U.S. moves to bar noncompete agreements in labor contracts • Hacker News Board

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

#151

Post by jpadkins » Thu, Jan 05, 2023, 4:53 PM UTC

bumby wrote: post #127

horsawlarway wrote: post #63

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Inequality_of_bargaining_power The idea is well known for hundreds of years, but here's a particularly salient quote for your line of thinking. ---- "In so far as the reduction of costs of production and distribution thus achieved is reflected in reduced prices, society as a whole ultimately benefits from the use of standard contracts… The use of contracts has, however, another aspect wh…

Workers have mechanisms to balance that power. E.g., forming a union, which could ensure the contract is more fair. I don't know what to make of the fact that they don't use them. In your opinion, is there a reason why something like a union couldn't be used to negate or modify non-compete clauses?

transaction costs & bundling effects.

Basically non-compete negatives for the worker don't outweigh the costs & downsides of forming a union -for just this issue-. Forming a union, negotiating, membership, etc all have transaction costs. Also unions come in a bundle with negative effects too (corruption, forced to go along with decisions where you are in the minority opinion, etc).

So if there was a super light weight union that only focused on non compete, then maybe it could level bargaining power. But since unions have a cost and come with downsides, it's not used in practice today.

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

#152

Post by bcaine » Thu, Jan 05, 2023, 4:56 PM UTC

thwayunion wrote: post #139

IMO the link should be changed to the FTC's press release, which has no paywall and provides a better summary: https://www.ftc.gov/news-events/news/press-releases/2023/01/... You can read the proposed rule and the full notice and factsheet here: https://www.ftc.gov/legal-library/browse/federal-register-no... Of note, an FTC commissioner (Trump appointee, so a minority voice in the executive atm) released a dissenting…

Do you know how to publicly comment? I couldn't find a way on the press release or their website.

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

#153

Post by bastawhiz » Thu, Jan 05, 2023, 4:56 PM UTC

cbb330 wrote: post #125

Government intervention is heavy handed and will cause unintended side affects with 100% certainty. What should happen is for: 1) employees to choose to not join companies with contracts that they don't agree with 2) employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs. A natural market response to bad company policy is always preferred to government mandates.

How is banning your employees from getting jobs with competitors aligned with a free market? That's the opposite of a free market: it prohibits me, the worker, from choosing a company that I want to work for. If I can't get a job with a company I agree with because I'm under a noncompete (perhaps the incentives aren't good enough anymore) then I'm kind of fucked, huh?

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

#154

Post by ericmay » Thu, Jan 05, 2023, 4:56 PM UTC

bumby wrote: post #145

ericmay wrote: post #135

Earlier quoted context omitted.

You are right, they do. But in practice it doesn't materialize. The other problem with "just create a union" besides the risk involved and inequality of bargaining power in starting a union in the first place is that you typically create a bureaucratic institution which has its own drag on economic efficiency. Banning non-competes has no clear downside, but does have clear upside. It makes sense to allow workers to f…

Those are all good points. I would probably push back on the idea that economic efficiency is treated as an end to itself, rather than a means to an end. There's a tipping point where increased economic efficiency isn't necessarily a net good for society overall. I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to…

I would agree that treating economic efficiency as an end to itself isn't ideal - that creates lots of obvious problems. It's probably super efficient to have child labor, for example.

> I think part of me just laments the fact that previous generations took a much bigger risk to form unions and modern generations have largely let it fall to the wayside.

I agree, and it's frustrating not just here but in the political realm as well. I think the Greatest Generation came back from the war and took hold of, and created instutitions: universities, the FDA, the CDC, the FAA, the MacArthur Foundation (just a random thing that came to mind), and importantly unions that protected workers rights and living standards. In the political realm I recently volunteered as a poll worker - it was a ton of fun, truth be told albeit a long day. But many people, friends, family, etc. thought it was a bit weird. We can't have nice things if we don't take care of them or do the hard work of democracy (or unionization, or maintaining valuable institutions) if we don't actually do it.

I'm not sure where this apathy and angst crept in, but I bet suburbanization and social media helped create and subsequently accelerate it to the point where we have some serious problems that need to be addressed.

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

#155

Post by AlexandrB » Thu, Jan 05, 2023, 4:57 PM UTC

cbb330 wrote: post #125

Government intervention is heavy handed and will cause unintended side affects with 100% certainty. What should happen is for: 1) employees to choose to not join companies with contracts that they don't agree with 2) employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs. A natural market response to bad company policy is always preferred to government mandates.

> employees to choose to not join companies with contracts that they don't agree with

And do what? There's not a robust social safety net in the US, if every company in your industry has a boilerplate non-compete you can't just choose not to sign any of them.

> employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs.

Why would they do that when they can just put non-competes in their contracts? Or to put it another way, it's extremely hard to quantify how many people didn't sign an employment contract due to a non-compete (and even harder to quantify the value of that potential employee), it's extremely easy to quantify the cost of an RSU program. Which solution do you think an entity optimized for profit maximization will choose most frequently?

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

#156

Post by Zigurd » Thu, Jan 05, 2023, 4:57 PM UTC

JumpCrisscross wrote: post #121

Zigurd wrote: post #105

Earlier quoted context omitted.

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 def…

> more than "custom." Since we have judicial review, courts can strike down an unconstitutional taking of property The custom cited is the power of the Constitution. The point is all property is an invented construct. This isn’t some neo-Marxist hot take. It’s reflecting that IP is simply a novel form of e.g. drawing lines on a map and calling them deeds. One is older and more precedented. That’s a huge advantage. Bu…

That's all true. Likewise I am just pointing out the underlying reasons why property deeds get more protection than stuff that the people writing the constitution thought was less worthy of protection.

Where we stand now is that courts are less likely to say that congress has no right to shorten patent and copyright terms, than to allow congress to take land without compensation based on market value.

And, in the case of non-competes, that may say even existing contracts cannot lay a proprietary claim to something between your ears.

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

#157

Post by legitster » Thu, Jan 05, 2023, 4:57 PM UTC

My understanding is that most non-competes in the US are not enforceable in the first place. So while I think there are situations where non-competes are valid, I think it would be pretty safe to make a rule that says, "if you are not prepared to actually take an employee to court to enforce non-compete, you should be willing to go to court to defend it."

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

#158

Post by stcredzero » Thu, Jan 05, 2023, 4:59 PM UTC

Rayhem wrote: post #132

notch656c wrote: post #51

Earlier quoted context omitted.

Should be reciprocal if it exists. I.e. if the employee leaves, the company would be barred from hiring anyone else for any remotely similar tasks. Make them taste their own medicine and decide if it's worth it.

It is always interesting to me how much 'morality' (in the sense that an individual/corporation 'should' abide by these rules) can be derived from applying symmetry principles.

People aren't particles, though. What symmetry tests are good for with regards to human beings, is to see if something like a principle which claims to be "fundamental" is really fundamental.

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

#159

Post by ElevenLathe » Thu, Jan 05, 2023, 5:00 PM UTC

notch656c wrote: post #136

ElevenLathe wrote: post #119

Earlier quoted context omitted.

Unless they're corrupt in my favor!

Lets be honest, the common American does not have the bargaining power to corrupt anyone powerful in their favor unless they move to the third world where their dollars go further and corruption is even more accessible.

This is the point of left IMO: to collectively develop the power to corrupt things in favor of workers. This was the point of Tammany Hall. Some Irish immigrant off the boat in 1890 was not a Democrat because he believed in liberalism, but because his ward healer got his brother a job in the sanitation department. When organized labor is strong, they can get Democrats to pass pro-labor policies. The point of all political economy is to corrupt the system of money and power in your personal favor (including your friends, people with similar class interests, your family, etc.). Sometimes that means "anti-corruption" but it's simply a bad idea (pointless, stupid, naive) to point out that some official is corrupt if they are doing what you want them to instead of what someone else does.

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

#160

Post by netheril96 » Thu, Jan 05, 2023, 5:00 PM UTC

endisneigh wrote: post #95

I disagree with banning noncompetes. The issue IMO isn't noncompetes, it's the fact that an employer doesn't have to pay. The rule should be that they can make you not compete, but you must be compensated monthly at your salary level prior to departure. A non compete without having to pay is having your cake and eating it to so to speak.

I disagree. The law can only mandate salaries during noncompete periods. It cannot mandate bonuses or stock grants, both of which can be significant.

And as an employee, I prefer that noncompete has no effect. Even if I were paid during noncompete period, I would be outcompeted by other people who are working rather than being idle. It would set my career back.