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

fortune.com

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

#191

Post by caddemon »

Paul-Craft wrote: post #45
cj wrote: post #40

Earlier quoted context omitted.

I hear what you’re saying, but it’s hyperbole. I think there’s zero percent of you starving over your unwillingness to sign a non-compete. Pretending like the situation is that extreme isn’t helping anyone.

Why should I believe you? You don't offer an argument. It is entirely plausible that one could be faced with a situation of losing one's home, health insurance, ability to exist in modern life, and, oh, one's actual life due to unemployment. I know this because it happens. Non-competes, by definition, make this problem worse by reducing the number of jobs available to a person. What's your justification?

Wall Street non-competes are only enforced if they pay you your base salary during the period. They can also opt to not do that and waive the non-compete, in which case you can work anywhere. I think it's ridiculous that Subway has non-competes, but with regards to the article I doubt anyone is forced to choose between working for a trading firm and starving. There also are some firms that do not do non-competes. So it's closer to voluntary than involuntary I'd say, though very few decisions are truly 100% personal choice.

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

#192

Post by lokar »

bachmeier wrote: post #39
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…

> 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. So the solution is that employees should only be able to work for one employer in their career? I wouldn't disagree with this argument if the noncompete…

I’ve seen “hostage exchanges” where two firms wave the noncompete (for people already on garden leave) so they can start right away. Seems to undermine the idea that sensitive IP is at risk.

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

#193

Post by kube-system »

avar wrote: post #172
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,…

Let's say your sister and her coworker form a union, and Subway fires them. Now they also won't have the legal ability to simply open a new sandwich shop right next to Subway. I.e. you're imagining that non-competes are there to protect proprietary know-how. That's mostly true for some companies, but for others (e.g. Subway) it's a wedge guarding them against the collective action of their employees.

> you're imagining that non-competes are there to protect proprietary know-how.

Legally speaking, that is often the case. Many states require a noncompete to have a “legitimate business reason”, and proprietary knowledge is the most common legitimate reason used.

I suspect judges in most states would invalidate a noncompete for a sandwich shop worker.

The legal purpose of these clauses is to keep high paid workers from stealing customer lists or business secrets. The legal system does tend to frown on them being used for rank and file.

Many employers just use them as an empty threat to manipulate people, because they know few people are going to hire a lawyer over it.

I mean, even from a practical perspective, noncompetes are pretty weak unless the employee is the kind of person who would make the news when they join a new company. You can always leave a company and tell them nothing about where you’re going. A subway franchise ain’t gonna hire some PI to figure out where a former front-line employee got a new job.

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

#194

Post by Hizonner »

kube-system wrote: post #193
avar wrote: post #172

Earlier quoted context omitted.

Let's say your sister and her coworker form a union, and Subway fires them. Now they also won't have the legal ability to simply open a new sandwich shop right next to Subway. I.e. you're imagining that non-competes are there to protect proprietary know-how. That's mostly true for some companies, but for others (e.g. Subway) it's a wedge guarding them against the collective action of their employees.

> you're imagining that non-competes are there to protect proprietary know-how. Legally speaking, that is often the case. Many states require a noncompete to have a “legitimate business reason”, and proprietary knowledge is the most common legitimate reason used. I suspect judges in most states would invalidate a noncompete for a sandwich shop worker. The legal purpose of these clauses is to keep high paid workers fr…

... assuming a sandwich shop worker had the legal acumen to realize that and the financial resources to get it in front of a judge and/or to carry it through to completion... especially because there's probably also an arbitration clause that at least initially puts you in front of an arbitrator very much biased in the sandwich shop's favor.

Just having the piece of paper to wave around is valuable even if it's totally unenforceable.

Which is why, at a minimum, any lawyer who participates in drafting something like that should be removed from the profession. And most likely there should be criminal penalties for the corporate management involved.

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

#195

Post by bee_rider »

karaterobot wrote: post #150
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.

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.

The first thing somebody in this sort of job should do is establish a 1-2 year savings buffer, right?

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

#196

Post by pclmulqdq »

karaterobot wrote: post #150
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.

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.

The signing bonus from your next job should make up for the loss of pay during garden leave. Many finance companies are willing to hire 12-18 months in advance if you are filling a real need.

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

#197

Post by snovv_crash »

lordnacho wrote: post #88
vgatherps wrote: post #72

Earlier quoted context omitted.

> I feel like the solution is to force the company to pay full TC (average of previous years + inflation or something?) for the duration of the noncompete. It absolutely has to be something like this at a bare minimum. The whole "We pay full base" argument is nonsense when the TC is multiples of base.

But bonus depends on how the team did plus individual perf... politics. How do you establish what the person would have gotten paid?

Take the average over the last years? If the employer doesn't want to pay that then the employee can always go work for a competitor, right?

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

#198

Post by caskstrength »

arrrg wrote: post #50
infairverona wrote: post #48

Earlier quoted context omitted.

I feel like the solution is to force the company to pay full TC (average of previous years + inflation or something?) for the duration of the noncompete.

In Germany non-competes have a max duration of two years and compensation has to be at least 50%.

Living two years on half the salary sucks though.

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

#199

Post by Hizonner »

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…

So they only make sense in an industry that probably shouldn't be allowed to exist in the first place?

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

#200

Post by CSMastermind »

bee_rider wrote: post #195
karaterobot wrote: post #150

Earlier quoted context omitted.

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.

The first thing somebody in this sort of job should do is establish a 1-2 year savings buffer, right?

Yes that's basically what everyone does.
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