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Laws barring noncompete clauses spreading

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Re: Laws barring noncompete clauses spreading

#151

Post by oolveea »

harry8 wrote: post #105
paxys wrote: 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…

Dejure harry defacto

Re: Laws barring noncompete clauses spreading

#152

Post by yrgulation »

drogus wrote: post #53

In Germany in order for a non-compete agreement to be valid a company has to pay an employee money for the non-compete period. 50% of an average of last 3 months of employment. With this law I would be actually quite happy for a company to include a non-compete clause in the contract.

That’s a nice and probably fair law. If you do wish to restrict your employees in what they do post employment then you need to pay them. I wouldnt mind sitting around getting half pay.

Re: Laws barring noncompete clauses spreading

#153

Post by yrgulation »

CaptainJack wrote: post #85

The UK has had a government call for evidence on the subject of non-compete, with the aim of limiting them as well, but nothing has been done so far. I'm myself in the long, lengthy and costly process of trying to fight a two years non-compete (well, 1yr garden leave + 1yr non-compete), and it's taxing. It adds stress, makes it harder to market yourself, and on top of that there is this clear asymmetry where the cost…

Thats interesting, i never heard of or met anyone in the uk with a non compete clause and always assumed it is a non issue.

Re: Laws barring noncompete clauses spreading

#154

Post by ghaff »

m463 wrote: post #139
ryandrake wrote: post #135

Earlier quoted context omitted.

> "But I'll spend money to train my employees and they'll just take those skills to go work for a competitor or start their own business!" Yes, that's a feature of the system, not a bug. This mentality has never made sense to me. Why would a business invest so much money into training someone, then fail to spend the money needed to retain the (more valuable) trained employee?? "They'll leave after we train them" is a…

wonder how that is solved in practice? (also wondering about the armed services and paying for medical school)

The armed forces are probably not the best example. There tend to be pretty severe consequences to just deciding you don’t want to be in the Army any longer.

Re: Laws barring noncompete clauses spreading

#155

Post by 6502nerdface »

bdw5204 wrote: post #127
paxys wrote: 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…

I'm fine with allowing non-competes as long as the company pays the ex-employee their full salary for the length of the non-compete and can't rescind the non-compete without mutual consent. For example, an 18 month non-compete would mean 18 months of paid vacation after you leave a job. I imagine this would be functionally equivalent to a ban on non-competes because it seems like it'd be an insane waste of money but…

This is almost exactly how noncompetes work in practice in the finance industry, where most employment contracts are governed by New York law or something similar, which will generally require the payment of "consideration" during the noncompete for it to be enforceable. The amount of consideration is part of what you negotiate when you join, generally always at least your most recent base salary at resignation, but possibly much more, i.e. some fraction of your total comp.

Usually the way it works is that when you resign, the employer has a fixed amount of time (specified in your contract) within which to decide whether to exercise the noncompete, and for how long (i.e. they could elect a subset of the maximum term in your contract), and once exercised, they can't change their mind. If you violate the noncompete, they'll of course stop the payments, possibly claw back payments, keep your deferred comp (which they are holding over your head during the noncompete), possibly reset the noncompete clock (so you have to start waiting all over again), and possibly sue you. Details will vary, but broadly that's my experience.

Some consider it one of the major perks of the industry, assuming you become important enough to have it exercised on you, and would be sad to see them banned. Firms consider it money well spent, which makes sense when you consider that investment strategies have no real protection as intellectual property... copyright is only narrowly useful, patenting would mean disclosing, and so at the end of the day they are just trade secrets, which can really only be protected by nondisclosure and noncompete agreements.

Re: Laws barring noncompete clauses spreading

#156

Post by ghaff »

chrisdhoover wrote: post #131
paxys wrote: 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…

Some say the valley dominated over route 128 for this very reason.

Except things didn’t really switch West for many years and a lot of other factors were in play.

Re: Laws barring noncompete clauses spreading

#157

Post by ghaff »

yrgulation wrote: post #152
drogus wrote: post #53

In Germany in order for a non-compete agreement to be valid a company has to pay an employee money for the non-compete period. 50% of an average of last 3 months of employment. With this law I would be actually quite happy for a company to include a non-compete clause in the contract.

That’s a nice and probably fair law. If you do wish to restrict your employees in what they do post employment then you need to pay them. I wouldnt mind sitting around getting half pay.

You might not. Im guessing the person with a mortgage and family to support might feel differently. Especially if it’s half pay of base salary.

Re: Laws barring noncompete clauses spreading

#158

Post by ghaff »

bhaney wrote: post #21
exabrial wrote: post #16

I think a better system is an up-front repayable bonus: "We'll pay you $2k on sign-on, but you have to stay for 2 years" or something. This benefits job applicants (extra money!), employers (retention), and protects applicants (employers abusing non-compete agreements for everything), and is a far easier legal process to execute.

This seems like the equivalent of a predatory loan with the interest paid in opportunity cost, and doesn't even properly address the same problem that noncompetes do.

I agree with the second part but otherwise seems like an RSU schedule for a public company.

Re: Laws barring noncompete clauses spreading

#159

Post by yrgulation »

ghaff wrote: post #157
yrgulation wrote: post #152

Earlier quoted context omitted.

That’s a nice and probably fair law. If you do wish to restrict your employees in what they do post employment then you need to pay them. I wouldnt mind sitting around getting half pay.

You might not. Im guessing the person with a mortgage and family to support might feel differently. Especially if it’s half pay of base salary.

I agree yes, not saying it should be the norm and i am totally against non competes.

Re: Laws barring noncompete clauses spreading

#160

Post by yardie »

kennend3 wrote: post #76
paxys wrote: 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…

Here (Canada) the courts almost always rule that the non-compete is unenforceable. The core issue is the rights of an individual to earn a living supersedes the rights of a corporation. https://globalnews.ca/content/8363992/can-non-compete-clause... " The majority of non-compete clauses challenged in the judicial system have been rendered unenforceable. Canadian courts, in my experience, look unfavourably on clauses…

I wonder what the cross-section of the population is smart enough to be worth making sign a non-compete yet not smart enough to do a basic Google search on their enforceability.
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