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The case for banning non-competes

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Re: The case for banning non-competes

#111

Post by throwawaygh »

gumby wrote: post #104
mabbo wrote: post #23

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer mak…

I share your concern but modulate the concern with two factors (you may not agree): 1 - if you work at a company like that (faang, basically) you probably have a choice of working elsewhere and they are paying you handsomely to give up the ability to have almost any software or electronics side projects (my gf wants me to go work at one of them and I have decided it’s not worth the money, though I can understand why…

> if you work at a company like that (faang, basically) you probably have a choice of working elsewhere

Heh. I advise early career students from my alma mater. One of them took a job with a mom-and-pop web dev + IT firm. Super mom and pop. Like, maintaining word press and similar installs for maybe a few hundred clients and then bundling that with generic IT services (computer repair, maintenance, blah blah blah). Basically, as boring as you could possibly get.

That employer told my advisee that because the company develops software, their non-compete covers all software.

Are they correctly interpreting state law? Absolutely not. Does that matter to a 2x-year-old making 80K worried about losing their job, being sued, being blackballed in their small regional labor market (which they don't want to leave for family reasons)? Also no.

> 2 - every such agreement I have signed has had a “carve out” clause: you can list things you’ve been working on (which is vague, I have listed areas I’m interested in and have looked into and counted that as ”work”) and exclude the stuff listed there from the agreement.

Wait, are you sure that list works how you think it does?

The vast majority of employers won't even talk to you about the scope of their non-compete.

At the outset, you are supposed to white-list things when you start employment. But then anything non on that white-list (which includes every idea you have after the moment you fill it out!!!) has to be assumed to be covered under the NDA, unless you're willing to risk a court battle and an enemy.

Re: The case for banning non-competes

#112

Post by Symmetry »

masklinn wrote: post #48
mabbo wrote: post #23

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer mak…

> There are two kinds of non-competes, and both have problems. There are more kinds of non-competes. Neither of the kinds you're listing is blanket-legal anywhere in Europe, as far as I can tell, but there are still NCC/NCAs. Generally speaking, in Europe, NCC/NCAs must: * show a reasonable business interest, mere competition does not ever qualify * be geographically limited * be temporally limited (rarely more than…

Honestly I think that just requiring that NCAs be financially compensated like that would be enough to prevent them from being a problem.

Re: The case for banning non-competes

#113

Post by LeifCarrotson »

Scarblac wrote: post #72
lifeformed wrote: post #52

Earlier quoted context omitted.

If you're using melodies and samples from work hours, then maybe not. And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work.

> And it would be tough to argue that your at-home trading app code is completely uninfluenced by ideas you have at work. And that your at-work trading app code would be influenced by ideas you have at home. You're a craftsman making trading apps, some for an employer, some for yourself, it's what you do. It's strange for an employer to be allowed to force you to stop doing the others without compensating you for it.

There's a difference in competition and compensation between a craftsman who constructs products and an inventor who generates ideas. The problem is that the world is not black and white, there's a little of each in every career, and obviously companies want the best of both.

If you were a carpenter who worked in an old-time furniture store, turning chair legs on a duplicating lathe at work and turning toy spinning tops on a treadle lathe at home, there's no harm to your employer if you use some related skills at home. If you're not making parts that match their requirements, those parts are of no value to them. The company might as well pay you per unit, rather than hourly or as a salary.

If you worked at a think tank or research institution, your job might be to generate one particularly brilliant concept that was by itself worth your annual salary. You might spend your days testing ideas and improving your understanding of the problem domain while your subconscious mulls over everything at night. A musician is an interesting career in context - are they paid to move samples around in Pro Tools or think about and try a huge variety of riffs until they find the next Top 40 sound? If you had a great idea in your sleep, it was probably because you've taken a paycheck for the last 6 months at work generating no useful output, the only thing you built was the thought patterns in your brain. The company wants to own your brain, the thought patterns therein, and everything you think of.

Technology and automation is making ideas more scalable all the time, the industrial era where workers were paid to pull a lever repeatedly is in the past. I think we're only seeing the beginning of non-competes.

Re: The case for banning non-competes

#114

Post by ghaff »

lostcolony wrote: post #89
ghaff wrote: post #22

Earlier quoted context omitted.

The idea that everyone who isn't in California is subject to draconian non-competes is California exceptionalism nonsense.

This is a bit out of date, but - https://www.beckreedriden.com/wp-content/uploads/2019/01/Non... There are three states where non competes are essentially not permitted. California, Oklahoma, and North Dakota. Now, certainly, it's up to the company whether or not it imposes a non-compete, and to what it covers/applies to. It might be that you never took a job with one. But I've been subject to them at every place I'v…

I've never had one in LA, MA, or NH except for one time when EMC (who was one of the big players who resisted the non-compete changes that MA finally put in place) acquired the company I was at. The non-compete was reasonably narrow in scope--couldn't take a senior exec position at a storage vendor--but they were also very clear this wasn't negotiable.

But I've certainly been aware of non-compete enforcement by the big companies in a certain category of consultants that basically meant anyone leaving couldn't do the same type of job anywhere for a couple years. My point though is that it's hardly universal even if not rare.

Re: The case for banning non-competes

#115

Post by ivanbakel »

tracyhenry wrote: post #86

A noob question: how can a small business get to keep the secret ingredient of their success if employees are allowed to jump ship as they wish? From the employee perspective banning non-competes are ofc the best thing. But this feels terrible if it means that secret sauces of small startups will get copied easily (potentially by bigger players).

The fact is that "secret sauces" are basically worthless. Every successful business is 99% execution (& luck). A startup, especially in tech, will never be able to base its value on something simple enough for an employee to smuggle out legally (i.e. in their brain).

Re: The case for banning non-competes

#116

Post by masklinn »

grepfru_it wrote: post #76
masklinn wrote: post #60

Earlier quoted context omitted.

Problematically though, in most of the US ridiculously broad NCCs are enforceable. The only place where you're safe is California, where the only way for an NCC to stick is related to business (co)-ownership (selling the business, dissolving a partnership, or dissolving an LLC). Out-of-state NCCs are also un-enforceable in California.

You made a very general statement! They are enforceable because usually the violator is doing something ridiculously broad. Like going to work for McDonalds R&D after leaving Burger King as the VP of product design. My anecdotal experience: I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his…

> Like going to work for McDonalds R&D after leaving Burger King as the VP of product design.

Don't rightly see why there would be any issue with that. If you bring McD IP to BK, then that's an IP theft issue.

> I once worked for a major bank and someone who left another major bank held a meeting with developers of a next-gen platform where he basically explained, in explicit detail, his old employer's entire platform. I would argue a non-compete would be 100% enforceable here.

And I would argue a non-compete should be 100% non-enforceable here. "I learned shit on my previous job" doesn't mean you should not be able to work in the field anymore.

Re: The case for banning non-competes

#117

Post by laGrenouille »

masklinn wrote: post #48
mabbo wrote: post #23

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer mak…

> There are two kinds of non-competes, and both have problems. There are more kinds of non-competes. Neither of the kinds you're listing is blanket-legal anywhere in Europe, as far as I can tell, but there are still NCC/NCAs. Generally speaking, in Europe, NCC/NCAs must: * show a reasonable business interest, mere competition does not ever qualify * be geographically limited * be temporally limited (rarely more than…

> be financially compensated (significantly, usually on the order of 50% gross salary for the entire period)

I think this is the most important protection that's needed in the US. NCCs for high-level executives with golden parachute clauses actually makes a lot of sense. If their former company is essentially paying them (usually a lot!) after they leave during the NCC period, that is unlikely to get abused and overused.

For anyone who's knowledge and connections is not important enough to those kinds of payouts offered to C-suite execs, NCCs are just a way to bully employees into not leaving.

Re: The case for banning non-competes

#118

Post by achenatx »

As a professional services company we have had a few people over the years shop their contract or try to go direct with the client.

They essentially split our gross margin with the client. The client reduces their cost and the employee gets paid more.

Our non-compete mainly is focused on not taking our clients.

Re: The case for banning non-competes

#119

Post by achenatx »

mabbo wrote: post #23

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer mak…

There is a third kind which bars people working for professional services companies from taking clients directly or going to another company and taking clients.

Re: The case for banning non-competes

#120

Post by skohan »

mabbo wrote: post #23

There are two kinds of non-competes, and both have problems. First, there's the really nasty ones saying "If you ever work here, you can't work for any competitor for X years", and they're clearly abusing of employees, labor, etc. I hope there is a straight up ban on that. The second kind is "You can't compete with us while you work here". And that is a much more complex beast. Obviously, if I work as a developer mak…

I just assumed that was a big part of what big tech is paying for when they over-pay developers. They are buying you off so you don't work for competitors, or someday become a competitor. It's a bit of a gilded cage.
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