Laws barring noncompete clauses spreading
businessinsurance.com
businessinsurance.com
"But I'll spend money to train my employees and they'll just take those skills to go work for a competitor or start their own business!" Yes, that's a feature of the system, not a bug.
https://globalnews.ca/content/8363992/can-non-compete-clause...
" The majority of non-compete clauses challenged in the judicial system have been rendered unenforceable. Canadian courts, in my experience, look unfavourably on clauses that restrict an individual’s ability to use their knowledge and experience to earn a living."
What companies here do falls into two general categories:
1) attempt to get people to sign and hope they don't know it is unenforceable.
2) pay people to stay at home and not-compete - Given this is expensive it doesnt happen often.
It is really dumb that while unenforceable, companies are able to get you to sign. As per the link the government is working on laws to outright ban the process.
The government needs to step up here, and enforce its own laws. If these are unenforceable companies should not be allowed to "trick" people.
Folks understand this, but their pay depends on them not understanding it so. . . here we are perpetually.
Funny enough, paying folks well often will pay dividends for your business in the long run. So long term they would make more money.
Humans are unfortunately quite short sighted, which I'm fairly sure nothing can be done about. We're just fancy animals after all.
The owner got suspicious due to some comments made by customers, and started listening in on the phone calls he was making on the company phone system.
This was a small business, and it nearly tanked the company, as the customers were confused as hell, and the ‘new’ company wasn’t doing well either. She ended up having to fire him, and sue him, but it took years, and meanwhile he kept operating.
He was paid well, but for some people it’s never enough.
I don’t care what anyone says, that is shitty criminal behavior.
Yours is something entirely different.
But that is not the case.
If he had done NOTHING while employed and quit to do his own thing do you think it would have been a problem? If so why?
1) It wasn't my business, and I'm not sure why you seem to think it was.
2) He only started the business because he was able to siphon off customers, and felt it was easy money.
3) If he had quit, and started his own business (even based on the prior one), and started from scratch, that wouldn't have been a problem. Him waiting a period of time (non-competes pretty much HAVE to be time limited to hold up anywhere) would not likely have changed it either.
But that would have required more work and more risk.
It's rare that folks actually do that.
As I look out the window of my Seattle apartment, observing a literal forest of new construction, sky-rocketing rents and costs of living, I must interpret the tech boom here as 'the next Silicon Valley failing', because Washington state has had a very strong form of non-competes prior to 2020, and a somewhat strong form of non-competes today.
Or, maybe I can choose to believe my eyes, and note that the the presence or absence of non-competes isn't a very important factor for driving a tech boom. [1]
It is a popular topic to bikeshed over, though.
[1] As a sibling poster points out, non-competes are absent in Canada, and yet nobody can accuse any locale in Canada of being the next SV...
Although allowed, I only once had to sign a pretty limited non-compete with an MA company. And people jumped between the various minicomputer companies all the time although tenures tended to be longer for other reasons.
Or that other factors of working in WA somewhat mitigate downsides of non competes. Sad that WA lawmakers accepted the bribes from large businesses and capped non compete bans at $100k per year payrates. Could have leveled the playing field with CA a bit more.
I can see how it could make for a vibrant scene if you already have incumbents, but if you are an area trying to attract them, I am not sure that works.
"We all know non-competes are unenforceable and illegal." <- Absolutely useless if you can end up in court. Using unenforceable rights as a deterrant is common and potential future employers get spooked by it even if it is illegal. "Don't hire Jill, Mary is almost as good and has no non-compete. Don't want to go to court even if its unenforceable."
There are no consequences for forcing someone to have the stress, expense, time and to secure the financing so that if everything works as it should (which it often doesn't in all the various legal systems) you get only some of that back. If it doesn't work as it should you're toast. Not a nice thing to be hit with when the law is clearly designed that you should not be hit with anything at all.
For an individual or a startup it matters. For a large revenue incumbant they have people employed to abuse the system like that and the business expense of doing it is trivial, more than worth it. The law may exist so that the strongest do not always get their way - but this is an ideal with many exceptions including this one.
Ban away, but with no consequences for abuse and all measurements for the abused being the magnitude of the downside alone, no upside possible you don't get the result you're looking for.
Summary dismissal with costs, compensation and the potential to be branded a vexatious litigant so it is more difficult to bring any court action against anyone would be a real consequence for abusing the rules. Is the best one? Is it fair? Dunno. What we have now in most countries sure isn't.
So what basis would a prospective employer have to request a copy, and how would said third party verify its authenticity?
Yes, they can presumably lie to you. But if you then so much as get a letter from a lawyer at that point, you fire them at a minimum.
Of course, noncompetes being unenforceable make for a good argument that one is not, in fact, bound by that covenant.
In practice, I’ve always just answered “no” to the question on this basis. If any former employer behaves in such a way as to get me fired from my present job, I’m rather optimistic about my prospects for legal remedy.
(of course, I live in California.)
It's maybe a little different if you're a chef and you've spent a lifetime mastering a particular recipe which is very hard to get right. You teach it to someone, and he goes out and opens his own restaurant selling that same dish. You can see the intuitive appeal of a noncompete, even if it's usually ineffective, and actually harmful to a high-tech ecosystem.
The situation regarding the difficult recipe could be handled under the Uniform Trade Secret Act, as adopted in various states, or under common law related to tortious misappropriation of classified information.
This might be a place where restrictive covenants not to compete aren’t really relevant, and if they disappeared, employees might still have all the tools they need to protect their interests.
Now, we're both in Ohio, where it likely would have been enforceable, but the point I'm making is that a court case wasn't necessary - the mere threat was sufficient.
Got hauled into a meeting with HR and general counsel where they both said basically “we got the same letter; we don’t think we compete nor would a court find we do; we’re sending them the following letter; don’t worry about it and get back to work.”
https://www.jdsupra.com/legalnews/california-court-of-appeal...
> Despite California’s general hostility towards post-termination restrictive covenants, the California Court of Appeal, in a recently published opinion, Blue Mountain Enters., LLC v. Owen, 74 Cal.App.5th 537 (1st Dist. Jan. 10, 2022), affirmed that a post-termination customer non-solicitation agreement was enforceable under California Business & Professions Code § 16601.
> Under most circumstances, contractual provisions that prevent a person from engaging in a profession, trade, or business, including customer non-solicitation agreements, are void in California. However, section 16601 of the California Business and Professions Code carves out a statutory exception to the rule for individuals selling all of their interest, including goodwill, in a business.
> ...
> After Owen’s employment was terminated for cause, Owen established a competing construction services company and sent a letter to Blue Mountain customers stating, among other things, that he was launching his new business with “greater perspective, more resources and a much stronger team.” Blue Mountain obtained preliminary and permanent injunctive relief prohibiting Owen from soliciting its customers and prevailed on its motion for summary judgment adjudication of its breach of contract claim.
https://news.bloomberglaw.com/daily-labor-report/amazon-uses...
https://www.geekwire.com/2019/amazon-sues-former-aws-exec-jo...
Disclosure: I work at Google.
I imagine this would be functionally equivalent to a ban on non-competes because it seems like it'd be an insane waste of money but if a company wants to provide a paid vacation on the way out I see no reason to stop them. Unpaid non-competes should be illegal as somebody's right to earn a living trumps a corporation's right to impose an unconscionable contract on its employees.
Only a tiny portion of truly critical positions would have compensated non-competes under this system and the rest would have no such blocks.
I think this is basically a non-issue in practice. People with such iron-clad non-competes typically either a) take a non competing job, or b) work on something anyway. The latter effectively means the original company funds some research.
If you do this with say, sales people, or traders, or whatever, it shuts down their work. If you do it with engineers they'll just make something at home.
Every now and then I see someone comment on HN about their experience with longer between-jobs periods, sabbatical, etc. The core theme I've noticed is that, apparently, it's common to "waste" some 3-6 months before one starts making good use of their time - apparently this is how much it takes to properly switch over to being fully self-directed.
If that hypothesis is accurate, then it's not surprising you've built "nothing worthwhile" during your five-month break - you've got yanked back into employment right as you were finally ready to make good use of your time!
It's called the same thing in Germany. The term also applies to when you quit, but the employer wants to cut your access to the company ahead of your contract termination date. It's typical to have 1-3 months of "notice period" in Germany.
Usually the way it works is that when you resign, the employer has a fixed amount of time (specified in your contract) within which to decide whether to exercise the noncompete, and for how long (i.e. they could elect a subset of the maximum term in your contract), and once exercised, they can't change their mind. If you violate the noncompete, they'll of course stop the payments, possibly claw back payments, keep your deferred comp (which they are holding over your head during the noncompete), possibly reset the noncompete clock (so you have to start waiting all over again), and possibly sue you. Details will vary, but broadly that's my experience.
Some consider it one of the major perks of the industry, assuming you become important enough to have it exercised on you, and would be sad to see them banned. Firms consider it money well spent, which makes sense when you consider that investment strategies have no real protection as intellectual property... copyright is only narrowly useful, patenting would mean disclosing, and so at the end of the day they are just trade secrets, which can really only be protected by nondisclosure and noncompete agreements.
This sort of a non-compete would almost have certainly resulted in Zoom not being built.
It's also done because it not allowed to have anti-poaching clauses IIRC.
This mentality has never made sense to me. Why would a business invest so much money into training someone, then fail to spend the money needed to retain the (more valuable) trained employee?? "They'll leave after we train them" is a ridiculously easily preventable problem.
(also wondering about the armed services and paying for medical school)
As to why not just pay more, probably the reason you were trying to train someone to begin with is because you can't afford to pay the higher wages to just poach the most experienced people? Otherwise why not just pay the higher wages to start with and skip the risky and slow training? Also, the software world has the unique problem that everyone is competing against VC backed startups that are willing to spend more up front to minimize time to market, so these firms generally don't train but can afford to poach anyone who is trained at a perhaps unsustainably high salary.
It’s not like walking around with sacks of money and hiring people interested in that money is low-risk. I’ve found training to be lower risk/uncertainty than hiring in terms of fewer outright failures and negative surprises.
Unfortunately, this is a coordination problem, and those are what humanity sucks at.
> This mentality has never made sense to me. Why would a business invest so much money into training someone, then fail to spend the money needed to retain the (more valuable) trained employee??
It didn't and doesn't to me either. It's very similar to the disturbingly common case of a company cheaping out on office chairs, computer hardware, etc. when the total cost of creating a comfortable working environment for an employee is less than the company pays them for a month of work!
Or, related, and perhaps even more common in tech: skimping on infra (be it physical or virtual), despite again wasting more money in lost productivity than they save. Like e.g. at one place, I used to regularly complain about the amount of build bots we had for the team, and the resources allocated to them. The response was always that it's as much as we can get from the company cloud, to which I'd reply, why not buy more compute? Never got a straight answer to that. Sure, more and beefier machines cost some money, but when the CI is running at capacity at all times, and you have several well-paid devs sitting there and getting distracted while waiting for their jobs to finish... Penny-wise, pound-foolish was the saying?
In fact, I'd happily spend a fraction of my salary to buy a beefy PC to use as a compilation server. And another one to lend to the team's CI infra. But I can't do that, because procedures and company IP protection and whatnot. In the end, I was left with the feeling that the company just wants to make it hard for me to do the very job they're paying me for.
You'd think that management and finance education would let the company do the obvious math, but apparently, it doesn't. But then, the whole problem seems eerily similar to what's apparently a Business Wisdom today (and to me is total insanity): always being focused on acquiring new customers, and not paying attention to retaining existing ones. Maybe the reasons are similar, whatever they are?
For cases of expensive training it is fair to demand they pay you back if you don't stay for a couple years. We are talking about a full masters at a major university though, not just some random 3 day design patterns class or whatever the hotness of the day is.
If you spend $20K on an MBA that I initiated and I quit, totally fair to have an arrangement where I have to pay some of that back.
If you fire me? No obligation.
If you send me to some series of certifications because you want me to have them? Also no obligation.
Lets change fire to lay off. There is a subtle but important difference. If you fire someone it is generally for cause - that is they did something bad. You still want someone doing their job, but because of their bad behavior it can't be them. That is if someone gets a MBA, moves to a management position and starts demanding sex of their underlings, you fire them and demand they pay for the education you got.
By contrast when you lay someone off, you are saying "you were good at your job, but we don't need someone doing your job anymore" (or maybe we can't afford to pay someone to do the job). You lost your job, but there wasn't anything you could have done different if you wanted to stay.
...and then there is Michigan where they were banned beginning in 1905, but then the ban was repealed 80 years later in 1985.
Pay your employees well, listen to their problems and fix them, and they won't leave the company for a competitor.
People leave for a handful of main reasons to competitors:
1. Money - this is the most obvious. Most employers simply don't want to give pay rises, to the point where they would rather hire a new person at 50-100% higher than your current salary, to do the same job, than to give you a 25-30% raise.
2. Bad management - second most common reason I see people leave, even for lesser paying jobs, just to be rid of bad managers. And for some reason most companies would rather hire _yet another_ manager to "fix things" rather than listen to the actual workers' problems. So the worker leaves when all they see is manager upon manager upon manager getting paid 2-3-5x as much as they are, who either don't do jackshit, or are overbearing micro-managers. Oh and of course these managers often claim any success of their managed people, while pushing any blame on them simultaneously.
3. No way to progress, either professionally, or within the company hierarchy. A lot of professionals end up doing the exact same job for years upon years, without going anywhere. They don't get promoted to a new position (but get new responsibilities continuously, without any financial renumeration of course), they can't go to another project, they're stuck in one place. And nobody likes feeling stuck.
Overall, a company can easily ensure that people they invest in, stay with the company to use those skills - just freaking listen to them. Not the managers, not some external "corporate coach", the people you invested in. Make sure they're happy, and they'll stay with you.
Oh, also, let's debunk that whole "I invested money in you therefore you can't work for my competitors" bullshit - all that investment, that's actually net zero for the company, since they can do tax writeoffs on those, as an expense. So at the end, that argument is pure BS, and restricting (ex) employees from working for the competition is pure pettiness.
But yeah, beyond ridiculous, as if a JJ employee is going to leak some crazy trade secret to Subway or whoever.
In France, the official term for a janitor was “surface technician”, which I previously considered to be the most condescending name for a job, but it has been violently dethroned by “sandwich artist”.
They’re definitely not comparable to security guards in that sense.
> “Employers need to get creative about how to impose restrictions to protect themselves against individuals” in whom they have made significant investments, or who have been allowed access to trade secrets, to protect themselves against such employees leaving, said Maxwell N. Shaffer, a partner with Holland & Knight LLP in Denver.
The sort of healthy employee-employer relationship that retains talent.
There are legitimate reasons for actual non-competes in many of these cases, and CAlifornia for instance just requires you pay them for it.
Which in such a situation seems justified.
Lots of examples of malicious employers doing the latter, as you'll note the sentiment throughout the thread comments and laws intending to patch this bug in statute.
You might say that's incredibly unaffordable but that is the point. Otherwise the employer is robbing society of the value created in addition to stealing the difference between present rate and market rate + foregone opportunities.
What you seem to be advocating is to never allow a company<-> employee to have a non compete clause, even if the company is happy to pay for it.
Which yikes. Do you think what Levandowski did with Waymo/Uber helped anyone? Including ‘society’ overall?
Likewise your other example is an employee taking an employees money and their customers at the same time. It would have been sufficient to bar him from competing and working against the employers interests WHILE he was there.
If he had quit and called prior customers and said I know you do business with blank but I can do better would that really have been wrong?
Employers will just say "the no-compete compensations is built in to your pay".
The only ones I’m aware of would be trade secret laws, but they’re dubiously applicable to bare customer contact lists.
You can make contractual restrictions of course (company property), but good luck being able to prove they actually took it unless they’re really dumb. Merely contacting all, or many, customers for instance wouldn’t prove it.
Being able to show they work for competitor x is easy, however, as is showing they’re pursuing customers in the same space.
It’s much easier to win this kind of civil suit than a criminal case. The court can absolutely crush a business that is founded in this manner to compensate the former employer.
That something is a civil tort doesn’t mean it’s a criminal offense (what is generally referred to as ‘illegal’). Trade secret theft is illegal.
But trade secrets have a specific definition which can pretty much never plausibly include a list of customers.
From your link ‘9) “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(A) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.’
Pretty hard to imagine a customer list meeting any of those criteria.
So long as you make a reasonable effort to keep it from being public knowledge, it meets the criteria you quoted.
In most court cases I’ve seen about this, it isn’t enough to keep it from being public.
It has to be protected from employees to the degree necessary to keep it a secret. It’s why all the song and dance around the ‘secret ingredients’ in KFC/Pepsi/Coke ‘secret recipes’ (that and marketing). If it was common knowledge at the company, even if it wasn’t public knowledge, they couldn’t use the trade secrets acts to prosecute offenders.
If everyone at the company knows who is on the customer list, including folks who don’t have a privileged need to know it, it isn’t a secret. It just isn’t public knowledge. That still means it isn’t eligible for trade secret protection.
So while yes, it’s possible - if they do that - it’s not at all common with how the information is protected in my experience, and it would be very difficult to actually prosecute anyone under the trade secrets laws because of it.
Civil lawsuit? Different burden of proof, different calculus. Tort law is about being compensated for a loss or injury, after all, and there is no requirement that such loss or injury have been from a criminal act.
That information however IS highly valuable, especially paired with knowledge of how a company is doing sales, how it is positioning itself internally strategy wise, etc. some of those things could be trade secrets, if adequately protected, but almost no one I know would meet such a bar with how they handle it. It would be at most confidential information, and could count as a NDA violation, but would be difficult to prove unless someone was really sloppy.
As to if it could be protected as a trade secret depends entirely on how it is stored, secured, what it contains, and who is given access to it.
But very unlikely. It has an actual definition [https://www.law.cornell.edu/wex/trade_secret]
As to if someone could sue someone else for damages related to breach of an otherwise valid contractual obligation, then of course.
As to if such a lawsuit would be successful will of course depend on a lot of factors, including if that obligation is valid under law, if anyone can show proof it occurred (and wasn’t say someone ‘using their extensive personal connections in the industry’), etc.
But that is an expensive, time consuming, and ultimately shitty time in court with few guarantees unless someone was really sloppy.
You go to jail for that. It's called "theft."
My company had us sign a ridiculous NCA. It pretty much made it impossible to get a job anywhere, after leaving the company; even if they fired you, or laid you off.
Their description of a "competitor" was so vague, that it could, literally, be applied to a 7-11, as they potentially sold peripherals that could be plugged into our devices.
Reminds me of how Gallup made everyone sign a 6-month contract in an at-will state. If you want folks to stay for at least 6 months, then don't suck so much to work for. One of the cultiest places I've ever had the misfortune to work at.
I think open source, the internet, and Stable Diffusion have shown that the diffusion of knowledge is generally in the public interest. I really think judges made a serious mistake when they stopped treating non-compete clauses as unlawful prior restraints on trade. They are not remotely in the public interest.
That is the point. It is a sincere suggestion, because it would force companies to only seek out a non-compete in the case where the employees knowledge is valuable enough to warrant subsidizing their extended vacation.
And this does happen in the finance industry. Some businesses do in fact do this.
They were flabbergasted that I wanted compensation in exchange for essentially cutting myself off from a wide swath of employment opportunities.
“Aren’t you our slave to do with as we see fit!?” was very much the attitude that I was getting.
I kind of want to see what would happen if states passed laws saying that all non-compete clauses contained an implicit agreement that the employee be paid their entire salary (including bonuses) for the pro-rated duration of the non-compete and that such clauses can be triggered by either party.
We all know the value of a non-compete clause is $0 for most employees. Hell, they are probably most effective at bullying unproductive workers who hate their jobs into staying on too long, thus might actually be a net negative for employers.
I've witnessed this on the other end. Someone was being pressured to engage in sales that would violate her non-compete that was openly discussed during the hiring phase. When she essentially said, "Sure, I have no problem breaking it as long as you put it in writing that you'll cover any legal fees" suddenly the new employer didn't think sales in that region were quite as important.
Luckily my union, Tekna, helped squish most of these in 2015. They can no longer be general, they have to name specific companies and areas you can't work for if you ask. And pay full salary while enforced. So now they're basically non-existent for individual contributors / devs, except for maybe naming the main competitor if you work for a niche company.
When the dining workers at my university in the US were campaigning for a contract, teamsters blocked most truck deliveries to the university
That's a good clause, that will basically eliminate them. It makes sense from the government's standpoint, they don't want anything that restricts people's income because that restricts their (tax) income too.
in NYC, it doesn't seem to stop quant firms. they have a term for it, although I forget what.
someone who knows more will have to chime in, i didn't even remember this was called gardening leave
Am I supposed to feel sorry because a business has to choose between either paying an employee more, or not restricting what that employee does after they leave? Let me get my tiny violin.
Also the law isn't really about enforcing what people "like," otherwise you wouldn't need a law.
* It has a chilling effect: less disputes are filed
* employees prevail less often
* when employees do win the employee portion of the award is less than standard litigation
https://facesofforcedarbitration.com/wp-content/uploads/2019...
There's also numerous stuff that should, IMO, fall into class action, but gets divvied up in forced arbitration, to the point where it isn't worth the time and expense for the individuals in the class to continue to pursue justice. (Although there have been some novel DoS style mass-arbitrations … that's more of a means of trying to force the corporations hand into a normal class action, and towards justice.)
Normally the reasons cited for arbitration are things like "the courts are slow" or "the courts are expensive" or "the courts are overwhelmed" — but you could still just do arbitration at the time of dispute with those. Saying that forced arbitration is better from these arguments is non sequitur.
There's also a conflict of interest between the chosen arbiter and the company. (And conflict of interest is independent of bias; a good arbiter can very well be unbiased, but it is easier for everyone involved to believe that if there isn't a conflict of interest.)
So let her opt-in. Why force it?
Outside of development specifically I have heard first hand examples that were essentially the equivalent of “any programming job.”
A quick review with a lawyer that the non-compete is unenforceable in my province and a nastygram sent by my lawyer, and he took his tantrum elsewhere.
The problem is that so many people, including some I know, get scared at the prospect of legal action that they fold, letting bully CEOs win.
These laws will help.
I applaud their death - they are fundamentally bad for employees.
Of course, they both completely balked at this and we could not move forward so I declined both offers. The third company had a non-compete initially but removed it as soon as I asked - it was completely pedestrian.
It's an indication of crazy entitlement on behalf of employers that they think workers should give away *for free* significant rights (like, uh, getting a new job quickly after a layoff, in your field of expertise). These rights are clearly not compensated as part of your base compensation from a job offer and any employee would be crazy to agree to those terms without severance protection. It just communicates bizarre entitlement and unprofessionalism. I hope more candidates will wise up to this and require severance packages or else decline the offers.
I'm myself in the long, lengthy and costly process of trying to fight a two years non-compete (well, 1yr garden leave + 1yr non-compete), and it's taxing. It adds stress, makes it harder to market yourself, and on top of that there is this clear asymmetry where the costs if it was to go to high court (£150k) would be huge for you, but petty change for your employer. On top of that, they'd get to claim these as expenses (so pre-tax), but you couldn't get any kind of tax-credit (so effectively post-tax). System is biased, it's about time they would change it.
This is a great development for many of these new areas, but a bad one for California since it loses one of its edges
However, everyone here should be aware that lots of startups are now including "power of attorney" clauses in their employment contracts that grant to the employer power of attorney to assign inventions to themselves. Feels like there's a lot of room for abuse, which could discourage moves to competitors.
They better be paying for this upfront.
This benefits job applicants (extra money!), employers (retention), and protects applicants (employers abusing non-compete agreements for everything), and is a far easier legal process to execute.
I don't see the issue. If you feel like you might bail later, you're free to keep the money in an interest bearing account so you can pay it back.
For example, how does a company prevent (setting aside the "should they" debate) an employee from:
1) leaving and starting up a consultancy for installing former employer's software (competing with company professional services)
2) leaving and starting up a new company that is a competitor to the former company
2) That is the problem I think this solves: retain your key employees. Maybe pay them a bit better than that 2% annual raise.
Creating a new competitor isn't about retaining employees. Consider the situation of https://en.wikipedia.org/wiki/Rose_Blumkin
> In 1989, six years after selling 90% of her company to Berkshire Hathaway, Blumkin retired, only to come out of retirement in three months to open up a rival store. It was called "Mrs. B's Clearance and Factory Outlet" and was situated directly across the street from the Furniture Mart. It became profitable by 1991. Buffett acquired the business in 1992. Blumkin continued to be involved in day-to-day operations until shortly before her death at the age of 104.
While this case wasn't covered and Buffett certainly handled it different than the non-compete, but should there be the ability to prevent that sort of behavior with a non-compete agreement?
That also seems like a very silly thing to prohibit in the first place, since Atlassian's getting paid either way in that case.
Another example is Epic's "not quite a non-compete" is that they won't release the certificates(?) that an employee got for supporting their software (as part of employee training) for a period of time after separating from the company. I'll admit to being hazy on this but (I believe) that this is to make it difficult to start a consultancy for installing health care software right after leaving as you wouldn't be able to demonstrate the certificates that you got while working there (and getting them again is costly).
Though, if you want an example of "recreate the software" (though not with IP infringements), look at Dave Hitz and James Lau from Netapp and that they formerly worked at Auspex. I'm sure that they dotted all the 'i's and crossed all the 't's with leaving a company and starting a new one that became a direct competitor - but that sort of thing happens too. I'm not sure what California's non-compete laws were like in '92.
---
The "you can't work anywhere using a computer" as a non-compete is certainly something that isn't reasonable. A "you can't start a competing company and try to get former clients to switch to you after selling your old one" is enforceable.
So where does the "you leave a company and then start a consultancy that competes directly with the professional services, consulting, or support of the previous company" fall? That's a question I haven't found an answer to.
As to the bit on some things being enforceable: Blue Mountain Enterprises, LLC v. Owen ( https://law.justia.com/cases/california/court-of-appeal/2022... )
> Primary Holding
> Court of appeal upholds the enforcement of a restrictive covenant against a former employee who had sold his ownership interest in the company while concurrently agreeing to the covenant.
And we've got an example where a non-compete / non-solicitation agreement was enforced, appealed, and found correct.
Retention is only tangentially related to non-competes. People leave for all sorts of reasons. If a company wants to restrict what they can do after they leave then they can pay them for that supposed value. We'd find out really quickly that most non-competes are bunk.
Not to mention that you'd need to add a couple zeroes to that sign-on bonus for it to mean squat to anyone actually working with valuable proprietary information.
Pay up or shut up. It's that fucking simple, and these abusive employers should not only be grateful that these clauses haven't been outlawed outright (as they should be), but also grateful that there's an earnings cap at all, let alone one that's low enough to exclude large swaths of the professional workforce.
Could this trend lead to the abolishment of patents - and perhaps should an effort be made to help people understand the comparison?
I would recommend that, because the connection isn't obvious to me.
I respect making sure the company doesn't steal someone's previous IP and I respect a company guarding their own IP. But I also respect that a person can work wherever the f they want without a previous company having any say.
I spoke to an employment lawyer who told me in pretty clear terms: the company can come after you to enforce one if they like; it's a tossup as to whether or not it will be upheld; and regardless, it will cost a pretty penny to fight.
I'd personally would not want to have that hanging over my head.
The vast majority of people don't run into such issues simply because they aren't important enough and/or haven't produced anything of value to waste a lawyer's time over.
[0] https://oag.ca.gov/news/press-releases/attorney-general-bont...