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Comment by johncessna | Hacker News Reader

Are there a lot of issues with non-competes? I've def heard stories, but it's usually related to poaching scenarios where a contractor gets hired by the company that they are contracting with.

That said, I also know that multiple states basically have mechanisms to prevent a non-complete from preventing work. For example, if I'm a mechanic, a non-complete can't keep me from being a mechanic and making a living because a former employer claims that every repair shop is a competitor.

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They are wielded as a weapon in an asymmetric power dynamic, hence the need to strike their use down.

https://www.ftc.gov/legal-library/browse/federal-register-no...

https://www.ftc.gov/news-events/news/press-releases/2023/01/...

https://www.cnbc.com/2016/06/22/jimmy-johns-drops-non-compet...

http://www.nytimes.com/2014/10/15/upshot/when-the-guy-making... | https://archive.is/I8wmH

Previous on the topic:

https://news.ycombinator.com/item?id=34260577

(disclosure: I submitted comments to the FTC advocating for their rule making against non competes; personal opinion: its important this is codified at both federal and state levels to inhibit rollbacks in the future based on SCOTUS decisions around executive branch authority, consider them lines of defense and policy ratchets)

Additional context: https://news.bloomberglaw.com/daily-labor-report/states-add-...

The whole problem was due to the abuse towards “low skill” workers. Stuff like if you get a job at Subway, you can’t go and work at another deli shop within a certain radius of the former employer.

The point of this change is to protect these people, which is totally sensible

Non-competes are also problematic for highly-compensated tech workers. The phenomenon of NCA'ing low-compenation workers is also horrible, of course, but not the whole problem.

Yeah most of the stuff that is ostensibly the purpose of classic non compete agreements is well handled by NDAs and explicit agreements not to poach clients/workers, if I understand things? It's still okay to block the use of secret information or professional contacts from your former company.

From a free market perspective, it's burdensome to make someone with experience in a sector stop working in that sector, even if that's what their career is about.

> It's still okay to block the use of secret information or professional contacts from your former company.

Indeed, and trade secrets are already protected federally by the Uniform Trade Secrets Act

Explicit agreements not to poach workers are also illegal in sane labor markets (California, for example).

Yep, had a non-compete working at an isp in Hawaii. It felt really scummy to sign that on my first day because I knew it would make it difficult to work in the tech sector when most other companies are within a very small radius and are all "competitors".

I did see one guy leave after 6 months and go directly back to his old job at a competitor and the CEO just grumbled about it and did nothing. It was kinda badass.

The reality was courts in NY generally would never enforce a non-compete for a Subway like case. Courts do weigh the "equivalent exchange" and what the non-compete is "protecting". They were more problematic in any other higher paying field.

The first proposed bill bans all non-competes while the second proposed bill basically codifies non-competes are legal only if there's "good-faith" aka equivalent exchange. Which usually means payoff or enormous salary.

This is what highly paid white collar workers on Hacker News like to parrot but it's sensationalist at best. Even in this article where the evidence points to low wage workers having the lowest percentage of NCA's runs with the click bait headline.

https://www.minneapolisfed.org/article/2021/non-compete-cont...

Regardless, no Subway worker ever GAF about a NCA. They walked right across the street to Jimmy John's and were hired on the spot. And even if Subway had a NCA in place - which I doubt most of the major chains do - Subway doesn't GAF either. The only time anyone would care is maybe if a manager opened another deli across the street and took all the info from their suppliers with them.

Easier to keep the employees around with the threat of legally enforced unemployment without the safety net than changing the business or working conditions or pay to something worth sticking around for.

There was a particularly high profile case of a high-level Microsoft engineer who left for Google, and Ballmer literally threw chairs across the room and had the guy sued.

Microsoft lost.

Nobody hears about these stories when they stakes are lower.

Never mind the issue of tech worker poaching and whatever secret agreements the companies made, the real issue here is Ballmer’s terrifying spasm of violence. He ought to have been removed from the building and barred from the property, and his employment terminated. That type of outburst is never ok because it forces everyone to wonder at what point he might assault someone.

I don’t care how many billions of dollars are at stake, none of it is worth getting hurt over, and throwing chairs around demonstrates that he has lost that perspective.

Ballmer being CEO of Microsoft for 14 years (and making himself $100B in the process) should be part of business school case studies for corporate mismanagement. He had no ability for the job, no technological understanding or vision, really no reason to be at the company at all other than being friends with Bill Gates in college. Microsoft as a company (along with its stock price) was stagnant throughout his tenure, and has grown 15x since Nadella took over.

The stock market is a poor measurement of how a company is doing. During Ballmer’s tenure, revenues tripled and profits doubled.

There is no reasonable analysis that Nadella did anything to cause the present value of all future cash flows to be 15x - how stock values should be evaluated.

Revenue and profit growth are poor measures of how good a manager is.

during how much inflation, on how much new capital, and what did competitors do during the time period?

A mannequin can double revenues with enough capital.

A passive investor can double profit with enough capital.

Only a superior manager/leader can out perform peers while consuming similar or fewer resources

Which “peers” did Microsoft have during most of the Balmer area? Apple was “beleaguered” during the early years.

Azure is only successful by selling into the enterprise based on relationships built during the Balmer era.

Microsoft Office is their other cash cow that was nurtured during the Balmer area and Windows is still a money maker.

The one big accomplishment that Nadela did was “Office everywhere”. But the iOS port was already in full swing when Balmer was CEO.

This doesn't get said enough. Just because you are CEO should not shield you from criminal liability

To be fair it wasn’t his office that shielded him from consequences, it was his wealth. It’s not like a poor person who founded their own LLC would be coddled by the legal system.

Someone "close to the source" once told me that he would pace about meetings rotating a baseball bat like a baton. The chair doesn't seem like the biggest problem here!

It's a tool for intimidating workers. Non-competes may make a worker afraid to leave a job for fear of being unable to work in their industry. It may also make a worker afraid to take specific positions for fear of retaliation by a former employer.

The key is, non-competes can accomplish these things even if they're not legally defensible. Your average worker doesn't have the legal knowledge to know if a given non-compete is actually likely to hold up, and will often assume that they signed a legally valid contract. Most workers can't afford to go to court, so the threat of a lawsuit can be used to bully them into submission.

Sometimes I wish there was a law that said if you knowingly say something that isn't true with intention to deceive then you can get sued for it.

In the financial industry there’s a norm that traders, and other high profile workers, will have gardening leave between jobs. The old company will pay the ex-employee for a few months to do nothing. This way when he starts at the new company and inside knowledge he gleaned is out of date. The new company knows that this is the deal and is okay with a start date after gardening leave.

This is the civilized version of a non-compete developed by New York Bankers. Oh so nice and caring California tech companies use the ruthless version. Since they now have offices in NY we need to change the law to force them to behave.

Some stores prevent retail workers going to work for a competing store. That's completely bananas - you can't work as a checkout clerk at Krogers if you worked at Safeway?

If a retail worker is key to your business such that it requires a non-complete, your business model is broken or you're abusing non-competes.

As far as I've read noncompetes have become very common, even some supermarkets have them for normal store workers.

IIRC Walmart makes every employee sign nccs as a matter of course.

"Are there a lot of issues with non-competes?"

What would constitute "a lot"? The last few years I've seen an increase in the tech industry of non-competes being required for less senior roles, plus reports of using non-competes in low-wage industries to try to freeze workers from leaving jobs. [1]

They're also over-broad and selectively enforced. I was considering a job last year that had a non-compete and wasn't eager to sign it because if you read it broadly it would've been hard for me to take a job that wasn't with a "competitor." Which was 1) over-broad and 2) bogus because the harm that would've been done to me was far outsized to any harm I could've done taking a job with any competitor.

I wasn't going to be such a strategic employee that me going to Company B would have hurt Company A in any real way (nor would I have been compensated at that level...), but I was expected to sign a non-compete and be severely restricted in my next job options -- or roll the dice and hope if I took a job with Company B later on that it wouldn't be considered "a competitor" or that the employer would care.

And that's the other problem - I was told by several people "eh, that's not enforced" but it was not something they were willing to forego, either. I don't sign agreements with the intent I'm not going to live up to them. It's not reasonable to have that kind of uncertainty, either.

Non-competes have their place - I can see, say, Netflix putting in place a NC with a head of programming or major cloud providers having non-competes for very senior execs who have extensive information about strategy, budget, customer lists, etc. But lower-rung employees who don't even have their own budget or any material knowledge about the operations of the business? That's stupid.

[1] https://www.mashed.com/620419/the-contract-you-didnt-realize...

I've had to sign many of them. The only one that would have definitely been enforced was not tech-related and very narrow in scope (don't open competition within 10 miles).

But every tech-related one amounted to, "you're not allowed to work if you sign this". I didn't have any "issues" with them, in the sense that nobody ever tried to enforce one, but it's still a load of BS that we shouldn't need to deal with.

Non-compete agreements for employees are a farce, IMHO.

Cases where companies actually take someone to court are almost certainly not very common and tend to involve high-level people (or employers with a real grudge).

But having worked for a very small company for a number of years, we wouldn't touch anyone with a remotely relevant non-compete. As far as our business office was concerned, no one was basically worth any risk of litigation and legal bills.

That said, I have known companies that were apparently known for enforcing non-competes and departing employees who wanted to put out their own shingle for competing services would sit "on the beach" for a year before doing so.

The most common use of noncompetes is just to discourage an employee from quitting their job. "Oh, you want to go for for unrelated firm X? Actually, legal says they're a competitor, because we're a huge conglomerate. So, you can't take that job. Sorry."

In this situation, the company doesn't actually care about the competition at all. The noncompete is just another tool in their toolbox to discourage you from quitting.

> Are there a lot of issues with non-competes? I've def heard stories, but it's usually related to poaching scenarios where a contractor gets hired by the company that they are contracting with.

There's no issue unless the state is into stifling innovation. Want to create a Silicon Valley? You have to allow for employees to jump ship and form startups w/o repercussion.

i"ve seen non-competes just to get a *job intereview*

You cannot interview with their competitor even if they reject you? Absurd!

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