Live data from Hacker News

Why I Don't Sign Non-Competes

penguindreams.org

221–230 of 295 posts

Re: Why I Don't Sign Non-Competes

#221
What are your thoughts about a non-compete which is tied to a bonus, restricted stock, or some other reward?

I worked for my employer for several years without a non-compete before I received my first chunk of restricted stock. In accepting the stock grant, I had to accept a non-compete for a period of 1 year, which included both competitors and customers of my employer. It was a significant sum, but not a year's salary. I feared that if I turned it down, I would be seen as disloyal, and it could cause my employer to pass me up for promotions or include me in the next reduction-in-force.

Since then, I've received almost yearly bonuses and stock grants which carry the same non-compete, so I am probably closer to having received a year's salary worth of additional consideration by now, but I still feel wary about the non-compete.

(edit) Note: I'm not in California

Re: Why I Don't Sign Non-Competes

#222

Earlier quoted context omitted.

> make it very easy for one or group of employees, to just take a company's current clients, offer them a low price, and start a new firm thereby causing losses for the original service company. Business which got burnt by their employees starting competitive business thereby started adding these clauses into their agreements. Sure, but this isn't a fair way to solve that problem. You don't need a non-compete to do t…

This is true in theory but not in practice. I know of a few (somewhat disreputable) big law firms and prop/hedge funds that primarily hire from competitors. They can offer better partnership terms or pay because they don’t spend on research, training, or developing their own talent. Let the competitors do that, and we can skim off the cream talent-wise. It’s good for wages, but is that really fair play? Does it have…

It seems like this problem is well-solved, though not with simple client-list rules. (I've definitely seen those thoroughly violated in ways no one can really enforce.)

Financial firms, for example, give strict noncompetes but back them with actually-valuable payouts. Employees can't be hired away for inside knowledge or clients, because those connections will decay for 6/12/24 months before they start. But their loyalty is actually incentivized, rather than just compelled with "if you quit you're not employable".

Re: Why I Don't Sign Non-Competes

#223

So recently I came across an Invention Disclosure agreement that a company wanted me to sign. The phrasing of this kind of threw me off: "I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intelle…

Nope the fuck away. There is no justification for that. If they're going to push, make them pay an extreme amount for it.

Re: Why I Don't Sign Non-Competes

#224

Earlier quoted context omitted.

Run away. No client/employer is worth that kind of baggage. It's even worse than a non-compete: instead of you simply being prohibited from competing with them, they automatically own your creations.

Pretty much every employer I’ve ever worked for has laid claim to all IP I produce, even on my own time using my own equipment at home. This is a very common clause in any tech company’s employment agreement. If you’re going to run away from these, your employment options are severely limited. The “within 1 year” thing, however is one I haven’t seen before. Ugly!

In California, it is flat out illegal for an employer to claim stuff you've created using your own equipment on your own time. As it should be.

Many believe this is one of the reasons Silicon Valley became what it is.

Re: Why I Don't Sign Non-Competes

#225

I work in California, specifically in Silicon Valley. What is the "Non-compete Clause" of which you speak? The only time I have heard of is a snippet of conversation that "Judges just laugh at them." In practice, there a plethora of laws that provide legitimate protection to employers. Taking a copy of the software, copying the customer list, purloining the secret to creating nooks and crannies in muffins are all pro…

In California, judges do laugh at them, because the vast majority of US non-compete agreements would be unenforceable in California. Employees can be prohibited from using trade secrets from the job after their employment is ended as you say, but the "non-compete" itself as generally described can only be enforced in the case of a business owner who sells his business, and "its good-will" (edit: and the good will is revokable and must be spelled out and compensated.)

The assumption underlying the exception being, last I heard at least, that if a business owner sells their business to you, there is an expectation that they are doing it in good faith, and they will not intentionally undermine the success of the business that you bought. It would be "in bad faith" or faithless for that former business owner to go out and round up all of the customers of your business, and start marketing at them new contracts with a new competing company that does just what the company you purchased does.

This is, to my knowledge, only really the law in California (non-competes are mostly enforceable in other states), but my understanding is that if a person from another state has some other kind of non-compete agreement that they wish to escape, they can also do it safely by moving to California and going to work for a CA employer.

My ailing memory tells me there was a third different condition in which non-competes were able to be enforced in CA, but that it was also very narrow and unlikely to cover a regular former employee, or ever prevent them from working for a competitor... if anyone knows the law better than I do, feel free to chime in with whatever I'm missing.

I think I remember that the "good-will" clause needs to be spelled out explicitly, in terms of a period of time and a specific compensation that it is tied with... that might be what I had forgotten.

The good-will is revokable and the penalty for revoking it can be no more than the specific compensation associated. I seem to remember actually, that the good-will compensation must be structured as a series of payments, because the penalty for revoking your good-will is actually just the discontinuation of those payments, not a statutory damage or requirement of returning any of that money that was already paid.

IOW California judges will usually just laugh at non-competes. I think I also remember that there is a statutory damage amount that employers must pay, if they write and attempt to pass any overly broad or non-enforceable non-competes as a condition of employment.

IANAL though, of course ask your lawyer if you really needed to know...

Re: Why I Don't Sign Non-Competes

#226

So recently I came across an Invention Disclosure agreement that a company wanted me to sign. The phrasing of this kind of threw me off: "I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intelle…

I've signed one once that had a clause where everything I made for a year after the job ended I had to approach them with it and give them a chance to offer me money for it (right of first refusal), but never anything where they automatically own it post employment. They did have a 'we own pretty much every thought you have while you work here' clause, though, because it was a game studio and the owner's reasoning wa…

"I don't think he'd enforce the clause to actually steal other people's outside projects"

There is zero reason for him to have that clause unless he wanted to do just that.

Re: Why I Don't Sign Non-Competes

#227

This is the flip-side benefit to living in Right-to-Work states. On the one hand, it's nearly impossible to unionize, but working as a contractor in Virginia, I had an agency try exercise the non-compete against me when I tried to take a job directly with their client. That client happened to be the Society for Human Resource Management. Their management laughed at the attempt and had a lawyer send the agency a lette…

These things aren't related. For example, California is not a right-to-work state but it has banned noncompete agreements since the late 1800s, except in a small number of very specific situations.

Re: Why I Don't Sign Non-Competes

#228
From the tail end of the OP:

> I’m a Computer Scientist. We don’t have unions and we don’t collectively bargain. Basic workers rights are our responsibility

I've always been bothered by this question. Why _don't_ we have unions? What is it about the tech industry that makes it so resistant (especially in the US) to labor organization? I work in the EU for a US company, and my American colleagues universally seem to find the idea of collective bargaining _preposterous_. Often, they even seem offended by the idea!

Is this a particularly American trait, or something endemic to tech?

Re: Why I Don't Sign Non-Competes

#229

So recently I came across an Invention Disclosure agreement that a company wanted me to sign. The phrasing of this kind of threw me off: "I will promptly communicate to the Company each and every invention, discovery or item of intellectual property made or conceived by me, either as an individual or jointly with others, during my period of employment, and I agree that any such invention, discovery or item of intelle…

I'd have to be pretty desperate to sign such a thing.

Or maybe if they pay me 3 times the market rate. And that's without the "1 year after termination" craziness. For that, I'd ask continued pay (3 times the market rate, remember?) for the duration of the clause.

If this means walking away from a dream job, so be it. Can't be a dream job with such a clause.

Re: Why I Don't Sign Non-Competes

#230
post #160

Earlier quoted context omitted.

>That is saying you can't work at all for a year after your employment terminates, because anything you produce during that time is presumed to have actually been created during your previous employment, and so belongs to your ex-employer. But it's not. Inventions != copyright or code produced. If I author a book after employment they don't own the rights to my book. If I write code after employment they don't necess…

The agreement explicitly says "or item of intellectual property". It's absurd.

I wonder if you could create a toxic legal liability by assigning an IP right to the company. E.g. create a trademark about bestiality or pornography, and assign it to the company. Or file a toxic patent (it doesn't need a lawyer). Obvious difficulty to find something you can publish while avoiding legal liability yourself...
Post reply on HN