Right-to-work_law

Why should laws say employers can't voluntarily sign a union security agreement?

Because (at least pre-Hobby-Lobby) laws have historically prioritized the rights of individuals over the rights of corporations. An employer which compels their employees to join a union is signing away the rights of those employees, while an employee who signs a non-compete is only signing away their own rights.

The compulsion in both cases is exactly the same - pay union dues/sign non-compete, or find a new job.

You can negotiate with an employer over the terms of the non-compete you sign.

If the employer has a mandatory unionization agreement, you can't negotiate with them to change the terms of that.

Sure you can - just invite the union to the negotiating table. Any contract can be changed if all parties agree. Or even simpler - ask for a pay raise in the exact amount of the union dues.

Asking for a pay raise to cover the union dues is a red herring -- unions do far more than merely collect dues from their members.

As do employers, so I fail to see your point.

> Right to Work laws say that workers can't be forced to join a union.

They say no such thing. They say that companies can't form agreements to exclusively hire union workers. They outlaw essentially non-competes in the opposite direction. A non-compete agreement binds a worker to exclusivity with a company. The agreements outlawed by right-to-work laws bind companies to exclusivity with a union.

I'm confused about the distinction. How can a worker be forced to join a union in the absence of an agreement between the company and the union to only hire union workers?

If you are thinking of "closed shops", companies where the union has a security agreement with the company and the union is free to deny membership to a person (thereby denying them employment), those were deemed illegal everywhere under US federal labor law.

> I'm confused about the distinction. How can a worker be forced to join a union in the absence of an agreement between the company and the union to only hire union workers?

A worker can't be forced to join a union even in the presence of such an agreement. The company simply agreed not to hire them if they don't join.

I feel like you are playing semantics here. "Forced to join a union" in this discussion is in the context of "in order to get a job at Company X". Of course this worker is free to forego employment at Company X if they don't like the terms of the employment. However, one of those terms forces the worker to join a particular union.

Taken to its logical conclusion, this semantic distinction could be used to justify eliminating just about any worker protection currently on the books.

Right to work laws say you have to a right to work or not work.

That is why they are called right to work laws, and this is why the parent is making that observation, as NCA's are antithetical to right to work.

Maybe trying reading in to things a bit more rather then jumping to the wrong conclusion?

> Right to work laws say you have to a right to work or not work.

No, they mean employees have a choice to join a union or not (ie. pay union dues or not.)

In other words, they're a legal tool to weaken unions by reducing their membership and revenue.

Is it possible "Right to Work" is a euphemism?

Its a whitewashing term carefully chosen. It is a right-wing goal to destroy unions as they might benefit of the lower or middle classes. As the rich and powerful do not serve the people, but only themselves, they favor laws that help companies, not workers.

While we are at it, let’s also send anti-moonlighting clauses into the abyss and drastically scale back IP-assignment clauses too! One’s employer should have no control over what you do on your own time using your own brain and equipment at home. All large companies I’ve worked for include such garbage and they are never open to negotiate them out. These clauses stifle innovation and actively deter entrepreneurship.

The UK approach is as ever very reasonable.

“To rely on a restrictive covenant in a contract of employment an employer needs to be able to show that it is designed to protect a legitimate business interest (e.g. goodwill or confidential information); and goes no further than is reasonably necessary to protect that interest.”

Any more than that and it is unenforceable.

Enforcement is in Employment Tribunals not courts where the burden of proof is largely on the employer.

Have a friend who makes crowns etc. for dentists. He took a job here in town working for two dentists. They hired some junior folk and had him train them and then fired him.

He tried to start his own business so they sued him with a noncompete. They claimed thousands of dentists as their territory and the judge became angry with them but in the end the noncompete crippled his ability to make a living for years.

On the flip side, I have another friend who was brought into a small town for a small branch of a medical-related practice. After awhile, he joined with the other guys in town and they started their own thing.

They actually did buy the business from the group who had brought them out, but it was a bit of a forced sale because there was no legal way for the group to stop them.

If I work for an employer based outside of CA but work out of a CA-satellite office, am I still subject to any non-compete?

California startup lawyer here, but not your lawyer. This is not legal advice. There's some misinformation here, so I'll clarify:

- California won't enforce noncompetes, except for a very limited set of circumstances (i.e. selling your business and then starting a competing business).[1]

- If you live and work in California, then you get the benefits of California law (including the noncompete law above), no matter what your employment agreement says. UNLESS you were represented by a lawyer during negotiations and you agreed to a different state's laws. NOTE: This section only applies to employment agreements entered into AFTER Jan 1, 2017.[2]

If your employer tries to pull a fast one and says you are subject to another state's laws, then you can invalidate that clause, and you can get your attorney's fees paid by the employer if you have to litigate it. [2]

[1] CA Business & Professions Code Section 16600-16602.5 Link here: https://leginfo.legislature.ca.gov/faces/codes_displaySectio.... Note: once you get to get to Section 16603, there are some super weird laws prohibiting bundling horror comic books. Aren't laws fun?

[2] CA Labor Code Section 925. https://leginfo.legislature.ca.gov/faces/codes_displaySectio....

Also, if complying with the non-compete would introduce a hardship there is usually a way to just ignore it entirely.

So, let's say you're a database specialist picked up to tune someone's DB, part of the contract you sign (probably unwisely) states that you can't work tuning DBs for the next 6 months after signing. If, after two weeks at the job, layoffs happen and you're let go then it's likely that a judge would dismiss any enforcement of the non-compete.

But here's why this _is terrible_ either you need to secure a waiver of the non-compete from the company based on goodwill in advance (which the company has very little motivation of doing) or you could consult with a legal expert about the validity of the non-compete (for the cash monies) or you find a new job and hope no enforcement is attempted with the onus on you to defend your new employment if the company decides to pursue you (which they very rarely do)

So it's basically like pirating music in the 90s, there's a thousandth of a percent chance that some company is going to try to ruin your life over it, and if they try there's another thousandth of a percent chance they'll succeed. But if they do, it is _terrible_.

> there's a thousandth of a percent chance that some company is going to try to ruin your life over it, and if they try there's another thousandth of a percent chance they'll succeed. But if they do, it is _terrible_.

Perhaps you're exaggerating for effect, or perhaps you really don't understand the probabilities involved. But this is many orders of magnitude less likely than you getting killed by a meteor strike. E.g. something like [0] estimates a 10km meteor strike every 10 million years. That has (optimistically) a 50% survival rate for humans and you will live 50 more years, so 1 in 400,000 chance it gets you.

If you don't like the meteor calculation, you can look at the odds of, say, a murder in your area and both the judge and all the members of the jury are convinced you did it despite your alibi to the contrary. Maybe a million to one. Or, you know, something a thousand times more likely, like you get diagnosed with a rare untreatable form of cancer and have a year to live. Maybe 1000 to 1.

Either way, if that's what you think of your non-compete it's not worth worrying about.

[0] http://www.tulane.edu/~sanelson/Natural_Disasters/impacts.ht...

I was indeed being hyperbolic but hey, I just learned about meteor strikes.

My intention was poorly portrayed but to try again, in all my years I've never known anyone who has been sued over a non-compete, a good chunk of those people have been software developers and most software developers sign non-competes these days, usually in overly broad topics (and I do know a bunch of people who have continued to work within the same relatively narrow industry).

Non-competes are nearly never enforced but their presence has a chilling effect, those of us aware of their unenforceablity and lack of attempts at enforcement generally waive off the consequences of signing them. People who are less familiar take them more seriously and they can have a real chilling effect, so their mere existence creates an imbalance in seeking future work.

I am aware of sufficient enforcements (admittedly second hand) to assume that at least certain firms are quite serious about pursuing them up to and including people basically looking to have a similar role at either another firm or independently.

But, yes, the chilling effect is much broader.

> this is many orders of magnitude less likely than you getting killed by a meteor strike.

No, a thousandth of a percent = 1/100,000, which is more likely than the meteor or murder scenarios presented.

Also, if "some company" turns out to be Amazon or EMC, then it's not only higher than that, but certainty in some cases.

A california court would invalidate the contract IF :

If (the venue was california in the contract)

Else if (the contract was based on laws that were similar enough to what the california legislature expressely legislated against or califonias judiciary addressed in prior case law)

Your employer may have standing in another states court and that court may find a way to establish jursidiction and sanction you according to the contract and its law

In general, no, but it's complicated (https://www.lexology.com/library/detail.aspx?g=60a2afec-34c8...).

It's complicated. Here you go: https://www.businessjustice.com/is-my-out-of-state-noncompet...

But a satellite office would almost certainly be considered a California-business and be actionable against.

These aren't the free markets the ultrarich are interested in.

Actually, America doesn't care much for free markets at all, which is why virtually all industries are monopolies or cartels.

Non-competes, the most anti-innovation, anti-skilled worker, anti-free market, anti-business and anti-American thing in working today.

Non-competes are protectionism for larger businesses over small/medium businesses and try to own employees skills that they may have brought to the company or client themselves.

As a freelancer, contractor and self-employed business owner/worker, please make these illegal, tired of these.

The worst part about non-competes is they are blanket protectionism usually and up to 2+ years of non-compete, this sometimes happens on a job that is only 1-3 months. You have to laugh at those types of situations. Usually the client will push them aside or lower the time to the job plus some time, but both non-competes and arbitration agreements are horrible for workers in today's economy where people change jobs frequently and many are self-employed/freelancing/contracting. NDAs are plenty enough to protect companies from clients and work done specifically for the projects.

After SCOTUS upheld arbitration agreements [1] I am worried if non-competes become fully legal which they are not in extreme cases except in California [2]. We need to move the way of California and make them null and illegal, it hasn't stopped innovation in CA and may be a big reason why so much innovation goes on in Cali.

The non-compete should not exist. At the core, removing competition from skilled workers in our economy is bad all around, unless you are one of the current big fish.

[1] https://www.nytimes.com/2018/05/21/business/supreme-court-up...

[2] https://www.nytimes.com/2017/05/13/business/noncompete-claus...

"In Great Britain, courts generally endorsed NCAs so long as they remained “reasonable” -- a quality that was very much in the eye of the beholder."

Legally speaking, reasonable refers to "The man on the Clapham omnibus" and is a standard test in many jurisdictions. It is NOT the same thing as the general use of the term in the English language. AT least in Great Britain and most Commonwealth countries.


> They also determined that patenting rates -- a useful proxy for innovation -- dropped after the change.

In a place where non-compete agreements are not allowed, patenting ideas is a neat way to prevent your employees leaving and then doing the exact same thing for a competitor.

Where non-competes are allowed, patenting things is far less important, since employees won't be able to jump ship with your ideas easily.

This really isn't true. Generally patents are used to prevent your competitors deliberately reverse engineering your innovation and selling it (which isn't _generally_ all that hard), and (by very large companies) to have something to negotiate with when you inevitably discover you're violating a patent you were unaware of, since at this point you dig for the patent your competitor is accidentally violating and come to an agreement to license them back to each other in exchange for not suing.

Really the problem is the laws themselves are basically embezzling. The government is paying to make society worse for the benefit of wealthy actors. In no world does that make sense - it is corruption plain and simple.

Like other such laws the beneficiaries should be told to go fuck themselves as a matter of good management alone.

I think you could sort of argue that non-compete agreements are a sort of price-control in favor of companies that write add them into their employment contracts. These companies are effectively trying to both lower the costs of their hiring, and make it cheaper for themselves to compete against their competitors.

What surprised me most about a recent job offer I got from one of the big SV companies, was just how restrictive and limiting they were.

Sure, they didn't have a traditional non-compete as such, but they had layers of code of conducts and the like which basically made it a firing offense to do anything that wasn't effectively invisible. I turned them down for a number of reasons. But the general "your our slave, and you will suffer and regret doing anything outside of work" sure didn't help much. The idea that I might have to take down my github account, or fill out piles of paperwork to continue helping a non-profit I am involved in was just too much (combined with the fact that basically nothing was negotiable other than RSU's).

NCs are a legacy management technique that needs to be replaced with continuous innovation, better work culture and a mentality to innovate or die!

Anyone know what the state of NC in Canada is?

I feel like the proliferation of non-compete agreements is counterproductive even from a practical standpoint. Sure, you get to prevent your employees from jumping ship to your competitors, but your competitors are doing the same thing. Better to be against them even for short-term gains, let alone long-term.

This is ironic for Bloomberg as it has a clause in its contract banning "influencing current employees to work for competitors" for a period of 3 years after an employee leaves the firm.

Source: I am ex-Bloomberg employee.

The idea this this is a silicon valley thing is funny to me since I didn't get asked to sign one until I came out here, and then when I refused the other party freaked out.

There's a new tactic non-supervisory coworkers can use to escape their non-compete BEFORE leaving their job, at noncompetes.org.

> But the history of these covenants suggests that there’s a strong economic case for banning them entirely

This is an example of starting to make a good point and carrying to an extreme that makes it unreasonable. Non-competes exist for a reason, and saying they need to be deleted is a silly argument. "This common business practice could use modification" generates less clicks, I suppose. <Insert rant about journalism>

I agree journalism can exaggerate points for clicks, but this is a strange comment here when you look at the actual research cited.

They are pointing to multiple economic studies based on natural experiments where the total prohibition of NCAs can be compared with their use under similar circumstances.

The studies strongly suggest that total repeal is better than permitting these contracts, and it's not obvious a simple modification would have the same results.

You might worry those studies are not representative of all the literature on this, or more work needs to be done, fine. But I don't think we can dismiss the argument as silly offhand.

The author makes at least a prima facie case.... Better than that, there's evidence supporting it from different contexts.

California banned them and has only benefitted as a result. Why should other states not do the same?

What, to your mind, are good reasons for non-competes? To me it just looks like rent-seeking.

Do you see any negative consequences in states that have banned them almost entirely, such as California?

In some cases an employee might be able to build up a base of loyal customers more easily with a larger firm than they could alone, leave and take much of that business with them, and enjoy the continued productivity with much higher margins. The resources of the larger firm then become a stepping stone to the loss of their own business.

I know of one case (in which I am actually mostly sympathetic to the individual bound by the non-compete) in which that's actually exactly what happened.

If the customers prefer a new business, that suggests non-competes are damaging, just like the article says.

We can all see why the company wants the clause, but it's equally clear that it's in society's interest to not allow it.

There's an actual cost the company is trying to avoid though, and that actual cost will have to go somewhere eventually. Either it will actually result in companies having higher overhead to maintain their business, or the employees who used to have non-competes having to pay for some of the firm's business generation one way or another.

Reminder that the question was "what are good reasons...", which suggests that not everyone knows why the company wants them, unless you assume all companies are inherently evil which is not reasonable. They invest in their brand. Employees get the benefit of that to help establish their own brand. And then they can take that brand elsewhere to the detriment of the original investor.

I'm not sure they're ever good in an absolute sense. I do think that individuals above a certain level can reach mutually beneficial agreements with potential employers when they sign an employment contract if it contains provisions for significant garden leave and the like. I'd mostly like to see minimum requirements embedded in law if non-competes aren't largely unenforceable (which is fine by me too).

They're mostly bad but the paper referenced also isn't that convincing. There was something of a shifting of the tech center of gravity from the East to the West coast. But, as the paper even notes, there were a lot of differences in business practices between east and west (long-term employment vs. job-hopping) that were at most only somewhat correlated to non-compete law. (I worked for one of the big "Route 128" companies for many years and never had a non-compete until acquired by EMC.)

There is a lot of research that suggests knowledge transfer among companies increases innovation but it's not clear how much non-competes retard that transfer in practice.

As a sidenote, Massachusetts finally put significant restrictions on non-competes over the past year or so.

Non-competes are an asymmetric, negative externality imposed by employers on to employees.

Employers like it because it decreases employee job liquidity and thus brings down the price of hiring for almost nothing.

It's like not charging factories for the polluting smog they create as it floats over your house, but in this case, it's the general economy.

Banning them is a simple act. Improving them invites writing legalese terms into law that probably won't help the situation. Big players have the political power to make such things happen, while everyone else only has the political power to get the practice banned.

non competes are incompatible with free Enterprise, and incompatible with social democracy. yeah send them back

A lot of people seem to think that "free enterprise" means that companies can do whatever they want and that that's somehow always good for employees. Same for "Right to Work".

So? Free enterprise is still a term of art.

well, what distinguishes capitalism from feudalism is the free movement of labor...

I’m not convinced NCs are always bad for workers. There are lots of junior SWEs out there who can’t get jobs because no company wants to hire them and pay to train them just to watch them leave for more money once they become productive.

There was once a time when I would have happily signed an NC since the alternative was unemployment.

There was once a time when I would have happily become a slave, since the alternative was starvation.

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