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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

#271

Post by subradios »

gen220 wrote: post #253

I think we're all pretty familiar with the arguments against non-competes. Does anybody have a compelling argument for them, as practiced in 2023 in the US? While we're at it, does anybody have a compelling justification for allowing non-poach agreements, too? From my perspective, they both seem like a non-durable benefit to $current_employer at the expense of a compounding opportunity cost to the greater economy (in…

The issue is that it's very difficult to tell trade secrets from expertise in certain fields. In a field that is sufficiently niche, like non flagship chip production - a lot of architectural ideas are well known across the industry are but the implementation details that enable them are trade secrets. You can't "un see" these details and IP law is loose enough that you could easily reimplement those features or products for a competitor without violating IP laws because you've seen the idea before and can come up with infinite implementations.

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

#272

Post by CodeWriter23 »

Doesn't this diminish the value of a startup, say, if the buyer hands the principals a mountain of cash in a buyout then the principals use that cash to build in the same industry / market the startup they would have if they had all that cash in the first place? Without having the non-compete with the principals, who would even want to buy your startup?

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

#273

Post by acd »

I suggest we also implement open source peer reviewed employment contracts.

Almost always in the end of the recruitment process are you showed the emploment contract fine print.

Been through a non complete clause myself I highly recommend against it. Your skill and work experiance is the most valluable asset to a future employer. Non compete clauses prevent you from seeking jobs in a similar field.

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

#274

Post by 1vuio0pswjnm7 »

yardie wrote: post #210
1vuio0pswjnm7 wrote: post #189

Earlier quoted context omitted.

Imagine that the employer does not have a non-compete in place with her current employees. In the US, she may offer a single, token amount in exchange for signing an agreement containing a non-compete clause. This could, for example, be described by the employer as a "bonus". It does not have to be reasonably-based on the amounts the employee might gain from working for a competitor. It could be much lower. The emplo…

You can always turn it down. Contracts have whats called consideration. I've seen companies try to get away with NCA/NDA by tying severance to signing one. I would have to be truly desperate to take the money over the health of my career, yet that is exactly what a lot of companies rely on.

In the US, I have never seen a severence agreement that did not include confidentiality provisions. However (IMO) the inclusion of non-compete provisions has become more common across all levels of employment and all job categories. The vast majority of US workers will sign these agreements. That cultural trend makes it (a) easier for employers' legal counsel to manage any issues raised by the minority and (b) more difficult, if not impossible, for the minority to negotiate.

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

#275

Post by chadash »

monksy wrote: post #252
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…

Non-competes do not protect an organization against IP theft or trade sceret dismenination. Those are portected by NDAs, confidentiality agreements, copyrights, patents, etc. Non-competes limit where your staff can go to. Without proper compensation for the time period in which they apply for, they're a very one sided (and in some cases illegal [NCs are legal in IL unless they assert an economic hardship]) way to pre…

> Those are protected by NDAs, confidentiality agreements, copyrights, patents, etc.

This gets thrown around HN a lot but I don't think it matches reality. Say I work in machine learning algorithms for show recommendations at Netflix. Amazon hires me to work on their machine learning algorithm recommender on Prime Video. Sure, I might have NDAs to protect what I learned at Netflix, but how does Netflix realistically show whether or not I disseminated that knowledge at Amazon? It's not like they can just ask to see Amazon's code to see if the knowledge has been ported over to there. The only way to really show that I infringed an NDA is for someone to rat me out, which is probably pretty rare. To that end, I understand why companies want non-competes (I'm not saying they should be allowed to have them... I'm just saying that there are reasons that they exist beyond "we don't want employees to leave). In finance, it's very common to get a paid non-compete where you get your full salary for as long as the company wants to enforce the non-compete. Companies aren't paying these high salaries just because "training cost is expensive and it's to limit staff from training at one company and leaving". They are doing it because they actually fear the consequences of the employee's new firm competing with them based on the knowledge that the employee has. For this reason, it's also pretty common for companies in finance to not pay out gardening leave when they aren't worried about the employee's new company directly competing.

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

#276

Post by Digory »

gen220 wrote: post #253

I think we're all pretty familiar with the arguments against non-competes. Does anybody have a compelling argument for them, as practiced in 2023 in the US? While we're at it, does anybody have a compelling justification for allowing non-poach agreements, too? From my perspective, they both seem like a non-durable benefit to $current_employer at the expense of a compounding opportunity cost to the greater economy (in…

In theory, it lowers the risk of hiring in certain situations. So, if the alternative is not hiring, that's beneficial.

For a lot of companies, the "sauce" is a personal relationship that isn't trade secret. If you hire a salesman, and give them access to Mr. Big, you create an incentive for the employee to trade the relationship for your competitor's money.

Penalizing the change in employer is not the only way to deal with it, of course. Without a non-compete, you might have to buy/keep the salesman's loyalty. Which may or may not be an economic deadweight.

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

#277

Post by TheCoelacanth »

CodeWriter23 wrote: post #272

Doesn't this diminish the value of a startup, say, if the buyer hands the principals a mountain of cash in a buyout then the principals use that cash to build in the same industry / market the startup they would have if they had all that cash in the first place? Without having the non-compete with the principals, who would even want to buy your startup?

I doubt the rule would apply in that case because that isn't a labor contract, it's a contract to sell a business.

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

#278

Post by saraton1n »

Of course, it was entirely hearsay, but I've always heard that non-competes were unenforceable and primarily a scare tactic. It's yet to impact me tangibly, and I understand the need to protect IP, but I don't think non-competes are the way to go about it. I believe this is the right move!

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

#279

Post by throwaway09223 »

chadash wrote: post #269
fendy3002 wrote: post #242

Earlier quoted context omitted.

Well if all companies are doing it, employees will have no option other than to agree. This is the current case with non compete afaik.

There's a big difference. Paid gardening leave means that the employer actually has skin in the game. I'd bet that 9 times out of 10 they won't actually enforce these non-competes if they actually have to bear some cost (certain industries might be exceptions). The problem with the status quo is that an employer will have the non-compete in play regardless of whether the "competition" would really hurt them.

When I look at the last decade of my employment, my base salary is less than 10% of my overall comp. Maybe even 5%.

For high demand folks (the kind we read about in executive emails between Apple and Google and so on) it seems very possible that a company would opt to pay 10% of the employee's comp to deny them from the competition.

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

#280

Post by Nomentatus »

subradios wrote: post #271
gen220 wrote: post #253

I think we're all pretty familiar with the arguments against non-competes. Does anybody have a compelling argument for them, as practiced in 2023 in the US? While we're at it, does anybody have a compelling justification for allowing non-poach agreements, too? From my perspective, they both seem like a non-durable benefit to $current_employer at the expense of a compounding opportunity cost to the greater economy (in…

The issue is that it's very difficult to tell trade secrets from expertise in certain fields. In a field that is sufficiently niche, like non flagship chip production - a lot of architectural ideas are well known across the industry are but the implementation details that enable them are trade secrets. You can't "un see" these details and IP law is loose enough that you could easily reimplement those features or prod…

IANAL but I had (kinda unconsciously) assumed that what can be protected by trade secrets was broader than what patents protect (patents merely implementations - which might be broad.) So I'd like to know more; though I wouldn't be shocked (now that I think about it) if you're quite right.

In any case, even if the employee refuses to work on a given task, that's information. Having to say: "Yeah, I think you want somebody else to design that particular part" (implying "because they'll be freer to innovate and free to choose the optimal solution") is a big fat clue that could attract a lot of resources to the design of that part.

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