Massachusetts gives workers new protections against noncompete clauses | Hacker News Reader

Massachusetts gives workers new protections against noncompete clauses

arstechnica.com

139 pointsBender82 comments

Too little, too late. It only protects "minors, students, and low-wage workers". So non-competes against most of us reading this article are still perfectly enforceable.

It's good that they're protecting the weakest class of workers, and those who need this protection the most. Enforcing non-competes against sandwich makers in fast-food chains was probably the most egregious abuse of non-competes ever committed, and a blatant attempt to keep down wages for jobs that already pay barely livable wage.

But these are not the classes of workers who made California's economy boom. It's too bad lawmakers prioritize their short-term funding needs and donors over long-term welfare of their state and its economy.

>Too little, too late

And a damn shame, too. One of the major enabling factors for Silicon Valley's success has been the unenforcability of non-compete clauses in CA.

MA has a lot going for it (e.g.: MIT, relative proximity with Europe, ...), but seems hell-bent on being the place where only large government contractors can emerge.

>And a damn shame, too

Meh, you reap what you sow and MA has spend decades cultivating incompetent government that's incapable of addressing the needs of the population but perfectly capable of spending our money. I'm sure we look like we have out shit together from far away in SillyValley but I assure you we don't.

>MA has a lot going for it but seems hell-bent on being the place where only large government contractors can emerge.

Large government contractors naturally find it easier to exist under a government that likes to stick its nose in all sorts of things (god forbid it actually stick its nose in things in a way that makes life better for people) than companies that are not specifically optimized to work with government.

Well, I completely agree that it doesn't go far enough (that's Massachusetts for you...) but it's a start. The article also specifies that laid-off workers are exempt.

I'm not so sure it's a "start". They had a chance to fix it, and they chose to legislate protections that fall short of that.

From a lawmaking perspective, it can be construed as "we looked at the issue, and found low-level employees to be worthy of protection, but nobody else."

> The article also specifies that laid-off workers are exempt.

Even in states where non-competes are generally enforceable, courts are often reluctant to enforce them against laid-off employees.

But guess what? Big corporations have little interest in enforcing non-competes against poorly performing employees.

Take a look at the article I linked elsewhere, to see what type of employees Amazon chooses to selectively target for non-compete violations. They are the well-performing employees who jumped ship for a better opportunity elsewhere. Their goal is to discourage this behavior, so they don't risk losing their best employees or (heavens forbid!) paying them their market value.

I don't know of a single case where they sued a poorly-performing, fired, or laid off employee.

I don't know about Amazon, but the earlier articles people posted on the subject did have a lot of people who were let go and then had non-competes enforced against them.

Interesting, do you have a link?

https://www.nytimes.com/2014/06/09/business/noncompete-claus...

> Daniel McKinnon, who had been a hairstylist in Norwell, Mass., lost a court battle with his former employer who claimed that Mr. McKinnon had violated the terms of his agreement when he went to work at a nearby salon. Mr. McKinnon said that he did not think the original restriction — to wait at least 12 months before working at any salon in nearby towns — still applied because he had been fired after years of friction with the manager there. Shortly after being fired, he went to work at a nearby salon.

> But a judge issued an injunction ordering him to stop working at his new employer.

> “It was pretty lousy that you would take away someone’s livelihood like that,” said Mr. McKinnon, who for the following year lived off jobless benefits of $300 a week. “I almost lost my truck. I almost lost my apartment. Almost everything came sweeping out from under me.”

Despicable. Seems like MA is one of the worst states as far as non-compete enforcement goes. I remember reading analysis that non-competes would generally be unenforceable against terminated employees even in states that do typically enforce them.

> From a lawmaking perspective, it can be construed as "we looked at the issue, and found low-level employees to be worthy of protection, but nobody else."

I think a political perspective is probably more relevant/accurate which would likely be along the lines of "we looked at the issue, and protecting low-level employees is the most we could do and still get the bill passed"

Obviously large employers have vested interests in protecting non-competes and also have the lobbying budgets to successfully oppose the passage of stronger individual protection from non-competes

From what I can tell from one listing of the text[0], it looks like there are two levels of protection.

The first (what you were discussing) prohibits non-competes completely for certain classes of employees (non-exempt, interns in school, employees terminated without cause or laid off).

The second applies to everyone else and has 8 requirements for a non-compete to be enforceable, including "the agreement includes a garden leave clause or other mutually-agreed upon consideration between the employer and the employee", where the garden clause includes at least 50% of the employee's wage! Of course, "other mutually-agreed upon consideration" could be something much less...

Also interesting: the law looks like it applies to any non-competes signed after October 1 - it starts in 10 days!

EDIT: IANAL

0: https://www.faircompetitionlaw.com/2018/08/06/massachusetts-...

50% salary isn't adequate protection. Imagine taking a 50% salary cut to change jobs. Pretty much pulls the rug under any motivation to do that.

Of course, that's also 50% of base. For the type of well-performing employee against whom non-competes are typically enforced, that means you have to settle for 25% or less of your total comp.

I am not a lawyer either, but from what I've seen in states where compensation is required, non-compete comp is typically 100% of base.

Of course, bonus is still a huge factor.

Often the difference between 0$ and 1$ is vastly more than 1$ and 2$. Companies are happy to setup a non compete for free, but if they need to spend real money then that get's rid of the vast majority of cases.

So anyone already with a job (and agreement) is out-of-luck.

Noncompetes are a classic tragedy of the commons, where it's in every individual company's interest to use them, but doing so nonetheless works against the vitality of the whole economy, and the competitiveness of the state.

Great to see Massachusetts taking a step in the right direction.

>Great to see Massachusetts taking a step in the right direction.

As a Masshole I assure you that this is just a distraction disguised to hide the fact that we've taken at least two steps back on some other issue.

Non-competes should require regular payment of for example 50% of your salary with some maximum, for example 2 years. Don't want your previous workers to compete? Pay them. This it will only be used in justified cases and most people will happily accept significant salary for doing nothing.

>most people will happily accept significant salary for doing nothing.

Nonsense. Most people are not in a position to just take a 50% pay cut. Furthermore, taking a year or two off from a career can be very damaging when you look for a new job after the non-compete expires.

You can do something else. Usually non-competes are very specific. I don't know anyone who wouldn't take 50% of salary for day 2 years in exchange to have all this free time to do other things. It's not like you can't get another job.

50% is a huge paycut. Most people won't voluntarily accept that, so it's hardly an adequate protection.

For what it's worth, in states that do require compensation for non-competes, that compensation is typically about the same as the base salary, i.e. at or close to 100%.

But it is a heck of a lot of money if you want to get a job in another sector for a period of time.

It's a huge pay cut but you're not working. You have tons of time to do something else while collecting money. It's a very sweet deal.

Exactly. Setup a consultancy and go do stuff that's out of your non-compete zone.

Or just chill and take time off / spend with family. Maybe see the world?

I really like the way Norway has done it. A couple of years back they introduced a law that to make non-competes enforceable the company would have to pay you a full salary for the duration that you're blocked out of other work. Non-competes has function, but it's far too cheap for the company and far too expensive for the employee. Now the employer has to consider whether it's a position it's worth to protect or not, rather than just put it in the default contract

It's about time. Unfortunately not time for this audience...mostly. It mainly applies to low wage workers, though there is a loose garden clause as well as provisions for hourly workers (which I guess can include us contractors/freelancers).

It's a step in the right direction but falls flat in addressing the competition in high tech with SV...which sounds like exactly the sort of timely pandering a guy like Baker would do right before re-election season: let the working class know he's "got their back" while still keeping the people lining his pockets happy. For a guy who calls himself a Republican he's sure got a backwards idea of how free market competition works.

>It's a step in the right direction but falls flat in addressing the competition in high tech with SV...which sounds like exactly the sort of timely pandering a guy like Baker would do right before re-election season: let the working class know he's "got their back" while still keeping the people lining his pockets happy. For a guy who calls himself a Republican he's sure got a backwards idea of how free market competition works.

Well, as long as we're being political, speaking as both a Mass resident and a Millenial American in general, when Republicans talk about "free markets" they mean free from state interference specifically. They make no guarantees, even rhetorical ones, about making sure the markets stay competitive. If you're hearing that from them, you're hearing what you want to hear, rather than what they're saying.

And it's not like the Democrats are super-good on this issue either! The parties can, by now, be viewed as coalitions of cultural and economic sectors squabbling over how to distribute the outputs of, and authority over, a fundamentally low-productivity, uncompetitive, oligarchical system in which you "ask permission, not forgiveness" if you want to get something done. Neo-Brandeisianism is the most under-appreciated political idea today[1].

[1] https://washingtonmonthly.com/magazine/july-august-2018/the-...

"And it's not like the Democrats are super-good on this issue either!"

Democrats don't claim to be "super-good" on free markets. Democrats would rather see fair treatment of employees and consumers, even if it makes the markets "less free".

>Democrats would rather see fair treatment of employees and consumers

It's been a strongly Democrat-controlled MA legislature that has avoided passing non-compete reform for a decade or more.

Plus false equivalence is a way of dismissing anything you can't support. Dems should be more likely to support this because it helps individuals. It also likely helps the whole business economy too.

I don't know where you're getting this isn't supported. I'm entirely on board with this; I just wish it went further.

>Democrats don't claim to be "super-good" on free markets. Democrats would rather see fair treatment of employees and consumers, even if it makes the markets "less free".

One would think that fair treatment of workers and consumers would involve significantly more stringent enforcement of antitrust law. This is why I appreciate having Elizabeth Warren as our Senator: she has spent her life fighting for our basic interests on issues that weren't sexy enough to get a thousand-person protest march going.

I also admire Warren's emphasis on competitive markets. It's the main thing that draws me to Warren-style capitalism, and I'm with you that "competitive markets" is a worthy rejoinder to "free markets".

Free markets deliver monopolies. Competitive markets deliver innovation.

>This is why I appreciate having Elizabeth Warren as our Senator: she has spent her life fighting for our basic interests on issues that weren't sexy enough to get a thousand-person protest march going.

She'd have been able to do a lot more good for us if she were still fighting those fights instead of toeing the party line as a senator. There's plenty of other senators to toe the party line day in and day out. Politicians that want to protect consumers are much rarer.

Just so you know, the phrase is “toeing the party line”.

Have you seen the co-determination and anti-corruption bills she just proposed? They're excellent.

I don't think that's an accurate characterization of Republican rhetoric. They frequently argue that markets free from government interference will be more competitive. It is perfectly reasonable to hold them to account for that line of argument and to insist that markets need to become more competitive and not just more free from government interference.

I want to run for office in the Washington state legislature on this issue. But I expect that would draw negative attention from Amazon, Microsoft et Al. You'd have to be in a race where you have an excellent shot before drawing recruited opposition.

To the contrary: You could start the cultural shift needed to make such a big change by running as a single-issue candidate. The negative attention would be valuable in bringing to light an issue that most Americans still don't know about.

I'd expect Amazon to fight you hard. They take their non-competes very seriously. I had friends get offers for senior positions, successfully negotiate every aspect of the package - especially substantial pay increases - yet fail to get any traction on the non-competes.

Amazon was clear that this clause is non-negotiable, even when everything else is, and even when that clause alone caused the candidate to decline.

They also have one of the most notorious records of actually suing former employees for non-compete breaches:

https://www.geekwire.com/2017/business-personal-amazon-web-s...

(Which didn't prevent them from telling my friend "why worry about the non-compete, it's almost never enforced".)

So yeah, I don't expect them to give it up so easily.

It's a clear case where the best interest of the state clashes with the best interest of large corporations... and the corporations prevail.

TFA mentions research that supports the claim that California became tech capital of the US because of non-compete non-enforcement. What's good for each individual business is bad for all of them together and the economy as a whole.

Tragedy of the commons.

On a scale of "number of staff who leave" vs "number of staff who threatened with legal action", it really does count as almost never enforced.

As the Geekwire article mentions, it's a scare tactic: don't try to leave for a direct competitor, or a business we particularly dislike - or you might end up spending the next several years in courts and out of a job.

Who knows how many employees were discouraged from taking a job with such direct competitors due to this substantial threat?

Just being told by HR that you'd be sued would rationally discourage most people.

It also selectively prevents some of Amazon's best employees from pursuing some of their best career alternatives. Would you like to get into this twisted paradoxical game, in which the better you perform at your job, and the more lucrative your alternative opportunity is (i.e. the more they underpay you), the more likely you are to get sued for taking it?

This is depressing wages and hurting all employees, not just the few chosen for a lawsuit.

That's true, but the 2% chance of someone making your life miserable is unfortunate.

Exactly. It's a nightmare scenario: you're a well-performing, well-paid (but still underpaid) Amazon employee. You change jobs for much better pay... But then Amazon sues.

Typically, you'll lose your new job, and probably become untouchable by most other employers. You'll be forced to pay a small fortune for lawyers, and spend numerous days in court, with the outcome uncertain, possibly for years, all while you're likely unemployed.

Not a chance most people would like to take.

On the plus side, now apparently only one year in Massachusetts.

Better than nothing, but one year is ages in technology.

Imagine you're working on cutting-edge technology, get an offer to lead a team or maybe a whole startup... but you have to wait a year.

For most startups, that's a deal-breaker. They simply can't wait that long.

So that's one key reason California is far better for startups - in other states, they're effectively prevented from poaching employees from big tech.

(Waiting a year is generally fine for big companies.)

Oh, I don't disagree, but before the limit was just "reasonable," whatever that meant.

This small risk of something very bad sounds like a case where insurance against this could be a win-win. "Pay a % of your increased earnings, and we cover any litigation related to your non-compete." If someone were able to analyze agreements and state laws to develop a good underwriting model there could be potential for an insurance tech startup here.

Yeah, or we could just have passed a version of the "garden leave" that wasn't toothless

Absolutely agreed. Didn't say to the counter. Was just pointing out that what was said was accurate. It's almost never enforced.

Thankfully when it came time to leave Amazon, Oracle retained a lawyer on my behalf to handle those exit negotiations. Made life a lot less hassle.

It really irks me that companies don't have to disclose all of the non-negotiable conditions (and something about their pay scales) before a candidate has any sunk costs.

The nice thing about infamous companies like Amazon is that I know never to respond.

I've heard this about amazon. Without giving myself away, I'm a very experienced engineer and people asked me to come work there in a senior role, but the fact they have started to enforce non-competes means no one should go there. It's a serious problem. So I can't work in my field after I leave an amazon job? They do basically everything, they compete with every software company. it's just ridiculous.

Focus on the grassroots and reach out to the grassroots movements even from other states that can help you organize. Who has the most money in a campaign still matters, but it doesn't matter as much as it used to, especially if you have a strong grassroots campaign behind. We've seen politicians win with 1/10 of the funding of their opponents recently using this strategy.

If anything, you may find bigger obstacles from the inside the big parties, which will use every technical trick in the book to make you lose against their pre-selected primary nominee. So in some cases, you may have a better shot running as independent, but that very much depends on the local politics and the help you request from certain grassroots groups, which may prefer you to be in a certain party.

There's already attempts in recent years sponsored by Rep Stanford

http://apps2.leg.wa.gov/billsummary?Year=2017&BillNumber=196...

https://www.geekwire.com/2016/non-compete-bill-stalls-washin...

Yes Amazon, Microsoft might be against, but the other tech Giants in the area but with their main campus in California probably are supporting it as this article points out: https://www.geekwire.com/2017/scaled-back-bill-aimed-providi...

"Microsoft and Amazon opposed the original 2017 bill" ... "According to the House staff memo, labor organizations and Google supported the original bill"

I enthusiastically encourage everyone to run for office at least once. Politics makes a lot more sense once you’ve tried to play the game.

There are really good candidate boot camps. I can recommend IDF, Fuse Washington, Camp Wellstone.

Better yet would be to volunteer on one or more campaigns. See the game first hand, learn on someone’s dime.

—

That said, you may want to go the policy & lobbying route. Way over simplified: find (or draft) model legislation and then shop it around. Stop by each legislative district party and get them to pass a resolution in support. Face time with your reps, ask them to intro bill. Find your allies.

Both Nick Licata’s How to be Citizen Activist and Camp Wellstone’s activism track are fantastic resources.

Again, to learn the ropes, volunteer for another issue based org. See what works, emulate people who get things done.

Good luck!

A little disappointing that it doesn't go as far as CA, but it's a good start (why the F do you even need a non-compete in the food or summer camp industries ??).

Out of curiosity though, has anybody ever faced an enforced non-compete? I signed many, but never had to deal with this. Don't most of them include a provision forcing the company to pay a share of your salary if they decide to activate it? You would have to be a freaking rockstar to justify that.

> Don't most of them include a provision forcing the company to pay a share of your salary if they decide to activate it?

Not in Massachusetts, that I've ever seen.

I'm in Mass and most of my past non-competes had this clause.

I have never seen that outside of finance. I think they are fine as long as the company is willing to give up something of similar value to get it.

They never are. And given that the company is usually the one making the demand, they get to define "similar value".

"Don't most of them include a provision forcing the company to pay a share of your salary if they decide to activate it?"

Almost none of them do that. That's one of the reasons why they're so shitty.

Interesting. My current non-compete mentions 50% of my salary at date of termination for a year, and I'm pretty sure my previous non-competes had similar provision. Maybe I only worked with mostly "ethical" companies.

That sounds incredibly shitty, though. You have to take a 50% pay cut and not be able to advance in your chosen field?

Most people I know would struggle quite a bit with such a huge pay cut.

Oh don't hear me wrong, it is not a good deal at all. But at least it has a cost for the company if they decide to activate it. Not enough for me to make a living, but most likely enough for them to take a step back and think "does what this guy can do really justify the cost?".

It wouldn't be great for a lot of people. I expect some here look at it and think "Ooh. I get paid 50% of my generous tech salary to work on my side project/travel the world for a year. Where do I sign up?" But the reality for many people is that they'd be taking a big pay cut to sit on the sidelines for a year which could be damaging both financially and professionally.

Yeah, if enforcing a non compete meant they had to match oldcomput would be different

oldcomput?

And I don't think that simply paying them their existing salary, or the salary at the last day is enough. I feel it should really hurt to enforce a non-compete, because you are saying that you do not want someone to be able to earn a living with their labor. That to me, no matter what your motivations are, is some degree of evil. I say it should be triple of the highest wage the person made during their tenure with the company, or the prevailing market wage, whichever is higher.

sorry, that was on my phone, was trying to say "if you had to pay someone their previous ("old comp") pay during the year the non-competes would be a lot more palatable to me.

I support your argument that it should be painful for a company to enforce a non-compete. I was trying to go middle to maybe show how bad non-competes are and attract people in the middle.

I just don't think it's politically viable to pay triple. On the other hand, you would be depriving someone of their liberty if they were not able to work.

I have not personally ever had an issue with a non-compete but I've been directly told a couple of the largest firms in a particular consulting industry sector vigorously enforce non-competes to a degree that people basically take a year off if they want to go to a competitor or hang out their own shingle.

In addition, as someone who worked for a small firm in the same space for a number of years, we wouldn't even consider someone who had an even vaguely relevant non-compete. It was just too much risk for a company our size.

That said, I think the role of non-compete enforcement or not is overblown when talking about the relative success of different states in various technology areas. Certainly, Massachusetts is far more important than California in areas like biotech and pharma.

> Out of curiosity though, has anybody ever faced an enforced non-compete?

The U.S. legal system is happy to oblige as the arena in which their lawyers beat you to a penniless pulp.

It doesn't matter whether their case is a crock.

Yes. Amazon sued former employees, for example:

https://www.geekwire.com/2017/business-personal-amazon-web-s...

While I'm happy to see some sensible restraints come to noncompetes I'm sad that it wasn't taken further. I actually applied, interviewed and got a job offer to a great little startup in Boston. After all was said and done they slipped in that I had to sign a noncompete.

This noncompete was incredibly broad. It could have applied to nearly any future employer. I worked with my lawyer and asked for some further limiting language but everything I asked for was rejected by HR.

I stuck to my guns and said that I could not sign this. The job was a perfect fit for me. I still wonder what I could have done there.

That's too bad. My understanding is that it's mostly the big companies who pushed the hardest against non-compete reform. EMC was particularly prominent.

I actually had to sign an EMC non-compete when the company I was at was acquired a number of years back. Fortunately, the terms didn't seem likely to affect me (and they didn't).

The only situation where non-competes make sense and should be allowed is when someone is selling a business to someone else. If I was buying a business, I would want to be damn sure the guy selling it to me isn't going take my money, turn around and open a competing business and poach all the customers, since they know the previous owner and don't know me. That is only time non-competes should be allowed.

A thought about this: How are these even legally enforceable?

If the employment is contingent upon this agreement, how can you make this claim that there are penalties for you after you leave or you're forced to leave? This is completely a one-sided contract that is detrimental to the person with less resources. It seems like to me, this contract no longer puts you "at-will." You're punished for walking away.

As a small business owner, this is perfectly fine. It's fair for our employees to jump ship - we wish them well and often they come back.

What I'm more concerned with is Non-Solicitation Agreements where our employees can't poach our customers based on inside knowledge - and it looks like those are still fine and good in Massachusetts.

>Non-Solicitation Agreements

Aren't those fine and good pretty much everywhere, including California?

The situation is murkier in this regard.

For the most part, anti-solicitation that covers recruiting people to switch jobs is void in CA.

Non-solicitation that covers customers? I’d clear that with a lawyer first.

Anti-poaching is pretty hard to enforce generally though I've heard of ex-employees systematically trying to recruit ex-coworkers being told to knock it off. (I'm guessing it would be hard to do anything besides scare them off a bit though.)

But I'm thinking more of non-solicitation in the vein of calling your entire client list and trying to get them to move. That's much more broadly enforceable.

One of the big protections in there is that a noncompete can not be enforced against someone who is terminated without cause or laid off.*

There are certain kinds of maneuvers that Just Shouldn't Work. Laying off someone and then invoking a non-compete against them is one of them.

---

* The one exception being if they put in a non-compete as part of a severance payment.

I don't like my country that much (France), but here, to be lawful, a noncompete clause must be:

* limited in time * limited in area * paid

I don't know the specifics and I'm not a lawyer, but in general, employees who sign such clauses are extremely happy if those are enforced :-)

To me they only really make sense for sales people and the accounts they currently are assigned.

Good. These agreements by themselves are completely immoral, but when you have a sandwich shop and a summer camp using them, then you know you've reached a new level of evil.

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