U.S. moves to bar noncompete agreements in labor contracts

https://www.nytimes.com/2023/01/05/business/economy/ftc-noncompete.html

by yoelo • 4 years ago

868 488 4 years ago

brohoolio• 4 years ago

I’m surprised it’s taken so long. Companies have abused this practice to an absurd degree. Got a job at a sandwich shop? I guess you are prohibited from getting a different job down the street based on the agreement you signed at the beginning of your employment.

runevault• 4 years ago

I know here in Colorado they recently passed a law that under a certain pay you cannot be made to sign a noncompete. However it was only like $110k so wasn't going to help many developers.

JJMcJ• 4 years ago

I think the sandwich shop and similar working class non-competes is what finally pushed this into happening.

TSiege3• 4 years ago

This is a bigger deal then the title suggests since it appears it would be retroactive and nullify existing non competes

The commission’s proposal appears to address this issue by requiring employers to withdraw existing noncompetes and to inform workers that they no longer apply. The proposal would also make it illegal for an employer to enter into a noncompete with a worker or to try to do so, or to suggest that a worker is bound by a noncompete when he or she is not.

This is very unclear to me, and seemingly experts, if the FTC has this power, but it would be very far reaching if it were to go into effect. Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC

LanceH• 4 years ago

Given the hostility of the current Supreme Court to federal agencies

Maybe it's overreach by federal agencies when they create their own law.

There is a distinction between authorizing an agency to figure out how to get something done and letting one make new law.

Dramatically limiting the power of agencies to make up their own new laws seems like a good thing.

ElevenLathe6• 4 years ago

It's good to let agencies make laws if they make good laws. It's bad to let agencies make laws if they make bad laws. The liberal obsession with process is what lets the far right make inroads everywhere, since they don't share it.

TSiege3• 4 years ago

This would not be a law, and an agency cannot issue laws as it goes directly against the constitution. This would be a regulation, which is specifically the purpose of Federal Agencies. It is onerous, slow, and ineffective to have congress pass small laws for every little thing that needs to be regulated. Instead Congress creates agencies with a charter defining the scope of what they have purview over, and the agency then creates regulations on what it deems fit. These can be challenged in federal court, which is specifically what I've been mentioning

mywittyname2• 4 years ago

Why shouldn't Congress be able to delegate powers? Congress writes the laws and it seems appropriate that they should be able to write a law that allows a group they delegate to write and enforce regulations on their behalf. Especially when the scope of such laws is so narrowly and explicitly defined.

Do you really expect Congresspeople to have the educational background necessary to regulate agricultural products, automobile emissions, and how medical testing is conducted? Do you really want AoC or MTG deciding which medicine you can take? Remember the ACA/Obamacare debacle? Without agencies, the entire government becomes a series of "let's pass the bill to see what's in it" laws.

The whole point of delegation is that experts make the important decisions, and Congress approves a leader for the department that is accountable to them for oversight. Requiring Congress to bring every decision an agency makes to the floor for a discussion and vote is akin to having the Board of Directors of a company approve and modify every PR it Github.

cataphract2• 4 years ago

Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC

More likely, in the short term it will be challenged in individual arbitration and we'll never hear about it.

TSiege3• 4 years ago

I'm not sure that would not be possible given what the article describes. This regulation would retroactively nullify them and bar companies from trying to enact anything like a non compete period

gnopgnip• 4 years ago

That isn’t how it works with non competes. The old employer threatens to sue the new employer unless they fire you.

Zigurd5• 4 years ago

It isn't too unusual for humans to be protected from entering into unjust contracts.

inetknght• 4 years ago

It isn't too unusual for humans to be protected from entering into unjust contracts.

Perhaps, but it is unusual for humans to be aware that they're protected from such.

andreareina• 4 years ago

Are they? I imagine if there were real repercussions for contracts with unenforceable clauses we would see far fewer of them.

zozbot2342• 4 years ago

The old common law barred non-compete agreements as contracts in restraint of trade. It was superseded by statutory anti-trust regulation and the creation of government agencies like the FTC. If you think the latter doesn't have power to regulate these matters, we fall back to the old common law and non-competes are still unenforceable.

cnelsenmilt• 4 years ago

This is a convincing argument to me, but there's no telling whether it is enough to convince five+ of The Nine.

blueprint7• 4 years ago

this seems like a really bad idea. people can just join a company, get trained, then leave. hello corporate espionage.

aliqot• 4 years ago

as opposed to joining a company, get trained, get laid off when the economy dips, forced to be unemployed

blueprint7• 4 years ago

so maybe regulators should introduce nullifying noncompetes with certain cases, not nullifying them in every circumstance. but still, they serve an obvious purpose, even if you are laid off by that company. the idea is you are given confidential info that you are not supposed to use because that's unfair competition. not that you're likely to care

dchuk• 4 years ago

There are still intellectual property laws in place that could protect the original companies. Non-competes stifle innovators at big companies from being able to leave and pursue their own ideas that are in the same domain as the parent company.

blueprint7• 4 years ago

I'm not saying the existing solution is complete, either. But banning noncompetition itself is not the right answer. Why do contract noncompetes clauses exist? What about the small companies and inventors and IP owners? None of these replies I'm seeing have considered the side effects to the world except what would clearly also benefit giant companies.

elashri• 4 years ago

If you allow a company to hire someone, then they left their current job, move to another place (worse if it is international and require visa) then the company says sorry but we have to let you fo without this being illegal. Now why this is different?. This at least restore some of the power balance.

rpmw• 4 years ago

In my experience noncompetes aren't enforced, unless you are very high up in the company and even then C-level folks usually get nice incentives to stay away from their competitors.

slackfan• 4 years ago

Noncompetes do not block corporate espionage in any way shape or form.

pc86• 4 years ago

Corporate espionage is a crime. You don't need to tack non-competes on top of that.

And if you think the primary purpose of non-competes is to prevent or mitigate corporate espionage, I've got a bridge to sell you.

blueprint7• 4 years ago

yeah and how exactly do you prove it happened ? and where did you get all this money to litigate? I dont believe you yet understand the problem.

FL410• 4 years ago

Noncompete != Nondisclosure

simplotek4• 4 years ago

Noncompete clauses for workers is the most anti-american, anti-free-market policy anyone could pull. If workers aren't free to switch to better jobs and at the same time are left to fend off for themselves them the economic system starts to resemble feudalism.

zozbot2342• 4 years ago

Yes, it's always been an obvious anti-trust concern. Contracts in restraint of trade should not be enforceable.

donatj• 4 years ago

anti-free-market policy

I go back and forth on that. It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do.

It certainly hasn't panned out that way though.

bern4444• 4 years ago

No, individuals have far less market power than institutions and businesses.

Especially since health care is tied to employment.

It's a privileged position if you can 'just say no' to a company that has non compete clauses - the majority of workers cannot.

horsawlarway• 4 years ago

https://en.wikipedia.org/wiki/Inequality_of_bargaining_power

The idea is well known for hundreds of years, but here's a particularly salient quote for your line of thinking.

----

"In so far as the reduction of costs of production and distribution thus achieved is reflected in reduced prices, society as a whole ultimately benefits from the use of standard contracts… The use of contracts has, however, another aspect which has become increasingly important. Standard contracts are typically used by enterprises with strong bargaining power. The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood only in a vague way, if at all."

F Kessler, ‘Contracts of Adhesion--Some thoughts about Freedom of Contract’

benrbray• 4 years ago

They should be legal, but expensive. If it is so valuable to companies that their workers not leave to work for competitors, they should be required to pay 100% salary for the non-compete period.

cryptonym• 4 years ago

Depends on your definition of "free". Market that favour free competition between economic actors?

No one telling anyone what to do.

Sounds like a good way to get mafia.

starwind• 4 years ago

Upvoting cause I agree in principal with where you're coming from in the sense that employers and employees should be able to bargain in their contracts and include clauses like non-competes as long as they square with the public policy of the state.

My issue (and probably yours) is the way non-competes get handled by employers * Every non-compete I've signed has been sprung on me while filing out paperwork on my first day. What am I supposed to? Walk out and be unemployed while I look for a new job? * What do I actually get for a non-compete clause? Judges routinely rule that continued employment is enough consideration for near-anything including non-competes. But if some companies don't have non-competes, to me that isn't true consideration. Me signing a non-compete that isn't worded in this-for-that like standard contract clauses should be should be treated as a gift on my part by the courts that can be revoked * Many states have restrictions on non-competes but most non-competes for national companies are boilerplate and often too broad. Combine this with a mandatory arbitration agreement and employers are doing an end-run around state labor laws either through arbitration or just strong arming employees

rubyn00bie• 4 years ago

No. Well at least in capitalism, that is a big no. There are no barriers to entry or exit the market in "real" capitalism (which no one has or has seen). This includes non-competes as it does any other barriers which distort the market.

But none of that matters when most people still don't understand profit vs economic profit.

bastardoperator• 4 years ago

The market isn't free if you're not allowed to work/compete in it.

Klinky• 4 years ago

I agree, absolute freedom doesn't mean a desirable outcome will occur for individuals or society, or that freedom even remains the defacto standard. Free markets are often a vacuum waiting for a bully to fill & exploit.

a4isms• 4 years ago

the free market ideal

I don't think that's the free market ideal. Let's switch away from employers vs. employees and ask, "Would an ideal free market allow companies to collude to fix prices? Would an ideal free market allow consortiums of companies to set up exclusivity contracts with vendors to block competition from entering the market? Would an ideal free market allow companies with profits in a monopoly to run other businesses at a steep loss to prevent competition?"

"Freedom from regulations" is a very thorny problem, it rarely leads to what people imagine are "free" markets.

AlexandrB3• 4 years ago

It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them.

This only works with a robust social safety net where a worker can have no job and still be ok. Otherwise you're usually going to be choosing the lesser of several evils when it comes to employment contracts.

simplotek4• 4 years ago

It seems like the free market ideal would be to allow them and if people didn't like them they wouldn't sign them. No one telling anyone what to do.

I’ve grown to learn that arguments on labour markets and free market ideals tend to be very simplistic and, knowingly or not, always boil down to victim blaming.

When we’ve unemployed and actively looking for a job, if we have bills to pay and our budget is tight, our goal is to get a source of income as soon as possible. Consequently, we are vulnerable for unscrupulous conditions, such as non-competes. This does not mean that the job market finds them acceptable or encourages them. It just means employees that push these abusive conditions upon their new hires are abusing their dominant position to exploit workers, specially those in vulnerable positions.

jpadkins2• 4 years ago

One confounding factor: In a true free market(tm), limited liability corporations wouldn't exist in their current form. So employers can be a lot larger, and gain more bargaining power over employees because of a government intervention that protects corporation owners from liability.

It's hard to be a true free market libertarian when the initial conditions aren't really that free...

giantg23• 4 years ago

There are many things that still resemble feudalism. Per capita tax, property tax, conservation easements on deeds, zoning, etc.

I'm not saying these things are necessarily good or bad. Just saying that most laws around income, taxes, and land have their roots in feudalism. And of course the ruling class still make themselves well to do off of the hard work of their subjects, just not to the same degree as kings. And yes, I know, people today have "choices" via voting. Even if those choices are between a shit sandwich and a shit sandwich without the bread.

simplotek4• 4 years ago

There are many things that still resemble feudalism. Per capita tax, property tax, conservation easements on deeds, zoning, etc.

Nonsense. Contributing back to society doesn't even register as a concern when your employer can force you to not have any alternative to work for him under his term, and apply harsh penalties to you and your loved ones if you step out of line. These nonsensical anarchist tropes only come in play to pull the focus away from the one-sided social arrangement between employers and employees in the US which his highly exploitative and outright resembles feudalism.

alistairSH2• 4 years ago

...the most anti-american...

I dunno, they seem pretty spot on for the US.

In the US, "free market" generally means one of two things... 1 - a fictional market with no externalities and perfect information symmetry. Ayn Rand fans think it's real, but it only exists in an ECON-101 textbook.

2 - code for "rules for thee, not for me" as said by the billionaire class. Or, really anything that keeps them rich and the rest of us beholden to them for basic life necessities.

Edit - I prefer a phrase like "functioning market" to "free markets". Or maybe "fair market"? Not sure. The current labor market in the US is dysfunctional, at least when considering the share of increased productivity seen by the working classes (vs business owners).

Edit2 - changed "perfect information asymmetry" to "perfect information symmetry"

Pet_Ant• 4 years ago

perfect information symmetry

FTFY. I believe that is what you meant to see or

perfect, no information asymmetry

ballenf• 4 years ago

Basically agree, but what we're increasingly facing in the US is growing barriers to entry to compete with behemoths in the form of an increasingly complex tax and regulatory structure which just isn't compatible with free market principles still applying to how those behemoths treat employees.

In short, we have quasi state-sanctioned hegemons that have undue negotiating power.

There are two solutions: nerf the barriers or buff the workers through more targeted regulation. There's no single regulatory body that can do the former, so the only option left is the latter.

rqtwteye• 4 years ago

Totally agree. “Free market” usually means that the big guys can do whatever they want to do including suppressing competition. “Competitive market”, “Functioning markets” or “fair markets” would be much better goals.

We should especially work on reducing information asymmetry. Big examples are salary negotiation and US healthcare. There we have parties (employers, hospitals, insurances ) that have almost all information and then the employees/patients that have almost no information. The old rule is that whoever has the least information in a negotiation will lose.

malandrew• 4 years ago

I would say that this issue is the lack of consideration for the duration of the non-compete. If a company is willing to pay me my full salary for the entirety of the non-compete, they seem reasonable. That said, it should still be something that’s optional.

petechapman• 4 years ago

economic system starts to resemble feudalism.

I've long been a proponent that capitalism is not just about the economy but is instead a larger force more akin to feudalism.

bpodgursky• 4 years ago

I agree that noncompetes are bad, but the FTC declaring it without a congressional mandate seems deeply questionable.

Arrath• 4 years ago

Is such a move not one of the purposes of these agencies staffed by (supposedly) experts and run by appointees? Legislature is so dysfunctional that the House can't elect a speaker at this very moment, and who knows if such a measure would even see the light of day in committee let alone get to the floor if the lobbyists got wind of it.

If the lawmakers take issue with the ruling they can issue a mandate to roll it back, no?

mschuster91• 4 years ago

The problem is, the courts may decide to kill it off before Congress gets out of its gridlock and approve or deny it, as many other regulations have been. Executive decrees or questionably legal actions of government agencies are fundamentally bad - but have become commonplace and a necessity of life since Congress is fundamentally broken.

And at the core, the problem is that the US' political system unlike everyone else's system does not enforce that the executive has a parliamentary backing. That provides a lot of perverse incentives that historically were only prevented by a basic code of ethics and conduct - but since the Obama days, open obstructionism has become acceptable and a target in itself in politics.

ffggvv2• 4 years ago

no. they have specific laid out bounds with which they can operate in. it's deeply dangerous and disturbing for them to try to exceed that. especially because they aren't elected. they don't get to just exceed those bounds and wait for legislature to issue a ruling to roll it back. it's quite the opposite.

its the equivalent of if the tsa started trying to pat you down before you got in your car. and then saying its okay because congress can just roll it back.

lovich• 4 years ago

The FTC believes this is part of their congressional mandate as per their interrogation of Section 5 of the FTC act[1]. If I recall correctly they were enforcing this under one legal theory previously that the Supreme Court struck down so I presume they have come up with a new legal theory.

[1] https://www.federalreserve.gov/boarddocs/supmanual/cch/20080...

whimsicalism• 4 years ago

The FTC does have a congressional mandate for administrative discretion.

ffggvv2• 4 years ago

too bad people's brains can't process stuff like that. they can only do a single level of "do i agree with the outcome" and not whether or not its actually legal or sets a bad precedent. or god forbid, think what powers that would give their political opponent when they take power.

student debt was another one. whether or not you agree with forgiving it, it's deeply disturbing for the president to knowingly do something unconstitutional and do an endrun around congress' power of the purse. With the hope that no one has standing to challenge it

comte7092• 4 years ago

The FTC has a congressional mandate (otherwise it wouldn’t exist), the only argument is whether this falls within the mandate they’ve been given.

The FTC claims non competes undermine competition, which is within their mandate, and honestly not that tough of an argument to make.

solomatov2• 4 years ago

IANAL, but the US federal law roughly consists of USC, i.e. US code written by congress, and CFR, code of federal regulations, written by executive branch of the government. They can't write anything they want, only using powers given to them by congress in USC.

AdmiralAsshat• 4 years ago

Would prefer this came from Congress rather than the FTC, because I can see at least two different ways this could get sunk from the FTC:

1) The process gets stalled from rollout until 2024, at which point a Republican comes into power, appoints new FTC head, and they roll it back.

2) Companies sue, and SCOTUS rules that this exceeds FTC authority.

But I'll freely concede that there is no way such a bill would ever make it through Congress.

MajimasEyepatch2• 4 years ago

Such a bill could make it through a Democratic Congress with a large enough Senate majority. Unfortunately we don’t have that right now.

Spivak2• 4 years ago

I have to believe that some, if not most, Republicans would go for a bill like this. A bill that's "freedom-from", costs nothing, is pro-worker while not being pro-labor, you get free talking points for "see you don't need unions."

treis• 4 years ago

Definitely one of those obviously broken things that should be stopped. Whatever legitimate usage they theoretically have in practice the vast majority do not protect against a bona fide company risk.

ajsnigrutin• 4 years ago

I understand noncompetes in some fields... but this can be solved in other ways. In my country (slovenia), a noncopete is valid only if you're being financially compensated by some amount while the noncompete lasts.

It's a bit complicated here, but ideally companies wanting noncompetes could be forced to pay the difference between what the worker would've earned if they stayed (+ some safety factor for a potential raise elsewhere, eg 20%) and what they earn now with a noncompete.

So if a worker earned 100k, with the safety factor for a raise that means 120k, and can only earn 50k due to a noncompete, the company would have to pay the difference of 70k to that worker if they wanted to keep the noncompete valid (for a limited amount of time). Company keeps their 'secrets', but has to pay for the secrecy.

weakfortress• 4 years ago

I don't understand them in any field. I was forced into signing one for tech that blocks me from working from any competitor for up to 2 years. Depending on how loosely you define competitors that could mean I can't work in tech for 2 years after this job. Unfortunately for me I can't afford a lawyer. Fortunately for me non-competes of this level are generally unenforceable.

You have NDAs already. It's not like you're working for Lockheed with secret stealth aircraft knowledge where a non-compete might be a national security protection. It's a representation of the inequality of bargaining power. If I didn't take the job I would've been out another job for possibly months to reach my payscale (Staff). They are a representation of the scourge of the neo-liberal variety of capitalism. It's not true capitalism, it's actually neo-feudalism, and it's not the only symptom of it.

You will never get anyone in power to agree to make non-competes force payment of a stipend while you're under one. The powers that be have paid off congress. The fact the FTC even wants to look into this after decades of this abuse just demonstrates that fact further.

blueprint7• 4 years ago

you're not automatically entitled to use or benefit from the IP developed by others and then disclosed to you just because you signed a paper that promises to pay you for work. maybe it makes more sense where your opponent is a horrible but huge company like facebook but this move can kill development of sensitive or novel tech by underfunded entrepreneurs. it is a mistake for the USA. maybe you guys should downvote me more while you ride around in your teslas powered by slave labor batteries.

schnable2• 4 years ago

I think you can afford a lawyer as a staff engineer, especially for an issue that directly affects your compensation.

supergeek• 4 years ago

Non-competes make more sense when you're working a highly personal job. It's very common for doctors to sign a non-compete saying they can't set up a practice within 15 miles of their employer for some time so that they don't take all of their clients with them when they leave.

runarberg• 4 years ago

The power imbalance is such that it won’t matter if a non-compete clause is enforceable or not. If it scares former workers from trying, they are in effect despite never actually being enforced. I think this is probably true of most workers which sign them.

LeonM• 4 years ago

a noncopete is valid only if you're being financially compensated by some amount while the noncompete lasts.

And this is about the only way they hold up in court, otherwise the non-compete would be a one-sided contract.

IANAL, but I was once sued by a former employer over a non-compete (an entry level IT job). The judge basically swept the floor with it.

Also, it made me understand why severance packages exist, it is usually a salary compensation for the non-compete duration. Now when you hear outrage over some bank exec getting a million dollar severance, know that this can be because of a non-compete.

hn_throwaway_99• 4 years ago

Now when you hear outrage over some bank exec getting a million dollar severance, know that this can be because of a non-compete.

But, as you pointed out with your story, much of the outrage is still directed at the rank hypocrisy that goes on - companies easily try to force noncompetes with little or no compensation to low level workers, but then automatically know they need to pay execs millions for the same privilege.

xen2xen1• 4 years ago

The only time I've ever heard of a noncompete being enforced was when an IT worker bid against his employer on a contract renewal he was working on, and won. His newly former employer had sued him and won, and made him unhappy for a long time via the courts. Some things like noncompetes really exist for the worst case scenario, but is threatened in all cases.

pvarangot• 4 years ago

And this is about the only way they hold up in court

I think if your company gets bought and you get stock compensation of the company buying it, both as a founder or an employee, they can also make it hold in court.

ecshafer• 4 years ago

Non-Competes being legal is only acceptable I think if the worker will continued being paid for the period of the non-compete. I can see reasons that non-competes exist, but those reasons don't really make sense in a world where patents and trademarks also exist. The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.

notch656c9• 4 years ago

Should be reciprocal if it exists. I.e. if the employee leaves, the company would be barred from hiring anyone else for any remotely similar tasks. Make them taste their own medicine and decide if it's worth it.

mywittyname2• 4 years ago

They'd hire for a different role and "transfer" the person.

Rayhem2• 4 years ago

It is always interesting to me how much 'morality' (in the sense that an individual/corporation 'should' abide by these rules) can be derived from applying symmetry principles.

falcor84• 4 years ago

I would love to take a short vacation to an alternate universe where all job descriptions say that applicants MUST NOT have any recent experience in the area of employment.

devmunchies• 4 years ago

It IS reciprocal. You're welcome to present that "non-comparable hire" contract to the company before accepting your offer, but they no doubt will rescind your offer. You have the same right to reject the offer if you don't like the contract they present.

It's common for executive's lawyers to negotiate contracts with the firm before accepting an offer (including what the firm can or cannot do to the executive without penalties). I wish it were more normalized for ICs.

Falkon13133• 4 years ago

May as well really be fair. If the employee isn't allowed to work in that industry for 2 years, neither is the company. They'll just have to find some other source of revenue and retool their business for a couple years.

mumblemumble2• 4 years ago

This is the standard I knew from the trading industry. I would say that, while it does initially seem more palatable, it also has some downsides. One that might be particularly relevant to programmers is that it sets up a structure that functions somewhat like a penalty of 1 year's worth of paid vacation for choosing a new job outside the industry.

I don't have the business or economic bonafides to back this up, but it seems likely to me that such an incentive structure would not serve the benefits of society as a whole, and might become quite damaging were it to become widespread. My own sense is that, with the possible exception of the "you can't take your client sheet with you" style of noncompete that sometimes gets applied to salespeople and hairstylists, non-competes are simply anti-capitalist. Not in some sort of ideological sense, just in a very practical, "This is nothing but a tool for retarding GDP by further concentrating wealth in the pockets of the already-wealthy," sort of way.

jacobr13• 4 years ago

Even in California, you can get sued for violating an NDA when going to competitor if you bring private technical data, which seems like a reasonable compromise. You can bring your expertise, but no code. Intersecting with this are patents. A company can also protect its IP with patents, but when should choose to disallow, or have more liberal patent laws? It seems there are similar tradeoff between the value to companies, competitors and public interests.

wahnfrieden• 4 years ago

workers shouldn't benefit from rising wage markets?

Alex3917• 4 years ago

The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.

The general rules that most states use for deciding when non-competes are enforceable aren't that bad. E.g. if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year, but it's fine if you do it a couple towns over. That doesn't seem especially crazy to me.

Volundr• 4 years ago

And if your employer is a national player? International?

gameman1443• 4 years ago

I'm curious, why does that seem less crazy than the simpler case of being allowed to open a bakery two blocks away within a year?

dagw• 4 years ago

if you work at a bakery, you're not going to be allowed to open your own bakery two blocks away within a year

What if you work at Starbucks and want to open your own coffee shop. Is it reasonable that you should not be able to open a coffee shop within two blocks of any existing Starbucks?

dkjaudyeqooe• 4 years ago

Why should employers have any control over your life whatsoever after they're not paying you?

snarf21• 4 years ago

That seems crazy to me. Why should I have to move to start a business? If I can start a new bakery with no following and run the old out of business, then it seems like the industry was ripe for competition anyway.

I do think it is reasonable for the competes to include not stealing recipes or IP or other capital from the business. Contacts are harder to legislate but there is a difference between remembering your best contacts and contacting them via LinkedIn vs exporting a contact list from your company's Salesforce and using that.

AlexandrB3• 4 years ago

This example seems extra crazy. The only entities it protects are large companies. The biggest threat to a local bakery is not their employee leaving and starting their own bakery, but a large bakery chain coming in and undercutting their prices. No non-compete will help with that. Meanwhile, the large bakery chain does benefit from being able to stop you from baking for someone else if you leave their employ. At a minimum it helps them suppress wages.

kelnos• 4 years ago

What? No, that bakery example is completely crazy.

scottLobster2• 4 years ago

Uh, how does that make any sense? What if the local bakery sucks? Why is the bakery you work at immune to competition but the bakery a couple of towns over isn't?

How are you examining these rules that it "doesn't seem especially crazy?", what's the rationale?

Capitalism requires competition to produce positive outcomes, the only reason to limit or ban competition is in the edge cases where the model doesn't work (patents, utilities, etc). Frankly we have too many regulatory moats as it is IMO.

ericbarrett2• 4 years ago

My understanding is that this arrangement is common in finance. However the worker is not given benefits or bonuses during this time. Since private health insurance is massively expensive and bonus comp can be a significant fraction of one's pay in the field, it can still be onerous.

sebzim45002• 4 years ago

it can still be onerous

Sure you get paid less than you are used to but you are still getting more than 95% of the population to do literally nothing.

makestuff• 4 years ago

IMO it should be full compensation of your last years' w2. In finance they pay you garden leave but only base pay. So they are only out a small portion of your actual cost.

slymon99• 4 years ago

Yea, I've always wondered if finance companies intentionally structure their comp this way to make garden leave more damaging

22SAS5• 4 years ago

Not all of them do it that way. The HFT I work with, pays the greater of base salary or 75% of base+bonus averaged over the last two years.

crazygringo2• 4 years ago

But even that has major drawbacks -- if you're not actually working, then you're not building your resume, you're not getting promotions, you're not advancing. And if you find your work meaningful and satisfying, that meaning and satisfaction is gone. Not to mention who determines how much "being paid" means, when compensation isn't just base salary but also variable things like company bonuses, individual performance bonuses, stock compensation -- plus the increased compensation you'd get from potential raises.

I too can see the reasons that non-competes exist, but I see more reasons why they shouldn't exist. And even if a company thinks it's worth it to pay someone's salary for a year or two to enforce a non-compete, is this really what's best for the economy overall? Motivated, highly skilled people excluded from the job market?

jacobr13• 4 years ago

I would agree these are system-wide less efficient, but shouldn't paid "garden leave" be legal if parties agree upfront?

ErikVandeWater• 4 years ago

Highly motivated/skilled people will probably do valuable things with their time off that is not measured well by GDP.

andirk4• 4 years ago

To a lot of us, career growth and the knowledge thereof is a requirement; we seek to be onward and upward whether in skillset, enjoyment, pay, etc. I have learnt in recent HN thread that this is not as common as I thought [0].

Non-competes are stupid period and thankfully in California are not enforceable. It's similar to a prenuptial agreement in marriage except who the f is marrying their employer?? A good employer wants to keep you, will compensate you to do so, and if they can't, they are proud of you and wish you well, _even if that means a stronger competitor_ .

[0] https://news.ycombinator.com/item?id=34257325

csdreamer7• 4 years ago

You are also not making a higher salary you would have made at the competitor depressing tax revenue and wages (especially until that minimum profits tax passed companies were paying 0% income taxes anyway).

The trade secret argument the poster above you alluded to is very unlikely. Usually a competitor is hiring you because you are already somewhat trained and up to speed in their field... and perhaps the competitor can slow your company's operations by hiring you away.

In the end, many companies only pay you what they have to keep their operations stable and feel more than free to pay the very top of management more than what they deserve, and keep those executive compensations while laying off people in operations quite freely when times are bad. Noncompetes only for the company, not the worker, during good times.

peteradio• 4 years ago

The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.

That's no argument. Parasites work as organism taxon, doesn't mean all life can become so.

lotsofpulp2• 4 years ago

Analogies are not arguments.

An example of an economy outputting businesses at the highest levels of performance while barring non competes is an argument.

gdcbe• 4 years ago

If they pay me close to my salary for doing nothing I’m all in. I can always side hustle something completely different on the side or just take the money and focus more on my kids. Please do enforce the agreement :D

monksy4• 4 years ago

Non-competes do not protect an organization against IP theft or trade sceret dismenination. Those are portected by NDAs, confidentiality agreements, copyrights, patents, etc.

Non-competes limit where your staff can go to. Without proper compensation for the time period in which they apply for, they're a very one sided (and in some cases illegal [NCs are legal in IL unless they assert an economic hardship]) way to prevent employees leaving. The claims for them is "training cost is expensive and it's to limit staff from training at one company and leaving" (which as we know.. companies generally don't do training in house)

chadash3• 4 years ago

Those are protected by NDAs, confidentiality agreements, copyrights, patents, etc.

This gets thrown around HN a lot but I don't think it matches reality. Say I work in machine learning algorithms for show recommendations at Netflix. Amazon hires me to work on their machine learning algorithm recommender on Prime Video. Sure, I might have NDAs to protect what I learned at Netflix, but how does Netflix realistically show whether or not I disseminated that knowledge at Amazon? It's not like they can just ask to see Amazon's code to see if the knowledge has been ported over to there. The only way to really show that I infringed an NDA is for someone to rat me out, which is probably pretty rare. To that end, I understand why companies want non-competes (I'm not saying they should be allowed to have them... I'm just saying that there are reasons that they exist beyond "we don't want employees to leave). In finance, it's very common to get a paid non-compete where you get your full salary for as long as the company wants to enforce the non-compete. Companies aren't paying these high salaries just because "training cost is expensive and it's to limit staff from training at one company and leaving". They are doing it because they actually fear the consequences of the employee's new firm competing with them based on the knowledge that the employee has. For this reason, it's also pretty common for companies in finance to not pay out gardening leave when they aren't worried about the employee's new company directly competing.

asveikau• 4 years ago

One of the biggest problems I see with non competes is that "competition" can be subjective, especially in a world of large employers with extremely diversified business interests.

Eg. If you move from one big tech co to another, you may be technically moving to a competitor, but the subject matter of your work could be unrelated.

This is probably true of other industries too.

mcv4• 4 years ago

My current client had a non-compete in their contract specifying I would not be allowed to work for one of their customers, or something like that. This client is one of the big four accountancy firms; their customers can really include everyone, and I have no way to tell who is or isn't their customer.

And my work doesn't even include any contact with their customers! What they really wanted was that I wouldn't do for, or even share with, the other big accountancy firms what I was going to do for them, because it's something unusual that's their idea and they think it gives them an advantage. That's completely fine of course. The original reading was ridiculous.

I don't think they changed it in the contract, but they did explain it by email.

gnicholas• 4 years ago

but those reasons don't really make sense in a world where patents and trademarks also exist.

Trademarks don’t really help with this. The bigger issue is trade secrets. You can’t make someone forget how your as-yet unreleased prototype is designed, and proving that their subsequent work for a competitor draws on that knowledge is expensive and time consuming. Not to say that non competes are a good idea, just saying trademarks are irrelevant to the conversation, and trade secrets are a more complicated issue than patents.

1vuio0pswjnm74• 4 years ago

"The fact that they are essentially illegal in California, and California's economy works shows that are unnecessary and also don't hinder technological development."

If there were another US state where noncompete agreements were "essentially legal" whose economy "worked" what would that show.

Are there any other factors one should consider that affect whether a state's economy "works".

Is it possible to work for a competitor of one's former employer without violating the former employer's intellectual property rights.

(NB. I am in favour of regulating non-competes.)

pacetherace• 4 years ago

If something unethical works doesn't mean it should be condoned.

deaddodo3• 4 years ago

I mean, if you want the counter example; we already have it. Texas and Massachusetts both had much more developed and supported engineering industries + talent pools in the first half+ of the 1900s. Talent specifically moved to California to be able to innovate without the encumbrances of current legislation in those states.

Sure, it's more complex than that and there are other reasons. But ultimately, a single piece of legislation had a huge hand in turning California into the preeminent global leader in the vast span of technology industries.

heavyset_go5• 4 years ago

That'll still hurt you because entitled employers will want to know why you didn't just take another job and will worry that if you sign their non-compete, they might have to pay out your salary + benefits for a year or more when you decide to leave.

mjevans• 4 years ago

On your resume you'd list the NDA period as employment by the other company in technical terms.

cwkoss• 4 years ago

Pay shouldn't just continue, it should increase exponentially at a rate that outpaces inflation by enough to disincentivize maintaining it. Make it compound monthly at 200% APR.

Might be worth 3 years of pay to keep someone silent and idle for 2 years in some exceptional cases, but 7 years for 3 years would be exceedingly rare and 15 for 4 would be unheard of.

I'd be happy to sink all my time in my hobbies for 200% APR exponentially growing pay as long as anyone would like.

chunk_waffle3• 4 years ago

Press release from the FTC (and no paywall): https://www.ftc.gov/news-events/news/press-releases/2023/01/...

lp0_on_fire• 4 years ago

I think noncompete clauses have their uses so rather than see them eliminated completely you make a company pay the employee under a noncompete the equivalent salary for the duration. Company wants you to sign a noncompete for five years after you leave? They can pay for you five more years.

Companies that truly need the protections will shell out for it. The ones that include it in their employment contracts because that's just what they do, won't.

ghaff3• 4 years ago

Garden leave isn't a panacea. For example, in Massachusetts, there's a relatively recent requirement that employers have to pay at least half of an ex-employee's salary for up to a 12 month non-compete coverage.

Better than nothing I guess. And it does put some skin in the game for the employer.

But while that might look like a good deal for some people who are in a position to just travel, start a project of some sort, etc. it isn't for everyone. Someone with a mortgage, kids in college, or other financial obligations might not think that dropping to half their base pay--to say nothing of just taking a year off mid-career--is so great.

And, depending upon how specialized they are, there may not be a role open to them which is a good match with their experience and skills.

lsllc2• 4 years ago

But in MA, the "reform" doesn't apply to existing employment contracts, only ones signed after it went into effect.

The MA law was watered down after some lobbying by large Hopkinton MA based company(s) that had taken A.I.M. at non-compete reform in the state. In fact the reforms that did pass, I think only did after of a certain acquisition that occurred involving said company(s).

https://www.telegram.com/story/business/columns/2016/07/10/p...

https://aimnet.org/non-compete-agreements-protect-innovation...

eclipsetheworld• 4 years ago

In Germany we have non-competes, however, the employer has to continue paying the ex-employee (a part of) their salary for the non-compete to have any effect.

edu• 4 years ago

Same in Spain.

0xAFFFF• 4 years ago

In France a non-compete clause must be attached to financial compensation or it is considered void.

1vuio0pswjnm74• 4 years ago

Imagine that the employer does not have a non-compete in place with her current employees. In the US, she may offer a single, token amount in exchange for signing an agreement containing a non-compete clause. This could, for example, be described by the employer as a "bonus". It does not have to be reasonably-based on the amounts the employee might gain from working for a competitor. It could be much lower. The employer could make signing the agreement a prerequisite to continued employment. Arguably the purpose of such a "bonus" is primarily to protect the employer against challenges to the enforceability of the agreement, not as an incentive or reward to current employees.

berniedurfee• 4 years ago

Sadly, this concept somehow feels very much counter to American culture.

I don’t think this would ever be implemented here.

govg• 4 years ago

It is implemented in certain areas. For example, "gardening leave" is the term used for similar situations in finance.

MiddleEndian3• 4 years ago

Even that seems too much in favor of non-competes. Instead it should simply be treated like another job that I can quit at-will.

If you don't want me to work for a competitor, pay me some amount of money we negotiate like a salary. It's up to you if you think it's worth enough to pay me not to work, and me to be paid enough not to advance my career how I choose during that time.

sagarm3• 4 years ago

This seems equivalent to simply retaining the employee.

teawrecks• 4 years ago

Agreed, but how is that different from what the person you replied to said? I assume they can't pay someone for their silence against their will. Or maybe I'm wrong.

Natsu• 4 years ago

To be honest, this always made the most sense to me. If they want a non-compete, fine, but it should have money attached because it has value they should pay for.

kaushikc• 4 years ago

They just want free sacrifices for nothing or for firing you.

blululu• 4 years ago

How much pay is given for this? This doesn't really give the desired effect unless the payout amount is guaranteed to be a substantial portion of salary. If a company can just pay $1/year for a non-compete then it is as good as nothing. In theory an employee can negotiate their contract but in practice it is much harder to do this since it involves lawyers and the power balance of the relationship is fundamentally unequal. Having a blanket ban on non-competes or requiring a significant percentage of compensation is needed to make this work.

chunk_waffle3• 4 years ago

Press release from the FTC: https://www.ftc.gov/news-events/news/press-releases/2023/01/...

kepler1• 4 years ago

For some reason I jumped to hoping the title also implied that union-only anti-compete clauses in government contracting were also banned. But that was too optimistic.

pclmulqdq• 4 years ago

Uncompensated non-compete clauses have been pretty much unenforceable anyway given the cost of enforcement and the actual value to the enforcer (usually less than 6 figures). It's a good step to ban these given that all they do is make people afraid to work somewhere else.

Compensated non-competes are a totally different story, and probably better to hold on to.

thwayunion7• 4 years ago

This has been my experience. One employer tried. With the help of a labor attorney, I told them that if they wanted to enforce the clause then I would voluntarily withdraw my acceptance of a new job offer and then avail myself of the courts.

Burned a bridge, of course, but it took them about 20 minutes to decide I wasn't worth the hassle.

grumple• 4 years ago

This is obviously great for workers and competition. It's actually good for companies too, even if they are too short sighted to realize it. See: silicon valley.

thwayunion7• 4 years ago

What you're missing is that most wealthy decision makers have highly concentrated holdings, so a general raise in national wealth doesn't necessarily provide them with a net benefit.

Ending non-competes would be good for GDP growth and the US economy writ large. But it's not necessarily for any particular company. See: all the businesses killed off by silicon valley.

Similar to how rent collection is a massive drag on economic productivity but fixing the housing crisis would be terrible for certain rent extractors in particular.

Zigurd5• 4 years ago

It's a way of establishing an "intellectual property" claim inside your skull. I put that in quotes because a limited term government grant of monopoly, which is what patents and copyrights actually are, are not "property." There is no property right in that grant of a monopoly. Congress could reset the term of patents and copyrights at any moment, on any terms. That's a much weaker thing than actual property rights.

JumpCrisscross4• 4 years ago

Congress could reset the term of patents and copyrights at any moment, on any terms. That's not how actual property rights work.

Isn’t it?

Zigurd5• 4 years ago

No. A bill setting patent or copyright terms to less than what they are now is constitutional. Some might argue the opposite side of that, but I don't think anyone can deny the Framers were wary of the kinds of monopolies monarchs granted, much less did they think a patent is property.

retrac• 4 years ago

Congress could reset the term of patents and copyrights at any moment, on any terms. That's a much weaker thing than actual property rights.

Property comes in many forms. There's real estate, and movable property, in the most basic sense of property. But there is also intangible property. You can own a licence for use of part of the radio spectrum in a region. This is a valuable thing and you can sell it or buy it from another licensee. Radio regulation is basically all created by government legislation, and it could probably be changed at any moment, too. There are also financial assets, such as shares or bonds. Corporations themselves are legal fictions, and might be modified by legislation, with associated impacts on the property.

I strictly avoid the term "intellectual property" myself. Because conflating all these senses of property is highly confusing. A car is not a steel mill, which is not a patent, which is not a taxi licence, which is not a share in a corporation, which is not land. We need to carefully distinguish these, in most cases. But in a political science sense, they are property: legally recognized rights, usually transferrable, that claim exclusivity to something, tangible or intangible.

tylergetsay• 4 years ago

When it comes to startups, arent most noncompetes basically in the form of stock compensation? It would be hard to work for somebody while being invested in a competitor, or am I completely off base?

egypturnash• 4 years ago

GOOD

vsskanth• 4 years ago

This is a big deal if they can pull this off and I'm very impressed with the FTC being proactive and doing something about it.

Noncompetes are a huge incentive for companies to prevent employees from being paid their true market value for their skills, especially true for those who are very specialized and only few employers can make use of their skills.

bickfordb• 4 years ago

Hopefully this will spur action to do this for all other contracts of adhesion that consumers, workers often face.

chaoz_• 4 years ago

Would be interesting to see how contracts in HFT are going to change. From what I heard, when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge. Garden leave helps to mitigate this effect.

If non-competes are banned, then TCs are (probably) going to rise even more.

affyboi• 4 years ago

For quant finance and HFT noncompetes usually pay out pretty generously

thwayunion7• 4 years ago

Interestingly, the FTC rule does not include an exception for garden pay.

thwayunion7• 4 years ago

when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge.

So without the employee the firm can't compete? If that's really true, then that employee should be able to extract as much blood as they want. They are literally the keystone of the business.

The good news is that the FTC rule would allow the firm to enforce a non-compete by giving the employee a 25% equity stake. That seems like a fair trade in exchange for with-holding such incredibly valuable specialized knowledge from the market.

renewiltord• 4 years ago

It's less that and more that once you see the inside here you can pass that on to the other place. Knowledge is everything. And it turns out you don't have to be the one to make something in order to memorize it.

logicalmonster• 4 years ago

Is it harder to come up a new idea for a trading strategy or is it harder to actually implement the system to perform those trades?

Not being in that industry, to me it seems like the easiest part is coming up with a new trading idea. The hardest part would seem to be actually implementing it without bugs. Therefore, I'm not sure if noncompete clauses really provide a super-significant amount of value. Even if you left a firm with a super good trading strategy today and wanted to implement it elsewhere, you're still going to have to perfectly re-build it, which is probably not trivial.

22SAS5• 4 years ago

Both. If one is on a competitive exchange or a latency-sensitive asset class, need to be both smart and fast.

Also, strategies change all the time and are mostly the domain of quants and traders. What they did a year ago, could very well be history at the firm they worked at.

I'd say an idea that generates alpha is tougher. I have seen firms like XR have great technology, but sucky ideas. They were fast, not smart and hence they didn't make a killing like their competitors did, due to all the volatility in the last three years.

22SAS5• 4 years ago

I work at an HFT. I am expecting most of the major firms, especially Citadel Securities, lobby hard against this.

While non-competes on our side are paid, they're a pain in the ass to navigate if one is a visa worker (my case). So, I am praying for this to pass. If it does, I am starting interviewing with competitors the very next day.

Eumenes2• 4 years ago

Lol @ this being an FTC proposal. Whats next, OSHA limiting your speech at work?

gameman1443• 4 years ago

What do you mean there? Maintaining competition in a labor market seems like it's absolutely within the scope of trade regulations.

Eumenes2• 4 years ago

Why are they suddenly making this decision in 2023? Seems like something congress should change.

Ethan_Mick• 4 years ago

Good.

I've seen over and over this harm friends in frustrating ways. Tech aside, non-competes in other industries are completely insane. My wife is an optometrist and all local shops have draconic noncompetes you are forced to sign. If you leave the shop you can't work within 30 miles (or more!) of that location.

I've had friends move entire cities just so they can get out of a terrible work situation. Worse, I've had friends stay in bad situations because their noncomplete would force them to move or drive way too far for work.

And since everyone does it, they're resigned to "it's just the way it is" and nobody wants to risk being sued.

brightball• 4 years ago

IMO the primary concern at an office like that is having access to patient data and then enticing them to go elsewhere. If the person wants to go work elsewhere, totally fine. The concern is trying to take customers or other staff with them.

I know somebody that happened to. Company opened a branch office and one of the senior staff rented an office around the corner, took half the staff and patients. Stuck them with multi year lease agreements, after the business already bore the entire startup cost of paying people while building up a patient load, marketing, etc.

I understand the opposition to draconian non-competes but there’s a flip side of this to protect an investment that is very valid.

Retric• 4 years ago

Protecting trade secrets and customer/client lists etc don’t require non competes.

What they are generally used for is to limit competition or depress wages both of which are economically harmful.

ssharp• 4 years ago

There are usually non-solicitation clauses as well that prevent you from actively recruiting former co-workers and clients/customers. That's different than a non-compete.

bumby5• 4 years ago

If you leave the shop you can't work within 30 miles

I know one person who worked in sales and was banned from selling in an entire region of the country. She was completely open about this when being recruited by another employer. That new employer appeared completely willing to work around the non-compete clause to bring her onboard.

That was, until she was actually hired and she was almost immediately pressured to sell throughout the forbidden area. When she said she was willing to, but only if the new employer would sign an agreement to cover any of her associated legal fees, they eventually backed off on the demands.

These situations always seem to push the risk to the employee to the benefit of the employer.

skeletal88• 4 years ago

In normal countries these are only valid when the previous employer pays for the time you are not allowed to work.

If I work at a bank as a developer then I can go straight to the next one, if the previous employer doesn't keep paying me a compensation for not working at the next bank.

Not being able to 'in sales' as sibling commenter says here is just insane, and should not hold in court anywhere.

endisneigh3• 4 years ago

I disagree with banning noncompetes. The issue IMO isn't noncompetes, it's the fact that an employer doesn't have to pay.

The rule should be that they can make you not compete, but you must be compensated monthly at your salary level prior to departure.

A non compete without having to pay is having your cake and eating it to so to speak.

richbell• 4 years ago

The rule should be that they can make you not compete, but you must be compensated monthly at your salary level prior to departure.
A non compete without having to pay is having your cake and eating it to so to speak.

Agreed. Noncompetes and NDAs have become standard boilerplate in job contracts despite being inappropriate in the vast majority of cases. In my opinion, it's an intimidation used by employers against employees: "we don't actually enforce this, unless you do things like leave us a negative review on GlassDoor".

Despite being unenforceable where I live, I know several people who have been threatened by their ex-employers. Even if such legal action is frivolous, most people don't have the time or money to spare fight it off, and employers know this. This relates back to the bargening inequality mentioned in another thread.

netheril962• 4 years ago

I disagree. The law can only mandate salaries during noncompete periods. It cannot mandate bonuses or stock grants, both of which can be significant.

And as an employee, I prefer that noncompete has no effect. Even if I were paid during noncompete period, I would be outcompeted by other people who are working rather than being idle. It would set my career back.

r00fus3• 4 years ago

Would you be ok if it was total compensation (averaged over a reasonable period) and not salary?

endisneigh3• 4 years ago

My fear around banning is that if an employer were willing to buy you out but non competes are banned the only real option they have would be to not hire you, no?

foobiekr2• 4 years ago

Be careful what you wish for, there are significant non-salary benefits (stock ESPP and RSUs, healthcare subsidy, etc.) that matter a lot. These employers would just restructure compensation to effectively recreate low-cost non-competes.

endisneigh3• 4 years ago

Not a big deal, could just say income as reported on your W2, then.

Not to mention employers already enforce non competes and don’t pay anything.

projectazorian• 4 years ago

Lovely, but seems unlikely to make it past the current iteration of the Supreme Court.

Robotbeat• 4 years ago

Banning noncompetes would be an awesome policy for economic growth and dynamism. It’s pro-freedom in the useful sense of the word. It’s also incredibly pro-worker.

Sometimes you get a win-win-win idea.

manicennui• 4 years ago

Unfortunately the "loser" in this situation is the only group that politicians really care about.

r00fus3• 4 years ago

How did the supposed captured government agency (FTC) happen to even propose this? Is it a) FTC is not captured b) proposal that goes nowhere (ie, Lucy with the football scenario) or c) perhaps that "group politicians really care about" realize the gains may be worth the cost ?

withinboredom• 4 years ago

The only loser is the company with the best whatever while all their competitors have a shot at bidding for employees who know the whatever. It tremendously levels the entire playing field.

cbb330• 4 years ago

Government intervention is heavy handed and will cause unintended side affects with 100% certainty.

What should happen is for: 1) employees to choose to not join companies with contracts that they don't agree with 2) employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs.

A natural market response to bad company policy is always preferred to government mandates.

bastawhiz• 4 years ago

How is banning your employees from getting jobs with competitors aligned with a free market? That's the opposite of a free market: it prohibits me, the worker, from choosing a company that I want to work for. If I can't get a job with a company I agree with because I'm under a noncompete (perhaps the incentives aren't good enough anymore) then I'm kind of fucked, huh?

AlexandrB3• 4 years ago

employees to choose to not join companies with contracts that they don't agree with

And do what? There's not a robust social safety net in the US, if every company in your industry has a boilerplate non-compete you can't just choose not to sign any of them.

employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs.

Why would they do that when they can just put non-competes in their contracts? Or to put it another way, it's extremely hard to quantify how many people didn't sign an employment contract due to a non-compete (and even harder to quantify the value of that potential employee), it's extremely easy to quantify the cost of an RSU program. Which solution do you think an entity optimized for profit maximization will choose most frequently?

Daishiman• 4 years ago

NDAs are just one axis when considering employment that has no upsides but the downsides are not necessarily bad enough for people who need work to consider them.

They’re just not useful and themselves an arbitrary restriction of employment that has no place in a a free market.

not_the_fda2• 4 years ago

Often times you are not informed about non-compete until your first day of work unless you know to explicitly ask about it. They have you over the barrel at that point.

I once took a job at a design service company. Asked about any non-competes and invention stuff. Said there wasn't any verbally. I get there and they have this draconian non-compete that you can't work for any other design services, start your own design service, or work for any of their clients for five years.

dmlerner• 4 years ago

How are you not informed in advance? Every job I've had, there's a contract I sign in advance with all terms, and no addendum on day one. I'd think you could refuse to sign an addendum, and even sue for promissory estoppel if they fire you for not signing.

NegativeK• 4 years ago

Non-competes require governments to enforce them; abolishing them is the actual anti-interventionist strategy.

sebzim45002• 4 years ago

Why is what you are describing preferable to the government outright banning them? California has effectively banned non-competes for years and their economy seems to have survived the ordeal.

mindvirus2• 4 years ago

It really does seem to me that the simplest solution would be to require non-competes to be paid at the maximum of the past ~N years total earnings (and benefits value), with a minimum of say $100k/year.

thwayunion7• 4 years ago

IMO the link should be changed to the FTC's press release, which has no paywall and provides a better summary: https://www.ftc.gov/news-events/news/press-releases/2023/01/...

You can read the proposed rule and the full notice and factsheet here: https://www.ftc.gov/legal-library/browse/federal-register-no...

Of note, an FTC commissioner (Trump appointee, so a minority voice in the executive atm) released a dissenting statement outlining the strategy that will be used to defeat the proposed rule: https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompe... (warning: pdf). In her dissent, she speaks eloquently about how darn important noncompetes are to Business and Competition, and "encourage[s] all interested parties to respond fully to all parts of the NPRM’s solicitation of public comments."

Which, well... I'll also encourage all interested parties to respond fully to all parts of the NPRM’s solicitation of public comments! You can do so at regulations.gov

bcaine• 4 years ago

Do you know how to publicly comment? I couldn't find a way on the press release or their website.

thwayunion7• 4 years ago

The notice will be posted on regulations.gov. You can leave a comment there.

It's not posted yet. The public comments should open shortly. Set a reminder for Wednesday next week and it'll almost certainly be up on regulations.gov.

thwayunion7• 4 years ago

Hey! Hopefully you go back and read comments on old posts, since the public comment period has begun and comments can now be submitted on regulations.gov:

https://www.regulations.gov/document/FTC-2023-0007-0001/comm...

twobitshifter• 4 years ago

The proposed rule would generally not apply to other types of employment restrictions, like non-disclosure agreements. However, other types of employment restrictions could be subject to the rule if they are so broad in scope that they function as noncompetes.

Do we think it would apply to non-solicitation clauses?

legitster• 4 years ago

My understanding is that most non-competes in the US are not enforceable in the first place. So while I think there are situations where non-competes are valid, I think it would be pretty safe to make a rule that says, "if you are not prepared to actually take an employee to court to enforce non-compete, you should be willing to go to court to defend it."

kevstev2• 4 years ago

The problem is that the threat of litigation is enough to make them essentially enforced. Sure you could go to a lawyer that says this isn't worth the paper its printed on, but either you, or maybe your employer, is now going to have to fight this out in court.

This is not theoretical. A few years back, my wife, who is in ad sales, had very deep relationships with certain companies. These people had become her friends, we vacationed with them. She took a job at AOL, which at the time held many properties like Engadget, Joystiq- there was a whole host of sites that no one had realized on the surface were owned by them, but they had a decent sized media empire at the time. She had to sign a non-compete saying that she couldn't call on anyone she called on at AOL for a period of 2 years. She joins, and smashes her goal. However, about 3 months in, there was a re-org, she was let go, probably for making too much, and got some paltry severance.

She asked to be released from the non-compete. They said no. We lawyered up. He said straight out that he had represented AOL employees before, and they fight these things tooth and nail. He said we would probably win, but it would cost tens of thousands of dollars, and be a cloud over our head for at least the next year or two. He was just being brutally honest with us. We ended up not going that route.

It took her several years to recover. She had to take some jobs at kind of shitty companies because no one wanted to touch her with a non-compete like that, and most of her value was in the relationships she brought to the table. AOL essentially got a book of new business for the cost of a few months salary and commission. Its absurd.

My last company also tried to put an onerous non-compete on me- they only wanted to pay me my base salary which was a fraction of my total comp. They wouldn't even define who their competitors were. I fought against it hard. I was then labeled "difficult" by HR and what had been a bit of a rocket ship of a ride up there all of a sudden came to a stop- I stayed for another 2 years there, but it became clear there was a glass ceiling above me.

Non-competes in any form need to go away. This is restraining the US economy from achieving its potential by reducing labor mobility.

Sohcahtoa82• 4 years ago

A few years back [...] She took a job at AOL

That's gotta be more than "a few years".

All4All• 4 years ago

I agree with the notion of ridding noncompetes entirely. Former employers should be limited to bringing cases against former employees who actually take something of legal value-i.e. trade secret misappropriation claims which require a higher standard of proof, as opposed to the broad restrictions that noncompetes impose on employees.

flerchin• 4 years ago

We have various "professional services" folks at my fortune 500, essentially staff aug. Some of those folks I'd like to convert, but there's a non-compete. I wonder if that goes away now? (non California)

jabroni_salad• 4 years ago

Might want to double check the text of the noncompete. I've never worked anywhere that forbade converting. Rather, it was to stop permatemps from hopping vendors when they inevitably found out some of them pay more for the same work, or from offering the client the same services and entering into competition with the vendor.

kmod• 4 years ago

I mostly think this is a good thing, but there are some fields where I feel like employers will have to take other precautions that are not as nice.

Most of us here are in tech where "ideas are cheap" is mostly true and commonly thought, but there are other fields (in particular, finance) where single ideas can easily be worth millions of dollars. (Imagine something like "the stock market goes down on Friday the 13th's".) How are employers supposed to let employees know these ideas? If there aren't noncompetes then I suspect employers will limit employees (and their growth) in other ways.

At least here in NY firms will pay ex-employees during their non-compete. My understanding though is that they only have to pay the base salary, which is usually a minority of the total compensation (even guaranteed compensation). Would be nice if that were fixed.

lucasgonze• 4 years ago

I doubt employers just won't hire. That would be self defeating. They'll look to protect their trade secrets in other ways, mainly through aggressive enforcement of non-disclosure agreements.

drewda2• 4 years ago

As the saying goes, California is the United States... just 30 years in the future.

(Note that often this is a good pattern, but not always!)

yardie2• 4 years ago

If thats true the rest of the US is going to be on fire, have an abundance of homeless, and high speed rail still won't happen.

Fargren• 4 years ago

Those seem like reasonable predictions.

drewda2• 4 years ago

Perhaps.

But the relevant point here is that California has long had state law banning most forms of non-compete clauses in employment contracts. It's considered to be one of the strengths of Silicon Valley and other California industries -- talent can move from established company to established company, or established company to startup.

xyzelement5• 4 years ago

Non competes are often necessary in the most interesting jobs. A few years ago I took a job at a hedge fund with a 2 year noncompete. I took a calculated risk doing so.

In the 2 years I worked in the fund, I learned a tremendous amount thanks to being exposed to the "secret sauce" which would have been really damaging for me to take to a competitor.

After I left the fund, I took the 2 year non-compete (ie: don't work in another fund) to explore other industries, ended up in a FAANG and quite happy.

Point being, as an adult I weighed the risk of the non competes vs the opportunity of the role and made a decision. I am not sure how this kind of role would work in a world of no non-competes but I suspect it would be suboptimal for everyone.

The bottom line is, a non compete is not something that springs on you. It's something you evaluated in context and chose, as a professional. You don't have to take the job.

lotsofpulp2• 4 years ago

I am not sure how this kind of role would work in a world of no non-competes but I suspect it would be suboptimal for everyone.

In your example, non competes seem to be optimal for the hedge fund investors, but I fail to see how it was optimal for everyone.

California has been pumping out quite a stream of “interesting jobs” and interesting businesses in a world of no non competes.

xyzelement5• 4 years ago

//but I fail to see how it was optimal for everyone.

It was also optimal for me as the employee because the fund could (a) hire me and (b) structure my role in a way that I could quickly learn and make impact which (c) enabled me to earn what I want.

Without the non-compete, the role/hire would not have been possible and would have to be structured in some less optimal way.

Like I said, if I didn't think this role was even w the non compete I'd have done something else.

ThrowawayIP• 4 years ago

Non-Competes are absolutely sprung on employees and I am an example of that. The company I worked for was acquired and the 2 year non-competes were high-pressure "Sign it or you're fired" conversations. So I sit at the same desk, doing the same work, for the same compensation and can now not take another job with anyone doing work in my field.

jeremydeanlakey• 4 years ago

The bottom line is, a non compete is not something that springs on you.

It's pretty standard now for employers to spring on you a previously-unmentioned non-compete clause at the time that you're onboarding. I've learned to ask for it before accepting an offer but I don't think most employees know to do that.

I'm a capitalist and I think non-competes have a very valid purpose in a limited set of circumstances. But the ubiquitous use right now is to make it harder for employees to leave.

xyzelement5• 4 years ago

I can get behind that. Non-competes between two consenting adults - great. If presentations are shady and opaque, that's a different story and a problem (and I would say that about any attribute of the employment contract that isn't easy to understand upfront)

ipaddr3• 4 years ago

After you took the FAANG job did you still receive money for the non-compete?

xyzelement5• 4 years ago

The way it worked (in my case at least) is that as part of my signing on with the fund, I consented to their ability to block my employment with anyone for 2 years post departure (technically, they could have blocked the FAANG job but there'd be no reason to - and similarly they could have approved a job in finance if it was sufficiently removed from what I was doing.)

There was no "money for the non-compete" involved, other than perhaps the premium baked into my compensation to begin with to make the deal attractive.

mebiles• 4 years ago

yeah if you've switched sectors then you clearly did not get the "secret sauce" lol

greatpostman• 4 years ago

Markets would be better and more efficient with that information public. Also, no need for a few people to rack up billions by holding secrets

Think about sota deep learning models. Much better that everyone knows about hot chat gpt works.

xyzelement5• 4 years ago

Sure, and when you invest millions into developing the financial models (or GPT-like models) - you are welcome to release them into the public domain if you wish.

However you don't get to dictate what the people who have actually invested the resources get to do with them, including what conditions they attach to who can be exposed to it (a la the non-compete). As an adult, I retain the option to not take the job with the non-compete.

22SAS5• 4 years ago

I work for a market maker. Have a maximum possible one year NC. Thinking of doing something similar in case my firm slams me with NC > 6 months, when I resign.

asah• 4 years ago

This is a huge deal for improving US competitiveness worldwide, can't wait for the comments period to open.

This is won't affect early stage startups much: startups have limited negotiating power and non-competes are a <blink> tag: it's such a bad look, entrepreneurs are quickly pulled aside by advisors, lawyers, etc.

This might affect California, which used them (their ban) to compete with other states. It's a soft thing along with sunshine, funding (easier, faster, better terms) and the talent pool (larger, better connected).

I've been affected by non-competes all my career and it was part of my decision to move from New York to California - the software industry was simply too volatile to attach yourself to one employer. As I graduated, I had companies recruiting me, it was impossible to pick. Decades years later, I have enough power (and savvy) to cross-out NCAs from contracts along with overly prescriptive SOWs, toothless financial promises, etc. But kids, if you're reading this, the negotiation never ends if you want to get paid and earn a living.

spamizbad• 4 years ago

Happy to see this. Unfortunately, the business community has completely abused these, with companies like Jimmy Johns requiring its minimum-wage employees to sign non-competes.

My state sued them over it and won: https://www.reuters.com/article/us-jimmyjohns-settlement/jim...

charcircuit• 4 years ago

Would this also block noncompetes that block you from creating a competitor to where you work or prevent double employment at competing companies?

OkayPhysicist3• 4 years ago

If they look to California's noncompete ban as an example, leaving your company to compete with them would be fine, but double-employment could still be restricted (because they can just fire you).

adventured• 4 years ago

This is both something I support (a huge win for labor), and it will accelerate the tech giants shifting work overseas to save money (incomes will rise as labor is able to more freely act to take advantage of opportunity, big tech will have to pay more for the same labor; to offset, they'll attempt to offshore more aggressively).

OkayPhysicist3• 4 years ago

Those "tech giants" already have huge presences in California, where noncompetes are already illegal.

krupan• 4 years ago

When I want to leave a company and look for a new job, I hate non-competes.

When I want to stay at a company and a good co-worker quits to go work for a competitor, I love non-competes.

When I want to stay at a company and a toxic co-worker quits to go work for a competitor I cheer that a non-compete did not block that move. And yes, I’ve been in this situation and the toxic employee was CEO of the start-up. I’m pretty sure the competing start-up he went to failed because he went there. Smartest move the start-up I was at ever made to let him go there.

I think the best solution is for companies to make damn sure that good employees don’t want to leave to work for a competitor, instead of making them sign a non-compete, especially before you really know if they are toxic or not.

gen2205• 4 years ago

I think we're all pretty familiar with the arguments against non-competes. Does anybody have a compelling argument for them, as practiced in 2023 in the US?

While we're at it, does anybody have a compelling justification for allowing non-poach agreements, too?

From my perspective, they both seem like a non-durable benefit to $current_employer at the expense of a compounding opportunity cost to the greater economy (insofar as it hinders an efficient execution of the labor-employer matching process).

Curious if anybody has an interesting argument for why this is OK. The only thing that comes to mind is "trade secrets" arguments, but don't we have separate laws for that?

snowwrestler• 4 years ago

The argument is basically that trade secrets violations are incredibly hard to detect and pursue. You can’t see inside a person’s brain, and (short of industrial espionage) you can’t see inside a competitor either. So a person could come work for you, gain some knowledge of your trade secrets, and then go get a huge offer from a competitor based on that knowledge.

In contrast, it is extremely easy to detect a person’s employer.

I’m not saying this is a valid or correct argument, I’m saying this is one of the arguments.

Another argument (that I know less about) is that there is knowledge that is valuable and proprietary, but does not actually qualify as “trade secrets” under those laws.

curiousllama• 4 years ago

This is a solid summary. Another, related argument I've heard is that it incentivizes R&D + upskilling. Much of the value is "we now have people who can do X", not X itself. Without noncompetes, it's a better strategy to try to poach your competitor's R&D employees, rather than invest in your own, which very quickly leads to less research + upskilling.

wpietri5• 4 years ago

A reasonable counterargument here is that if the improvements from misusing trade secrets are that hard to detect, then they were perhaps not sufficient to be worth suing over. Especially given that the discovery phase of a lawsuit does indeed let you see inside a competitor.

anigbrowl• 4 years ago

That's a somewhat reasonable concern. But if it really matters to an employer...pay for it. For example, offer a security that vests after 5 years or whatever. Saying 'it's already built into the compensation' doesn't cut it, because then it starts becoming the norm for everyone.

TechBro8615• 4 years ago

"Trade Secrets" have always sounded like a form of protectionism to me, anyway. If you believe software patents shouldn't exist, then you should follow the same logic to lead to the conclusion that trade secrets shouldn't exist either. Both are expressions of business processes that shouldn't otherwise be restricted by blanket clauses or gag orders.

To me (a non-lawyer and non-legal scholar), an NDA seems more appropriately legal than a non-compete agreement, because it at least depends on enforcing a specific action rather than blanket gagging a person's ability to do an entire job where they might not necessarily disclose pertinent information.

It begs the question, where is the line between NDA and non-compete? If I have an NDA and then go to a competitor, my former employer still has a right to enforce that NDA, but how would they ever determine (prove) I violated it? I guess this difficulty is where the justification for non-compete comes in, but I think the onus should be on the employer. It's not fair to the employee if the employer can just blanket forbid them from working somewhere because they might disclose some information to their new employer in a violation of an NDA which the old employer is either too lazy or incapable to detect.

QuercusMax2• 4 years ago

Only thing that comes to mind is a scenario where a sales person goes to another company and takes all their sales leads with them. This happened at a previous employer, at which time they instituted noncompetes for all the salespeople and most of the engineering force.

They forgot to have me and several other very senior engineers sign the noncompete, which was extremely hilarious to me when I went to another company in roughly the same industry and my old boss asked me about it...

flakiness• 4 years ago

Any stories after that conversation?

subradios• 4 years ago

The issue is that it's very difficult to tell trade secrets from expertise in certain fields. In a field that is sufficiently niche, like non flagship chip production - a lot of architectural ideas are well known across the industry are but the implementation details that enable them are trade secrets. You can't "un see" these details and IP law is loose enough that you could easily reimplement those features or products for a competitor without violating IP laws because you've seen the idea before and can come up with infinite implementations.

Nomentatus4• 4 years ago

IANAL but I had (kinda unconsciously) assumed that what can be protected by trade secrets was broader than what patents protect (patents merely implementations - which might be broad.) So I'd like to know more; though I wouldn't be shocked (now that I think about it) if you're quite right.

In any case, even if the employee refuses to work on a given task, that's information. Having to say: "Yeah, I think you want somebody else to design that particular part" (implying "because they'll be freer to innovate and free to choose the optimal solution") is a big fat clue that could attract a lot of resources to the design of that part.

Digory3• 4 years ago

In theory, it lowers the risk of hiring in certain situations. So, if the alternative is not hiring, that's beneficial.

For a lot of companies, the "sauce" is a personal relationship that isn't trade secret. If you hire a salesman, and give them access to Mr. Big, you create an incentive for the employee to trade the relationship for your competitor's money.

Penalizing the change in employer is not the only way to deal with it, of course. Without a non-compete, you might have to buy/keep the salesman's loyalty. Which may or may not be an economic deadweight.

gen2205• 4 years ago

That makes sense as to why an employer would want a non-compete.

Is there some way that this translates into why "we the people" would want to allow companies to enforce non-competes?

From my perspective, if a company's sauce is personal relationships, the non-compete is not particularly effective in engendering loyalty and extracting the greatest value from that relationship.

A disaffected salesperson is not going to be enthusiastic about leveraging their relationships for an employer they're unhappy with -- whether they're under a non-compete, or not. This means they'll extract the minimal value to keep their salary, but not the maximal value out of the potential they have access to.

In fact, a non-compete prevents that salesperson from bringing that relationship to a different company, where that relationship might produce greater dividends for "we the people" (as measured by the new company's ability to attract salespeople and engender their loyalty).

mnehring• 4 years ago

So, here are a couple of arguments for:

1. I have a relative who is an MD. He was recruited cross-country at great expense. (Average cost to recruit an MD can be about $250K). So, if his comp was $200K/year and it cost $250K to recruit, a neighboring practice could monitor for new incoming docs, and make an offer of $220K/year in salary to the newly hired doc. If that happened, it would be in the best interest of the doc to switch jobs, but the original practice would be out $250K in recruitment costs.

2. In the case of an acqui-hire, the team is often the special sauce. You embed a bit of non-compete in the form of stock options that vest on a particular schedule, but it may be tricky to structure the deal in an attractive way without a non-compete and non-poach agreement.

3. Trade secrets are often hard to cover in NDA's. Your trade secrets may become embedded in the employee's mind in a manner that they cannot extricate. So, if your employee receives training that includes your trade secrets, those trade secrets will be implicitly used at the next job.

So, I think the argument basically boils down to there being a vast upfront cost to the employer for getting a new employee. If the employee switches to another company, the value of that upfront cost transfers to the new company with no compensation to the old company. It seems a new, more pernicious workaround to non-competes is where employers are charging their employees for training if they leave early. That seems even more hostile than a non-compete.

(As a side note, I think non-competes can be quite damaging. In the case of the MD relative, he was fired, essentially without cause, and his non-compete forced him to be unemployed for a year before he was finally able to convince the former employer to waive the non-compete. So, there should be very hard parameters around non-competes. One thing I think should be mandatory is a written buyout amount for any non-compete that has some basis in reality. For example, if my MD relative was recruited at a cost of $250K with a 2-year non-compete, then he could buy himself out at $250K, minus about $20K for each month of service he completed. Obviously, I haven't fleshed this idea out all the way.)

p_j_w• 4 years ago

In the case of the MD relative, he was fired, essentially without cause, and his non-compete forced him to be unemployed for a year before he was finally able to convince the former employer to waive the non-compete.

It seems like an easy and obvious solution that the non-compete is automatically null and void if the employee is let go for any reason.

wpietri5• 4 years ago

I think those are all reasons a company might want it. But asking the government to force people to not work requires reasons why it's good for society, not just the company.

In the first case, you're talking about a company that wants to pay below-market salaries. Why should that be the employee's problem?

In the second, there's a case for carrots to make the acquired team stay, like the stock options you mention. But from a societal perspective, why should the company be able to use the courts as a stick if the carrots turn out to be insufficient?

In the third, I again get why companies want to treat employees like property. But I don't see any societal argument for that other than "rich company wants things".

danhon• 4 years ago

In your first case, I'm pretty sure I've seen contracts that require the repayment of e.g. relocation costs if the employee leaves within x time period.

neycoda2• 4 years ago

So, if your employee receives training that includes your trade secrets, those trade secrets will be implicitly used at the next job.

That's not a compelling argument for NCCs. It's an argument stifling competition, which should not be what NCCs are used for.

Every company takes a risk hiring someone that may leave with field expertise specifics to the company. Them using that expertise elsewhere makes the market healthier and more robust because it increases competition.

It's conceivable that NCCs are more anti-competitive than protective of the company's trade secrets, at least that's how it appears they're being effectively used nowadays.

lolinder5• 4 years ago

1. If the doc is worth $220K, why couldn't the practice that hired him match the offer to save themselves the $250K they spent hiring him? This feels like exactly the kind of wage suppression that the FTC is arguing against.

2. Workers are not serfs to be bought and sold. If the acquiring company wants the talent, then they should structure the deal in a way that makes the talent want to stay, not use legal handcuffs to force them to.

3. I can see this as an argument for noncompetes being legal in some very limited cases, but most jobs don't need this. Others have suggested requiring garden leave in lieu of a noncompete, and in the few roles where this applies I suspect that would work out fine.

gen2205• 4 years ago

1. I think the end-game here is salary-parity, no? If Practice A learns that Practice B is taking their employees for a marginal salary difference, that forces Practice A to improve their compensation package.

But I don't think I fully understand this example. Why does it cost $250k to hire an MD? Why does Practice B not need to pay this cost, is it because they can skip the vetting process since A has already performed it?

2. If it's an acui-hire, the only way it can be successful (in real terms, not just fake "retention" terms) is if the acquired team is consenting to the acquisition and partnership. If the acquirer can't create a deal (involving stock options, work lifestyle guarantees, whatever) that's successful in the eyes of their prospective future employees, non-competes and non-poaches simply delay the inevitable. This is to the detriment of "we the people", because we want good people to be productively working on important things.

In my not incredibly informed opinion, NCs for acquihires smell lazy and inefficient, because they optimize for the wrong metrics (employee retention vs value creation + satisfaction). If there's uncertainty about the long-term success of the merger, it can be factored into the acquisition price.

To me, this implies that outlawing NCs would lead to fewer acquihires, on the margin. This seems like it would probably be a good thing.

3. I think there's some "basement" of trade secrets that we just need to accept are going to spread around. As a company, you have to understand that this bottom 20% of ideas are going to osmosis their way out with every departing employee, and there's nothing you can do about it other than work to retain employees and innovate new ideas.

Similarly to the acquihire issue, NCs simply delay the inevitable here, and don't seem to provide much benefit "we the people" (or protection to "we the entrepreneurs").

dhx• 4 years ago

1. There's two costs being confused here. The impact of a doctor burning out or otherwise retiring and no longer using their qualifications, requiring the training of a junior doctor with required specialisations at a potential cost of USD$250k-$1M[1] and many years of waiting. And the much less significant impact of a doctor using their qualifications to find an equivalent job with a different employer. In the later example, it's a fairly standard professional recruitment process and cost.

2. Stock options are a risky gamble for employees and employers alike. Neither party can rely upon stock options too heavily as a retention tool because no one knows what the stock options would be worth 3 years in the future. If it's really essential to keep employees on for numerous years then guaranteed salary increases would be a better way to ensure employees are adequately compensated for the detriment to their career of staying in the same organisation doing the same work for a long period of time. And of course, proactively ensuring employee salaries are _always_ in the top decile of industry/specialisation salaries is needed too because it is not uncommon for some labour rates to move +10% in a single month. Many employers with a high NIPE/PPE[2] could easily pay higher salaries if they desired to keep employees for longer periods of time.

3. Aren't patents are meant to protect such R&D investments? Employers benefit from hiring from each other creating a mixture of technical knowledge and culture that is gained from employees having worked in different roles and projects elsewhere. Thus I struggle to comprehend why employee movement would be viewed as a net negative overall that justifies non-compete agreements.

[1] https://www.ama-assn.org/practice-management/physician-healt...

[2] https://tipalti.com/profit-per-employee/

DannyBee• 4 years ago

It depends entirely on your target goal.

If your target goal is something like "maximization of worker pay",for example (really, i'm not suggesting that's what you want, it's just a convenient example), then no, there will never be a compelling argument for non-competes, because they always stand in the way of that particular goal.

This is because costs by employers can always be expressed without non-competes somehow to within some reason, and not get in the way of that goal (but may harm others).

For example - there are fields where large amounts of on-the-job training is paid for by employers. Certainly they don't get nothing out of it in the end, but they have upfront costs too. It is more frontloaded cost wise, such that if the employee leaves immediately after training, the employer would lose money.

The literal training cost can simply be expressed as an actual penalty for leaving rather than a non-compete. But the loss of time and need to train someone else (IE the time during which you would have made more money on the person who just left) is harder to value as a penalty (since it depends on what your profit would have been, which is probably variable, and lots of other things). So that is often expressed as a non-compete. But that would still stand in the way of "worker pay maximization", so that particular difficulty is not compelling for that goal (IE you could just assign a value to it and deal)

Similarly, there are fields where there are not enough people, and great upfront cost may be spend in acquiring people (doctors in rural areas, etc). Normally they would non-compete them and give a significant hiring bonus. You can also express this as a penalty, but it still puts you out a doctor for the time it takes to recruit someone else, etc, which is bad for the community. But not for worker pay!

If you go for worker pay maximization, them taking a 250k bonus to go work in that area, then leaving a year later (or whatever), maximizes their pay. It also likely forces the community to pay more to the next person to have that not happen!

So again, if your target goal is maximization of worker pay, no, I think there is no compelling arguments for non-competes.

If you switch your goal to say something like "maximization of production of useful things", maybe you could get to more compelling argument, because constant job hopping by everyone, while maximizing worker pay, probably interferes with maximizing the production of useful things.

Or if you introduce some balance of goals, maybe.

gen2205• 4 years ago

I think my goal would be "maximization of [responsible] production of useful things".

Constant job-hopping requires an employer who wants to hire you. If you're a "constant-job-hopper", you'll find few people who want to hire you.

NCs are not only a meaningful barrier to fair compensation, they also seem to be a barrier to the allocation of labor to more productive businesses that, by virtue of their productivity, can afford to pay higher compensation.

mminer237• 4 years ago

The main time I see them make sense is with very skill-based, client-based practices like accounting. You're likely giving this hire a lot of clients, and you don't want him leaving in two years and taking half the clients with them.

bob1029• 4 years ago

I think NC clauses are pretty bad in general. But, I can't shake a weird feeling that crops up from time to time. Anyone out there operating without one of these things over their heads that feels like maybe they should?

I started out at a tiny company that didn't think their app idea would make it as far as it did. It mostly has. Now I am looking at the terms of my employment and finding myself approximately as encumbered as a McDonalds employee on their first day.

Some of the things I know could be leveraged to turn our biggest competitor into an unstoppable explosion in very little time. I'd never actually do this (there are always higher-order effects w/ betrayal), but I do think I could use this concern as part of my salary re-negotiation this year.

Equity and other forms of compensation serve as a very powerful carrot to abate this temptation. Carrots don't always work though. You usually need some kind of stick at some level.

johngalt• 4 years ago

Difficult to defend "as practiced". For example trying to enforce a non-compete for sandwiches is ridiculous.

There are obvious scenarios in competitive industries where losing key people to competitors creates risks for everyone involved (not just the losing employer). The problem is when employers expect the individual employee to absorb the costs to mitigate that risk. Or where the non-competes are applied overbroadly. Rather than ban non-competes, it would be better to require compensation for the term of the non-compete. This prevents frivolous applications of non-competes, which is the actual problem.

monksy4• 4 years ago

Non-competes do not protect an organization against IP theft or trade sceret dissemination. Those are protected by NDAs, confidentiality agreements, copyrights, patents, etc.

If you see someone making a claim that it's to protect company secrets, that is misinformation used to justify NCs. Please inform them otherwise.

batmaniam• 4 years ago

If businesses think their employees are so valuable that blocking them from working for a competitor is necessary... then how about just giving them incentives to stay? I don't know, maybe a huge bonus, or above-average salary adjustments against the competitor, etc? Or fix the toxic work environment so that they'll actually want to stay?

Otherwise too bad, the business created unfavorable conditions for their employees, so workers should have every right to leave and work for anyone else, including competitors. Either employees are that valuable or they're not, can't have your cake and eat it too, Mr. Big Boss.

schnable2• 4 years ago

Nice to see the Biden admin continuing the fight for upper middle-class professionals.

CodeWriter23• 4 years ago

Doesn't this diminish the value of a startup, say, if the buyer hands the principals a mountain of cash in a buyout then the principals use that cash to build in the same industry / market the startup they would have if they had all that cash in the first place? Without having the non-compete with the principals, who would even want to buy your startup?

TheCoelacanth• 4 years ago

I doubt the rule would apply in that case because that isn't a labor contract, it's a contract to sell a business.

OkayPhysicist3• 4 years ago

I don't know if you've noticed, but there's this little state "California" that gets a lot of press in the start-up scene. Non-competes are basically illegal there, and it doesn't seem to have hampered either the start-ups, nor the build up of megacorporations who buy them.

acd• 4 years ago

I suggest we also implement open source peer reviewed employment contracts.

Almost always in the end of the recruitment process are you showed the emploment contract fine print.

Been through a non complete clause myself I highly recommend against it. Your skill and work experiance is the most valluable asset to a future employer. Non compete clauses prevent you from seeking jobs in a similar field.

saraton1n• 4 years ago

Of course, it was entirely hearsay, but I've always heard that non-competes were unenforceable and primarily a scare tactic. It's yet to impact me tangibly, and I understand the need to protect IP, but I don't think non-competes are the way to go about it. I believe this is the right move!

nscalf• 4 years ago

My understanding was that this was one of the big competitive advantages for California. I could be totally off, but wasn’t a reason to work in California that you’re not getting stuck with hostile noncompetes?

neycoda2• 4 years ago

Wow, that's a big deal. While NCCs I've signed have generally looked fair, I've seen a few lives destroyed by them. When somebody has expertise in a career in a certain field, and leaves a company, they shouldn't be punished for continuing on with their expertise in another company, even their own. This is called competition. It shouldn't be stifled. Stealing trade secrets is one thing, but competing in a field should be regulated by companies that don't wanna compete.

rajeshp1986• 4 years ago

Does anyone know if this would retro-actively applied to employees who signed the non-compete contracts?

lsllc2• 4 years ago

Yes, from the FTC press release [0]:

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.

[0] https://www.ftc.gov/news-events/news/press-releases/2023/01/...

EchoReflection• 4 years ago

Depaywalled snapshot: https://archive.vn/nLiSq

cashsterling• 4 years ago

Whether or not this goes through, I think a lot of folks on HN should consider refusing to sign non-compete agreements... especially if you are a subject matter expert in your field of work.

If a employer wants you to sign a non-compete it should cost them something (extra salary, extra signing bonus, pay for a period of time after you leave the company, etc.). You shouldn't just give away your right to work for nothing.

I stopped signing non-competes a number of years ago on the basis that I'm hired for my expertise and know-how and, as such, "I bring everything to table" in my domain of expertise (not my company or they wouldn't have needed me)... it is my experience,knowledge and capability and I should be able to do whatever the hell I want with it, with the exception of stuff specifically covered by trade secret protections, classification, etc.

Nomentatus4• 4 years ago

It's interesting to consider Marx's viewpoint here, namely that businesses are always, even during good times, in a rigorous exploitation contest for the right to stay in business; and so only the businesses that use every possible means of exploiting their workers to the max, and thus piling up the biggest heap of surplus value as liquid assets; will be able to draw on pile that long enough to survive severe economic downturns (thus selecting for max exploitation over the longer run.) (Really a dollar auction, not that he used that phrase.) This seems esp poignant, and accurate, re low-wage and low-skill workers having to sign non-compete clauses. (Downturns were both more frequent and more severe in Marx's day.)

However I think Marx would be confounded by the Justice Department fully pushing this initiative, if indeed it does; since he believed the elites had an iron grip on democracies that was not going to be shaken. He would have predicted a far higher GINI than the (kinda high) one we have. More like Russia's, at least.

I may be selling him short though, he might view the Justice Dept action as mostly theatre; allowing other forms of exploitation to proceed apace and only addressing abusive clauses that weren't being enforced anyway; and the expansion of skilled and better-paid work in our day as only an apparent exception to his views.

cmurf• 4 years ago

One of the FAANGs tried to get me, as an independent contractor, to sign a non-compete that exactly described my business. And they wanted a multi-million dollar indemnification for work that amounted to 2+2=4. As in, no one owns the work result, it's a discovery of facts about how the world works. At first they suggested I needed to sign the agreement before they'd pay my invoice, but then quickly paid it and nixed further work planned. I was not going to sign something so blatantly lopsided. Not everyone is in a position to do that though.

boppo1• 4 years ago

I recently had to deal with some onerous IP clauses that were essentially a non-compete. Fortunately they agreed to drop it.

But for the future: Any advice on finding a good IP lawyer who knows software/media? Lots of IP lawyers around here happy to charge me $300/hr, not so many I'm confident understand the creation of videogame code & assets.

steelframe2• 4 years ago

When I was interviewing last year, I cut off an interview loop with a company primarily because I don't reside in California and their NDA was, "Anything you say, anything we say, forever." Since I was also interviewing with one of their direct competitors that I really preferred, I didn't want to put myself anywhere near a legal situation where they might try to mess things up for my career.

They freaked out when I told them I didn't want to complete the interview loop because apparently I had passed their initial "weeder" interview and they were getting really excited about the possibility of me joining. But I would have had to sign that "everything, forever" NDA to keep going, and they weren't willing to go back to legal or do anything to change it, so that was that.

I personally know several people in my state who had their careers impacted due to threats from former employers over an NDA, so I really don't feel like that was an overreaction on my end. And I'm super-happy where I ended up.

I just wanted to provide a data point on how NDAs that go overboard ("everything, forever") can cut both ways.

mcv4• 4 years ago

Contracts that restrict you, whether non-compete, NDA or otherwise, should be as narrow as possible and limited to a reasonable time. Overly broad restrictions are stupid, dangerous, and unnecessary.

I had quite a bit of discussion about this for my current project. It had two non-competes; one for the client and one for the intermediary, and the important one, the one by the client, sounded very broad and vague, and I wanted explicit and in writing how broad they meant it. (Turned out to be only about a handful of their direct competitors.)

nerpderp822• 4 years ago

It is legally lazy of them to throw that in there and good for you to stand your ground.

Make them sleep in the bed they make!

encryptluks2• 4 years ago

Smart choice. If they are trying to get you to sign an NDA before even being offered a job then they better be offering some kind of amazing package. I've seen recruiter companies try to do the same just to interview.

rnk• 4 years ago

Everyone always thinks their non-compete is good for you and the industry, don't worry about it. They are all bs. I once had a job offer at a startup in seattle where the noncompete said something along the lines of you can't ever say anything about bill gates, who was one of the investors (it seemed extremely broad). I said fuck that, you aren't going to prevent me from making my own political comments about him, whatever they are. I think they wanted to limit people from saying things about his personal family or something. Anyway, I wasted some money on my own lawyer who negotiated a much stricter thing with them. Just say no to these.

bumby5• 4 years ago

I personally know several people in my state who had their careers impacted due to threats from former employers over an NDA

I'm curious, was there any actual legal action or was it just the threat? I'm not dismissing the fact that a threat can create enough risk to make someone change their behavior, but I've also heard these NDAs are tough to legally enforce. Of course, nobody wants to be the one calling their bluff only to find out it wasn't an idle threat.

steelframe2• 4 years ago

I'm curious, was there any actual legal action or was it just the threat?

One particular instance that stands out in my mind was for someone who I saw hired into the company for a specific role with a certain scope. The previous company's HR then sent a letter to the new company's HR telling them about the employee's obligations under the NDA. The new company's management decided the prospect of a legal issue was too much a hassle, so they reassigned the new hire to a different role outside their direct area of expertise and with a smaller scope for a year.

AFAIK, there was never really an opportunity for the employee to say, "No, don't do that, I'll shoulder any legal responsibility if the previous company decides to get nasty about this." The simple "it would be a shame if something were to happen" letter between HR departments was all it took to put the worker in a career tarpit for a year.

rubyfan• 4 years ago

This is probably a sign that other things outside of NDAs would ultimately be problematic there.

humanistbot3• 4 years ago

The thing that makes me so angry is how lightly so many people treat these legally binding contracts.

I showed up to a meetup at some tech company's offices. After putting in my name, I was shown a contract on a small tablet and was expected to click next and sign with my finger. I have normal vision and couldn't read it without putting it right in front of my eyeball. I don't sign anything without reading. I asked if they had a printed copy so I wasn't holding up the entire line.

Their response? "Oh, that's just all standard legal stuff, don't worry about it."

Easy to say when your lawyers wrote it. It turned out to include both a non-disclosure and non-disparagement agreement. I did not attend that meetup.

b112• 4 years ago

Their response? "Oh, that's just all standard legal stuff, don't worry about it."

I'm a Canuck, so centuries of legal, common law separation here...

But if someone misrepresents what a contract is, and even more so applies pressure to sign, it's meaningless.

My understanding is that this goes back to "make your mark" and lower levels of literacy, and in modern times, that legalese is gibberish to many, thus misrepresenting what you're signing can effect enforcement/validity.

It's very stupid for them to brush it off like that.

(I wouldn't have signed either, and have walked from jobs and contracts over absurd NDAs. One client actually wanted me to sign a forever NDA, but 1/2 way through the contract! Wtf?! Negotiate that at contract sign, not months later!)

jackson1442• 4 years ago

Yep. Got multiple eyerolls when I was checking in to a testing center for a certification when I actually stopped to read the full page of rules presented to me before I signed it.

Funny enough, they didn't even follow the rules themselves. The "end test" protocol was to raise your hand in the testing room and be escorted out, I sat there for a few minutes then just walked out myself and apparently that's what I was supposed to do.

tehwebguy• 4 years ago

"Oh, that's just all standard legal stuff, don't worry about it."

Oh good so it's no big deal if we just skip it

amatecha• 4 years ago

Oh yeah, it drives people crazy but I actually sit there and read the entirety of contracts I sign (though I not only read very fast but I'm also able to easily skim along where warranted). It took a bit longer than expected to buy a used car a few years back. In that case the car dealer seemed pretty impressed I was actually reading what I was signing. Most people respond to it like "uhhhhh..." hahaha

Like, honestly, I'm not going to subject myself to some legal encumbrance because of peer pressure. I got a bunch of pressure at a former employer where they wanted everyone to sign these new employment agreements and it took months because I wasn't getting sufficient answers to questions I had. I should have taken it as a warning sign of where they were headed based on how stuff proceeded there later on, but I was pretty young back then. :P

heavyset_go5• 4 years ago

If you think that's bad, I've been to multiple medical practices where part of the "standard legal stuff" they want you to sign would have you give them the right to sell your private information and info about your visit to their partners for the purposes of advertising, etc.

vegetablepotpie• 4 years ago

What makes me upset is when kiosks and websites ask you to agree to terms and conditions, and while you’re reading them, the interface times out.

There’s zero intent from operators to allow their users to understand what they’re agreeing to. It’s all legalese written for their convenience.

trentnix2• 4 years ago

100%

It’s ridiculous how flippant and deceptive companies are about signing non-competes. Sometimes they neglect to mention it until you actually show up for work. So there you are, depending on this new job, standing in front of your new boss, compelled to create and maintain a positive relationship, presented with a legal contract that significantly damaged your leverage and alternate prospects.

That might even be criminal.

Often, I hear from some about how non-competes in some states are “non-enforceable”. But even when that’s true it doesn’t inoculate you from serious problems.

A friend signed a non-compete regarding professional services when he want to work (as an independent contractor, mind you) and was sued by the company after he left. He lawyered up and won, but the case took 18 months due to stalling and delays by the company. During that 18 months the judge had granted an injunction preventing him from providing similar services, leaving him effectively unemployed. It did great damage to his savings and the strength of his resume, which now had a significant gap.

As I said, he won! But he was awarded no damages, despite the victory. Seeing this play out convinced me that even you’re in the right, the process can be plenty of punishment on its own.

lmm2• 4 years ago

The thing that makes me so angry is how lightly so many people treat these legally binding contracts.

But most of them aren't legally binding.

I've never understood why people care so much about these unenforceable non-competes. They want me to sign a contract that's inherently void? Sure, I'll do that all day (or if I'm feeling feisty I'll ask them for a small salary bump for the trouble - may as well take the free money right?). If they want me to witness them signing a deed to the Brooklyn Bridge I'll do that too.

godelski• 4 years ago

It's an anti-pattern. People are pressed for time due to social pressure. The length of the documents adds to the stress, especially since it is full of legal jargon and looks like things you've seen before. Personally I think contracts need to be easily readable by laymen. Otherwise companies have an unfair advantage to tricking people. Isn't deception supposed to be illegal?

nlitened• 4 years ago

I wonder whether signing with finger-drawn “I don’t agree” would be a solution that satisfies all sides?

DennisP• 4 years ago

I quit a job I'd been at for well over a decade, because the company's new owner was making everyone sign noncompete, non-disparagement, and intellectual property contracts. They would own everything I invented while employed with them, even if I did it at home on my own time, if in their opinion it had anything to do with their business. I checked with a lawyer first, who said it was probably all enforceable in my state.

nerpderp822• 4 years ago

This is what Google claims when you work for them.

pyuser583• 4 years ago

I suspect this did why Satoshi Nakomoto is a ghost.

anon223345• 4 years ago

I’m on this, it really really sucks. I have a good idea that has nothing to do with my work and I can’t / won’t build it

I love my job, and I have a family, so the risk reward is too hard, but I’m literally going to quit in the next year just to get out of that stupid paperwork

tejohnso• 4 years ago

Wouldn't they be making their NDA useless by having such a broad scope applied? I thought your contract had to be somewhat sensible for it to stand up in court.

jonny_eh• 4 years ago

Good for you, but the article is about non-competes, not NDAs.

pseudalopex• 4 years ago

The comment was about NDAs used as non compete agreements.

dragonwriter4• 4 years ago

Note that while an unqualified “eveything ever” employment NDA is expressly illegal in California [0], California is not as hostile to NDAs and non-disparagement agreements as it is to post-employment noncompetes.

[0] https://www.employmentlawwatch.com/2021/10/articles/employme...

PaulHoule• 4 years ago

What's hilarious is that many industries run on "expert networks" of people who are full of knowledge they accumulated while under NDA.

The thing you have to realize about commercial contracts is that the law doesn't enforce itself, people who violate them usually don't get caught, etc.

Note also there are other inputs to NDAs. I worked for a firm that did a project for a big accounting firm that itself had confidentiality requirements to its customers so it is natural as an employee of the first firm I help the second firm keep its commitments.

I'd say there are two threads in NDAs: one of them is threats against those who violate confidentiality, another is a description of the procedures that are supposed to be used to protect confidential information. The last time I was doing a lot of consulting I had an NDA that had no threats but lots of guidelines.

prirun• 4 years ago

My ex business partner and I founded Ruby Lane (I'm out now) and hosted our servers at he.net in Fremont CA. eBay wanted to meet with us so we were going to stop by on a server maintenance trip. When we walked into the eBay building, they presented us with an NDA and said it was routine and we couldn't walk into the building until we signed it. I refused, because they never told us we would need to sign an NDA and they didn't send it to us ahead of time to review. I didn't even bother reading it, because no matter what it says, if they later wanted to cause trouble over that NDA, we didn't have the financial resources to fight them. Even though they invited us and I told them we don't want to discuss any of eBay's trade secrets, they refused to budge on the NDA. So we met with an eBay person on their outdoor patio for about 30 minutes and then left.

neonate• 4 years ago

https://archive.ph/PWeyx

dang• 4 years ago

Recent and related:

FTC cracks down on companies that impose harmful noncompete restrictions - https://news.ycombinator.com/item?id=34254183 - Jan 2023 (165 comments)

tchock23• 4 years ago

[Put this in another thread but adding it here since I didn't realize it was a duplicate thread]

My Dad was forced to retire early as a network engineer after the small (5 person) RSA consulting shop he was working for actively threatened his livelihood with a non-compete. No one in the industry would touch him because of how aggressively and proactively the owner of the shop was defending the non-compete.

I offered my financial resources and network to help him fight it, but he was nearing the end of his career and just didn't have the energy to fight. He now delivers dry cleaning at $15/hr just to get out of the house.

Non-competes can't die fast enough.

worik2• 4 years ago

Part of the problem, IMO, is the idea that rules can take the place of integrity.

Rules are useful. But they are useful for "other people". We all act with integrity because we are decent people, not because we will be punished if we do not

solomatov2• 4 years ago

If anyone wants to read the rule as written by FTC, could do it here: https://www.ftc.gov/legal-library/browse/federal-register-no...

asdff2• 4 years ago

Noncompetes are a classic example of employers abusing their position and their ability to lobby for laws such as these in the first place, to benefit their bottom line at the expense of their employees.

If you had some sensitive information that an employee knows about and you are worried about losing them, why not just pay them more to stay on then, versus making them absolutely unmarketable in the workplace because all their relevant skills and experiences are illegal to be used again? What are you even expected to do in that case then? Get a job at McDonalds until the noncompete expires and you can actually send your resume out gain?

Communitivity2• 4 years ago

I had a company that had a very vague noncompete. As worded it could be 'Anything, everywhere'. I asked about it and was told 'Yeah,but we never enforce that.' I wanted to work for the company, but that was a full stop. I hired a lawyer a friend recommended. He went over it and confirmed I should be concerned if I did anything outside of work that could create IP that I might want to sell later. He drafted some new language that confined the noncompete for me to industry and specific region for 1 year only, that everything I working on outside of work and on my own resources outside of that industry was mine, as well as some set-asides that clearly noted work I had been working on before coming on and we're my own work. It cost me a little under $1k

If you are going for a job that pays $100k or more, get a lawyer (ideally a lawyer in your sector) to look over your employment contract, NDA, Non-compete, etc. It is worth every penny, in my opinion.

Communitivity2• 4 years ago

Noncompetes in any form should be illegal, in my opinion. They are a form of intellectual slavery - saying the company owns my mind and my mental work products.

fleddr• 4 years ago

For those wondering how this relates to hairstylists...

People are not a customer of "Awesome Hair Inc". They are a customer of Laura, whom happens to work for said company. Because Laura knows exactly how to do my hair properly.

So when Laura switches company or becomes an independent, her customers follow her. Awesome Hair Inc just lost half their regular customers. A source of perpetual drama. Now you know why hairstylists are so excellent at bonding with people. It's how you create forever customers.

An interesting variation of this dynamic is found at the very publication of the article: NYT. Some of their journalists have become very savvy on social media, building up an enormous personal following. A following that is loyal to the person, not specifically to NYT. Yet it was NYT that paid for it, as these journalists tweet on the job, as part of their job. At the very least, NYT could hope that this sends a lot of clicks towards their articles, but even that is questionable as increasingly these journalists tweet screenshots of key sections, knowing that nobody on social media actually reads anything.

An awkward marriage, to say the least.

djur2• 4 years ago

News outlets already have social media policies (often inconsistently enforced, but they exist). If they were really worried about their employees using their good names to kickstart their Substack they could do something about it. In reality, NYT and others actively seek out writers who get a lot of engagement on social media.

svillar• 4 years ago

Does that mean engineers working at FAANG no longer will be subject to noncompetes?

Amazon is known for enforcing non competes on employees (especially AWS employees) who leave to join the competition.

Their CTO has been vocal about this on Twitter and a quick Google search will reveal a lot more details.

What about job offers that require employees do waive away some rights and agree to arbitration as the only avenue to resolve a labor/employment dispute?

mustafabisic1• 4 years ago

Michael Scott likes this :S

How the turntables ...

winrid• 4 years ago

The interesting thing about this is that companies may treat their employees a little bit better if they know they can immediately go to a competitor.

dathinab• 4 years ago

I think noncompoetes should be bound on income as in:

- illegal if your income isn't majorly above the average (like 50+% above)

- in situation where legal bound in maximal time by a combination of how much your income is above average and how long you worked for the company before you stopped doing so

- in no situation should it be longer then 1 year

- in no situation should it be longer then half the time you worked for a company

mnming• 4 years ago

Fully supportive to this move! However, I am worried if this will change the typical "all source code available to all employees" situation to limited read access to everyone.

sbaiddn• 4 years ago

Im ok with noncompetes.

However, if my would be ex-employer wants to block me from joining a competitor then he has to pay me 150% of the salary that the competitor would have paid me for the duration of the non compete while I twiddle my thumbs.

Fair is fair

jjtheblunt• 4 years ago

the cynic in me wonders if this, now, is a planned diversion from the seeming universal outrage at SBF being out on bail, with widely documented vanished stolen investor money having been given to politicians (of both parties).

U.S. moves to bar noncompete agreements in labor contracts

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