Laws barring noncompete clauses spreading • Hacker News Board

Re: Laws barring noncompete clauses spreading

#161

Post by TheTon » Wed, Nov 02, 2022, 2:50 AM UTC

Cupertino95014 wrote: post #119

harry8 wrote: post #105

Earlier quoted context omitted.

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…

I've never heard of a court case involving a noncompete. Have you? (of course, I live in California.) It's maybe a little different if you're a chef and you've spent a lifetime mastering a particular recipe which is very hard to get right. You teach it to someone, and he goes out and opens his own restaurant selling that same dish. You can see the intuitive appeal of a noncompete, even if it's usually ineffective, an…

IBM v Papermaster was a pretty high profile one.

Re: Laws barring noncompete clauses spreading

#162

Post by shagie » Wed, Nov 02, 2022, 3:26 AM UTC

Cupertino95014 wrote: post #119

harry8 wrote: post #105

Earlier quoted context omitted.

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…

I've never heard of a court case involving a noncompete. Have you? (of course, I live in California.) It's maybe a little different if you're a chef and you've spent a lifetime mastering a particular recipe which is very hard to get right. You teach it to someone, and he goes out and opens his own restaurant selling that same dish. You can see the intuitive appeal of a noncompete, even if it's usually ineffective, an…

Blue Mountain Enterprises, LLC v. Owen https://law.justia.com/cases/california/court-of-appeal/2022...

https://www.jdsupra.com/legalnews/california-court-of-appeal...

> Despite California’s general hostility towards post-termination restrictive covenants, the California Court of Appeal, in a recently published opinion, Blue Mountain Enters., LLC v. Owen, 74 Cal.App.5th 537 (1st Dist. Jan. 10, 2022), affirmed that a post-termination customer non-solicitation agreement was enforceable under California Business & Professions Code § 16601.

> Under most circumstances, contractual provisions that prevent a person from engaging in a profession, trade, or business, including customer non-solicitation agreements, are void in California. However, section 16601 of the California Business and Professions Code carves out a statutory exception to the rule for individuals selling all of their interest, including goodwill, in a business.

> ...

> After Owen’s employment was terminated for cause, Owen established a competing construction services company and sent a letter to Blue Mountain customers stating, among other things, that he was launching his new business with “greater perspective, more resources and a much stronger team.” Blue Mountain obtained preliminary and permanent injunctive relief prohibiting Owen from soliciting its customers and prevailed on its motion for summary judgment adjudication of its breach of contract claim.

Re: Laws barring noncompete clauses spreading

#163

Post by _tom_ » Wed, Nov 02, 2022, 3:26 AM UTC

Cupertino95014 wrote: post #119

harry8 wrote: post #105

Earlier quoted context omitted.

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…

I've never heard of a court case involving a noncompete. Have you? (of course, I live in California.) It's maybe a little different if you're a chef and you've spent a lifetime mastering a particular recipe which is very hard to get right. You teach it to someone, and he goes out and opens his own restaurant selling that same dish. You can see the intuitive appeal of a noncompete, even if it's usually ineffective, an…

Yes. They aren't common, but I e seen maybe half a dozen. Typically high level employees. Never a normal engineer.

Re: Laws barring noncompete clauses spreading

#164

Post by _tom_ » Wed, Nov 02, 2022, 3:31 AM UTC

oolveea wrote: post #149

So from I understand only companies that can pay 100k can make their employees sign non-compete, and keep this big firm’s technology secret, whereas a startup that cannot pay 100k, its tech can be openly shared.. … ………..

Most starting salaries in tech are over $100k, at least in high COL areas. That's why the limit.

Re: Laws barring noncompete clauses spreading

#165

Post by _tom_ » Wed, Nov 02, 2022, 3:33 AM UTC

brindlejim wrote: post #96

Banning non-competes is a great idea. However, everyone here should be aware that lots of startups are now including "power of attorney" clauses in their employment contracts that grant to the employer power of attorney to assign inventions to themselves. Feels like there's a lot of room for abuse, which could discourage moves to competitors.

Yeah, I've signed that. I hate it, but I understand. If the employee can't be reached, they can still finish the patent. If the employee won't cooperate, they can get the patent.

They better be paying for this upfront.

Re: Laws barring noncompete clauses spreading

#166

Post by whyenot » Wed, Nov 02, 2022, 3:44 AM UTC

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…

Obviously there is a little more to it than that. Oklahoma and North Dakota have both banned noncompetes for 130 years or more. no nexus of tech in either place.

...and then there is Michigan where they were banned beginning in 1905, but then the ban was repealed 80 years later in 1985.

Re: Laws barring noncompete clauses spreading

#167

Post by michaelmrose » Wed, Nov 02, 2022, 3:49 AM UTC

lazide wrote: post #144

diob wrote: post #136

Earlier quoted context omitted.

This is talking about non competes that apply after one is no longer employed. Yours is something entirely different.

If it was different, then he would have been fine once he was fired no? But that is not the case.

If he wants to quit and compete with you he should be able to even if this destroys your business. The problem is he used his access while employed to redirect customers. It wasn't fine after he was fired not because it wasn't ok for him to compete with his prior employer but because he had already swiped your customer base. The prior behavior and challenges after he left are inextricably intertwined. Him quitting didn't separate them.

If he had done NOTHING while employed and quit to do his own thing do you think it would have been a problem? If so why?

Re: Laws barring noncompete clauses spreading

#168

Post by michaelmrose » Wed, Nov 02, 2022, 4:00 AM UTC

toomuchtodo wrote: post #29

lazide wrote: 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.

I agree. If you want to pay someone to sit on the bench because that has value to you ("Garden Leave"), I support that. If you want to twist their arm because you have power as an employer, nope. That's what labor law and regulation are for. Lots of examples of malicious employers doing the latter, as you'll note the sentiment throughout the thread comments and laws intending to patch this bug in statute.

Why let them have that at all. The honest true is instead of worrying what strategy most balances the interests of 99.9% of people and a few whiny rich people we could spend that time creating actual value. Whereas if you want to continue on with the Rube Goldberg device we ought to force them to pay not employers present rate but market rate and cost of foregone opportunity.

You might say that's incredibly unaffordable but that is the point. Otherwise the employer is robbing society of the value created in addition to stealing the difference between present rate and market rate + foregone opportunities.

Re: Laws barring noncompete clauses spreading

#169

Post by ipaddr » Wed, Nov 02, 2022, 4:01 AM UTC

yardie wrote: post #160

kennend3 wrote: post #76

Earlier quoted context omitted.

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.

Canadians don't break rules.

Re: Laws barring noncompete clauses spreading

#170

Post by encryptluks2 » Wed, Nov 02, 2022, 4:27 AM UTC

bigmattystyles wrote: post #61

deathanatos wrote: post #18

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.

Arbitration can also be more expensive than a court case. In many jurisdictions the cost to file a complaint is less than $100 but arbitration can cost $2500+ to file and sometimes you still have to compensate the arbitrator even if you win.