Ask HN: are non-compete agreements just for suckers? | Hacker News Reader

Ask HN: are non-compete agreements just for suckers?

9 pointsj_baker18 comments

I hear of a lot of people who are asked to sign non-compete agreements successfully requesting to have them taken out without too much argument. Is this a common thing? Are there that many companies out there that will put them in the contract hoping that employees won't notice?

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In the very few places that I've had to deal with a non-compete agreement, I've always been able to get amendments made to the contract that limits the specificity to a more acceptable level. Companies just want to try to protect their property as much as possible.

The conventional wisdom appears to be that non-compete agreements are largely unenforceable, however I'd be careful in using that assumption: No company wants to deal with someone if they feel that person has no regard for contractual agreements to begin with.

The enforceability of a non-compete depends solely on the state involved.

States like OH and TX will enforce them vigorously (OH is so bad that I would never move to that state, nor work there). States like CA will reject them (except for sale of businesses). This is why MS fought tooth and nail for the jurisdiction of the folks who quit to work for Google to be in WA (MS' home) - where they are mostly enforceable vs CA (Google's home) - where they are not worth the paper they are written on.

If it weren't so difficult to get a ballot initiative going (I ran for election last year, and I had to learn a lot about what it takes to get on the ballot and also getting elected - which I didn't get), this is one of my pet peeves. I'd write it so that if you want to enforce a non-compete against a CO resident, then you pay their salary for the duration of the non-compete - even if the non-compete requires jurisdiction elsewhere.

Actually, that's not necessarily the case in Texas. Enforcement is growing stronger, but Texas courts are traditionally pretty reluctant to enforce non-compete agreements.

Nowadays, they are enforceable, but there are lots of restrictions: http://www.hersh-law.com/lawyer-attorney-1078665.html

It's a bit surprising, but Texas can be a rather employee and consumer-friendly state in a lot of respects. Granted, it's a pretty backwards state in most other respects.

They're the norm in tech companies. I don't think they're really necessary for most employees. But few investors would invest in a startup whose founders hadn't signed noncompetes. Otherwise they'd be investing in air. All the founders could leave and start a new company doing the same thing.

Yup, this is exactly it. When shopping the company to investors or as a potential acquisition, Non-Compete/NDAs are an item on the due diligence checklist.

In my experience (IANAL etc.): If you're being hired solely for your expertise &/or experience, there should not be a non-compete clause in your contract. If you are expecting to some extent to be trained in an emerging field then a non-compete clause may be justified. Juristiction plays it's part too - I've 'agreed' to such a clause in the past knowing that it was unenforcable as restraint-of-trade under EU legislation.

As far as I know, they're not enforceable (at least not in Canada). I would take it as a warning sign that the company has some d*ckhead lawyers running around without adult supervision.

In the best case scenario, that sounds like the case. Worst case scenario: they're trying to scare you into staying with them for longer than you would normally. And that IMO makes them scum.

I've had every one of my employment or contracting agreements changed. I usually don't strike them completely, I usually modify them to something limited and reasonable. I won't steal inside info. I won't go to work for one of the clients whose project I worked on, etc... Never had a problem as long as I was willing to stand my ground.

It doesn't seem like that big of a deal to me.

I had to sign one for my job this summer (small tech consulting firm that's now doing a couple products and less consulting), but it was pretty limited. It just said that I wouldn't work in the couple of pretty-specific fields that my company's products are in for the next year.

One nice thing about the one they gave me was that they had a clause saying that it did not in any way prevent me from using the programming knowledge that I'm gaining, just the specific knowledge about the fields the products are in.

Now, I wouldn't be comfortable of signing one much longer than a year. A lot can change in say, 5 years. But 1 year so that you can't steal their ideas or have an unfair advantage in competing with them because you know their plans is fairly reasonable.

Here's a good article:

http://mixergy.com/why-i-wont-sign-your-nda/

While I know a non-compete isn't an NDA, the reasons outlined in the article make a lot of sense and could be applied to reasons to not sign a non-compete. Particularly:

Reason #1: It puts all the obligation on me and none on you

H&R Block is infamous for attempting to bust people for breaking non-compete agreements. Yet, it has been in the news recently that H&R Block is being investigated for their practices in forcing employees to sign non-competes.

Interesting. I recall reading that Google, MS, and Apple were in hot water over that kind of thing. But I didn't realize H&R Block was in trouble too!

They are difficult to enforce in many jurisdictions; and to be enforceable at all they usually have to be limited in scope. That said, yes, they are for suckers, it's a sucker move to ask for one, and a sucker move to accept one.

In some states, Calif included, they are practically unenforceable (except for perhaps the sale of a business).

They are mostly unenforceable here in Australia but I've still seen them in a few contracts and never agree to them. Far more common are clauses that prohibit overt poaching of clients or staff to a new venture which is more reasonable IMHO.

I don't think they're enforceable in CA.

I think NDA is for Paranoids.

I think you mean non-compete agreement instead of NDA? They are two different things. :-)

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