New York may ban noncompete employment agreements and Wall Street is not happy • Hacker News Board

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#151

Post by lovich » Sat, Nov 18, 2023, 2:43 PM UTC

silverlake wrote: post #138

bradleyjg wrote: post #101

Earlier quoted context omitted.

This is a problem in the tech industry but not on Wall Street. The norm there is paid time off between jobs (“gardening leave”). Everyone knows it is part of the system and that a mid level or senior hire can’t start right away. They also buy out still vesting bonuses and the like. It’s quite a civilized system and I think the law ought to leave it alone, while addressing abusive ones like we have in tech.

Garden leave means you get your low base salary but not any bonus, which is the bulk of a finance income.

It doesn’t _mean_ that.

It _can_ imply that if garden leave isn’t valued by workers in the negotiation stage of a position, but that also means it could be the bottom right corner of the prisoner’s dilemma.

Luckily one of the major reasons for the government to exist is to create regulation like this to make everyone pick the top left square of the prisoner’s dilemma so we all get a better outcome

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#152

Post by Kamq » Sat, Nov 18, 2023, 2:44 PM UTC

gorbachev wrote: post #121

xvector wrote: post #79

Earlier quoted context omitted.

Why is that the employee's problem? Pay the employee well and they will stick around.

The compensation model in investment companies is such that they will not be able to pay employees well compared to how much value they bring in, unless you're a partner. Furthermore the industry attracts the sort of people who are never satisfied with what they got, and are always looking for more. Not that I'm advocating for non-competes, just saying that you can't address the concerns non-competes are attempting t…

> The compensation model in investment companies is such that they will not be able to pay employees well compared to how much value they bring in

There's definitely an argument here that those companies deserve to be out-competed then.

I'm not saying to ban any of these practices, but the legal system doesn't have to guarantee the feasibility of companies.

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#153

Post by [deleted] » Sat, Nov 18, 2023, 2:48 PM UTC

amadeuspagel wrote: post #73

vgatherps wrote: post #26

Quant firms at least are one of the few places where noncompetes can make sense. It's an extremely IP sensitive industry with stupendously high pay where the employee is going to someone probably competing very directly with you, for the same/similar opportunities. Actual code + NDAs banning literal reimplementations of stuff aren't that valuable, the knowledge and ideas will stay in the head of the employees. The tw…

Isn't the same true for SV companies, and aren't they doing fine without noncompetes?

[deleted]

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#154

Post by lovich » Sat, Nov 18, 2023, 2:48 PM UTC

thsksbd wrote: post #144

bradleyjg wrote: post #101

Earlier quoted context omitted.

This is a problem in the tech industry but not on Wall Street. The norm there is paid time off between jobs (“gardening leave”). Everyone knows it is part of the system and that a mid level or senior hire can’t start right away. They also buy out still vesting bonuses and the like. It’s quite a civilized system and I think the law ought to leave it alone, while addressing abusive ones like we have in tech.

Its a terrible system. If we assume that the financial sector is good for society, then a productive element of it is idling causing inefficiencies leading to higher fees. If the assumption is incorrect, then the financial sector is not a productive part of the economy. In this case the worker's vacation is irrelevant since it's just a manifestation of the parasitical nature of it. Either way normal people are paying…

Do you believe that buffers are a terrible system? Do you think that any significant piece of software could run without a buffer?

If the answer is no, then you should reconsider thinking that garden leave is bad. It’s essentially a buffer that covers the switching cost for agents needing to decide which principal they work for.

If you removed garden leave you’d have a higher up front cost for rational actors who needed to account for the fact that they could lose their income stream at any moment if they were fired

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#155

Post by donatj » Sat, Nov 18, 2023, 2:56 PM UTC

Sometimes I feel like corporations do things just because their lawyers are cargo culting and adding clauses because everyone else does rather than some logical reason.

My sister worked at Subway and had to sign a noncompete that she wouldn’t work at another sandwich shop for three years. Are they really afraid she’s going to steal their secrets of placing meat on bread?

The more cynical will certainly assume malice, that the company did this to keep you from leaving. It particularly at the time it was not hard at all to find new fast food workers, and I am a firm believer in Hanlon’s Razor and never assume malice when incompetence will do. I genuinely think the explanation could just be Subway’s lawyers were like “everyone else is doing noncompetes”.

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#156

Post by davedx » Sat, Nov 18, 2023, 2:58 PM UTC

vgatherps wrote: post #26

Quant firms at least are one of the few places where noncompetes can make sense. It's an extremely IP sensitive industry with stupendously high pay where the employee is going to someone probably competing very directly with you, for the same/similar opportunities. Actual code + NDAs banning literal reimplementations of stuff aren't that valuable, the knowledge and ideas will stay in the head of the employees. The tw…

Eh. Firms quants work for compete with the public market not each other. Writing an automated trading strategy isn’t targeting specific actors, it’s trying to convert alpha into profit.

I guess there’s a weak argument to make for the HF part of HFTs

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#157

Post by durumu » Sat, Nov 18, 2023, 2:59 PM UTC

lordnacho wrote: post #89

izacus wrote: post #68

Earlier quoted context omitted.

And what benefit does the economy and society get by allowing monopolization of these strategies by a single company at the expense of basic right for workers to switch jobs to the ones that pay them the most? It sounds so profoundly anti-capitalist - if the knowledge of certain strategy is so important, the employee should be retained by paying them more and giving them better perks instead of enforced labor contrac…

This is exactly the right question. If quant firms make the world a better place by tightening spreads - a common justification - then wouldn't we get an even better place if everyone knew about these strategies?

A counterargument here is the effects on internal transparency. If a quant firm knows its employees can leave and join a competitor tomorrow, they will be less forthcoming with IP. The lack of openness could lead to lower productivity within the firm, as work gets duplicated and teams can't share their insights with each other.

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#158

Post by j45 » Sat, Nov 18, 2023, 2:59 PM UTC

Non-competes have always been interesting:

"We are hiring you because you already know how to swing a hammer in our industry, but you may not use a hammer for any other company who may also have hired you for knowing how to swing a hammer"

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#159

Post by malux85 » Sat, Nov 18, 2023, 3:01 PM UTC

donatj wrote: post #155

Sometimes I feel like corporations do things just because their lawyers are cargo culting and adding clauses because everyone else does rather than some logical reason. My sister worked at Subway and had to sign a noncompete that she wouldn’t work at another sandwich shop for three years. Are they really afraid she’s going to steal their secrets of placing meat on bread? The more cynical will certainly assume malice,…

Is there a version of Hanlons Razor but instead of incompetence, it’s money?

I’m a firm believer in that. The clause was probably put in there so the lawyers could bill more hours.

I can easily imagine a legal firm noticing a drop in billable hours so they start reaching out to existing clients, throwing in a bit of fear, saying everyone is putting non-competes in their agreements you should too. Boom, all clients get billed extra that month, I wouldn’t call this incompetence, but greed

Re: New York may ban noncompete employment agreements and Wall Street is not happy

#160

Post by GuB-42 » Sat, Nov 18, 2023, 3:01 PM UTC

JoeAltmaier wrote: post #119

GuB-42 wrote: post #78

The article doesn't address what I think is the most important aspect of noncompete agreements: compensation. In France, and I believe in many other places as well, you can't have a noncompete without proper compensation. Compensation is relative to how it will affect the former employee career, it is usually less than a full wage, but it can be that if it makes finding a new job particularly difficult. There have be…

Good idea to ban them, then. No issue remains.

I don't think completely blanket banning noncompetes is a good idea either, there are some cases where they are justified. We just need rules to make sure that they serve their intending purpose (protecting company secrets) without negatively affecting employees.

The rule of thumb should be that the majority of employees under noncompete should be happy about it (because of the advantageous compensation). It is only a problem when it is not the case.

Not you can argue about the value of secrecy vs openness to society as a whole, but that's another debate.