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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

#81

Post by ghaff »

munk-a wrote: post #58
chii wrote: post #51

Earlier quoted context omitted.

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 gi…

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

Re: Send Noncompete Agreements Back to the Middle Ages

#82

Post by opnitro »

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.

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#83

Post by teraflop »

tathougies wrote: post #71
chris_engel wrote: post #30

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…

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.)

Re: Send Noncompete Agreements Back to the Middle Ages

#84

Post by DINKDINK »

chris_engel wrote: post #30

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…

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#85

Post by baron816 »

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#86

Post by ghaff »

mindslight wrote: post #74
ghaff wrote: post #60

Earlier quoted context omitted.

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?

Re: Send Noncompete Agreements Back to the Middle Ages

#87

Post by dragonwriter »

dunpeal wrote: post #34
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.

> 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…

> > 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.

Re: Send Noncompete Agreements Back to the Middle Ages

#89

Post by munk-a »

dmurray wrote: post #77
munk-a wrote: post #15

Earlier quoted context omitted.

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 d…

> 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.…

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.

Re: Send Noncompete Agreements Back to the Middle Ages

#90

Post by ryandrake »

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.
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