Hacker News Reader

> be on the hook for continued compensation at some proportion of the employee's former wage to actually exercise the privilege to deny the employee work in a specific field

Yes. The proportion should be 100%, plus all benefits (401k, health, continued vesting of equity, etc). If you're being denied future employment then the employer can pay for it if it's that important to them. Possibly even more than 100% if they're preventing me from going to a company with a substantial increase in pay.

Ultimately that is still very anticompetitive, it just asks for more compensation to the worker but is still paying them to do nothing and hurting competition, a sure sign of a broken system (paying people to do nothing is usually a charged leveled at very broken bureaucracies).

For sure - I would like to see non-competes banned outright, of course.

I was just replying to OP for implying that a worker should get a reduced (i.e. proportional) payout for being denied employment at a competitor. The "losing" employer should pay substantially for such a egregious act and the employee should benefit.

This is already done at financial sectors in some countries, mostly to prevent immediate poaching of clients and transfers of strategies.

In six months everything will be out of date.

Which is why I think companies should have to “buy you out” in the event you get another job. If you get an offer and they want to exercise the non-compete they have to pay you total comp for that offer otherwise you can work there.

I’m sure in a forum of devs you’ll will think of plenty obvious “hacks” which are just fraud and our courts are perfectly capable of sussing that out.

This seems unwieldy because people change jobs for reasons beyond their own immediate salary.

Maybe I want to make a lateral move because I'm unhappy with my boss or my commute. What if I'm moving because my partner found a new/better job elsewhere, or I want to be closer to my extended family?

You can try to put a monetary value on some of these (pay my commute?) but I don't think you could "buy me out" of moving for an ailing parent or sick kid.

Huh? Why doesn’t this work? If you want to change jobs for any reason you can and if the employer wants to exercise the non-compete they have to pay you your best offer to not work, not to keep working for them.

My bad! I thought the buy-out would keep your working at your original job.

I still think there's something off about the power asymmetry though.

Ehh, this seems like a hard deal to really get right, to the extent that it is sort of “fair” to the employee, the company could just offer that deal if they wanted.

Which is to say, nothing prevents a company from offering that deal as an alternative, rather than attempting to force it through with a non-compete. But, the employee would have to consider the cost to them of basically pausing their career development and letting their skills atrophy. That’s a pretty big cost! It seems unfair to force that cost on them through the contract (especially if we agree with the premise that non-competes are usually entered on a sort of unwilling basis).

Nothing prevents the company from offering this sort of deal currently. But I’d expect something higher than the offer, to take it. Companies don’t seem to offer this sort of deal currently, I guess because it seems like a pretty bad deal on their side too. Paying somebody to do nothing seems pretty expensive, I think you only do that for political favors.

I think they are talking about doing it in place of a non-compete, so you’re either

* not working due to noncompete and not getting paid for the duration of time

* not working due to noncompete and getting paid for the duration of time

The point is to make noncompetes a hassle and only worth it if you’re actually trying to protect something. The status quo is pretty poor if Subway’s “sandwich artists” are getting told to sign noncompetes without compensation. Companies aren’t really offering the latter if they don’t have to, because they’re more expensive; with the notable exception of finance.

But what’s the status quo? My perception at least is that non-competes almost never get enforced or are struck down if they do get enforced, usually, outside of really specific situations. I guess my assumption is that the companies don’t offer the latter because they don’t actually care very much about individual engineers going to do similar jobs at the competition, and they just try to get their employees to sign as many contracts as possible because… “why not?” I guess.

i can’t find the local news article because the link is dead, but here is a change.org petition about a Subway employee having a noncompete enforced: https://www.change.org/p/subway-restaurants-absurd-non-compe...

The NYT has more examples including a summer camp counselor: https://archive.ph/1BvoM

If the noncompete truly has no value, and it is also not worth paying out for, then it should just not be in the employment contract to start.

Oh, mea culpa then. I guess I’ve made a popular incorrect assumption given that people keep signing these things.

> In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests.

This may be true in theory, but more often that not for the most vulnerable people it's not true in practice. The problem is that people have to be both aware that they can challenge a noncompete and willing to do so. That is, at a minimum, very time consuming, and if you're working a low-wage job, you probably aren't going to be practically able to fight a noncompete. If you get a new job and your old employer sends a threatening legal letter to your new employer, they're probably just going to fire you rather than help you fight it.

If the system put the burden on the employer to prove that a noncompete was valid before making any attempts to enforce it, the current system might work well. Unfortunately, the reality is that even totally unenforceable noncompetes are still effective most of the time - that's one reason you still see them put into contracts in places where they have no chance of surviving a legal challenge.

To add to this, I know a person who had a job offer rescinded because the company he was going to didn't like the potential of non-compete enforcement by the company he was leaving. It's fortunate that it can (sometimes) be challenged successfully but in many unfortunate instances that won't be an option. The best case from my perspective is that these contracts are simply voided.

Thats my understanding of non-competes. It is really for the company to win in a court case. Its a threat to scare people in complying because most people don't have the war chest to fight it out. For most people, you can fight it, but your gonna go bankrupt. So it is often better to just cave in. The company will just drag it out so it costs you the entire time. Its more of a competition of who has the bigger war chest and the employer is usually the one with it.

>current chilling-effect bullshit of overly vague and broad non-competes that are never intended to see the inside of a courtroom

I worked for a very small company for a number of years quite a while back. We basically wouldn't even look at someone who had a non-compete even if it "probably" wouldn't be an issue. The risk of having to fight some big tech company--who might also have been clients to some degree--was just too great.

At what point in the hiring process did this come up.

I assume you didn't ask to see new hires former contract and would you routinely ask, "are you subject to any non-competes?"

As I recall, yes, our business office would routinely ask early in the process if they were subject to non-competes.

I'm not an expert, but IIUC the financial industry tends to pay full "garden leave" for employees serving out their noncompete terms https://en.wikipedia.org/wiki/Garden_leave , presumably partly for this reason.

This is correct — very common practice in trading (I am currently sitting out one now!).

Generally they are 3-12 months in duration, although recently we are seeing much longer ones (24 months) from firms such as Citadel.

You generally draw full base salary, and healthcare comes from COBRA.

US-wide ban of non competes is good for hiring firms (they get the talent immediately), bad (allegedly) for firms from whom the talent is leaving, and mixed for the workers themselves (for whom the garden leave can be sometimes received as a paid sabbatical). It will be a really big change.

And you highlight how allowing non-competes with garden leave is a mixed bag. If someone's fine with taking a year or two off while getting some fraction of the total compensation they were getting previously, I suppose it can look like a good deal. But that would be pretty unsatisfactory for a lot of people mid-career with kids in college.

IIUC we're generally talking about full base salary in the case of financial-industry "garden leave", though obviously missing out on the possibility of bonus payments could really sting for many in that business. And obviously being "out of the game" for a significant amount of time can hurt, especially if you're in an area where things are changing quickly.

From the offers I was getting back in the day, finance runs on low base salary and huge bonuses. Bonuses of 200% of the base salary are not unheard of. Full base salary can still mean quite a bit of pain.

Long-term garden leave is still unequal as you forfeit things like bonus (which can be a significant percentage of TC) and you can't practice the skills of your employment for months or years. Imagine going on leave from the financial sector in 2007 and coming back in 24 months later, for example.

New CV item: "Zero losses during the global financial crisis" :-)

Are you really a financial-industry veteran if you didn't tank at least one merchant bank when you had the opportunity? ;)

In the most recent contract I saw from a trading firm, they would only do this if they let you go, and not for cause.

So for sure no "garden leave" if you quit, and also not if they can find a reason to fire you. And of course no bonus, which is often a majority of total comp.

Possibly this sort of thing may vary by state. There might also be some room to negotiate depending on how much they want you.

Though employees that typically receive such tend to have substantial variable elements to their compensation.

100%+ annual bonus for performance are not unusual and typically they are not paid during a period of garden leave.

I'm trying to think of why the powers that be want this too, and the only thing I can think of is to expand their hiring pool/make poaching legal. Maybe I'm too cynical.

Requiring employers to allow employees to sell their labor to whoever they want is a good thing, in my opinion.

Option 1: The labor pool is a free market. This means that companies are free to choose who to hire, and workers are free to choose who to work for. Non-compete agreements prevent the latter, and so the market becomes inefficient.

Option 2: The labor pool is a class struggle, in which employees exploit their workers. Non-compete agreements of a form of exploitation, tying a worker’s livelihood to a single employer.

Option 3: Employees belong to the company they work for. Non-compete agreements codify this natural relationship. Hiring a different company’s employee is a form of theft, and is called “poaching”.

Option 4: Any voluntary, informed contract is valid. Non-compete agreements are one such contract. Forbidding non-compete agreements is an unjust restriction.

Under options 1 or 2, non-compete agreements are clearly unethical. Option 3 requires accepting an unethical premise. Option 4 requires stretching the terms “voluntary” and “informed” to apply to Morton’s Fork.

I’d put the question another way: Given the negative effects of non-competes, why should they be allowed?

It's good for workers regardless of any cynical take. Non-competes put more burden on workers than it does on companies.

Yes, but another way to look at it is that the volume of successful strikes of the last few years are making the powers-that-be sweat a bit.

This feels like a sacrifice play to me. I'm sure that the cost of improving wages, hours, and benefits so as to retain staff is a lot less than improving all those things plus the overall cost to the business and/or economy of a strike.

What courtroom? Such contracts always come with binding arbitration.