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White House urges ban on non-compete agreements for many workers

reuters.com

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Re: White House urges ban on non-compete agreements for many workers

#191
post #146

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelli…

1) There are limits to the freedom to make contracts. I can't sell myself into slavery and that is a good thing.

2) maybe I have better information than the government, but my potential employer has better information than either of us. I won't have a better picture of the local employment market than a business so I will easily get swindled.

3) allowing the desperate to sign a contract no wants to sign leads to a race to the bottom where everyone has to sign a non-compete. How can I refuse to sign if 99% of applicants will sign even if I am the best applicant? They will just say no to me and take the #2 applicant. The only way to fight non-competes here would be a union to form collective bargaining at which point we have lost the ability to make our own contracts as individuals entirely.

Re: White House urges ban on non-compete agreements for many workers

#192
post #146

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelli…

> Your entire approach here is quite arrogant.

You're right, it was unintentional but I can see how what I wrote could be perceived this way. My apologies. I am clearly acknowledging the intelligence of other posters by attempting to make a clear case for my position. If I did not believe that other posters were intelligent I would not engage in the discussion at all.

> 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.

Freedom to contract implies that both parties to the contract have bargaining power. In an employee/employer relationship this is mostly untrue. The only bargaining power that the employee has is simply to walk away. Legally any term of a contract is supposed to be met with "due consideration". In an employment contract, typically the offer of employment is treated as "consideration". I argue that a non-compete is so onerous as to require additional consideration beyond a mere offer of employment, however this is rarely if ever given. As an employee you may only choose to accept it or walk away, unless you individually have some unique position which grants you bargaining power.

While I am generally opposed to government regulation, if we had an absence of all regulation it leads to less freedom for individuals, not more. Or rather, it leads to less freedom for the majority of individuals in favor of more freedoms for a small number of individuals. This is not beneficial to society, and thus this argument does not refute my statement "They have literally no value to society."

> 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.

This is possible, but isn't a societal argument. This is an argument that says there may be value to you as an individual employee due to local knowledge, but it doesn't mean there's a larger value to society. I accept that it's possible to have local knowledge that gains you a benefit from the non-compete. Such as: You have some special skill that is required by the employer. You are one of the few people with that skill. The employer both /must/ hire you and /must/ keep the non-compete in the contract. This provides you local knowledge which could allow you to bargain for an outsized salary or bonus compared to others in your field, or to get special severance arrangements to counter-balance the non-compete.

In this case, it might be possible that the insistence of the employer on the non-compete provides you individual value. Although, I'd also argue that the terms of the non-compete are not valuable to you, it's the fact your opponent in the negotiation won't let it go and your knowledge of what that is worth that lends it value. In either case, it doesn't give it value for society as a whole, so this does not refute my statement "They have literally no value to society."

> 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc.

In this case, your desperation as an individual implies you don't have the bargaining power necessary to negotiate a contract fairly. Your willingness to agree to a coercive term is a sign of desperation, not value. This argument establishes neither a societal value or an individual value to the terms of the non-compete.

If your skills are lower than your peers, then other employers are less likely to hire you away. If the company hiring you is trying to get you to agree to a non-compete because they intend to train you to increase your skills, then a fairer method would be to increase your compensation as your skills increase with the understanding that your increased skills increase your value as an employee. The non-compete is unnecessary and exists again only to provide coercive action against you. This argument neither establishes a societal value or an individual value for the non-compete.

If you know you're moving in three years and the terms of the non-compete are strictly geographic, then you have local knowledge which means the non-compete cannot harm you. It doesn't provide any additional value you for you, but you've managed to nullify its downsides for you individually. I'll concede this one neutrally on an individual level that this provides some level of local knowledge (in the vein of your 2nd argument) that assists you in contract negotiation. This argument though fails to establish a societal value.

Again, this argument fails to refute "They have literally no value to society."

I cannot prove a negative, but I spent quite a bit of time thinking about why they exist before I wrote my original post. I could not come up with any reason why non-competes are valuable to society. I could not come up with any reason why they are valuable to employees. I could only come up with reasons why they might be valuable to an employer and narrow cases where an employee might use them as a bargaining chip but only in a way which nullifies their downsides. There is no upside to an employee for a non-compete. None. They restrict freedom of movement in the labor market and arguably lower the overall innovative output of a society.

I reiterate my original statement. "They have literally no value to society."

Re: White House urges ban on non-compete agreements for many workers

#193
post #146

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelli…

>To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelligence. When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something.

That's a strawman, since it assumes that only insanity or ignorance makes people favor a position that's bad for the general public. There are much more probable causes for such a view, such as personal interests.

>1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people.

This is not an argument. This is a conclusion, or an axiom. ("Because human rights" are not an argument either. See where how deep this rabbit hole goes?).

Second, it can be argued that freedom to contract is NOT "always a good thing". It's a good thing only when one side is not far more powerful than the other to the point of forcing the contract. When one side is coerced to sign (because e.g. else they cannot find employment in SV because all employers require non-competes), then it's not a freely chosen contract clause anymore, nor a free job market.

Third, even if freedom of contract was "always good", still what's good thing for an individual, is not necessarily a good thing for society.

Stealing and cheating, for example, can be good for the person doing it, but it's not good for society (and even less so in many people start doing it).

>2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits.

That's a naive view that assumes government as some removed from society enemy entity. In a democracy a government is the representation (imperfect as most human creations are) of the will of the people, and laws are based on historical experience and reasoned arguments, with input from people "in the field" in drafting them.

Also, government has much more complete information and view of the overall societal cost of non-competes, whereas you as individual mostly have your local knowledge to go by and personal gain as your guide (assuming of course you're freely entering the contract out of calculation, and not because employers have created a trust on the issue, and you are left with no other option).

>3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete.

Or offer to have sex with them. This rabbit hole also goes very far...

Re: White House urges ban on non-compete agreements for many workers

#194

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

Sales is tricky because you build up a relationship with said client on the companies dime usually. poaching customers seems wrong to me.

Re: White House urges ban on non-compete agreements for many workers

#195
post #92

Earlier quoted context omitted.

In my understanding, you can't unilaterally quit the severance to terminate your non-compete.

My understanding is that severance is usually terminated when the former employee accepts a new position; I am not sure how a former employer could prevent the former employee from accepting a position from a competitor without use of a non-compete. Do you agree that NDAs are flawed in the ways I described?

Most severance I've witnessed was paid out in a lump sum. Severance that wasn't paid out in a lump sum generally did not end when the former employee accepted a new job. However, I have heard of some that does.

But that's irrelevant. The severance and non-compete contracts were two separate contracts, not linked in any way. The fact they had the same length wasn't a coincidence, but after they were signed it may as well have been.

And no, I don't agree that NDA's are flawed in the way you describe. If a former employee is willing to commit criminal fraud or theft then the choice of paper you make them sign isn't going to make any difference.

Re: White House urges ban on non-compete agreements for many workers

#196
post #142

Earlier quoted context omitted.

Yes, and it's rarely enforced. Most of the time its activation is at the employer's discretion.

It's not just that it's rarely enforced it's that it's rare at all, there's no point in putting one in the contract when there's 95% chance you'll get big fat middle finger in whatever labor court has jurisdiction if you try to activate it, and inane contractual obligations are a risky bet for the contract itself.

> there's no point in putting one in the contract when there's 95% chance you'll get big fat middle finger in whatever labor court has jurisdiction if you try to activate it.

There's potentially plenty of point if you don't expect your employees to understand that (or be able to count on it)

Re: White House urges ban on non-compete agreements for many workers

#197

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

Sales is tricky because you build up a relationship with said client on the companies dime usually. poaching customers seems wrong to me.

This is a valid non compete reason, and also a TV news anchor who a company invests in marketing shouldn't be able to jump to a cross town rival. Out of market sure, but not cross town.

Re: White House urges ban on non-compete agreements for many workers

#198

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

> The only thing a non-compete does is say that Employee A cannot work in their chosen field for some period of time after they are fired or quit. In doing so it offers no consideration or compensation typically in the contract. Many (if not most) EU countries require compensation for non-competes to be valid (usually at least 30% gross), and the non-compete can still be challenged in court if e.g. it applies to too…

Yeah. Germany is a big one on this. If ask you for a non compete, they have to basically pay you for the full duration of it.

As a consequence, almost no one ever does, except for very high level executives.

Re: White House urges ban on non-compete agreements for many workers

#199
post #170

Earlier quoted context omitted.

The fact that the grandfather comment is the top-rated comment (as of this writing) in the thread to me suggests that a great number of people agree with him/her, which sort of contradicts your "argument from ignorance" point. Just because thousands of HN readers are intelligent engineers, founders, scientists, marketers, etc. doesn't make them legal experts, or political experts. You assume that "freedom to contract…

My "argument from ignorance" comment seems pretty rock solid, given that the original comment began with the words "I don't understand why..." That is literally the definition of an argument from ignorance.

He's saying "I don't understand why..." shouldn't be followed with a conclusion or statement (here, "They have literally no value to society"). That it should instead be followed with "could someone please explain this?"

Re: White House urges ban on non-compete agreements for many workers

#200
post #185

I'm perfectly OK with a non-compete agreement... as long as it pays me for my downtime. You think the information in my head is so valuable that you don't want me working for a competitor for three years after I leave? OK, pay me for three years. It's not worth that much to you? Well, how much is it worth?

How would you determine the cost of your downtime?

If you're assuming that all you're going to do after you leave a company is become a wage slave at another one, then getting paid the same wage for a few years might be enough to compensate you. However, if you really aspire to start your own company that might become hugely successful (e.g. the next Facebook or Google), how would you be compensated for that?

The point is that even if you're paid for the time when the NDA is in force, you are still being harmed, because your freedom to invest your time is restricted.

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