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Send Noncompete Agreements Back to the Middle Ages

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Re: Send Noncompete Agreements Back to the Middle Ages

#11

Post by gammateam »

dawhizkid wrote: post #5

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?

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

Re: Send Noncompete Agreements Back to the Middle Ages

#12

Post by brownbat »

kryogen1c wrote: post #4

> 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.

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#13

Post by ghaff »

munk-a wrote: post #10

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,…

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#15

Post by munk-a »

dawhizkid wrote: post #5

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?

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_.

Re: Send Noncompete Agreements Back to the Middle Ages

#16

Post by wpietri »

munk-a wrote: post #10

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,…

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#17

Post by rrggrr »

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#18

Post by ghaff »

LanguageGamer wrote: post #8
kryogen1c wrote: post #4

> 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.

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?

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).

Re: Send Noncompete Agreements Back to the Middle Ages

#19

Post by paulie_a »

wpietri wrote: post #16
munk-a wrote: post #10

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,…

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.

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#20

Post by whatshisface »

rrggrr wrote: post #17

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?
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