Earlier quoted context omitted.
That's a terrible law. 30% of your total monthly income as it was, when you are likely leaving for more money at a competitor or to start your own company...
I'd think it isn't about employee getting 30%. It is about the companies would be paying money really for nothing in most cases, and thus forcing the companies to avoid blanket enforcement (and unpredictable at that as it avoids the company having the free option of coming after you nilly-vanilla when they feel like it years later) - and such avoidment is great for innovation industry-wise. If your confidentiality ag…
Tell HN: Beware confidentiality agreements that act as lifetime non competes
181–190 of 269 posts
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#182Earlier quoted context omitted.
Not only in the US; without going into too much detail, many countries in south America and Africa have strong business connections with the US, and it is quite common to see the ever-abusive dumb dumb US contract templates being used in those countries, even when local law differs significantly. Usually, the posture is "we can do whatever you want and you keep your mouth shut, or else we'll sue you for everything".…
On a personal note, I once was presented with such a (US) contract that also required me to list every NDA I had signed to date; Since then, I always assume most US lawyers are beyond incompetent.
"Under the terms of NDAs I have signed I am not free to disclose that list."
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#183I think the Chinese law is effective in this regard: in order to maintain any non-competition agreement, the company must continue to pay you a monthly compensation amount equal to 30% of your total monthly income when you were at the company. Whenever the payment stops, the non-competition agreement is automatically void.
Imagine if Tesla had been able to stop Andrej Karpathy working at Open AI just by spending 1/3 of what his salary was when he was on Autopilot. That sounds like a terrible idea.
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#184Non-competes (including stealth non-competes like the OP mentioned) are being abused by US employers seeking leverage over their employees. In fact, 12% of hourly workers earning $20 or less had to sign non-competes. These workers do not have access to corporate secrets. It simply reduces their power to negotiate with their employer. https://www.minneapolisfed.org/article/2021/non-compete-cont...
Australia is straight up banning non competes for anyone earning under $175k, for this reason. They are also tightening up the contract law around non competes to reduce the impact of the scare tactics employers have been using to bind low level employees with unenforceable, but still litigable, contract terms. And scare tactics are really all they are (in this country), because even before they do this the courts ha…
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#185Post employment restrictions fall under the doctrine of restraint of trade - which explains why we use "gardening leave". While you are employed you and your employer have a relationship which includes a duty of loyalty by you to your employer. They have duties such as a duty to pay you for your work. By default they should also be offering you work, so a specific "gardening leave" clause is required to keep you at home, bound by restrictive covenants but without work and being paid.
After employment, it is much harder to make restrictions that will bite. Typically an employer must show there is some legitimate interest they are protecting and that it is reasonable to do so.
Hence: non-solicitation of clients tends to be easier to justify, though only if an employee actually had some kind of relationship with or knowledge of those clients. Whereas a non-compete is much harder to justify. It is also harder to make reasonable, hence time/space/sectoral limitations.
Looking at confidentiality: the default established in the amusingly named Faccenda Chicken v Fowler (Mr Fowler was a frozen chicken sales lead). It is that you are bound by the usual duties of confidentiality that arise when anyone has confidential information but that you cannot be prevented from using information gained while working that is part of your normal skill acquired as part of the job unless that is so secret as to amount to a "trade secret".
In this case, Mr Fowler knew where to sell chicken (from having done so). While this was confidential, he was able to use that information (not being a trade secret) in setting up a competing frozen chicken sale network.
The core idea is that you can't stop someone plying their normal trade.
That's the default. Obviously if you sign an agreement that imposes post-contract confidentiality obligations it can go further than Faccenda Chicken, but if it went too far, it would also be vulnerable to the rule against restraint of trade.
In short:this sort of "you cannot work in the industry" idea is very unlikely to work in England and Wales (and I suspect the rest of the UK - though I am strictly only an English lawyer).
That said: there is still value in reading your contract of employment carefully and making sure that you are happy with it.
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#186It's funny how states like Washington are notorious for enforceable non-competes, to be "business friendly". Meanwhile California bans non-competes, and its GDP is 4th largest in the world if it were a country! "incumbent friendly" vs "startup friendly"
I'm also not sure where you heard that Washington is "business friendly." B&O Tax, labor laws, Seattle city politics and the institution of income tax have all driven significant exodus from WA elsewhere over the last ten years.
But, Biden admin + WA laws in 2020 and 2024 make it a relatively low employee load for non-competes, as far as I know. Duration limited to 18 months, auto canceled if an employee is laid off, $120k-$300k income floor under which they are not enforced, details must be offered before job offer made (including a verbal job offer), no venue shifting regardless of location of employer, new employers are granted presumptive standing to sue on behalf of a new hire, agreement only allowed against current customers of the company, not enforceable when selling equity of up to 1% of a company to competitors of the company..
These are not your father's east-coast non-compete agreements! Combined with broad federal support that a non-compete cannot stop you from earning your living, e.g. banning a doctor from working for a competing healthcare system is likely no-go on its own.
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#187I mean even patent has 20-year limit
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#188Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#189Earlier quoted context omitted.
US finance has the same thing, and also calls it gardening leave. In our case I think it's reasonably common for it to be as long as a year. Downside for finance folks is that the usually make a decent chunk of their compensation through bonuses, not their base salary. So their gardening-leave pay ends up being quite a pay cut, and while they're "gardening", they're out of the game for a year and their skills/knowled…
> reasonably common for it to be as long as a year Absolutely not. For ibanks, less than VP is one month. VP/ED/MD is three months. Sometimes it is six months for an MD, but that is extreme. The longest that I ever heard was someone who left Citadel as a portfolio manager had a TWO year gardening leave. How can that make any financial sense for Citadel? Before the HN crowd jumps in about that Citadel example being "r…
Re: Tell HN: Beware confidentiality agreements that act as lifetime non competes
#190Earlier quoted context omitted.
That's a terrible law. 30% of your total monthly income as it was, when you are likely leaving for more money at a competitor or to start your own company...
Bad if you leave for a competitor. I've never really done so. Fintech, social media, recipes, bidding, e-commerce, fashion, saas, mental health, games, and so on. There's just a wide range of fields you can go into that don't compete and still use the same skills. Unless the previous employer is slow and incompetent, if you've done good work, they'd probably be ahead and better funded. I'd take the money.
I mean I would probably take the money and temporarily switch fields too but I don't think it's quite that simple for a lot of people.