Interns’ Job Prospects Constrained by Noncompete Agreements

Idk why anyone is down voting me. I consult on lawsuits for a living and recently worked on one where all the parties, lawyers, and the judge agreed that the non-compete was both valid and enforceable in exactly this situation.

I think they downvoted you because that is totally different context than what discussion is about. We are not talking about CEO level agreements but simple workers.

You are absolutely correct. I went through exactly this when a large valley tech company bought the startup I founded and I joined the company as part of the deal. My lawyer explained it as "For regular employees these aren't enforceable but you're when you get millions of dollars personally, this is part of what they get in return." Seemed fair enough and we also negotiated the wording to be pretty specific. Basically, I couldn't go make another version of the products they purchased from me as part of the acquisition. However, if I wanted to quit and compete against any of their other pre-existing products I could (even though I wouldn't want to anyway).

Yeah, that's... Interesting. Is this truly something that simply has no repercussions for the lawyer?

Parts of the agreement aren’t enforceable but not everything?

I’ve seen things like venue and arbitration rules established and persist in otherwise junk agreements.

I see a lot of contracts from customers buying our dev services with weird language in it. The opposing counsel would have to know it not enforceable but it’s there anyway. Sometimes it’s silly stuff like “no open source software or code” yet it needs to be MEAN stack running on Ubuntu in AWS.

Or on the more likely occurrence that employees will simply assume they're enforceable.

You do know that non competes are not for protecting trade secrets right?

You wouldn't get a 2 year non compete for a FSTE 100 CEO in the UK to stand up in court.

A

It’s a bit more messy than that in California even. Non competes are not forbidden, just generally unenforceable due to some other labor laws. So a lot of companies will still to this day have employees sign non-competes, and threaten them with legal action if they violate them.

They’d almost certainly lose, depending on circumstances, but the threat is enough to have a pretty strong chilling effect.

Well, I wouldn't take half my pay to not work. This is prime career time. The losses are huge? I could be compounding my income by working.

50% is an embarrassing amount. I'd accept 100% maybe.

50% is…not great.

The values are generally accurate at least.

A non-CA startup once tried to get me to sign a non compete for an internship. It would have forced me to resign a position at the university that was the reason they wanted to hire me in the first place. I pointed that out, and they immediately escalated to the founder, and replaced the internship contract. The old one was boilerplate that they cut and pasted from some other document.

They were pretty apologetic, actually.

The non-competes were limited to a specific industry.

FYI, the bizarre practice of “garden leave” as well as contractual notice periods is limited to the U.K. market.

In the USA no significant tech company has any contractual notice period, and the social norm is to provide two weeks notice.

In fact, at Google the policy is that the maximum period an employee may continue is three weeks once they have handed notice of resignation.

I believe bizarrely long notice periods, commonly three months now, are a large contributing factor to the depressed wages in technology in the U.K.

When friction is applied to the labor market, it’s to the detriment of the employees.

If there are millions of college kids who all need contract review within the span of a few days in the spring, I would expect the market to adapt in some way. The most likely, I think, is that employers (at least employers within an industry) would settle on some boilerplate contract, and law firms would let you upload a contract to their website, have a script run a diff, and come back "Yes, this is in fact the boilerplate contract, here is our plain-English summary" or "No, here's how it differs, you can retain us at normal rates to explain the diff or you can push back on your employer." (They could charge you a few bucks, or they could just have the cost of reviewing this year's boilerplate contract be paid by the employers, who are incentivized to successfully and legally hire interns.)

The more interesting question is whether if everyone knows there's a non-compete and it's the industry standard, there will be any more effective pushback... now that I think of it, I worry there may be less if contracts get mechanically standardized.

Alternatively, the author of said contract could, by law, be forced to pay for the other party’s lawyer.

That seems simpler, but I think it is more easily abused by consumers. (Get a overpriced slimey lawyer, apply for 100 credit cards, and split the fee with the lawyer after the fact).