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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

#361

Post by bumby »

master_crab wrote: post #351
bumby wrote: post #347

Earlier quoted context omitted.

We agree that it's a rare edge case. That's why the rationale of IP protection works. Before patents, important knowledge was lost because people didn't want to divulge it because they had no IP protection. Back then, everything was a trade/state secret. I guess I'm not seeing the point made. If you agree it wasn't developed in parallel, you copied it from your previous employer. If it was their IP, you likely commit…

I wasn’t making any point. Just that that the initial patent example isn’t a good one to use.

u/akira2501 was providing a bad equivalency by saying both the company and employee has knowledge of a product, therefore either both (or neither) gets to claim it as property.

A patent is an example that shows why that is a bad principle. The point of a patent is to share knowledge, but it also gives claims of ownership (for a period) to only a specific party. So obviously "knowledge of a product/process" isn't the discriminator. The important portion of a patent that distinguishes what is owned is literally called its "claims." My point is that whether or not you have knowledge does not lay claim to ownership, contrary to u/akira2501's question/point.

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

#362

Post by bumby »

therealdrag0 wrote: post #358
bumby wrote: post #319

Earlier quoted context omitted.

Importantly, even if noncompetes aren't enforced, trade secrets can still be grounds for litigation against a former employee. They can't just go from one employer to another and take all the secret sauce recipes with them.

Based on what? I honestly don’t know and most comments seem to be assuming that’s not the case. And also in some ventures it might be pretty hard to litigate when everything is done behind closed doors. How would you know if a rival trading firm is using an algorithm influenced by yours or not?

Are you asking under what grounds are trade secrets enforced? In the U.S., that would be 18 U.S. Code Section 1832: Theft of Trade Secrets. The USC are passed by Congress so it's applicable in the entire nation. If you're asking what's the point, the idea is that it helps foster fair competition. Suppose a company founder has to dilute their ownership by taking on millions in investment to finally get a breakthrough. You don't want a system that allows an employee to immediately walk away and start a company of their own with that knowledge and completely undermining those who put in the money and effort for R&D.

But, maybe to your point, just because it's illegal doesn't mean it's easy to litigate. Much of the legal system is specifically to avoid litigation. Apropos to this discussion, even if a contract isn't enforceable, it only has to be perceived as having teeth to give it value. It's like when a baby elephant is tied to a stake and it grows to an adult still thinking that stake prevents it from leaving. All it takes is for an employee to think a non-compete has merit to keep them in place.

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

#363

Post by eru »

Paul-Craft wrote: post #33
cj wrote: post #31

Earlier quoted context omitted.

If they aren't voluntarily, they wouldn't be enforceable in court. What you're trying to say is there's limited alternatives. (The most obvious alternative is to not take the job)

No. What I'm saying is "take a job with a non-compete or starve" is not a situation in which a worker can make a voluntary choice, "enforceable in court" be damned. Not to mention, such agreements are often not stated up front as part of the job description.

> What I'm saying is "take a job with a non-compete or starve" is not a situation in which a worker can make a voluntary choice, [...]

That may or may not be true, but it's not the situation workers are in. Have you looked at unemployment rates in the US recently?

> Not to mention, such agreements are often not stated up front as part of the job description.

Yes, but they are part of the contract that you can read, before you sign.

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

#364

Post by eru »

acdha wrote: post #83
cj wrote: post #59

Earlier quoted context omitted.

I’m not going to debate or justify non-competes. I’m also not advocating for them. All I’m doing is calling you out that when you join a company, you’re voluntarily signing all of the contracts. It’s not some kind of involuntary act of slavery. A responsible adult is presented a contract and chooses to sign it. That’s the opposite of involuntary. Your argument is it’s involuntary. That’s what we were debating. I wasn…

This is too simplified a position: 1. A company can usually go without hiring people than a worker can go without making mortgage payments or issuing rent. In the United States, that includes basic access to medical care. 2. Companies have large legal departments advising them on how to craft language and the boundaries of the law. Most workers don’t even want to pay a lawyer to review a contract knowing that they’ll…

A worker can very easily go without working for company A, and go work for company B. Especially at current low levels of unemployment.

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

#365

Post by eru »

caddemon wrote: post #191
Paul-Craft wrote: post #45

Earlier quoted context omitted.

Why should I believe you? You don't offer an argument. It is entirely plausible that one could be faced with a situation of losing one's home, health insurance, ability to exist in modern life, and, oh, one's actual life due to unemployment. I know this because it happens. Non-competes, by definition, make this problem worse by reducing the number of jobs available to a person. What's your justification?

Wall Street non-competes are only enforced if they pay you your base salary during the period. They can also opt to not do that and waive the non-compete, in which case you can work anywhere. I think it's ridiculous that Subway has non-competes, but with regards to the article I doubt anyone is forced to choose between working for a trading firm and starving. There also are some firms that do not do non-competes. So…

> Wall Street non-competes are only enforced if they pay you your base salary during the period.

You are mixing up gardening leave with non-competes. Typically, they have both.

(Eg for a recent job, I had six months of gardening leave, when they paid my base salary, and then another six months of non-compete.)

> [...] but with regards to the article I doubt anyone is forced to choose between working for a trading firm and starving.

Indeed! We don't need welfare for well-off folks. They can fend for themselves, and we can focus limited resources on the poor (and those who want the help).

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

#366

Post by bobthepanda »

LeifCarrotson wrote: post #355
hadlock wrote: post #350

Earlier quoted context omitted.

If you are making $10 million a year based on an employee's personal contribution to the company, and paying them $135,000, they are likely underpaid, and another company might gladly pay them $250,000 to add $10mm to their bottom line. But the non compete holds them in the job paying less. Their value to the company clearly allows them to pay $250k to that employee, but it's the non-compete that is allowing the comp…

I totally agree that if an employee adds $10M or $1M to the bottom line and you're paying him $100k, that's under compensation. But there's a categorical difference between that situation and when an employee or dozens of employees who may be a break even or negative impact on profits have knowledge of a trade secret researched by a team of their predecessors that makes the company $100M. I'm all about fair compensat…

You can certainly pay them the duration of the noncompete at their prevailing wage.

In fact, this already exists. https://en.wikipedia.org/wiki/Garden_leave

It really should be required of all noncompetes.

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

#367

Post by hnbear »

YetAnotherNick wrote: post #283
tomp wrote: post #270

Earlier quoted context omitted.

Quant firms have already adapted years ago. Now they don't have 6-24m non-competes anymore, but 6-24m notice periods. You're paid full salary (incl bonus) but you don't work ("gardening leave") and obviously can't work for a competitor (because you can have a non-compete while you're employed).

Few of my friends are in quant, but I have never heard anything like this. Can an employee just apply for notice period after a month of joining and be paid 6-24 month of salary?

After a month they wouldn’t know much, so the firm would just let them go. The firm picks the leave duration, not the employee.

And after only a month their sign-on would be subject to claw back.

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

#368

Post by Spooky23 »

wslh wrote: post #136
Spooky23 wrote: post #124

Earlier quoted context omitted.

When this legislation was originally introduced, an Albany area Jimmy Johns franchisee got attention for suing former minimum wage employees who took the secrets of sandwich assembly to a nearby Subway and local deli. Timing was poor - during the budget season when the entire legislature was in town. The notion that a sandwich stop should be allowed to restrict the future employment is absurd on its face. Yet there a…

> When I was an employee of the government, ethics laws limited my ability to leave and sell my services to the government in various ways. There are similar scenarios in other industries. I think this is more about corruption control than non-compete.

It’s really one and the same. If I’m a commercial banker, flipping to a competitor and presumably planning client relationships with forethought before the move.

It’s a form of corruption.

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

#369

Post by eru »

Paul-Craft wrote: post #21
eru wrote: post #7

Earlier quoted context omitted.

It's about voluntary contracts, too.

Agreements between parties of vastly unequal power and alternatives are not voluntary.

Unemployment is very low in eg the US at the moment. That suggests that workers have lots of alternatives, but employers don't. Are you arguing that employers don't voluntarily hire workers, but are somehow forced to?

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

#370

Post by eru »

neilwilson wrote: post #19
eru wrote: post #7

Earlier quoted context omitted.

It's about voluntary contracts, too.

It can only be voluntary if everybody has an alternative job to go to. While firms only hire if there is a profit to be made, and people have to earn to eat the 'no deal' stand off isn't an option.

Unemployment is near record lows in the US.
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