How non-competes are damaging the Massachusetts economy: Angela's story
boston.com
boston.com
Instead of that, what do we see? Employers that grudgingly give tiny pay rises to loyal employees that are essential cogs to their operations. I can't feel terribly sorry for the company when the employee decides that their career would be better served working for the competitor.
A non-compete is professional suicide, in my opinion. There is no upside to the employee at all.
Point being, I did not sign their boilerplate non-compete. They were actually fine with that as long I signed a confidentiality agreement... and that's only fair.
Was she under duress when signing? Nothing in the article suggests she was. She signed the contract voluntarily and should stand by her decision. If she was too lazy to do her due diligance before signing, that's her fault too.
that tends to be the result of years of people saying "you're lucky to get a job at all" combined with a long search and endless interviews.
and while yes, she did sign the non compete, it doesn't mean it's not bullshit, which is the entire point of the article. of course you can be a hardass and say "she signed it", "should have read it more carefully", "her fault", etc, but now she's on the dole until the clause expires because someone had a hissy fit and threatened to sue her employer. it's a crappy, stifling situation all around which is what the article aimed to point out.
She was fired after her previous employer threatened legal action. You can't say she "chose to quit" that job.
She chose to quit two jobs before running into trouble at her third.
And "sic" is used to imply that the original quote was grammatically incorrect. Your usage implies I misused the word "chose" when you should have rephrased your sentence to make the tense correct.
Also, Fixed the tense on the previous comment, sorry.
It's not though. The whole article presents her as unemployed because of the NCA. That's inaccurate. She can and did work in her field.
I suppose some people might say "so be it" - after all, we don't normally intervene. Two weeks of vacation with a forced closure over the summer and winter that eats it all up might seem unfair as well, but we (at least in the US) don't typically look to the gov't to force companies to act differently (though obviously we do set some standards, just not to the same extent you might see in Europe).
Even so, I think that non-competes are a terrible idea, mainly because they damage the economy and do harm everyone. They're also different from many other contracts in that they have a powerful effect on people who were not a party to the original contract. The employee may have signed an agreement not to work for anyone else, but the new company certainly never signed an agreement not to hire that worker!
The main reason I can see for enforcing these non-competes is the notion that companies will increase hiring and invest more in training unexperienced workers by providing reassurance to the employer that the person will not immediately take the skills straight over to a different company. I wonder how big a problem this really is. Even if it's a problem, is it a bigger problem than what we have here? This woman is now on unemployment insurance rather than creating wealth through employment and contributing to the tax base. As you can probably tell, I doubt this has much effect. I don't think that software patents cause much innovation that would not have otherwise occurred, but I do think they stifle innovation. I don't think that non-competes cause much hiring that would not have otherwise occurred, but I do think that they stifle hiring.
Interesting that the journalist here expressed surprise that the owner of the business enforcing the non-compete is actually opposed to them in principle. I don't think people in software are surprised. There are all kinds of things, from non-competes to patents, that we don't like but engage in anyway (to refrain on principle seems, to many people, like "unilateral disarmament" in a war zone).
See: http://boingboing.net/2008/08/08/california-supreme-c-1.html
i think it depends. The hairdresser in the article may have moved to the salon next block - there is obviously an element of competition here, her regular clients may follow her, etc... - it seems valid for me to enforce non-compete in such a case. On the other side if her new job is sufficiently distant from the old one that no actual competition between businesses exists - then no-compete is satisfied by the virtue of the absent competition.
The same in the software - my previous non-compete was clear and very specific about same clients (existing or engaged in some degree), products, etc... and while my new employer does have similarly looking product - they are in different market segments, and i made sure to have nothing to do with this product (to avoid any violations of confidential agreement as well).
Like any good contract, the non-compete should be specific and fair - this also in the interests of the old employer as enforcing a specific and fair agreement in case of clear violation is much easier than vague "i never be a programmer again"
Why are you against competition?
you made a very far reaching conclusion.
Taking your clients (that old employer invested in bringing in) is obviously unfair competition. I feel ok toward enforcing non-competes where otherwise would be situation of unfair competition.
No it isn't, it's normal practice. In a customer facing profession you are the product being sold. If you have a developed a big client base from your skill I see no problem with you taking them with you [1]. If the company wants to keep you then they have relatively easy means of doing so. If some other place is willing to offer you a larger percentage on the value you're creating then you should be able to take it. The company loses for not paying you your market price. As it should be.
[1] Do you realize that this is common practice in various industries? This is also how a lot of consultancies and other kinds of businesses (even hedge funds!) get started. It's bad enough that if I make something that nets the company 1 million annually I will never see any of that.
As there should be. Do you not like free markets?
>her regular clients may follow her
Good. Her value is not "doing hair" it's attracting clients (i.e. you can be very good at doing hair but have a personality that makes no one want to deal with you). That's what defines her market value that she's selling every day. If she finds a customer (i.e. company) willing to pay her a better rate for the value she provides (i.e. clients) then the rational thing for her to do is move her offering to that customer (i.e. company).
>the non-compete should be specific and fair
The existence of a non-compete is unfair. They only exist because of the power deficit between companies and workers.
At least the company doing the suing is getting some negative publicity for it. What a jerk.
I agree it can be hard in the first job (I didn't do it then), but I don't think it gets you labeled as a trouble maker. It actually could get you labeled as a thoughtful and aggressive person. This can actually help quite a bit for your relationship with the new company.
Just be sure you are negotiating with your new boss and NOT HR. Make it light and playful if you can. Explain yourself as best you can. Read up on negotiation (there are a number of great books on it) so that you don't do it in a way that is bad for the relationship.
Also employees of all stripes would do well to get over thinking that offers are take it or leave it. It is rarely the case. Most people talk themselves out of negotiating or never think its an option.
Hiring is really hard (IMHO) and when you find someone you want to hire you are going to want to make the deal happen.
First job was a big company; second two have been with smaller firms. If an employer wants you I think refusing to sign one is unlikely to get in the way.
I've also, without a lawyers help, modified my employment agreement for my current and last job. I've hired a number of folks over the years and not had them negotiate these types of things.
Always negotiate; you can get a lot of what you need/want.
In that case, a non-compete is ridiculous. The hairdresser should never have signed it, and the employer should never have asked for it.
As far as the hairdresser shouldn't sign, what if all his/her potential employers have such agreements? There should be laws against this sort of thing.
Note: I'm purposefully NOT discussing whether or not it is ethically correct, or if it's the right thing to do, or if it will create a more motivated employee, or anything of the sort.
Also, I understand that employers can't give that justification or the agreement would be ruled invalid. But as you said, what other point is there that's not served equally well by other means?
Exactly. It's purely a mechanism for interfering with the natural function of the job market to artificially keep wages down. I should have said "makes legitimate/ethical sense". This kind of behavior is not legitimate, it should not be legal to make these agreements a condition of employment anymore then making being white can be.
Company B would love to know this secret. So they hire one of the workers in Company A that knows the secret. Legally and ethically Worker X cannot tell the secret. But they can hint, and work towards that secret without telling anyone. They may even let it slip by accident.
Non-competes are designed to prevent Worker X from revealing this secret, even by accident.
>Non-competes are designed to prevent Worker X from revealing this secret, even by accident.
If the person is willing to break one law, why wouldn't they be willing to break another? Non-competes have nothing to do with this. It's just another technique businesses use to try and disrupt proper market forces in the job market. It should not be legal to use a non-compete contract unless you are going to pay the person's salary while they're under the agreement. Why should tax payers be footing that bill?
So, even if I was working on word processing apps, the fact that the company has a hand in cloud computing makes me unable to take a job that field also.
As corporations get larger, these issues will become more prevalent.
A confidentiality agreement is completely separate from this.
"Non-compete agreements are automatically void as a matter of law in California, except for a small set of specific situations expressly authorized by statute. They were outlawed by the original California Civil Code in 1872."
When I walk out the door, I would assume the contract is over and I'm at liberty to use my freedom of contract to go elsewhere.
But non-competes are one of the few things I don't disagree with. It's only a year, and it's only that 1 industry. And it's designed to prevent people from giving away business secrets to the new company. The kind of person who would accidentally give away business secrets is the very same kind that doesn't pay attention to what they're signing.
I have both signed non-competes, and refused to sign them, when the situations were acceptable and unacceptable respectively. If, in her situation, she didn't think she would be privy to business secrets, she should not have signed a non-compete.
And finally, it's not like she can't get a job elsewhere. That she chose to stay in the same industry was her fault. If she wasn't privy to any business secrets, she doesn't have any more experience in that industry than any other.
This is where the thinking comes in. I've had these contracts before. Fresh out of school, my choices were sign this and take a position in the career I want and studied for or continue bussing tables. The employer loads the contract with enough ominous legal mumbo-jumbo that it can be dangerous for you but not so dangerous that a court would take one look at it and toss it for being very one-sided.
Most people aren't rockstars, they take a job because they need it and it might be the only offer they've received in weeks if not months. There is a huge world of difference between your typical entry level job and your typical C-level, Mark Papermaster type of position. Most people don't have a company like Apple going to bat for them over NCAs.
Like you I've also questioned NCAs and you can make small adjustments if you need to. And if the company wants you bad enough they can strip entire sections. But your typical job just wants a warm body in a world of interchangable warm bodies, make too many waves and they might think it's better to replace you with another warm body.
However, by asking long before ever being offered a job of time it puts me in a much stronger negotiating position when the time comes. Thus far, I've refused every single contract preventing me from working in my field and/or preventing hobby projects related to my work. Unfortunately, that sometimes means leaving promising companies.
An edit to the above: I tried negotiating in a respectful manner but didn't have much leverage after quitting my previous job and being told "What are you, a lawyer?"
It's a very nasty situation. I had incurred what was significant expense for me at the time moving and my previous position had been filled. It was very early in my career, so getting a job would have taken longer than the meager savings I had time to accumulate by that time.
So I signed it. I consider having savings enough to be without work for a year, at minimum, over crap like this is a high priority for me. So also is not being at the arbitrary whims of the employer in a fairly one-sided power dynamic.
Iffy in your case, but it's not uncommon for companies to e.g. get new financing from not so clue-full investors who want to [ fill in the blank ] the employees.
Of course, if you sign it anyway under those conditions the mere threat of a lawsuit can prevent you from getting hired (keeping a low profile helps a lot there) or starting up a new business.
Or you could just move to California.
Sorry about the no cite on that, I think it was from a Time magazine article a few years ago.
Rather like slavery, come to think of it, the big issue of the status of a slave who escaped to a free state. Dred Scott is not considered to be one of the finer moments in US Supreme Court history.
Are you sure you're not remembering a case that falls under the exceptions to California law?
http://lawzilla.com/content/noncompete.shtml
"Who wins often depends upon a race to the courthouse. For multi-state employers it is often a rush to the courthouse to determine if a non-compete agreement is valid. The employer's strategy is to get an order outside of California in their favor. The employee or California prospective employer's strategy is to get an order within California in their favor. In the face of dueling, and opposing orders, the first to the courthouse may win because states often must give effect to orders from other courts."
The article I recall probably was about someone in california who was bound by a non-compete, but it wasn't the california courts that did it?
Anyway, my lack of expertise is really showing here, so I should probably stop. All I really wanted to say is yeah, I had that wrong.
That's an incredibly long time.
That she chose to stay in the same industry was her fault
I consider my mind and my skill set as a tool of my trade. If I can't use it freely, I'm a serf. Presumably she wouldn't be allowed to /start/ a company, either.
A cow-orker of mine came to (large software company) from (another large software company), and had expertise in a certain sensitive area. We only found out about this when we asked him the reason he would go silent in meetings on certain subjects. He was under a funky trade-secret non-compete that had been worked out by lawyers, and was gagged for (I believe) five years from having technical input on stuff he was an expert in at the other company.
I don't agree with any of it.
No, she couldn't start a competing company.
I signed a noncompete, and am now starting a company. The only thing the noncompete prevents me from doing is a certain kind of high frequency trading.
Employers have reacted more favorably to addendums rather than crossing out clauses, even if the addendum practically neuters the entire document.
> it's only that 1 industry
That said instead of outlawing the practice the law should demand sevetance based on salary for each month of non-compete. Even 50% is probably enough to quench interest for it in junior positions.
Is it the same as if the person got a valid job offer and refused (so they lose unemployment), or are there exceptions?
We can't really guess from this article how much proprietary information was involved in her line of work, but the other examples in the article (gymnastics instructor and hairdresser) made me sick. Non-competes are supposed to be used to protect intellectual property, not to take away someone's entire living.
How does contract law work if you can sign a contract preventing other contracts from being signed?
In this story, you had a 21 year-old work for a company for three years. That company invested time in a green worker. After three months, maybe after two years, she actually started producing for the company.
After she is trained and producing for her company, she quits and gets another job in the same field (but not a direct competitor).
She quits that and tried to work for a competitor of her original employer and is let go.
She is collecting unemployment (possibly at the combined expense of employers 1, 2, & 3 and the people of Massachusetts).
I don't see what the inequity here is.
They're about encouraging employers to make the investment in a new employee, knowing the time and effort put into that person isn't going to be easily transferred to a competitor.
That said, you can negotiate a non-compete, either doing away with it completely, or changing the terms.
Non-competes generally have at least three limiting features: industry, time, and region.
You can negotiate on the industry side: from "same industry" to "company's direct competitors".
You can negotiate on the region:"the Northeast" to "New England" to "metro Boston".
And you can negotiate on the time: twelve months, to six, to three.
I've just thought of this, but I think it would be fair it limit the non-competes based on the time worked in a position in a company. Less than one month and more than five years in a position, the non-compete clause goes away. Or the terms change.
In my whole career I've always gotten my best salary increases by moving. If companies want to keep me around the way to do it is not with a modern form of slavery but rather by keeping me happy. If they have some stupid rule that says the max raise per year is 3% and I can get 8% somewhere else then fuck them.
But what do you know about the clients? Who at Company B needs to be handled with kid gloves? Who likes it when you're pushy? How much can you negotiate with Company C on the timeline? What are the strengths of the other developers both in house and at other firms?
That's the stuff you can only learn by working in the industry. That's what makes an employee valuable. That's the real skills, the stuff you won't learn in school.
In a profession, learning things like clients' preferences can be vital to performing a job effectively, but it's overly reductionist to call them "the real skills", even if that might be true in, say, a sales position.
So what? I learned some stuff from the company I worked for and they get the financial benefit for my creations long after I'm gone (at least potentially). I call that even (actually I already consider this advantage: company. I'd like to be getting residuals like people other industries do). If you don't want me to leave then make it attractive enough for me that I can't do so rationally.