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New Washington state law bans noncompete agreements

seattletimes.com

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Re: New Washington state law bans noncompete agreements

#51

Post by colechristensen »

dismalaf wrote: post #43

This feels a tad heavy-handed and will make it tougher to sell a business without hard assets. It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

As the years go buy I'm gradually more and more in favor of restrictions to sell businesses. They tend to benefit two groups: the people running a successful business and the people running the even more successful businesses buying them.

They tend not to benefit the employees, the customers, the competitors and really anyone else besides a small number of people who are already very successful.

Re: New Washington state law bans noncompete agreements

#52

Post by SilverElfin »

otterley wrote: post #30

Why wait until 2027, instead of making it effective immediately?

Especially when WA’s ruling party regularly uses false ‘emergency’ declarations to make new laws become effective immediately and because this lets them make new legislation immune to voter referendums (yes they abuse this loophole all the time). They could do the same here. If they don’t, it’s a choice made on purpose.

Re: New Washington state law bans noncompete agreements

#53

Post by dismalaf »

colechristensen wrote: post #51
dismalaf wrote: post #43

This feels a tad heavy-handed and will make it tougher to sell a business without hard assets. It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

As the years go buy I'm gradually more and more in favor of restrictions to sell businesses. They tend to benefit two groups: the people running a successful business and the people running the even more successful businesses buying them. They tend not to benefit the employees, the customers, the competitors and really anyone else besides a small number of people who are already very successful.

Not all businesses are wildly successful. Some are just successful enough to provide a single family with a middle class income. For some people, selling that is their only hope of retirement.

It's not like the seller never has an option to say no to the non-compete.

Re: New Washington state law bans noncompete agreements

#54

Post by Beestie »

jeffreyrogers wrote: post #14

The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.

Non-competes are restrictions on employees by their current employer. A non-compete agreement between a seller and buyer is perfectly fine.

Re: New Washington state law bans noncompete agreements

#55

Post by coredog64 »

Analemma_ wrote: post #5

It always baffles me how much resistance there is to banning noncompetes every time this is proposed, and how that resistance lives right alongside “we want to be the next Silicon Valley”, even though pretty much every analysis of “what’s Silicon Valley’s secret sauce” cites the unenforceability of noncompetes as one of the most important factors. But maybe the ship is turning very slowly.

Personally I think the way to go about this isn't to ban non-compete agreements but instead to get a couple of highly public cases where said non-compete is voided because the employee didn't receive anything of value for it. Once case law is clear that it requires 80% of the employees salary for the term of the lockup, companies will only require it where it makes sense rather than applying it willy-nilly due to the essentially free nature.

Re: New Washington state law bans noncompete agreements

#56

Post by dymk »

lateforwork wrote: post #11

The flip side should be considered as well. There should be some sort of protection for small startup companies. A big company should not be able to steal an innovative startup's technology by hiring away the employees that worked on the product. That used to happen a lot when Bill Gates was running Microsoft, for example. Patents provide some protection, but it is flawed because a big company can put you out of busi…

Employers have plenty of leverage over workers already.

Every time a pro-worker bill passes, there's an endless scree of "But what about the corporations?". Wow it's tiring.

Re: New Washington state law bans noncompete agreements

#57

Post by BurningFrog »

colechristensen wrote: post #51
dismalaf wrote: post #43

This feels a tad heavy-handed and will make it tougher to sell a business without hard assets. It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

As the years go buy I'm gradually more and more in favor of restrictions to sell businesses. They tend to benefit two groups: the people running a successful business and the people running the even more successful businesses buying them. They tend not to benefit the employees, the customers, the competitors and really anyone else besides a small number of people who are already very successful.

All voluntary transactions benefits both buyer and seller.

This is as it should be!

Re: New Washington state law bans noncompete agreements

#58

Post by Beestie »

A clause I frequently see (as one who performs a lot of contract work) is a restriction on accepting an offer of employment from the client of the consulting firm I'm contracting with. Whenever I see this clause, I redline it out and advise the consulting firm to fashion a buyout clause* with the client. I'm very firm that the consulting firm cannot restrict my employment opportunities.

* The buyout clause is between the client and consulting firm and roughly compensates the consulting firm for the lost profit of the rate diff over the remaining term of my contract with the consulting firm.

Re: New Washington state law bans noncompete agreements

#59

Post by dylan604 »

colechristensen wrote: post #45
hodgesrm wrote: post #39

Earlier quoted context omitted.

That's how it works in California. I had a 3 year non-compete with VMware after we sold a business to them. It was restricted to the specific market and technology our business covered but didn't limit activities in other areas. It seemed completely fair to me. Besides, competing would have meant doing exactly the same thing over again. What's the fun in that?

>Besides, competing would have meant doing exactly the same thing over again. What's the fun in that? All of the baggage and tech debt gone! THIS TIME WE'LL DO IT RIGHT

It is not unheard of that employees leave a company to start their own precisely because the company is not addressing something specific leaving a gap in services. The startup begins to gain traction to the point the company the employees left buys the startup. It's like this is the only way for the company to "do it right", yet it would have been cheaper if they'd just let the employees do the thing as employees in the first place

Re: New Washington state law bans noncompete agreements

#60

Post by dylan604 »

NewJazz wrote: post #15
jeffreyrogers wrote: post #14

The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.

Isn't that doable via stay on and holdback clauses?

I think every company with contracts like this should have a well furnished roof for these employees to hang out during the day
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