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Laws barring noncompete clauses spreading

businessinsurance.com

101–110 of 224 posts

Re: Laws barring noncompete clauses spreading

#101

Good riddance to this form of wage suppression. Let's do forced arbitration next.

For some reason (I never dug deeper), my friend who is an attorney said she prefers arbitration. Maybe because she already is an attorney? The only thing I can think of is that it is more expedient and having seen behind the curtain the talk of biased arbiters (biased towards the Goliath) are exaggerated. But if anyone can opine I'm all ears.

> my friend who is an attorney said she prefers arbitration

So let her opt-in. Why force it?

Re: Laws barring noncompete clauses spreading

#102
post #95
post #81

Earlier quoted context omitted.

Right, the idea is to train + pay them well enough that they stay. It helps the local economy because rather than your business putting more into investments around the world (or wherever the rich store / grow their money), that person puts the money in the local economy. Folks understand this, but their pay depends on them not understanding it so. . . here we are perpetually. Funny enough, paying folks well often wi…

I saw first hand a sales guy at a prior company I worked for start a side business directly competing with the primary business he was working for in his day job, while still working with them. Including redirecting customers while working for them. The owner got suspicious due to some comments made by customers, and started listening in on the phone calls he was making on the company phone system. This was a small b…

That's basically the one situation in which non-competes are enforceable in the US. The problem is, most people don't understand that, and fall prey to companies putting non-compete clauses into their employment agreements that say they can't go do CRUD software development at any company in a 50 mile radius.

Re: Laws barring noncompete clauses spreading

#103
post #78
post #22

Earlier quoted context omitted.

What is being banned are non-competes that don’t pay someone to not compete. There are legitimate reasons for actual non-competes in many of these cases, and CAlifornia for instance just requires you pay them for it. Which in such a situation seems justified.

> What is being banned are non-competes that don’t pay someone to not compete. Employers will just say "the no-compete compensations is built in to your pay".

Which is what is banned in California. If someone wants an enforceable non-compete, they need to pay them (fairly and explicitly) for the time they’re not allowed to compete.

Re: Laws barring noncompete clauses spreading

#104
post #27

Earlier quoted context omitted.

Really, which laws are those? The only ones I’m aware of would be trade secret laws, but they’re dubiously applicable to bare customer contact lists. You can make contractual restrictions of course (company property), but good luck being able to prove they actually took it unless they’re really dumb. Merely contacting all, or many, customers for instance wouldn’t prove it. Being able to show they work for competitor…

lol, no. Confidential business information is an area heavily protected by law. Customer lists are the canonical example. It’s much easier to win this kind of civil suit than a criminal case. The court can absolutely crush a business that is founded in this manner to compensate the former employer.

Then surely you’ll have no issues providing a cite of the relevant criminal code?

Re: Laws barring noncompete clauses spreading

#105
post #40

Over the years so many different jurisdictions around the US and the world have stated their desire to be the "next Silicon Valley" and have poured an immense amount of money and effort to make it so, whether in the form of incentives for businesses, tax breaks, education, job training, or even just straight paying smart people to move there. Every such scheme has generally failed because they refused to emulate the…

Beyond banning them de-jure you've also got to ban them de-facto.

"We all know non-competes are unenforceable and illegal." There are no consequences for forcing someone to have the stress, expense, time and to secure the financing so that if everything works as it should (which it often doesn't in all the various legal systems) you get only some of that back. If it doesn't work as it should you're toast. Not a nice thing to be hit with when the law is clearly designed that you should not be hit with anything at all.

For an individual or a startup it matters. For a large revenue incumbant they have people employed to abuse the system like that and the business expense of doing it is trivial, more than worth it. The law may exist so that the strongest do not always get their way - but this is an ideal with many exceptions including this one.

Ban away, but with no consequences for abuse and all measurements for the abused being the magnitude of the downside alone, no upside possible you don't get the result you're looking for.

Summary dismissal with costs, compensation and the potential to be branded a vexatious litigant so it is more difficult to bring any court action against anyone would be a real consequence for abusing the rules. Is the best one? Is it fair? Dunno. What we have now in most countries sure isn't.

Re: Laws barring noncompete clauses spreading

#106
post #39
post #33

Earlier quoted context omitted.

Specifically, you can't take trade secrets from one employer to the next. Customer contact lists are just one example of this.

Trade secrets have a very specific definition, and a mere list of contact information that is already likely public in an unfocused way (aka contact lists) almost certainly doesn’t qualify. Neither would a list of company names, etc. That information however IS highly valuable, especially paired with knowledge of how a company is doing sales, how it is positioning itself internally strategy wise, etc. some of those t…

The idea of a client or customer list being public information is profoundly ludicrous. It’s the canonical example, as another commenter put it.

Re: Laws barring noncompete clauses spreading

#107
post #3

IMHO, companies should have to compensate the employee for the period of the non-compete since they're still effectively working for them. Salary limits are okay, but don't really go far enough. If they want this it has a value and should be compensated for fairly.

I agree. Rather than having legislators get into the weeds of defining "compete", "trade secrets", "customer poaching", etc., laws should simply require that enforcing ANY post-employment terms require the former employer to pay the former employee the greater of the employee's maximum salary plus 10% (to cover opportunity cost) or 110% of any offer by a prospective new employer. Who better than the company to price…

Why even allow this? Just makes things less competitive and pays people to be unproductive.

Re: Laws barring noncompete clauses spreading

#108
post #3

IMHO, companies should have to compensate the employee for the period of the non-compete since they're still effectively working for them. Salary limits are okay, but don't really go far enough. If they want this it has a value and should be compensated for fairly.

I agree. Rather than having legislators get into the weeds of defining "compete", "trade secrets", "customer poaching", etc., laws should simply require that enforcing ANY post-employment terms require the former employer to pay the former employee the greater of the employee's maximum salary plus 10% (to cover opportunity cost) or 110% of any offer by a prospective new employer. Who better than the company to price…

My current employer tried to make me sign a noncompete clause and I asked them for precisely this.

They were flabbergasted that I wanted compensation in exchange for essentially cutting myself off from a wide swath of employment opportunities.

“Aren’t you our slave to do with as we see fit!?” was very much the attitude that I was getting.

Re: Laws barring noncompete clauses spreading

#109
post #40

Over the years so many different jurisdictions around the US and the world have stated their desire to be the "next Silicon Valley" and have poured an immense amount of money and effort to make it so, whether in the form of incentives for businesses, tax breaks, education, job training, or even just straight paying smart people to move there. Every such scheme has generally failed because they refused to emulate the…

Does banning non competes help if you don't already have businesses attracted to an area in some critical mass? I can see how it could make for a vibrant scene if you already have incumbents, but if you are an area trying to attract them, I am not sure that works.

Without talent, your employer pool isn't going to grow much. Non-competes are one of many things to make the chicken and egg problem worse.

Re: Laws barring noncompete clauses spreading

#110
post #107

Earlier quoted context omitted.

I agree. Rather than having legislators get into the weeds of defining "compete", "trade secrets", "customer poaching", etc., laws should simply require that enforcing ANY post-employment terms require the former employer to pay the former employee the greater of the employee's maximum salary plus 10% (to cover opportunity cost) or 110% of any offer by a prospective new employer. Who better than the company to price…

Why even allow this? Just makes things less competitive and pays people to be unproductive.

No business would do this; non-competes would be de facto banned. It's not a sincere suggestion.
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