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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

#201

Post by caskstrength »

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.

Cry me a river. If knowledge of some particular employees worth so much to the quant firms, then they should pay them not to leave accordingly.

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

#202

Post by habosa »

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,…

Lawyers will attempt to put the most advantageous terms possible in any contract they write. It’s just what they do. It’s not malice or incompetence. It’s training.

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

#203

Post by nostrademons »

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,…

The lawyers are largely copying & pasting. They come up with a template that works for most of their clients and then re-use it when a new one comes along.

I worked in Massachusetts (which allows non-competes) early on in my career, and at one point took my contract to a lawyer. He was like "This was written by a California law firm. It has clauses that are specific to California law." (One of them was that it specifically did not have a non-compete, carved out in the contract.)

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

#204

Post by eszed »

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?

That's why he suggested "average of preceding years". Maybe you allow companies to appeal to reduce the amount based on a decline in profits leading to reduced bonuses for employees on identical schemes, but... Meh. If they want to use non-compete clauses I think they should bear that risk. It will make companies think hard about on whom they should impose them, which in my opinion is the point of creating restrictions.

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

#205

Post by hysan »

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…

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

Unless you have the monetary means to bring the issue to court (and see it through to the end), any clause like this will effectively be a law.

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

#206

Post by ghaff »

ajb wrote: post #47
cj wrote: post #29

Earlier quoted context omitted.

Non-solicits also include not soliciting customers. Which is particularly relevant at consultancies where the product is a service. If you join a consultancy group, and 2 months later quit with the client roster... is it really OK to poach all their clients to start your own consultancy? All of these contracts are time limited, FWIW. E.g. non-solicitation doesn't mean you can never work your your colleagues again. It…

I'm talking only about soliciting co-workers. It should be within the ability of legislators to ban only that - they are clearly distinguishable, as they have different contractual relationships. I don't really have an opinion about soliciting clients. It's true that multiple people can quit at the same time, but non-solicitation clauses significantly impedes the process otherwise companies wouldn't bother to write t…

Non-solicitation clauses are typically mostly about client lists. Companies may get a bit grumpy if a bunch of employees leave to go work for a former manager elsewhere but AFAIK there's not much they can do about it. Who is to know who even initiated the reaching out assuming a bare minimum level of discretion?

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

#207

Post by eszed »

durumu wrote: post #157
lordnacho wrote: post #89

Earlier quoted context omitted.

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.

As long as we're throwing around generalized hypotheses, a company that shared internal IP freely, and also compensated people such that they didn't leave, would gain a lasting competitive advantage.

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

#208

Post by greenyoda »

j-bos wrote: post #75

Would this law apply to a conpany headquartered in NY but incorporated in Delaware? Assuming the employee lives in a third state?

Usually, the legal rights of an employee are based on the location (city, state or country) that the employee is located in. (For example, if you're an Idaho company with employees in New York City, you need to pay those NYC employees at least the NYC minimum wage of $15/hr.)

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

#209

Post by kube-system »

Hizonner wrote: post #194
kube-system wrote: post #193

Earlier quoted context omitted.

> 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 total…

Yeah, that’s what I meant by

> 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.

These noncompetes do work well as an empty threat.

Although I suspect the majority of sandwich shop workers or managers aren’t paying any attention to the language in their onboarding paperwork, and are just going through the motions.

I would like to see limits on this, but I’m not sure there’s a way to penalize lawyers for this, because they often are not the ones deciding who to hand these contracts to. Usually businesses have a lawyer draft up a general agreement, and then lazy business management just hands the same one to everyone from the VP to the janitor. That’s not really the lawyer’s doing.

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

#210

Post by FpUser »

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,…

So those supposedly smart people do not realize that said claim if followed is like semi slavery? Of course they do. They just do not give a flying fuck. Give them freedom and they will sell you for organs smiling all the while.
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