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Laws barring noncompete clauses spreading

businessinsurance.com

191–200 of 224 posts

Re: Laws barring noncompete clauses spreading

#191
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…

The real danger is if you don't train your people and they stay. That risk is why you train everyone even those who leave. For cases of expensive training it is fair to demand they pay you back if you don't stay for a couple years. We are talking about a full masters at a major university though, not just some random 3 day design patterns class or whatever the hotness of the day is.

The clawback also needs to be contingent on the employee somehow requesting the training and initiating the end of the job.

If you spend $20K on an MBA that I initiated and I quit, totally fair to have an arrangement where I have to pay some of that back.

If you fire me? No obligation.

If you send me to some series of certifications because you want me to have them? Also no obligation.

Re: Laws barring noncompete clauses spreading

#192

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…

The investment into training isn't merely money and can't usually be neatly calculated. It's usually paid in the form of time, motivation, distraction and lost opportunities by more senior staff. If you, personally, sink a year into training someone intensively, and then they leave, would you perceive it as merely lost opportunity costs? Probably not. Mentors and mentees are supposed to have a more than purely transa…

> why not just pay the higher wages to start with and skip the risky and slow training?

It’s not like walking around with sacks of money and hiring people interested in that money is low-risk. I’ve found training to be lower risk/uncertainty than hiring in terms of fewer outright failures and negative surprises.

Re: Laws barring noncompete clauses spreading

#193
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…

> "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…

Also there's the obvious culture / coordination angle: if enough companies train their employees, then the people they hire to replace ones that left were already trained by their competitor. It boosts average competence level for everyone. And, to the extent it builds goodwill with the (ex)employees, you may discover they're sending quality candidates your way.

Unfortunately, this is a coordination problem, and those are what humanity sucks at.

> 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??

It didn't and doesn't to me either. It's very similar to the disturbingly common case of a company cheaping out on office chairs, computer hardware, etc. when the total cost of creating a comfortable working environment for an employee is less than the company pays them for a month of work!

Or, related, and perhaps even more common in tech: skimping on infra (be it physical or virtual), despite again wasting more money in lost productivity than they save. Like e.g. at one place, I used to regularly complain about the amount of build bots we had for the team, and the resources allocated to them. The response was always that it's as much as we can get from the company cloud, to which I'd reply, why not buy more compute? Never got a straight answer to that. Sure, more and beefier machines cost some money, but when the CI is running at capacity at all times, and you have several well-paid devs sitting there and getting distracted while waiting for their jobs to finish... Penny-wise, pound-foolish was the saying?

In fact, I'd happily spend a fraction of my salary to buy a beefy PC to use as a compilation server. And another one to lend to the team's CI infra. But I can't do that, because procedures and company IP protection and whatnot. In the end, I was left with the feeling that the company just wants to make it hard for me to do the very job they're paying me for.

You'd think that management and finance education would let the company do the obvious math, but apparently, it doesn't. But then, the whole problem seems eerily similar to what's apparently a Business Wisdom today (and to me is total insanity): always being focused on acquiring new customers, and not paying attention to retaining existing ones. Maybe the reasons are similar, whatever they are?

Re: Laws barring noncompete clauses spreading

#194
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.

It would be financially devastating for me to halve my salary for a year; perhaps if the non-compete weren't too broad, I could make some of that up with contract work, but I'd also be paying for healthcare for my family which adds up as well.

Yeah, I absolutely couldn't survive on 50% of my current salary, but as far as I know non-compete can't also be "any programming job". So given I sign a non-compete with, for example, a fintech company, it would be totally fine to join company doing something completely different. But then with half of my salary already paid I could do like 4 days week and not necessarily go with a highest paying option.

Re: Laws barring noncompete clauses spreading

#195
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.

It should be 125%. Make them really really want it.

Sounds good to me!

Re: Laws barring noncompete clauses spreading

#196
post #157

Earlier quoted context omitted.

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.

Usually you can still find jobs easily. Most of these laws also bar companies from defining it very broadly, so I don't think they could make a non-compete like "any programming job"

Re: Laws barring noncompete clauses spreading

#197
While this is a good thing, be careful: other shady practices are spreading to replace non-competes. One example is clauses requiring employees to pay companies back for "training" provided if they leave for any reason. Can you afford to take a new job with a 10k pay rise if you have to pay existing employer 20k to leave?

Re: Laws barring noncompete clauses spreading

#198
post #179

Earlier quoted context omitted.

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…

I think that's fine for the employee (great, really: long-term paid vacation!), but if the goal is to create the "next Silicon Valley" or whatever, then allowing paid non-competes is going to work against that goal. You want an employee to get excited about striking out on their own and starting a company, immediately after quitting their old job (or, hell, before quitting their old job, as some SV founders do). Allo…

Maybe, but the cost means that it won't be the norm, they'll only actually exercise it when they really, really need to.

Re: Laws barring noncompete clauses spreading

#199
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…

> "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.

Pay your employees well, listen to their problems and fix them, and they won't leave the company for a competitor.

People leave for a handful of main reasons to competitors:

1. Money - this is the most obvious. Most employers simply don't want to give pay rises, to the point where they would rather hire a new person at 50-100% higher than your current salary, to do the same job, than to give you a 25-30% raise.

2. Bad management - second most common reason I see people leave, even for lesser paying jobs, just to be rid of bad managers. And for some reason most companies would rather hire _yet another_ manager to "fix things" rather than listen to the actual workers' problems. So the worker leaves when all they see is manager upon manager upon manager getting paid 2-3-5x as much as they are, who either don't do jackshit, or are overbearing micro-managers. Oh and of course these managers often claim any success of their managed people, while pushing any blame on them simultaneously.

3. No way to progress, either professionally, or within the company hierarchy. A lot of professionals end up doing the exact same job for years upon years, without going anywhere. They don't get promoted to a new position (but get new responsibilities continuously, without any financial renumeration of course), they can't go to another project, they're stuck in one place. And nobody likes feeling stuck.

Overall, a company can easily ensure that people they invest in, stay with the company to use those skills - just freaking listen to them. Not the managers, not some external "corporate coach", the people you invested in. Make sure they're happy, and they'll stay with you.

Oh, also, let's debunk that whole "I invested money in you therefore you can't work for my competitors" bullshit - all that investment, that's actually net zero for the company, since they can do tax writeoffs on those, as an expense. So at the end, that argument is pure BS, and restricting (ex) employees from working for the competition is pure pettiness.

Re: Laws barring noncompete clauses spreading

#200
post #2

Makes a ton of sense. Completely absurd for security guards and administrative assistants to have non-compete clauses. Just another way businesses were trying to reduce the willingness of employees to quit so that they can suppress wages.

Believe it or not they're now being used for fast food employees.

Petsmart makes you sign one or at least used to. For the groomers that they sent to training, it makes sense. For the cashiers, it ought to be illegal to have them sign it even though it's mostly unenforceable. It's an intimidation tactic. There's nothing that a damn pet store employee learns in training or in 5 years on the floor that could even begin to be considered a trade secret.

Reminds me of how Gallup made everyone sign a 6-month contract in an at-will state. If you want folks to stay for at least 6 months, then don't suck so much to work for. One of the cultiest places I've ever had the misfortune to work at.

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