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White House urges ban on non-compete agreements for many workers

reuters.com

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Re: White House urges ban on non-compete agreements for many workers

#361

Post by ScottBurson »

ScottBurson wrote: post #325
tjic wrote: post #146

Earlier quoted context omitted.

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelli…

Against all that is the fact that California -- which, if it were a separate country, would be the world's seventh largest economy -- does just fine without non-competes. Compare the vibrancy of Silicon Valley with that of the Boston area, for example, which has a much older tradition as an intellectual center and is even better supplied with top universities; but Boston's tech economy has been dominated by large, ol…

I can expand on this a bit.

Non-competes [0] are a tragedy of the commons. There's no incentive for any single employer, in a jurisdiction that allows non-competes, not to require them of most employees. Any employer who did that would be unilaterally taking a loss (the potential employees they can't hire because they're subject to their current employers' non-competes) with no corresponding benefit. But if all employers require non-competes, we demonstrably wind up with a less vibrant economy.

So, what is the libertarian response to a tragedy of the commons? Is it not to create and assign property rights so that someone has a legally defensible interest in protecting the common property? In this case, I would suggest that by outlawing non-competes, California has asserted that workers have a property right to the general skills and knowledge that they acquire by working. The word "general" is important here; companies still have IP rights to their specific techniques and processes. But companies cannot claim ownership of the worker's general knowledge; it belongs to the worker.

[0] I'm using the term as shorthand for "non-compete restrictions that don't require the employer to pay at least a substantial fraction of the employee's salary for the duration of the restriction".

Re: White House urges ban on non-compete agreements for many workers

#362

Post by losteverything »

briffle wrote: post #329
losteverything wrote: post #274

Tragic story of a business. You decide if it was stolen. Happened a few years ago to a client friend. Husband wife owns a florist. Has for decades in a county fourth highes per capita income in us. Built a nice life but it was time to retire and sell the business. They did not own their building. New landlord buys building ( shop in nice main street area.) raises rent to outrageous amount. Too much to run the busines…

I'm a bit confused on how this is relevant? would a employee signing a non-compete agreement have prevented this? Even if there was one with the previous lanlord, would that have applied in the case of a sale?

Well. Nda protects the company from losses.

Ultimate loss is the loss of the business.

Thus my example.

No, not really an NDA issue but I shared because I was interested and also signed many a NDA in my lifetime.

Re: White House urges ban on non-compete agreements for many workers

#363

Post by pinot »

dmourati wrote: post #52

Massachusetts has realized that its current legislation allowing for non-competes sniffles innovation. https://techcrunch.com/2016/02/18/silicon-valley-keeps-winni... http://news.wgbh.org/2016/06/29/politics-government/deleo-pl...

In 2013 I turned down a job in Philadelphia, with a company who was headquartered in Boston. They wanted me to sign a 1yr non-compete with the stipulation that I wouldn't work for a company sold similar products within a +/- 30% wholesale cost of their product. After two trans-continental flights, interviews etc, I said no because of the NC. The recruiter flipped over it. He basically yelled at me "you're going to come work with us, we'll train you, then you'll go somewhere else?"

No. I'm mid-career. I have skills you want. You're not training me. Your company is not an engineering school. I'll leave because I might not like working for you, or living where your company's office is. It's my life, not yours.

Decided to stay in California where this wouldn't ever even be a question that would come up.

Re: White House urges ban on non-compete agreements for many workers

#364

Post by Arcaten »

What is most surprising to me about these stories today is how uncommon NDAs are. I read somewhere that 20% of workers in the US have signed one.

I don't know if this is a common experience, but my employer recently began putting NDAs in place and, in retrospect, I feel they took advantage of the ignorance of most of the employees (including me). They insisted that the NDA was "standard," managers told us that there was no room for negotiation and pushed to have us sign immediately (eventually relented to having it signed by end of the following day).

Re: White House urges ban on non-compete agreements for many workers

#365

Post by Gibbon1 »

TheCoelacanth wrote: post #326
Sacho wrote: post #102

Earlier quoted context omitted.

As a counterpoint, it allows companies to give you a higher salary in exchange for #2 and 3. Or alternatively, if non-competes are the norm, it would allow a business to provide lower salaries for the incentive of no non-compete clause. The argument whether to ban non-competes should be rooted in the practical applications of the clause. Highly skilled, in-demand workers have the power and financial safety to negotia…

Or the non-compete allows them to keep your salary lower because you have fewer options of places to work.

That is the right answer.

Re: White House urges ban on non-compete agreements for many workers

#367

Post by antisthenes »

omouse wrote: post #273
jedrek wrote: post #224

Earlier quoted context omitted.

The logical conclusion of a regulation-free system is of corporations large enough to destroy competition before it starts.

That's not the logical conclusion. Have you ever seen a large corp and how inefficient they are? The only reason they can remain large is because they can afford to buy politicians and legislation to keep their competitors small. Big Corp creates new regulations to protect their business, the most clear examples are in telecommunications and the music/movie/copyrightable industries. If we removed more regulations tod…

You essentially said the same thing that the comment above you, just in a less succinct way.

A regulation-free system is not a stable equilibrium, so the conclusion will not be regulation-free.

Re: White House urges ban on non-compete agreements for many workers

#368

Post by antisthenes »

pinot wrote: post #363
dmourati wrote: post #52

Massachusetts has realized that its current legislation allowing for non-competes sniffles innovation. https://techcrunch.com/2016/02/18/silicon-valley-keeps-winni... http://news.wgbh.org/2016/06/29/politics-government/deleo-pl...

In 2013 I turned down a job in Philadelphia, with a company who was headquartered in Boston. They wanted me to sign a 1yr non-compete with the stipulation that I wouldn't work for a company sold similar products within a +/- 30% wholesale cost of their product. After two trans-continental flights, interviews etc, I said no because of the NC. The recruiter flipped over it. He basically yelled at me "you're going to co…

That's almost as ridiculous as parents asking their kids for a lifelong non-compete in the same field as them.

Re: White House urges ban on non-compete agreements for many workers

#369

Post by SilasX »

tjic wrote: post #146
tristor wrote: post #139

I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. They are a tool of restrictive coercion to stifle an employees freedom of movement in the job market. Trade secrets, IP, secret sauce: covered by NDA and IP assignment agreements Client lists, contract terms, sales strategies, reported metrics, financials: covered…

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelli…

I would say this specific fallacy is that of failing to understand that there are upsides and downsides to every policy, that you can oppose a policy even when it has upsides and that it should be a red flag if you can't think of any upsides.

Re: White House urges ban on non-compete agreements for many workers

#370

Post by SilasX »

cmdrfred wrote: post #226
tjic wrote: post #175

Earlier quoted context omitted.

> You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. No, it doesn't. I'm Hayek-friendly, so I don't think two entities EVER have the same knowledge. "Freedom to contract" no more implies equal knowledge than "freedom to drink" implies equal knowledge of brewing, or "freedom to date" implies equal attractiveness.

I have been told by a lawyer friend of mine that for a contact to be valid both parties must have the ability to negotiate it. He said that is why most non-competes are unenforceable in the first place as you don't really have the leverage to negotiate that for most jobs. I took his advice and advantage of his letterhead and told a previous employer to pound sand when they wanted me to not work for a competitor. Work…

But taken seriously, that would mean all employment contracts, and therefore employment in general, should be illegal.

Once you get on the "less bargaining power = invalid contract" train, you may not like where it stops.

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