[HN Gopher] Laws barring noncompete clauses spreading
       ___________________________________________________________________
        
       Laws barring noncompete clauses spreading
        
       Author : hhs
       Score  : 226 points
       Date   : 2022-11-01 19:09 UTC (3 hours ago)
        
 (HTM) web link (www.businessinsurance.com)
 (TXT) w3m dump (www.businessinsurance.com)
        
       | Waterluvian wrote:
       | Years ago I had a former CEO throw a ridiculous tantrum over me
       | leaving to work for a different company in an adjacent industry.
       | He emailed me demanding I quit my job.
       | 
       | A quick review with a lawyer that the non-compete is
       | unenforceable in my province and a nastygram sent by my lawyer,
       | and he took his tantrum elsewhere.
       | 
       | The problem is that so many people, including some I know, get
       | scared at the prospect of legal action that they fold, letting
       | bully CEOs win.
       | 
       | These laws will help.
        
       | site-packages1 wrote:
       | What's the enforcement for these anyways, when a company insists
       | on enforcement? "Cease working for your new employer or else"?
        
       | jyu wrote:
       | noncompete clauses are good if you actually get compensation for
       | not working at a competitor. e.g. firms paying you a decent
       | salary for ~2 years after your employment is over. signing a
       | blanket noncompete without compensation is the problem.
        
       | mbostleman wrote:
       | My personal experience with non-compete is something that was
       | being purchased from me by my employer as part of a severance
       | package. Does this mean that that ability for me and my employer
       | to make those deals is removed?
        
       | yellowapple wrote:
       | > Colorado employers have expressed frustration with the new law,
       | said Carrie Hoffman, a partner with Foley & Lardner LLP in
       | Dallas. "Nobody likes being told when they're about to hire
       | someone" that that person does not make enough to be eligible for
       | a noncompete, she said.
       | 
       | Pay up or shut up. It's that fucking simple, and these abusive
       | employers should not only be grateful that these clauses haven't
       | been outlawed outright (as they should be), but also grateful
       | that there's an earnings cap at all, let alone one that's low
       | enough to exclude large swaths of the professional workforce.
        
         | [deleted]
        
       | anttisalmela wrote:
       | Finland is currently transitioning to a system where employer
       | must compensate for the time employee is restricted, and all
       | previously agreed contracts must be either terminated before this
       | year ends or employee will get paid for the time according to the
       | new law - 40% of the salary if restriction is for less than six
       | months, 60% if more than six months.
        
       | mkl95 wrote:
       | My current contract has a lot of oddly specific noncompete stuff.
       | Fortunately those clauses are mostly non enforceable in my
       | country, unless your former employer still pays you a bunch of
       | money every month. Those clauses are there to please investors.
        
       | loceng wrote:
       | Isn't this ethos similar to being counter to monopolistic
       | patents?
       | 
       | Could this trend lead to the abolishment of patents - and perhaps
       | should an effort be made to help people understand the
       | comparison?
        
         | julienreszka wrote:
         | I don't think this is comparable.
        
         | weberer wrote:
         | Lol, no.
        
         | blep_ wrote:
         | > and perhaps should an effort be made to help people
         | understand the comparison?
         | 
         | I would recommend that, because the connection isn't obvious to
         | me.
        
       | matsemann wrote:
       | Where I live (Norway), these laws came thanks to unions. When I
       | graduated, all developer jobs I was offered had a noncompete
       | clause in the contract. These were wide and potentially career-
       | altering if enforced, barring you from doing basically any kind
       | of work for long stretches of time. All companies when pushed
       | basically said "ohh, we seldom enforce them, only for upper
       | management", but still they insisted on them being there.
       | 
       | Luckily my union, Tekna, helped squish most of these in 2015.
       | They can no longer be general, they have to name specific
       | companies and areas you can't work for if you ask. And pay full
       | salary while enforced. So now they're basically non-existent for
       | individual contributors / devs, except for maybe naming the main
       | competitor if you work for a niche company.
        
         | shadowgovt wrote:
         | I had a chance to visit Norway recently, and this was something
         | that a tour guide impressed upon us about the culture; she gave
         | an example of a restaurant in town that was caught skimming
         | pay, and it wasn't just a union representing restaurant workers
         | they heard from; they found themselves unable to find someone
         | to repair plumbing or their storefront (the plumbers and
         | glaziers wouldn't work with them), and their ingredient supply
         | chain suffered (truck drivers told them to make their own 3AM
         | trip to stock up).
        
           | neon_electro wrote:
           | https://en.wikipedia.org/wiki/Solidarity
        
           | whimsicalism wrote:
           | This also happens in the US, it just isn't reported on
           | heavily by the media.
           | 
           | When the dining workers at my university in the US were
           | campaigning for a contract, teamsters blocked most truck
           | deliveries to the university
        
             | yamtaddle wrote:
             | Labor action generally is barely reported on in the US. You
             | have to go to far-left media like Democracy Now to hear
             | about most of it. People who don't seek that out could be
             | forgiven for thinking unions in the US almost never do
             | anything at all.
        
               | whimsicalism wrote:
               | It's worth noting also that this sort of "secondary
               | strike" approach is explicitly illegal in the United
               | States.
        
         | bonestamp2 wrote:
         | > And pay full salary while enforced.
         | 
         | That's a good clause, that will basically eliminate them. It
         | makes sense from the government's standpoint, they don't want
         | anything that restricts people's income because that restricts
         | their (tax) income too.
        
           | whimsicalism wrote:
           | > that will basically eliminate them
           | 
           | in NYC, it doesn't seem to stop quant firms. they have a term
           | for it, although I forget what.
        
             | [deleted]
        
             | [deleted]
        
             | renewiltord wrote:
             | Garden leave
        
             | tomesco wrote:
             | Gardening leave.
        
             | joebob42 wrote:
             | But if they're willing to pay it, it seems like it probably
             | means this is a real issue rather than just a way to punish
             | employees who leave, and it seems like they're reasonably
             | compensating employees for the problem.
        
               | whimsicalism wrote:
               | i think they are probably slightly disincentivizing
               | leaving if they are only paying base salary.
               | 
               | someone who knows more will have to chime in, i didn't
               | even remember this was called gardening leave
        
               | joebob42 wrote:
               | Yeah, that's fair, if I only got base salary I'd be
               | pretty strongly disincentivized to take such a deal.
        
       | drogus wrote:
       | In Germany in order for a non-compete agreement to be valid a
       | company has to pay an employee money for the non-compete period.
       | 50% of an average of last 3 months of employment. With this law I
       | would be actually quite happy for a company to include a non-
       | compete clause in the contract.
        
       | hjeutysd wrote:
       | The existence of non-competes doesn't surprise me and I'm OK with
       | companies being allowed to require them. _But_ what shocks me is
       | that companies do not offer commensurate severance packages. If
       | you have a 12-month non-compete, then you 'd better pay 12 months
       | of total compensation as severance. Over the past year, I did 3
       | intense long interview loops and declined 2 offers and accepted
       | the third (a FAANG where I work now). The first two places had me
       | jumping through hoops - take home assessments, tricky behavioral
       | interviews, intense live coding, etc., amounting to like 10+
       | interview rounds spent evaluating me before making an offer. At
       | the offer stage I politely mentioned that the offer letter
       | included an X-month non-compete agreement and I was only able to
       | consider signing if the doc was amended to also include an
       | X-month severance package with clear terms on "just cause"
       | firings (when severance is exempted) and "good reason" quitting
       | (when severance is owed even if I quit, very common in cases
       | where 'just cause' is included), or, I offered, the non-compete
       | can just be removed (one of the two firms already had its main
       | presence in California but I live on the east coast where this
       | role was based ... but still, why a company already complying
       | with laws banning non-competes for 90% of their workforce feels a
       | need to include it for east coast employees is just beyond me).
       | 
       | Of course, they both completely balked at this and we could not
       | move forward so I declined both offers. The third company had a
       | non-compete initially but removed it as soon as I asked - it was
       | completely pedestrian.
       | 
       | It's an indication of crazy entitlement on behalf of employers
       | that they think workers should give away *for free* significant
       | rights (like, uh, getting a new job quickly after a layoff, in
       | your field of expertise). These rights are clearly not
       | compensated as part of your base compensation from a job offer
       | and any employee would be crazy to agree to those terms without
       | severance protection. It just communicates bizarre entitlement
       | and unprofessionalism. I hope more candidates will wise up to
       | this and require severance packages or else decline the offers.
        
       | chaostheory wrote:
       | This is one of SF Bay Area's (and California's) largest
       | advantages. It's one of the reasons why so many companies are
       | formed and thrive here
       | 
       | This is a great development for many of these new areas, but a
       | bad one for California since it loses one of its edges
        
       | brindlejim wrote:
       | Banning non-competes is a great idea.
       | 
       | However, everyone here should be aware that lots of startups are
       | now including "power of attorney" clauses in their employment
       | contracts that grant to the employer power of attorney to assign
       | inventions to themselves. Feels like there's a lot of room for
       | abuse, which could discourage moves to competitors.
        
       | andirk wrote:
       | Am I the only one who doesn't add any inventions and doesn't care
       | about a non-compete clause because I will never honor it and come
       | at me bro if you want to try to enforce it?
       | 
       | I respect making sure the company doesn't steal someone's
       | previous IP and I respect a company guarding their own IP. But I
       | also respect that a person can work wherever the f they want
       | without a previous company having any say.
        
         | mywittyname wrote:
         | > and come at me bro if you want to try to enforce it?
         | 
         | I spoke to an employment lawyer who told me in pretty clear
         | terms: the company can come after you to enforce one if they
         | like; it's a tossup as to whether or not it will be upheld; and
         | regardless, it will cost a pretty penny to fight.
         | 
         | I'd personally would not want to have that hanging over my
         | head.
        
         | paxys wrote:
         | You're not the only one, but this kind of "I'm a sovereign
         | citizen!" defense also won't hold up in court for a second if
         | the company actually wants to come after you.
         | 
         | The vast majority of people don't run into such issues simply
         | because they aren't important enough and/or haven't produced
         | anything of value to waste a lawyer's time over.
        
         | andirk wrote:
         | My Attorney General and my state fully agree with me in no
         | uncertain terms thanks [0]. Feel free to add all those "we're
         | not responsible at all!" clauses that ski resorts add which are
         | also not enforceable. Thanks for the downvotes.
         | 
         | [0] https://oag.ca.gov/news/press-releases/attorney-general-
         | bont...
        
         | yellowapple wrote:
         | I just list my GitHub/Bitbucket/Sourcehut/etc. user pages and
         | my website and say "everything listed at these URLs". I've yet
         | to get any complaints about that.
        
       | ptudan wrote:
       | Makes a ton of sense. Completely absurd for security guards and
       | administrative assistants to have non-compete clauses. Just
       | another way businesses were trying to reduce the willingness of
       | employees to quit so that they can suppress wages.
        
         | jasonwatkinspdx wrote:
         | Believe it or not they're now being used for fast food
         | employees.
        
         | DebtDeflation wrote:
         | It jumped the shark a few years back when Jimmy Johns tried to
         | force their "sandwich artists" to sign non-competes.
        
           | Sohcahtoa82 wrote:
           | Does JJ refer to their employees as sandwich artists too? I
           | thought that was just a Subway thing.
           | 
           | But yeah, beyond ridiculous, as if a JJ employee is going to
           | leak some crazy trade secret to Subway or whoever.
        
             | munk-a wrote:
             | I assume the "sandwich artist" title is an allusion to that
             | old saying - y'know because they pay their employees so
             | little that they're starving.
        
             | aliqot wrote:
             | Everyone knows you spread mustard from right to left. We
             | aren't knaves.
        
             | justinpombrio wrote:
             | That's the most hilarious double speak. I can only imagine
             | the repressed artists getting told off for putting 5 slices
             | of cheese on a foot-long instead of 4. "I was just trying
             | to express myself, you said I was an artist."
        
               | [deleted]
        
         | lazide wrote:
         | Admin assistants (like actual admin assistants) usually have
         | access to full customer contact lists, and exposure to rather
         | intimate details of the business and executives lives.
         | 
         | They're definitely not comparable to security guards in that
         | sense.
        
           | ChrisMarshallNY wrote:
           | There are already laws against taking trade
           | secrets/proprietary information, and using it elsewhere.
           | 
           | You go to jail for that. It's called "theft."
           | 
           | My company had us sign a _ridiculous_ NCA. It pretty much
           | made it impossible to get a job _anywhere_ , after leaving
           | the company; even if they fired you, or laid you off.
           | 
           | Their description of a "competitor" was so vague, that it
           | could, literally, be applied to a 7-11, as they potentially
           | sold peripherals that could be plugged into our devices.
        
           | jaxn wrote:
           | Every admin assistant should be under an NDA /
           | Confidentiality agreement. Same for personal security. But
           | those are not non-competes.
        
             | noasaservice wrote:
             | If they're that important, then the company should pay a
             | significant percentage of their pay to keep them from doing
             | their profession, or GTFO.
        
           | toomuchtodo wrote:
           | This is not enough of an excuse to encumber someone from
           | earning a living elsewhere.
           | 
           | > "Employers need to get creative about how to impose
           | restrictions to protect themselves against individuals" in
           | whom they have made significant investments, or who have been
           | allowed access to trade secrets, to protect themselves
           | against such employees leaving, said Maxwell N. Shaffer, a
           | partner with Holland & Knight LLP in Denver.
           | 
           | The sort of healthy employee-employer relationship that
           | retains talent.
        
             | lazide wrote:
             | What is being banned are non-competes that don't pay
             | someone to not compete.
             | 
             | There are legitimate reasons for actual non-competes in
             | many of these cases, and CAlifornia for instance just
             | requires you pay them for it.
             | 
             | Which in such a situation seems justified.
        
               | toomuchtodo wrote:
               | I agree. If you want to pay someone to sit on the bench
               | because that has value to you ("Garden Leave"), I support
               | that. If you want to twist their arm because you have
               | power as an employer, nope. That's what labor law and
               | regulation are for.
               | 
               | Lots of examples of malicious employers doing the latter,
               | as you'll note the sentiment throughout the thread
               | comments and laws intending to patch this bug in statute.
        
               | prirun wrote:
               | > What is being banned are non-competes that don't pay
               | someone to not compete.
               | 
               | Employers will just say "the no-compete compensations is
               | built in to your pay".
        
               | lovich wrote:
               | They can say anything, but the behavior has gotten enough
               | voter anger to make politicians view this as something to
               | regulate, so their opinion on the matter is quickly going
               | to lose any weight
        
               | lazide wrote:
               | Which is what is banned in California. If someone wants
               | an enforceable non-compete, they need to pay them
               | (fairly) for the time they're not allowed to compete.
        
           | ec109685 wrote:
           | There are already laws against Admin assistants from taking
           | full customer contact lists from one job to another. You
           | don't need non-competes to enforce that.
        
             | lazide wrote:
             | Really, which laws are those?
             | 
             | The only ones I'm aware of would be trade secret laws, but
             | they're dubiously applicable to bare customer contact
             | lists.
             | 
             | You can make contractual restrictions of course (company
             | property), but good luck being able to prove they actually
             | took it unless they're _really_ dumb. Merely contacting
             | all, or many, customers for instance wouldn't prove it.
             | 
             | Being able to show they work for competitor x is easy,
             | however, as is showing they're pursuing customers in the
             | same space.
        
               | jahewson wrote:
               | lol, no. Confidential business information is an area
               | heavily protected by law. Customer lists are the
               | canonical example.
               | 
               | It's much easier to win this kind of civil suit than a
               | criminal case. The court can absolutely crush a business
               | that is founded in this manner to compensate the former
               | employer.
        
               | JackFr wrote:
               | Then why didn't Dunder Mifflin sue the Michael Scott
               | Paper Company?
        
               | dpkirchner wrote:
               | Because they didn't reach out to the very real lawyers at
               | Boston Legal.
        
               | lovich wrote:
               | Assuming you were asking seriously, its a comedy show
               | that was not trying to accurately portray how businesses
               | run.
        
               | JackFr wrote:
               | Really?
        
               | lazide wrote:
               | Then surely you'll have no issues providing a cite of the
               | relevant criminal code?
        
             | hedora wrote:
             | Specifically, you can't take trade secrets from one
             | employer to the next. Customer contact lists are just one
             | example of this.
        
               | lazide wrote:
               | Trade secrets have a very specific definition, and a mere
               | list of contact information that is already likely public
               | in an unfocused way (aka contact lists) almost certainly
               | doesn't qualify. Neither would a list of company names,
               | etc.
               | 
               | That information however _IS_ highly valuable, especially
               | paired with knowledge of how a company is doing sales,
               | how it is positioning itself internally strategy wise,
               | etc. some of those things could be trade secrets, if
               | adequately protected, but almost no one I know would meet
               | such a bar with how they handle it. It would be at most
               | confidential information, and could count as a NDA
               | violation, but would be difficult to prove unless someone
               | was really sloppy.
        
               | DiggyJohnson wrote:
               | The idea of a client or customer list being public
               | information is profoundly ludicrous. It's the canonical
               | example, as another commenter put it.
        
       | bhaney wrote:
       | > Nobody likes being told when they're about to hire someone that
       | that person does not make enough to be eligible for a noncompete
       | 
       | Am I supposed to feel sorry because a business has to choose
       | between either paying an employee more, or not restricting what
       | that employee does after they leave? Let me get my tiny violin.
        
         | rdiddly wrote:
         | Yeah it's a weird thing to say. Nobody likes being told they're
         | going too fast to be eligible for immunity from speeding
         | tickets either, and yet they chose what speed to travel in that
         | jurisdiction didn't they.
         | 
         | Also the law isn't really about enforcing what people "like,"
         | otherwise you wouldn't need a law.
        
       | indymike wrote:
       | One of the best features of legislating against non-competes is
       | that an employer can't sue a former employee for violating a non-
       | compete. Right now, for most occupations in my jurisdiction
       | (Indiana, USA), non-competes are usually not enforceable, but it
       | costs $500-$2500 to get these lawsuits thrown out. Some employers
       | will sue former employees knowing they can't afford a defense, or
       | just to throw shade on them at their new job.
        
       | Natsu wrote:
       | IMHO, companies should have to compensate the employee for the
       | period of the non-compete since they're still effectively working
       | for them. Salary limits are okay, but don't really go far enough.
       | If they want this it has a value and should be compensated for
       | fairly.
        
         | drogus wrote:
         | This is how it works in Germany and in some other EU countries.
         | Companies need to pay 50% of an average of 3 last months salary
         | in order to enforce a non-compete clause.
        
           | debesyla wrote:
           | Yeah, same in Lithuania.
        
         | biomcgary wrote:
         | I agree. Rather than having legislators get into the weeds of
         | defining "compete", "trade secrets", "customer poaching", etc.,
         | laws should simply require that enforcing ANY post-employment
         | terms require the former employer to pay the former employee
         | the greater of the employee's maximum salary plus 10% (to cover
         | opportunity cost) or 110% of any offer by a prospective new
         | employer. Who better than the company to price the value of
         | what the former employee knows? Maybe cap enforcement to 2-3
         | years.
        
           | cma wrote:
           | Why even allow this? Just makes things less competitive and
           | pays people to be unproductive.
        
           | jiggawatts wrote:
           | My current employer tried to make me sign a noncompete clause
           | and I asked them for precisely this.
           | 
           | They were flabbergasted that I wanted compensation in
           | exchange for essentially cutting myself off from a wide swath
           | of employment opportunities.
           | 
           | "Aren't you our slave to do with as we see fit!?" was very
           | much the attitude that I was getting.
        
         | hailwren wrote:
         | Yep. This is what we do in finance. It sucks a bit because most
         | of our comp is bonus and you only get your base pay on garden
         | leave, but I'm shocked this isn't a requirement.
        
           | ghaff wrote:
           | Garden leave isn't a panacea. And in MA it's minimum 50% of
           | salary. It does make the employer put skin in the game which
           | is no small thing. But it may end up with someone not being
           | able to be in a competitive job for a year for maybe 25% of
           | their prior comp. Not a great situation for a lot of people.
        
         | mywittyname wrote:
         | This would make things interesting.
         | 
         | I kind of want to see what would happen if states passed laws
         | saying that all non-compete clauses contained an implicit
         | agreement that the employee be paid their entire salary
         | (including bonuses) for the pro-rated duration of the non-
         | compete and that such clauses can be triggered by either party.
         | 
         | We all know the value of a non-compete clause is $0 for most
         | employees. Hell, they are probably most effective at bullying
         | unproductive workers who hate their jobs into staying on too
         | long, thus might actually be a net negative for employers.
        
           | willcipriano wrote:
           | The best part would be the rapid "Oh no, we don't need you on
           | a non-compete anymore" throughout the state the day after the
           | law passed. All of sudden how to fold sheets the Ramada way
           | isn't a highly confidential trade secret.
        
             | bumby wrote:
             | > _The best part would be the rapid "Oh no, we don't need
             | you on a non-compete anymore"_
             | 
             | I've witnessed this on the other end. Someone was being
             | pressured to engage in sales that would violate her non-
             | compete that was openly discussed during the hiring phase.
             | When she essentially said, "Sure, I have no problem
             | breaking it as long as you put it in writing that you'll
             | cover any legal fees" suddenly the new employer didn't
             | think sales in that region were quite as important.
        
       | CaptainJack wrote:
       | The UK has had a government call for evidence on the subject of
       | non-compete, with the aim of limiting them as well, but nothing
       | has been done so far.
       | 
       | I'm myself in the long, lengthy and costly process of trying to
       | fight a two years non-compete (well, 1yr garden leave + 1yr non-
       | compete), and it's taxing. It adds stress, makes it harder to
       | market yourself, and on top of that there is this clear asymmetry
       | where the costs if it was to go to high court (PS150k) would be
       | huge for you, but petty change for your employer. On top of that,
       | they'd get to claim these as expenses (so pre-tax), but you
       | couldn't get any kind of tax-credit (so effectively post-tax).
       | System is biased, it's about time they would change it.
        
       | paxys wrote:
       | Over the years so many different jurisdictions around the US and
       | the world have stated their desire to be the "next Silicon
       | Valley" and have poured an immense amount of money and effort to
       | make it so, whether in the form of incentives for businesses, tax
       | breaks, education, job training, or even just straight paying
       | smart people to move there. Every such scheme has generally
       | failed because they refused to emulate the one key piece of
       | California law that is necessary for a startup ecosystem to exist
       | - banning noncompetes.
       | 
       | "But I'll spend money to train my employees and they'll just take
       | those skills to go work for a competitor or start their own
       | business!" Yes, that's a feature of the system, not a bug.
        
         | kennend3 wrote:
         | Here (Canada) the courts almost always rule that the non-
         | compete is unenforceable. The core issue is the rights of an
         | individual to earn a living supersedes the rights of a
         | corporation.
         | 
         | https://globalnews.ca/content/8363992/can-non-compete-clause...
         | 
         | " The majority of non-compete clauses challenged in the
         | judicial system have been rendered unenforceable. Canadian
         | courts, in my experience, look unfavourably on clauses that
         | restrict an individual's ability to use their knowledge and
         | experience to earn a living."
         | 
         | What companies here do falls into two general categories:
         | 
         | 1) attempt to get people to sign and hope they don't know it is
         | unenforceable.
         | 
         | 2) pay people to stay at home and not-compete - Given this is
         | expensive it doesnt happen often.
        
         | rileymat2 wrote:
         | Does banning non competes help if you don't already have
         | businesses attracted to an area in some critical mass?
         | 
         | I can see how it could make for a vibrant scene if you already
         | have incumbents, but if you are an area trying to attract them,
         | I am not sure that works.
        
         | diob wrote:
         | Right, the idea is to train + pay them well enough that they
         | stay. It helps the local economy because rather than your
         | business putting more into investments around the world (or
         | wherever the rich store / grow their money), that person puts
         | the money in the local economy.
         | 
         | Folks understand this, but their pay depends on them not
         | understanding it so. . . here we are perpetually.
         | 
         | Funny enough, paying folks well often will pay dividends for
         | your business in the long run. So long term they would make
         | more money.
         | 
         | Humans are unfortunately quite short sighted, which I'm fairly
         | sure nothing can be done about. We're just fancy animals after
         | all.
        
           | lazide wrote:
           | I saw first hand a sales guy at a prior company I worked for
           | start a side business directly competing with the primary
           | business he was working for in his day job, while still
           | working with them. Including redirecting customers while
           | working for them.
           | 
           | The owner got suspicious due to some comments made by
           | customers, and started listening in on the phone calls he was
           | making on the company phone system.
           | 
           | This was a small business, and it nearly tanked the company,
           | as the customers were confused as hell, and the 'new' company
           | wasn't doing well either. She ended up having to fire him,
           | and sue him, but it took years, and meanwhile he kept
           | operating.
           | 
           | He was paid well, but for some people it's never enough.
           | 
           | I don't care what anyone says, that is shitty criminal
           | behavior.
        
             | moron4hire wrote:
             | That's basically the one situation in which non-competes
             | are enforceable in the US. The problem is, most people
             | don't understand that, and fall prey to companies putting
             | non-compete clauses into their employment agreements that
             | say they can't go do CRUD software development at any
             | company in a 50 mile radius.
        
         | vxNsr wrote:
         | Yup kinda interesting to see this play out. With the federal
         | trade secrets law tho it no longer matters.
        
         | harry8 wrote:
         | Beyond banning them de-jure you've also got to ban them de-
         | facto.
         | 
         | "We all know non-competes are unenforceable and illegal." <-
         | Absolutely useless if you can end up in court. Using
         | unenforceable rights as a deterrant is common and potential
         | future employers get spooked by it even if it is illegal.
         | "Don't hire Jill, Mary is almost as good and has no non-
         | compete. Don't want to go to court even if its unenforceable."
         | 
         | There are no consequences for forcing someone to have the
         | stress, expense, time and to secure the financing so that if
         | everything works as it should (which it often doesn't in all
         | the various legal systems) you get only some of that back. If
         | it doesn't work as it should you're toast. Not a nice thing to
         | be hit with when the law is clearly designed that you should
         | not be hit with anything at all.
         | 
         | For an individual or a startup it matters. For a large revenue
         | incumbant they have people employed to abuse the system like
         | that and the business expense of doing it is trivial, more than
         | worth it. The law may exist so that the strongest do not always
         | get their way - but this is an ideal with many exceptions
         | including this one.
         | 
         | Ban away, but with no consequences for abuse and all
         | measurements for the abused being the magnitude of the downside
         | alone, no upside possible you don't get the result you're
         | looking for.
         | 
         | Summary dismissal with costs, compensation and the potential to
         | be branded a vexatious litigant so it is more difficult to
         | bring any court action against anyone would be a real
         | consequence for abusing the rules. Is the best one? Is it fair?
         | Dunno. What we have now in most countries sure isn't.
        
         | vkou wrote:
         | > Every such scheme has generally failed because they refused
         | to emulate the one key piece of California law that is
         | necessary for a startup ecosystem to exist - banning
         | noncompetes.
         | 
         | As I look out the window of my Seattle apartment, observing a
         | literal forest of new construction, sky-rocketing rents and
         | costs of living, I must interpret the tech boom here as 'the
         | next Silicon Valley failing', because Washington state has had
         | a very strong form of non-competes prior to 2020, and a
         | somewhat strong form of non-competes today.
         | 
         | Or, maybe I can choose to believe my eyes, and note that the
         | the presence or absence of non-competes isn't a very important
         | factor for driving a tech boom. [1]
         | 
         | It is a popular topic to bikeshed over, though.
         | 
         | [1] As a sibling poster points out, non-competes are absent in
         | Canada, and yet nobody can accuse any locale in Canada of being
         | the next SV...
        
       | exabrial wrote:
       | I think a better system is an up-front repayable bonus: "We'll
       | pay you $2k on sign-on, but you have to stay for 2 years" or
       | something.
       | 
       | This benefits job applicants (extra money!), employers
       | (retention), and protects applicants (employers abusing non-
       | compete agreements for everything), and is a far easier legal
       | process to execute.
        
         | bhaney wrote:
         | This seems like the equivalent of a predatory loan with the
         | interest paid in opportunity cost, and doesn't even properly
         | address the same problem that noncompetes do.
        
         | shagie wrote:
         | That's attempting to solve a different problem (employee
         | retention) than non-competes attempt to address in their
         | original form.
         | 
         | For example, how does a company prevent (setting aside the
         | "should they" debate) an employee from:
         | 
         | 1) leaving and starting up a consultancy for installing former
         | employer's software (competing with company professional
         | services)
         | 
         | 2) leaving and starting up a new company that is a competitor
         | to the former company
        
           | exabrial wrote:
           | 1) That would be IP theft, and is already covered by other
           | laws.
           | 
           | 2) That is the problem I think this solves: retain your key
           | employees. Maybe pay them a bit better than that 2% annual
           | raise.
        
             | shagie wrote:
             | Starting up a consultancy to do installation of your former
             | employer's software for clients isn't IP theft. If I worked
             | for Atlassian and then created a company that did
             | consulting for how to install Jira and and organize
             | workflows - there's no IP theft involved there.
             | 
             | Creating a new competitor isn't about retaining employees.
             | Consider the situation of
             | https://en.wikipedia.org/wiki/Rose_Blumkin
             | 
             | > In 1989, six years after selling 90% of her company to
             | Berkshire Hathaway, Blumkin retired, only to come out of
             | retirement in three months to open up a rival store. It was
             | called "Mrs. B's Clearance and Factory Outlet" and was
             | situated directly across the street from the Furniture
             | Mart. It became profitable by 1991. Buffett acquired the
             | business in 1992. Blumkin continued to be involved in day-
             | to-day operations until shortly before her death at the age
             | of 104.
             | 
             | While this case wasn't covered and Buffett certainly
             | handled it different than the non-compete, but should there
             | be the ability to prevent that sort of behavior with a non-
             | compete agreement?
        
               | yellowapple wrote:
               | > If I worked for Atlassian and then created a company
               | that did consulting for how to install Jira and and
               | organize workflows - there's no IP theft involved there.
               | 
               | That also seems like a very silly thing to prohibit in
               | the first place, since Atlassian's getting paid either
               | way in that case.
        
               | exabrial wrote:
               | I'm sorry, I misread the parent comment. I thought they
               | meant recreating the the software, not installing it.
        
               | shagie wrote:
               | I'm thinking more the professional services / support. "I
               | used to work for $foocorp, pay me $money and I will help
               | you install your software and support it better than
               | $foocorp offers."
               | 
               | Another example is Epic's "not quite a non-compete" is
               | that they won't release the certificates(?) that an
               | employee got for supporting their software (as part of
               | employee training) for a period of time after separating
               | from the company. I'll admit to being hazy on this but (I
               | believe) that this is to make it difficult to start a
               | consultancy for installing health care software right
               | after leaving as you wouldn't be able to demonstrate the
               | certificates that you got while working there (and
               | getting them again is costly).
               | 
               | Though, if you want an example of "recreate the software"
               | (though not with IP infringements), look at Dave Hitz and
               | James Lau from Netapp and that they formerly worked at
               | Auspex. I'm sure that they dotted all the 'i's and
               | crossed all the 't's with leaving a company and starting
               | a new one that became a direct competitor - but that sort
               | of thing happens too. I'm not sure what California's non-
               | compete laws were like in '92.
               | 
               | ---
               | 
               | The "you can't work anywhere using a computer" as a non-
               | compete is certainly something that isn't reasonable. A
               | "you can't start a competing company and try to get
               | former clients to switch to you after selling your old
               | one" is enforceable.
               | 
               | So where does the "you leave a company and then start a
               | consultancy that competes directly with the professional
               | services, consulting, or support of the previous company"
               | fall? That's a question I haven't found an answer to.
               | 
               | As to the bit on some things being enforceable: Blue
               | Mountain Enterprises, LLC v. Owen (
               | https://law.justia.com/cases/california/court-of-
               | appeal/2022... )
               | 
               | > Primary Holding
               | 
               | > Court of appeal upholds the enforcement of a
               | restrictive covenant against a former employee who had
               | sold his ownership interest in the company while
               | concurrently agreeing to the covenant.
               | 
               | And we've got an example where a non-compete / non-
               | solicitation agreement _was_ enforced, appealed, and
               | found correct.
        
               | snapcaster wrote:
               | I fail to see what's wrong with this. Not trolling, what
               | actual harm is being done here? it should be priced into
               | the risk of acquiring the company right?
        
         | ptmcc wrote:
         | I don't see how this addresses non-competes at all. Also that
         | is already how many sign-on bonuses work.
         | 
         | Retention is only tangentially related to non-competes. People
         | leave for all sorts of reasons. If a company wants to restrict
         | what they can do after they leave then they can pay them for
         | that supposed value. We'd find out really quickly that most
         | non-competes are bunk.
         | 
         | Not to mention that you'd need to add a couple zeroes to that
         | sign-on bonus for it to mean squat to anyone actually working
         | with valuable proprietary information.
        
       | aiperson wrote:
       | They should ban unpaid non-compete clauses above 6 months. I
       | wouldn't want them to go further than that. A half-year paid
       | vacation is a pretty good thing for almost all workers.
        
       | deathanatos wrote:
       | Good riddance to this form of wage suppression. Let's do forced
       | arbitration next.
        
         | [deleted]
        
         | bigmattystyles wrote:
         | For some reason (I never dug deeper), my friend who is an
         | attorney said she prefers arbitration. Maybe because she
         | already is an attorney? The only thing I can think of is that
         | it is more expedient and having seen behind the curtain the
         | talk of biased arbiters (biased towards the Goliath) are
         | exaggerated. But if anyone can opine I'm all ears.
        
           | deathanatos wrote:
           | I've yet to hear a single valid reason for _forced_
           | arbitration. I have nothing against two parties, _at the time
           | of a dispute_ , who want to engage in arbitration, in doing
           | so.
           | 
           | There's also numerous stuff that should, IMO, fall into class
           | action, but gets divvied up in forced arbitration, to the
           | point where it isn't worth the time and expense for the
           | individuals in the class to continue to pursue justice.
           | (Although there have been some novel DoS style mass-
           | arbitrations ... that's more of a means of trying to force
           | the corporations hand into a normal class action, and towards
           | justice.)
           | 
           | Normally the reasons cited for arbitration are things like
           | "the courts are slow" or "the courts are expensive" or "the
           | courts are overwhelmed" -- but you could still just do
           | arbitration at the time of dispute with those. Saying that
           | _forced_ arbitration is better from these arguments is non
           | sequitur.
           | 
           | There's also a conflict of interest between the chosen
           | arbiter and the company. (And conflict of interest is
           | _independent_ of bias; a good arbiter can very well be
           | unbiased, but it is easier for everyone involved to believe
           | that if there isn 't a conflict of interest.)
        
           | jonny_eh wrote:
           | > my friend who is an attorney said she prefers arbitration
           | 
           | So let her opt-in. Why force it?
        
           | shemnon42 wrote:
           | Forced arbitration is bad for employees, based on empirical
           | evidence
           | 
           | * It has a chilling effect: less disputes are filed
           | 
           | * employees prevail less often
           | 
           | * when employees do win the employee portion of the award is
           | less than standard litigation
           | 
           | https://facesofforcedarbitration.com/wp-
           | content/uploads/2019...
        
       | munk-a wrote:
       | In the US these clauses are almost never enforceable and simply
       | serve as a chilling effect. There is a fundamental issue with
       | non-competes that if they prevent a person's well being they
       | can't be enforced so if a person secures a job that would violate
       | their non-compete the enforcement of their non-compete would
       | cause them to lose their income. This is considered a hardship so
       | enforcement of a non-compete clause requires a clear
       | demonstration that other work would be available which in many
       | cases is hard to do in the modern world since it'll often require
       | there existing a genuine offer of work to the individual - offers
       | are normally private so they can be hard to discover but,
       | additionally, simply demonstrating the availability and presence
       | of job listings is usually insufficient because hiring processes
       | are a lot more complex today then in 1800 when some dude would
       | hand you a shovel and offer you a dime at the end of the day.
       | 
       | I applaud their death - they are fundamentally bad for employees.
        
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