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U.S. moves to bar noncompete agreements in labor contracts

nytimes.com

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Re: U.S. moves to bar noncompete agreements in labor contracts

#101

Post by ghaff »

lp0_on_fire wrote: post #25

I think noncompete clauses have their uses so rather than see them eliminated completely you make a company pay the employee under a noncompete the equivalent salary for the duration. Company wants you to sign a noncompete for five years after you leave? They can pay for you five more years. Companies that truly need the protections will shell out for it. The ones that include it in their employment contracts because…

Garden leave isn't a panacea. For example, in Massachusetts, there's a relatively recent requirement that employers have to pay at least half of an ex-employee's salary for up to a 12 month non-compete coverage.

Better than nothing I guess. And it does put some skin in the game for the employer.

But while that might look like a good deal for some people who are in a position to just travel, start a project of some sort, etc. it isn't for everyone. Someone with a mortgage, kids in college, or other financial obligations might not think that dropping to half their base pay--to say nothing of just taking a year off mid-career--is so great.

And, depending upon how specialized they are, there may not be a role open to them which is a good match with their experience and skills.

Re: U.S. moves to bar noncompete agreements in labor contracts

#102

Post by anon291 »

ghaff wrote: post #82
anon291 wrote: post #30

Earlier quoted context omitted.

It's already illegal in many states

Aspects of non-competes are not enforceable in some places--and enforcement may require payments to the ex-employee in others (e.g. MA). But some non-compete conditions are generally enforceable even in CA as I understand it (e.g. if you sell a business, you can't set up shop the next street over and contact all your former customers). But they're not illegal as far as I know.

> if you sell a business, you can't set up shop the next street over and contact all your former customers

The article as about non-compete for workers. Non-competes for M&As are not mentioned.

Re: U.S. moves to bar noncompete agreements in labor contracts

#103

Post by ballenf »

alistairSH wrote: post #69
simplotek wrote: post #6

Noncompete clauses for workers is the most anti-american, anti-free-market policy anyone could pull. If workers aren't free to switch to better jobs and at the same time are left to fend off for themselves them the economic system starts to resemble feudalism.

...the most anti-american... I dunno, they seem pretty spot on for the US. In the US, "free market" generally means one of two things... 1 - a fictional market with no externalities and perfect information symmetry. Ayn Rand fans think it's real, but it only exists in an ECON-101 textbook. 2 - code for "rules for thee, not for me" as said by the billionaire class. Or, really anything that keeps them rich and the rest…

Basically agree, but what we're increasingly facing in the US is growing barriers to entry to compete with behemoths in the form of an increasingly complex tax and regulatory structure which just isn't compatible with free market principles still applying to how those behemoths treat employees.

In short, we have quasi state-sanctioned hegemons that have undue negotiating power.

There are two solutions: nerf the barriers or buff the workers through more targeted regulation. There's no single regulatory body that can do the former, so the only option left is the latter.

Re: U.S. moves to bar noncompete agreements in labor contracts

#104

Post by gameman144 »

Alex3917 wrote: post #61
ecshafer wrote: post #21

Non-Competes being legal is only acceptable I think if the worker will continued being paid for the period of the non-compete. I can see reasons that non-competes exist, but those reasons don't really make sense in a world where patents and trademarks also exist. The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological…

> The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development. The general rules that most states use for deciding when non-competes are enforceable aren't that bad. E.g. if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year, but it's fine if you do it a…

I'm curious, why does that seem less crazy than the simpler case of being allowed to open a bakery two blocks away within a year?

Re: U.S. moves to bar noncompete agreements in labor contracts

#105

Post by Zigurd »

JumpCrisscross wrote: post #67
Zigurd wrote: post #52

Earlier quoted context omitted.

No. A bill setting patent or copyright terms to less than what they are now is constitutional. Some might argue the opposite side of that, but I don't think anyone can deny the Framers were wary of the kinds of monopolies monarchs granted, much less did they think a patent is property.

My point is all ownership is a legal concept. Congress can abridge many property rights, including real estate, and the only thing keeping them from going further is the custom enshrined in our Constitution.

It's more than "custom." Since we have judicial review, courts can strike down an unconstitutional taking of property. It goes back to WWKGD? ("What would King George do?") ...and doing the opposite. So we have constitutional protections against seizing private property, but arbitrary terms, except they must be limited terms, for grants of monopoly.

Not perfectly observed of course. The Mouse always stretches the definition of "limited term." But the intent is there for anyone to see.

Re: U.S. moves to bar noncompete agreements in labor contracts

#106

Post by thwayunion »

affyboi wrote: post #94
chaoz_ wrote: post #71

Would be interesting to see how contracts in HFT are going to change. From what I heard, when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge. Garden leave helps to mitigate this effect. If non-competes are banned, then TCs are (probably) going to rise even more.

For quant finance and HFT noncompetes usually pay out pretty generously

Interestingly, the FTC rule does not include an exception for garden pay.

Re: U.S. moves to bar noncompete agreements in labor contracts

#107

Post by duped »

prottog wrote: post #78
mschuster91 wrote: post #46

Earlier quoted context omitted.

The problem is, the courts may decide to kill it off before Congress gets out of its gridlock and approve or deny it, as many other regulations have been. Executive decrees or questionably legal actions of government agencies are fundamentally bad - but have become commonplace and a necessity of life since Congress is fundamentally broken. And at the core, the problem is that the US' political system unlike everyone…

> Executive decrees or questionably legal actions of government agencies are fundamentally bad - but have become commonplace and a necessity of life since Congress is fundamentally broken. Two wrongs don't make a right. Everyone involved should remember that the US is a federation of fifty states that share sovereignty with the federal government, and that nothing stops the various states from enacting their own nonc…

> They can even do that in cooperation with other states

This is actually super interesting in that Article 1. Section 10 suggests this requires Congressional approval.

I'd also that the US is a de jure federation of independently sovereign states, whereas we are a de facto central government with weak provincial governments. States cannot act independently or as a peer to the federal government or with each other, and state sovereignty has been eroded since the ratification of the Constitution.

Debating whether or not Congress or the States should make these laws is purely academic. 250 years of history has shown that the only way for meaningful change to be enacted anywhere is for it to be done everywhere, by Congress, with the support of the Executive, and without a meddling Court to nullify it. If we lived in a country that you're hypothesizing about, we would still be segregated.

Re: U.S. moves to bar noncompete agreements in labor contracts

#108

Post by ghaff »

anon291 wrote: post #102
ghaff wrote: post #82

Earlier quoted context omitted.

Aspects of non-competes are not enforceable in some places--and enforcement may require payments to the ex-employee in others (e.g. MA). But some non-compete conditions are generally enforceable even in CA as I understand it (e.g. if you sell a business, you can't set up shop the next street over and contact all your former customers). But they're not illegal as far as I know.

> if you sell a business, you can't set up shop the next street over and contact all your former customers The article as about non-compete for workers . Non-competes for M&As are not mentioned.

The FTC is specifically proposing a carve-out for selling a business. So it is mentioned. The parent made a blanket statement about non-compete legality.

Re: U.S. moves to bar noncompete agreements in labor contracts

#109

Post by simplotek »

benrbray wrote: post #72
donatj wrote: post #50

Earlier quoted context omitted.

> anti-free-market policy I go back and forth on that. It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do. It certainly hasn't panned out that way though.

They should be legal, but expensive. If it is so valuable to companies that their workers not leave to work for competitors, they should be required to pay 100% salary for the non-compete period.

> they should be required to pay 100% salary for the non-compete period.

I'd argue that falls way short of being useful and still screws over employees.

People switch jobs because they get better offers, and being forced to not only forego better offers but also get stuck with the same income while your offers get taken away from you hardly seems something that's in the worker's interests. In fact, it looks an awful lot like plain old unemployment benefits.

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