Evidently, Obama campaigned on promises to protect low-wage earners from employer exploitation using non-competes. Politicians seem to be more in favor of advancing non-compete protections only for this demographic.
Some good articles about non-compete politics in America and the de-fanging of the FTC federal initiative:
Non-compete clauses are already extremely difficult to enforce. They're traditionally disfavored under common law; get one before a judge and it will frequently be struck out, or at minimum, sharply limited in scope. But it's not about winning an injunction or damages for the employers that use non-competes, it's about using the threat of a lawsuit to keep workers nice and biddable.
So the bill is well worth doing, just people stop writing unenforceable bs into contracts.
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…
> We just need rules to make sure that they serve their intending purpose (protecting company secrets) without negatively affecting employees.
Every time there is a discussion of non-competes on HN there is always a bunch of confused people who can't grasp the difference between NCA, NDA and NSA. You don't need NCA to "protect company secrets" or ensure that people don't just steal company's clients or something. Non-competes are only needed to depress the wages by making it very hard for employees to change jobs, end of story.
To be honest, I find this really refreshing in a - to me - weird way, cause at least no one lies to themselves or the other. It reminds me of what people say about Oracle, that it only has one goal: To make money. No bullshit about mission or whatever. Why are we at Oracle? To make money. The end. Maybe if more companies and their executives were so open with what they want (and maybe I'm cynical, but imho it is the…
If you (or others) haven't seen it you owe it to yourself to see the "Larry Ellison lawnmower" talk: https://youtu.be/-zRN7XLCRhc?si=SMpYPck-EJqe1uEv&t=35m00s
It's where I partially got it from - but thanks for the link. The whole conversation just reminded me of it.
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 ge…
> Is there a version of Hanlons Razor but instead of incompetence, it’s money?
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 it possible it’s just about power?
Non-competes make it harder to find a new job. Employers want it to be hard to find a new job, since that means it’s hard to leave your current job even if the pay/hours/whatever is poor.
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"
They make sense where there are specific internal secrets, it's not just about IC skillset necessarily. But it's true they're definitely overused.
Non-competes have only ever made sense where the employee is compensated for signing. Codifying this change would immediately make companies stop with blanket non-competes, and only have them on key people. While not impossible, non-competes without compensation are already hard to enforce as judges don't look kindly on preventing people from earning a living. The problem is the asymmetry of power let companies bully…
I mean yeah that's the point I made? FWIW, trading firm noncompetes are almost always compensated with the base salary and they're still blanket applied. A major contributor is that the employer is only paying a fraction of the true employee compensation, making it easy to blanket apply and creating a form of golden handcuffs.
They're not applied as widely as it may seem. The terms are typically "up to" the length of time, and in practice firms waive 50-100% of the non-compete length pretty frequently, which is a decent sign that the cost is non-negligible. It is a bit tricky not knowing until you quit how long you'll be held to it, though.
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.
From my perspective it sounds civilized, but a friend of mine who sat out most of quarantine on gardening leave said he found it hard to support his family. You get your base salary, but not your bonuses, which are the majority of your pay in that industry. And since you can't get another job for the duration (or he couldn't, at any rate) it got a bit tougher than I would have assumed.
Gardening leave--especially if it's not even 100% base salary--isn't really a great answer especially to the degree that it normalizes non-competes. For a young unattached person who will use it to travel the world for a year on the cheap? Maybe. But others might be looking at easily a 50% total compensation cut and a year+ hole in mid-career employment. For most people, it's not a simple matter of "Great, I'll spend a year building a startup!"
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…
Why does it make sense. Pay employees for their work and they’ll stick around.
The argument against this is that a company spends millions of dollars in research to learn something valuable, and anyone who didn't spend that money can trivially outbid for the employee that knows the results, since they can pay the employee some significant portion of the cost of the research that they didn't have to do and still come out ahead. I'm not sure I entirely buy this, but it's a lot more nuanced than "just pay your employees well".