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Comment by codys | Hacker News Reader

Palantir's official reason of "improving employee moral" doesn't seem to really mesh with the conditions they are imposing on the buy-back:

> [...] employees who sell their shares agree agree that they will not compete with Palantir for 12 months or solicit any Palantir employees during that time [...] [and] agree to a nondisclosure arrangement that forbids them from even talking about the repurchase and waive any claims they might have against the company.

The nyt put forwards a reasonable idea that this is a mechanism to increase their perceived value, and I'm inclined to agree.

EDIT: the buzzfeed article [1] paints an even worse picture:

> If they [employees] get any inquiries about Palantir from reporters, the contract says, they must immediately notify Palantir and then email the company a copy of the inquiry within three business days.

[1]: https://www.buzzfeed.com/williamalden/palantir-seeks-to-muzz...

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Given that the buyback price is above market price, I don't see a problem with this. Palantir is compensating you for signing a noncompete/NDA. If you don't want to sign those things, you are free to sell on the private markets for less than what Palantir offers you.

> you are free to sell on the private markets for less than what Palantir offers you

Perhaps you are more aware of the terms on those shares than the rest of us, but generally you aren't quite "free" to sell the shares on the private market.

Read the article more carefully: "Palantir did not impose restrictions on employees or stockholders selling shares in the private market."

I did miss that detail. Sorry.

Many former employees have done exactly this.

Many have, but the way the stock agreements are structured, it effectively gives them a pocket veto on stock sales, which impacts the value that an employee can get for them.

If Palantir is a CA business entity (I didn't check, maybe it's a DE corp), its noncompete should be per se invalid (= automatically void) in CA. There are only a few circumstances in which noncompetition agreements are valid in CA, and this doesn't seem to be one of them. See section 2.1.2 in:

https://en.wikipedia.org/wiki/Non-compete_clause#Exceptions_...

Palantir's attorneys surely can't have missed this, but I don't see an alternative.

This is one of the exceptions to noncompetes in California - when you sell your interest in a company. They are a Delaware corp. They have tons of employees outside of California (New York?).

Actually, I think you have to be selling the whole business - but from my comment above - it's not part of the employment agreement, so ... it's possibly enforceable. Maybe not, but I wouldn't count on it either way.

A non-compete clause in an employment agreement isn't valid. I think it's arguable for a stock option agreement. At that point it's not a one-sided agreement. The employee is gaining something in exchange for their non-compete, and can opt out if they want.

I would bet they don't apply that to existing employees, but they'll give it a shot on anyone hired since the change.

If this turns into a trend, it will mean a very interesting change to silicon valley culture. I read a blog post a couple of days ago that the average tenure for a software engineer at a medium to large company in SV was 1.5 to 2 years. With an effective way to push non-compete agreements on employees, that would be... significant. It would take a lot of companies doing it at once, though. Otherwise everyone would simply avoid the handful of firms that did it. After looking at this summary, I wouldn't work for Palantir. If I did, I'd have to consider the stock completely valueless.

YC venture concept: generate automated press inquiries directed at employees of firms with such policies.

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