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Comment by lawrenceyan | Hacker News Reader

Luckily noncompetes are illegal in California. The Bay Area/Silicon Valley wouldn’t be what it is today without the freedom to move between different companies and/or start your own company yourself.

Edit: illegal should be replaced with non-enforceable as mentioned below. Initially I didn't see any difference between the two words, but I can appreciate the nuance in meaning now based on hedora's provided example.

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Non-competes are unenforceable in California, not illegal.

By reading this message, you agree not to accept employment in technology-related firms for the next 25 years.

(This comment doesn’t violate the law, it just isn’t worth the electrons it’s written in in a court of law.)

There are situations in which non-competes are enforceable in CA, just not for regular employees. For instance, if you sell a company you own in part or whole, a non-compete with the acquirer is enforceable.

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.

because voting on HN is broken.

-2 I should be proud. hn's voting system is trash and they do their best to make everyone look the other way. kind of dystopian.

Would you please stop this? It's strictly noise, and we're trying for better signal/noise, not worse.

https://news.ycombinator.com/newsguidelines.html

Talking about downvotes is against the rules here

So even in circumstances where the consensus is just inaccurate, and even though that results in rate-limiting you removing your opportunity to engage in a discussion, merely talking about this circumstance simply exacerbates it

The mods think this is useful

Welcome to HackerNews!

It's not that we think that is useful; it's that subthreads like this one are useless. A clear example for why we have that rule.

https://news.ycombinator.com/newsguidelines.html

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.

I'm not arguing against the point. I'm simply clarifying-- for everyone's benefit-- that the assertion that "non-competes are unenforceable in CA" is not universally true.

You can be a simple worker and fall afoul of the above - if you have any options or stock you would be considered a part owner and then subject to a possible non compete, even as engineer #n

How does this work in practice? When you accept employment, you sign a non-compete which commences at the close of a future acquisition? I don't doubt that it's possible but I'm skeptical of the idea that a company can make a unilateral decision that's legally binding on you as an individual simply by virtue of the fact that you're a stock-holder. Has anyone here signed such an agreement? I'd be genuinely interested in reading the non-compete language.

No, when you're acquired as part of being acquired you sign a non-compete agreement. You're probably renegotiating salary/perks at that point so you'll likely be signing a new contract anyway.

I sold a two person company to a fifty person company, which triggered this situation. After the acquisition, I was a "normal worker" by most definitions.

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).

Sure is unusual how a lawyer, versed in California employment law, drafting a contract and including terms he knows are unenforceable, in an attempt to mislead a worker and cheat them out of their rights, isn't considered fraud.

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

I'm not sure how it is in that specific case, but in general the penalties can be very severe. For example, when Apple was misleading Australians that they have only 1 year of warranty, instead of the 2 guaranteed by Australian law, they received a strongly worded letter from the courts telling them to stop. [1]

[1] https://www.zdnet.com/article/apple-forced-to-comply-with-au...

There was nothing under the law that limited it to 2 years. There is nothing under the law that defines specific timeframes for warranties in Australia.

Is the use of the word severe sarcastic? Because I don’t see any punishments at all

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.

Ahh, interesting. So I suppose that means many companies add noncompete clauses into their contracts regardless, on the off chance that someday they can be retroactively enforced?

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

Yes. I used to point that out to visitors from other states who wanted to create "Silicon Austin" or something. Their state won't have the guts to ban noncompetes, so they're doomed to lose.

They are unenforceable, but the offending company can still haul you into court and make your life miserable.

Even if it legal doesn't mean it should stop you to work with competitor, what matter is how likely it is to cause you trouble.

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