The case for banning non-competes • Hacker News Board

Re: The case for banning non-competes

#251

Post by haraball » Fri, Jul 16, 2021, 7:56 PM UTC

matsemann wrote: post #42

mrweasel wrote: post #10

You don’t exactly need to ban them, but the employees should be compensated during the non-compete period and limit the lenght of the non-compete contract. In Denmark my employeer can’t make non-compete contract for more that 12 month, during which I’m entitled to 60% of my salery. It’s also only valid within the same field. That is: You can’t jump from Microsoft, developing Windows, to Apple and work on macOS, but y…

In Norway it's 100% pay up to some relative high amount. And the non-compete has to be very specifically towards me and my role at the company, not some generic "we do a little bit of x, y and z, therefore everything is considered a competitor". Actually my union, Tekna, was a big player in getting the laws much better in 2016. Unions work, and can be useful even for us techies even if in high demand.

Though if you get a new job during the period the non-compete is valid, the amount can be reduced down to 50%, depending on your income. The company also can't enforce the non-compete if they fire you. The Norwegian way of handling this is good, I think.

Re: The case for banning non-competes

#252

Post by nfriedly » Fri, Jul 16, 2021, 7:57 PM UTC

seanhunter wrote: post #197

Had a fun one just happen to me in the last few days. I got contacted by an agent out of the blue. "Hey Sean we've got a role that you seem perfect for, just sign this NDA so we can talk." I look at the NDA and it includes a noncompete for the duration of the project + 12 months after. The nda is also not mutual so the noncompete and nondisclosure is only binding on me not the other party. In fact I don't even know w…

I used to freelance in the past, and I always charged extra for signing NDAs other than my standard one. Usually it turned out that my standard one was good enough after all, but sometimes I actually got paid for signing the client's "special" NDA.

I've never seen any one that egregious, though. I'd charge quite a lot to sign that.

Re: The case for banning non-competes

#253

Post by smichel17 » Fri, Jul 16, 2021, 7:57 PM UTC

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…

Agreed on the first kind. It kind of sort of makes sense in the original context: say I run a bakery. I put it up for sale. You think it's a pretty good deal, so we agree and I sell the bakery to you. Then I take the money you paid me to renovate the building across the street, hire your employees out from under you. Customers quickly learn that the "original" moved across the street, and I'm laughing all the way to the bank. A noncompete that says, "I promise not to open a bakery within 40 miles in in the next 3 years" is pretty reasonable. However, the concept deteriorates with the internet, where there's no reasonable equivalent of a 40 mile radius, so the terms become "just don't use your expertise for X years".

Noncompetes for employees are much more dubious. If my head chef wants to try and pull the same trick on me, it's his investment at risk... If he's really that motivated to undercut me, maybe I should think long and hard about why. The only variant I could see being okay with is if the term starts at the start of the employment. That is, if you leave after 2 months, you can't compete for 22 months, but if you stay the full 2 years, nothing stops you. (I still don't like that, but it's tolerable).

I'm not sure about the second type of noncompete. Is it the problem, or is the problem that your employer does everything? I suspect both, and a fairer version would restrict the noncompete to "stuff that you work on directly". Or maybe the noncompete should have to specify the bounds and wouldn't be enforceable if they're too broad, similar to patents... on second thought, never mind. In any case, I'd first like to see whether it's still overly restrictive if companies were capped to some reasonable size.

Re: The case for banning non-competes

#254

Post by lucideer » Fri, Jul 16, 2021, 7:59 PM UTC

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…

> Obviously, if I work as a developer making a stock trading app, I shouldn't be making a competing stock trading app after hours.

A lot of siblings have pointed out that this isn't the case (I'd agree), so it's maybe worth digging into why you (and likely many people) think this should be the case.

My guess is it's to do with IP and trade-secrets, but that's clearly already covered by IP law and absolutely doesn't need extra provisions in employment contracts to protect company interests there.

If I create a competing stock app, I need to be able to demonstrate novelty. If I can do that, I don't see an issue. My employer still has a lot of advantages in the market (first-to-market network effect, funding, etc.) so if I'm able to compete with them without stealing IP, I must have (tangible/intangible) assets unique to me as an individual to do so: my employment contract should not sign over those assets outside of my working hours.

If I'm actively weakening my employer's product during my working hours to benefit my own that's easily a firing offence without the need for non-competes.

What other reasons are there?

Re: The case for banning non-competes

#255

Post by fgonzag » Fri, Jul 16, 2021, 8:00 PM UTC

stevesimmons wrote: post #172

masklinn wrote: post #123

Earlier quoted context omitted.

> I'm in a US state that allows non-competes and recently turned down a job because I wasn't comfortable with the non-compete expressly because the company's opinion of its own market was so broad. They implored me to trust that they had "never sued anyone" and "have no intentions to", and I think they honestly believe that. But then why have the non-compete at all? FWIW you can try editing the contract, removing the…

> tacking on steep consideration for exercising the NCC (as well as hard limit on it) Now I'm mid-career, employers want to hire me for my experience. If presented with a non-complete clause, I first strike it out, saying it isn't fair that you stop me working in my core area of expertise, when you're hiring me for exactly that reason. If that gets refused, I instead add a clause that says any period where the non-co…

> If that gets refused, I instead add a clause that says any period where the non-compete is enforced will be paid at my full salary.

I believe employment NCs should be illegal, but this is the minimum standard a non compete should require to be legal. The fact that companies can essentially force you to stop working for years, without paying, is ridiculous in my opinion.

Re: The case for banning non-competes

#256

Post by Gibbon1 » Fri, Jul 16, 2021, 8:03 PM UTC

filmgirlcw wrote: post #246

jfengel wrote: post #223

Earlier quoted context omitted.

I wonder if that would be necessary. San Francisco is kind of a special case as a small peninsula. That puts limits on the ways it can grow. You could probably build more housing units but you'll rapidly run into limits on streets, utilities, schools, etc. I don't know how much the issue is with the rest of Silicon Valley. There used to be a lot of undeveloped area not too far from Palo Alto. Texas may want to avoid…

>I wonder if that would be necessary. San Francisco is kind of a special case as a small peninsula. That puts limits on the ways it can grow. You could probably build more housing units but you'll rapidly run into limits on streets, utilities, schools, etc. I'm going to push back on this. Manhattan is less than half the size of San Francisco and has nearly four times the population density. The Bronx is roughly the s…

You know what Manhattan has that SF doesn't.

Subways[1].

Sure developers would love to build more chicken coops for tech bros. But they absolutely don't want to kick down coin to pay for the subway system needed to support that density.

[1] Oh yea SF has BART which was built 50 years ago and not expanded since. And the central subway which is 1.7 miles long, not open yet after ten years of construction and 20 years after it got the green light.

Re: The case for banning non-competes

#257

Post by 3wolf » Fri, Jul 16, 2021, 8:04 PM UTC

One argument in favor of non-competes in the consulting world is that they avoid a situation where Company B undercuts Company A during a recompete, and then poaches all of Company A's employees to staff the project (likely at lower salaries since they put in a lower bid on the contract).

Re: The case for banning non-competes

#258

Post by wcunning » Fri, Jul 16, 2021, 8:42 PM UTC

Interesting anecdata: the automotive industry does not actively enforce any of this on engineering talent. Per one of the other comments, I am prevented from attempting to create a competitive product on my own time during my employment, but that's mostly an IP assignment clause and not directly non-compete. Honestly, they'd love for me to do a bunch of unpaid work that they'll assert ownership over, I'm sure. But, when I quit one of the Big 3 and moved to another (for better career movement, thank god), I didn't even have to live out my 2 weeks because I might steal IP, nevermind that I created a bunch of it, and no non-compete was mentioned. Similarly, lots of engineers move up and down from OEM to supplier and back again, so there's nothing directly tied to that either.

The only example that I'm aware of in the industry at large was when Ford partnered with Argo AI, there was an agreement with Argo that they would not hire Ford engineers beyond the initial group going over as part of the partnership. My understanding, having no direct access to any agreements, was that this was fairly time limited, but did prevent me from applying at the time, though in retrospect, I'm grateful since Argo has a bad reputation for chewing up engineers.

Final note: I'm curious if some rule along these lines would encourage more actions like the Google/Apple deal that wound up costing them in lawsuits later on -- specifically, would that kind of deal get more enforcement action and more scrutiny because it would be the last refuge after the non-compete if they were severely limited or banned?

Re: The case for banning non-competes

#259

Post by filmgirlcw » Fri, Jul 16, 2021, 8:44 PM UTC

Gibbon1 wrote: post #256

filmgirlcw wrote: post #246

Earlier quoted context omitted.

>I wonder if that would be necessary. San Francisco is kind of a special case as a small peninsula. That puts limits on the ways it can grow. You could probably build more housing units but you'll rapidly run into limits on streets, utilities, schools, etc. I'm going to push back on this. Manhattan is less than half the size of San Francisco and has nearly four times the population density. The Bronx is roughly the s…

You know what Manhattan has that SF doesn't. Subways[1]. Sure developers would love to build more chicken coops for tech bros. But they absolutely don't want to kick down coin to pay for the subway system needed to support that density. [1] Oh yea SF has BART which was built 50 years ago and not expanded since. And the central subway which is 1.7 miles long, not open yet after ten years of construction and 20 years a…

I agree, which is my underlying point: they don’t want to expand! The lack of public transit is a problem plenty of people have been yelling about for decades, as you mentioned. Developers, citizens, and the city council have all proven over the years they are unwilling to do what needs to be done to make expansion possible.

Re: The case for banning non-competes

#260

Post by hannasanarion » Fri, Jul 16, 2021, 9:06 PM UTC

deregulateMed wrote: post #94

grogenaut wrote: post #79

Earlier quoted context omitted.

I had a non-compete when I was making $50k

And did the company invoke it?

If they didn't want to invoke it, they wouldn't have put it in the contract.

Would you sign a contract that says I have the right to point a gun at you at all times, with only my unofficial assurances that I won't pull the trigger?