Massachusetts Governor Announces Plan to Abolish Noncompetes • Hacker News Board

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#61

Post by danvoell » Thu, Apr 10, 2014, 6:16 PM UTC

bm1362 wrote: post #51

danvoell wrote: post #42

For sales people I see a value in non-competes. I own a company which can run successfully with 100 clients. If I hire a sales person who builds good enough relationships with 50 of our existing clients such that he takes them to another company, he could cut our revenue in half. Why is that supposed to make me want to set up my business in Massachusetts? This announcement would seem to make businesses less competiti…

If a sales person is keeping around 50% of your business, you should provide incentive for them to stay- right?

Yes you should provide incentives. I'm not in favor of bad management or bad partnerships, I just think that the value of an employee who can bring new relationships to a new company should be more than the value that they have maintaining relationships at their existing company.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#62

Post by ghaff » Thu, Apr 10, 2014, 6:21 PM UTC

nickff wrote: post #57

ghaff wrote: post #39

Earlier quoted context omitted.

Economic theory would suggest so. I suspect that, adjusting for everything else, it's a pretty small effect. Would be an interesting study though. I wonder if there's one there. [EDIT: Duh. I misread the original post. Of course, the salary should be higher not lower to compensate for such a restriction--though I still suspect it would be small.]

What economic theory would suggest this? This non-compete appears to be an option, and would be priced as such.[1] I would guess that purchasing any additional assurance from an employee would cost the employer(s) more, perhaps in the form of salary, severance, or a signing bonus. [1] http://en.wikipedia.org/wiki/Valuation_of_options

You're, of course, correct for the reason that you state.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#63

Post by cloverich » Thu, Apr 10, 2014, 6:23 PM UTC

danvoell wrote: post #53

chris_mahan wrote: post #46

Earlier quoted context omitted.

If those 50 clients would be better served getting a different product from a different vendor, then why would you want to stop that? If your product is superior in value, the salesman won't be able to move the customers away from your products. Make better products. Anyway, you'll attract better salesmen.

I don't want to deny consumers from the ability to choose. This concept theoretically makes business entities weaker and employees stronger. In practice I presume that this concept would force business owners to provide less information to employees if such information could be used against them in the future. So is the employee actually stronger?

Well, withholding useful information from an employee can weaken the business as much, or more, than the employee. Given that business advantages are relative, that could potentially balance out. Conversely, the employees ability to work at will is an out-right advantage, so I'd argue that the employee still comes out ahead.

Additionally, these non-competes are often used in business where no meaningful additional data is shared, such as in the Dental field (e.g. they can't not share their clients with Dentists they hire, regardless of non-compete status). You may argue they would choose not to hire an associate in the first place, but then that leaves clients on the table for a new practice anyways. (empiric data would be a god-send)

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#64

Post by api » Thu, Apr 10, 2014, 6:25 PM UTC

GFK_of_xmaspast wrote: post #12

drawkbox wrote: post #3

Non-competes are anti-business, anti-innovation and feudal. I have never signed one. I can't tell you how many times I have been asked to sign one that locks up your skills, which you are bringing to the company that they might not have yet, solely for them for years even though the project might only be 3-6 months. I applaud this effort immensely in MA, there is no place for non-competes in the US. It is entirely an…

Non-competes are very much pro-business, in that they weaken the power of labor.

Capitalism is an adversarial system. People forget that.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#65

Post by danvoell » Thu, Apr 10, 2014, 6:26 PM UTC

cloverich wrote: post #63

danvoell wrote: post #53

Earlier quoted context omitted.

I don't want to deny consumers from the ability to choose. This concept theoretically makes business entities weaker and employees stronger. In practice I presume that this concept would force business owners to provide less information to employees if such information could be used against them in the future. So is the employee actually stronger?

Well, withholding useful information from an employee can weaken the business as much, or more, than the employee. Given that business advantages are relative, that could potentially balance out. Conversely, the employees ability to work at will is an out-right advantage, so I'd argue that the employee still comes out ahead. Additionally, these non-competes are often used in business where no meaningful additional da…

I agree

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#66

Post by rz2k » Thu, Apr 10, 2014, 6:26 PM UTC

nickff wrote: post #48

_delirium wrote: post #34

Earlier quoted context omitted.

Historically the rationale for pro-business policies is that greater production creates more wealth for everyone in a society. I don't think that's really true, in a realpolitik sense if you look into why different interest groups were advocating for "pro-business" policies at various points in various countries' histories. Historically the rationale for "pro-business" policies has most often been that they increase…

This is a 'bootleggers and baptists'[1] situation, and it is almost impossible to determine the true motives of the politicians.[1] We might be suspicious of the motives of the politicians, but we should also consider that they may be operating with a variety of rationales, all difficult to disentangle. [1] http://en.wikipedia.org/wiki/Bootleggers_and_Baptists

It's an excellent term!

It does capture why I am surprised that content distributors have lobbied against ISP favoritism. I want to believe that Netflix wants an entrepreneurial environment like the one that enabled their initial growth, but I can't help wonder if their greatest threat isn't some new upstart, and why they wouldn't be in favor of a large barrier to entry, even if it costs a nontrivial portion of their revenues.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#67

Post by bippi » Thu, Apr 10, 2014, 6:27 PM UTC

There is a rumor in the company I work for currently that an employee went to go work for a vendor of ours. That vendor was informed that if they wanted to stay a vender, they wouldn't hire that former employee. The former employee wasn't hired. This was all kept in phone conversations and voice calls, so it was hard to legally track.

Since that time, anytime someone leaves, no one...and I mean no one... finds out about where someone is going until long down the road.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#68

Post by nchuhoai » Thu, Apr 10, 2014, 6:30 PM UTC

It's really surprising to me that no one has so far mentioned the EIR program for international students. While details are vague, it seems like Massachusettes is trying to set up an alternative for international students that want to start startups instead of being slaved in an H1B position. Really looking forward to this one

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#69

Post by lawnchair_larry » Thu, Apr 10, 2014, 6:32 PM UTC

tptacek wrote: post #36

iamthepieman wrote: post #19

Earlier quoted context omitted.

This was a company with under 50 employees who had a full time general counsel. They had no lines of business that were remotely related to law. Maybe that's not abnormal but I had never, and have never since, seen a small company who didn't outsource their GC needs.

I think the general pattern I'm referring to is: * Candidate inbound * Has presumably-unenforceable noncompete * Prospective employer made aware of noncompete * Prospective employer concerned that former employer might make a claim that the hiring process constituted knowing interference with a contract, and that that claim might be colorable even if the noncompete had no teeth. * No hire

I know of at least one company (Microsoft) that goes the extra mile and stipulates in your non-compete that you must show every future employer the non-compete that you signed. It would seem like that is only in there because Microsoft has very intimidating teeth.

I also heard a rumor that when Google takes their talent, they send them down to the bay area for 18 months to dodge WA's non-compete friendly laws. But I'm a bit skeptical of that one unless perhaps it's a VP or something.

Re: Massachusetts Governor Announces Plan to Abolish Noncompetes

#70

Post by dusing » Thu, Apr 10, 2014, 6:34 PM UTC

chris_mahan wrote: post #46

danvoell wrote: post #42

For sales people I see a value in non-competes. I own a company which can run successfully with 100 clients. If I hire a sales person who builds good enough relationships with 50 of our existing clients such that he takes them to another company, he could cut our revenue in half. Why is that supposed to make me want to set up my business in Massachusetts? This announcement would seem to make businesses less competiti…

If those 50 clients would be better served getting a different product from a different vendor, then why would you want to stop that? If your product is superior in value, the salesman won't be able to move the customers away from your products. Make better products. Anyway, you'll attract better salesmen.

I think the main issue is not the product but that the salesperson knows who in the 50 companies to talk to, and has relationships with those 50 people so they will talk to him/her. The amount of money spent by the original business to obtain those 50 contact's trust and business could be very large, yet the salesperson is allowed to steal all that investment and take it as their own.