Companies don’t really need non-competes anymore. Some companies take an extremely broad interpretation of IP confidentiality, where they consider doing any work in the industry during your lifetime an inevitable confidentiality violation. They argue it would be impossible for you to work elsewhere in this industry during your entire career without violating confidentiality with the technical and business instincts you bring to that domain. It doesn’t require conscious violation on your part (they argue).
So beware and read your employment agreement carefully.
More here https://www.promarket.org/2024/02/08/confidentiality-agreeme...
And this is the insane legal doctrine behind this
If you ever see one of those contracts here, it's usually usually for a very reasonable situation and a well paid position.
It’s not at all a ridiculous ask, either. I’ve made a career out of going after high-impact roles in whatever is the fastest growing area of technology at the time. The non-compete isn’t just asking me to sacrifice the income from my next role, it’s asking me to sacrifice the experience as well. It also limits my ability to renegotiate comp while on the job, because they know your BATNA isn’t to just go get a better offer from a competitor.
If a company wants me to give all of that up, I’m sure as shit not doing it just for the privilege of working for them.
The free movement of workers is important to having an efficient economy. The US could do a lot better here; we have bad safety nets, non-competes, "trade-secrets".
When workers move freely and spread trade-secrets, this results in all companies performing better, on average. This is good for everyone except the lazy owners who would lose money to those who perform better.
While the US worries about limiting the free movement of workers, non-competes, and "trade-secrets", China is going to build approximately a billion homes and factories.
If we take the "free" out of "free market", then we're just a market, and far from the most efficient one.
Net present value of 50% of salary for the next 30 years is something like a million dollars for most HN commenters, I'd guess.
Plus it'd almost certainly end with zero notice. You'd get a email saying "you're free to go". Suddenly. After say 26 months.
So it's not like a "pension for life" - just a gap in your employment history.
Any employment gap can be easily explained by saying "I was under a non-compete and being paid garden leave while working on personal projects to keep my skills fresh". It's very common in e.g. the finance world, I believe.
The uncertainty means you're still out on the job market looking for a real job.
Uk law generally is that non compete clause is ok, if the length of time is reasonable. But you can't stop a person with a trade from applying that trade unreasonably.
Most tend to be 3-6 months.
Normally it's to stop a person leaving from stealing clients.
Downside for finance folks is that the usually make a decent chunk of their compensation through bonuses, not their base salary. So their gardening-leave pay ends up being quite a pay cut, and while they're "gardening", they're out of the game for a year and their skills/knowledge becomes a little out of date.
I have a lot more sympathy for "you may not take clients with you" clauses than for "you may not work in the same industry" clauses.
As the employee, it’s still clearly a bad position for me unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.
This clearly depends on your role and industry. I can write code in a bunch of industries I've actually never had 2 jobs in the same industry. If I were an oil pipeline engineer it would be different.
30% of your total monthly income as it was, when you are likely leaving for more money at a competitor or to start your own company...
Unless the previous employer is slow and incompetent, if you've done good work, they'd probably be ahead and better funded. I'd take the money.
I mean I would probably take the money and temporarily switch fields too but I don't think it's quite that simple for a lot of people.
Hmm… in four different industries, though… Yeah okay there might be some issues.
In fact, 12% of hourly workers earning $20 or less had to sign non-competes. These workers do not have access to corporate secrets. It simply reduces their power to negotiate with their employer.
https://www.minneapolisfed.org/article/2021/non-compete-cont...
They are also tightening up the contract law around non competes to reduce the impact of the scare tactics employers have been using to bind low level employees with unenforceable, but still litigable, contract terms.
And scare tactics are really all they are (in this country), because even before they do this the courts have a track record in this country of looking very dimly on overly broad or restrictive non compete 'agreements'.
At least in Brazil you can't enforce something the law doesn't allow in a contract - that clause would be considered void without nullifying the contract. And Labour law in Brazil leans (or used to lean) more in favor of the employee,so yes, the law would win. Another aspect there is that unions are more common than in the US, and they will help in such cases.
Unless the law also has severe penalty for including such terms, of course they are. They don't need to dissuade 100% of people from breaking 100% of the terms to be of use to the company.
"Under the terms of NDAs I have signed I am not free to disclose that list."
Similar to asking the candidate what they dislike about their previous boss. Their response may indicate how they’ll talk about you someday.
So yes, if you get employees yo sign an NDA then this is a filter as well.
Meanwhile California bans non-competes, and its GDP is 4th largest in the world if it were a country!
"incumbent friendly" vs "startup friendly"
https://en.wikipedia.org/wiki/Traitorous_eight
Per capita isn't a good measure here, as Washington's weather helps lower the denominator (I say this as a former Seattle resident)
Source: grew up there.
I'm also not sure where you heard that Washington is "business friendly." B&O Tax, labor laws, Seattle city politics and the institution of income tax have all driven significant exodus from WA elsewhere over the last ten years.
But, Biden admin + WA laws in 2020 and 2024 make it a relatively low employee load for non-competes, as far as I know. Duration limited to 18 months, auto canceled if an employee is laid off, $120k-$300k income floor under which they are not enforced, details must be offered before job offer made (including a verbal job offer), no venue shifting regardless of location of employer, new employers are granted presumptive standing to sue on behalf of a new hire, agreement only allowed against current customers of the company, not enforceable when selling equity of up to 1% of a company to competitors of the company..
These are not your father's east-coast non-compete agreements! Combined with broad federal support that a non-compete cannot stop you from earning your living, e.g. banning a doctor from working for a competing healthcare system is likely no-go on its own.
Some form of a ban on noncompete enforcement in CA has existed since then.
It has long been codified in CA business code 16600, https://leginfo.legislature.ca.gov/faces/codes_displaySectio...
I'm against non-competes except in narrow cases. But a lot of people probably give the general inability to enforce non-competes in California too much credit for CA tech success in spite of one story in particular.
I know of several cases where lawyers said "don't bother arguing with them about clause X, just sign it and ignore it".
Seems like a lot of successful people in business know exactly how far they can step over the line without suffering serious consequences.
Looking at what the growth trajectories are of countries with high corruption, it’s not great, so our growth is probably still reduced by the corruption or lawlessness that still exists.
The alternative is something like oligarchs that extract wealth because of state granted monopolies, corporatism that strangles competition with anti competitive regulation, etc. The accumulation of wealth is all out of proportion and possibly not even correlated in those cases with the production of actual value.
Asking because it turned out nearly impossible to find a local lawyer to advise on a dispute couple months ago - with 9 out of 10 telling me they only do divorces or real estate or immigration. I was literally calling one by one from a list based on what I believe were relevant search criteria on State Bar website.
I had them recommended to me. I have used them and was pleased.
If you're in California, try the following; they all know their stuff and aren't in supercostly BigLaw firms (although I think most are BigLaw alumni):
- Betsy Bayha - https://www.linkedin.com/in/betsy-bayha-560107/
- George Grellas - used to post here a lot, not so much recently - https://grellas.com/our-team/george-grellas/
- Sean Hogle - https://www.linkedin.com/in/epiclaw/
- Kyle Mitchell - https://kemitchell.com/
And while I don't support our continued extraction of oil, I feel like your comment is quite weird. How is it relevant in this context? Lots of other nations have public health care without having oil. Besides, the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
Whatever beef you have, please don't include me in it.
> the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
The US isn't funding health care through oil profits. If it was going to fund public health care (which it does) it does it through taxes.
You basically have a free money fountain and get free stuff it (while you burn down the rest of th world) and then you come on here and say "things are great over hear! surprised they aren't great over there" without acknowledging that you have a free money source.
I do think your attacks are quite unwarranted. Every time something good about the US is mentioned, should I then swoop in and mention how you're bombing the world, the tech profits are made on algorithms destroying society, your constant one-day delivery is flooding the world in plastics? How is that even relevant?
Also note, I only mentioned how the union here managed to remove non-compete clauses. Then someone else brought in health insurance and then oil. Not me.
For the record, I have been voting for the green party, that wants to disallow opening new oil rigs. Your beef isn't with me, don't harass a whole country, that's just unfair of you.
https://en.wikipedia.org/wiki/Unconscionability
At the time I was working for a competitor and I figured they could use the fact that I interviewed with them to argue that I - either intentionally or unintentionally - gained proprietary knowledge of their product and my current employer gained from it.
The NDA gives them some protection to answer your questions openly and transparently.
And you slam dunk any chance of connection for what seems to be the sake of argument and posture. All because of a difference in opinion? Because you have the mighty all-seeing eyes of an objective opinion we should all see through too?
I “had” to know my response would get no love? The only mistake I made here is my continued thought that this was a place for some kind of industry togetherness: It is just a constant stepping over each other for no apparent reason than to satisfy a kind of unfulfilled ego.
I wasn’t concerned with how much you would love my response. I didn’t cater it for you. You are not the only person in my god damn universe. It was meant to be my authentic perspective, to be helpful, or to invite conversation and debate if I missed another perspective unhad.
But with responses like these, gosh, why bother? What a waste of my love.
I think the argument you made is just an entirely different one. The inequality in your argument is basically whether you should be compensated for interviewing with a company — which, I don’t know what’s economically fair there and I’m not making an argument about. I’d love to be paid to interview :) I don’t know the economic impact of it though. I wonder if it would just lead to more selective hiring practices and worser mutual fits.
Requesting payment for just the NDA is weird to me. Without something like this, you’re asking the company to provide detailed specifics of the role you’re interviewing for, but you won’t give them any legal peace that you won’t run away with the secrets you learn: It’s a free and permitted distribution of anything your interviewers go and share with candidates.
It leads to interviews where you have no idea what the role actually is and what you’ll be doing on the job. Every question stonewalled with a generic answer so the employee doesn’t get in trouble. An atmosphere of curation and inauthenticity, to gauge how you will potentially spend years of your life.
Lovely.
1) ask them to remove it... and so I risk not getting the job
2) don't say anything, and sign it
If I'm really interested in the job, I'll go for option 2 because I know they cannot enforce such claims, so I'll be fine.
Approximately all businesses explictly try to exploit workers to the full extent of the law. That's what capitalism is and it's how we've structured our society.
but i think your broader societal point stands though. especially with horrible language in vendor contracts that people click through because who has time for that garbage. i hope llms will help people push back in somewhat more concerted and systematic fashion.
The answer to those questions might be really unsatisfying in practice, since it breaks down to a cost calculation by the sueing company (if the company leadership is rational). So in case you get sued you have to fight defensively and bleed them enough so they give up or something.
Having talked to lawyers about this sort of case, be prepared to speak to several to find a match, or read between the lines - when you ask questions like, “If I break this clause, what sorts of liabilities am I exposing myself to, and how often in your experience does that happen?” Be prepared for, “as my client, I don’t advise you to do that.” Not super helpful in my case, as I was trying to understand the possible outcomes and likelihoods.
The best advice I got was from a business mentor which was, “if you don’t rub it in their face, they probably won’t notice, and probably won’t care.”
Which is, as you mentioned, a probability calculation.
What I would personally guess [not legal advice] is that you rate the likelihood of your employer suing higher than they do (absent anything egregious).
What are the other options than contract lawyers… IP? M&A? Employment?
Whether that's a good idea, that depends on the circumstances but I'm just noting it as an option.
Of course, doing it without telling the new employer is a great way to get an offer rescinded.
Also, if you modify it after the other side signed, then you’ll want them to initial the changes.
If you modified it, then they signed without noticing the modifications, then I guess ask a lawyer.
I don’t see what outsourcing has to do with it. If they have power of attorney to an external HR firm, that seems like their problem. (I’ve never encountered a company dumb enough to do that though.)
OTOH, I've seen non-competes as long as 2.5 years from places like Citadel.
In that case you need to ask for a lifetime worth of salary, including growth from being in position to be put in escrow before you sign the dotted line. Otherwise they can hire you and fire you immediately and you'd never be able to work in your field that you spent years/decades training for.
At least in theory, any judge that saw clauses like that should throw it out for that reason alone in those jurisdictions.
Companies are really banking on people making the value decision that doing the legal stuff is too much work, time, and money, so they're hoping for self-enforcement. It's the same reason we still see companies commonly doing things like terminating employees before maternity leave. They know a new mother (who is now jobless) isn't going to bother with the trouble of a potentially multi-year wrongful termination suit.
"Just semi-retiring" is a pretty sensible option at some point.
In my experience, the more the employer puts up a show, the more unenforceable it is.
you do get non competes etc., but it never holds up in court as you can easily prove it prevents you from finding jobs.
i wish for you in your legislation there might be a similar law, otherwise these things are really evil. i mean, its like prison in some fields niche enough, and those are exactly the fields prone to such overly protective clauses
Here it's six months top, and it only applies to management and specialists with critical domain knowledge - and this also has to be reflected in their wage.
AI companies protecting their IP.
It's not reasonable to expect an employee to build up a body of expertise in a field, and then agree to be bound never to work in that field again after leaving your current job. IANAL, but confidentiality agreements that act like lifetime noncompetes are good candidates for being found unconscionable, even absent an explicit anti-noncompete statute in your jurisdiction. (Other clauses you may rightly consider unfair, I don't know about.)
Making things worse for the companies implementing such contracts is the fact that things change so fast now that they are unable to substantially benefit from such a contract. The contract is purely a CYA move.
If you have agreed to lifetime noncompete terms, you may wish to speak to an employment attorney about how enforceable the contract actually is in your area.
I moved from New York to California a bit over 20 years ago in large part because I personally encountered this (the IP ownership bit), and preferred to live under California's rules.
It is worthwhile to read https://www.paulgraham.com/america.html. Point 7 talks about how easy it is for regulations to accidentally squash startups. I believe that the fact that California makes neither mistake causes us squash fewer startups. It is not sufficient to have made Silicon Valley a startup hub, but it was likely necessary.
It was only 20 years too late to help me.
This agreement shall not apply to any inventions, conceptions, discoveries, improvements, and original works of authorship that [my name] developed entirely on their own time without using [the employer](s) equipment, supplies, facilities, trade secret information, or anything not based on or received from [the employer].
They can say that all they want, but that isn't what the statutes or case law about trade secrets says. in California state courts take a very dim view of this sort of overreach.
I'm also skeptical how enforceable this theory is in general. Have there been any noteworthy cases of employees getting screwed over that rested on it?
Finally: Yes, I think these agreements should be illegal. I recently signed a new employment contract that requires me not to disparage my new employer... forever. Literally: There is no end date. I could be an old man in a squeaky rocking chair that says something bad about my (then) former employer, and they have the right to sue me for breaking a non-disparagement agreement. I laughed to myself when I signed that contract.
You can change these contracts. Hiring people is difficult and once the company has made that decision they don’t want to lose you over a contract clause.
It’s anecdata on my part but whenever a white collar worker tells me they don’t need a union because they can negotiate a better deal, they get real angry at me when I ask them the last time they negotiated a better deal for themselves
I am good at what I do, but no unicorn and not FANG "level".
But then again, I don't live in the US
Post employment restrictions fall under the doctrine of restraint of trade - which explains why we use "gardening leave". While you are employed you and your employer have a relationship which includes a duty of loyalty by you to your employer. They have duties such as a duty to pay you for your work. By default they should also be offering you work, so a specific "gardening leave" clause is required to keep you at home, bound by restrictive covenants but without work and being paid.
After employment, it is much harder to make restrictions that will bite. Typically an employer must show there is some legitimate interest they are protecting and that it is reasonable to do so.
Hence: non-solicitation of clients tends to be easier to justify, though only if an employee actually had some kind of relationship with or knowledge of those clients. Whereas a non-compete is much harder to justify. It is also harder to make reasonable, hence time/space/sectoral limitations.
Looking at confidentiality: the default established in the amusingly named Faccenda Chicken v Fowler (Mr Fowler was a frozen chicken sales lead). It is that you are bound by the usual duties of confidentiality that arise when anyone has confidential information but that you cannot be prevented from using information gained while working that is part of your normal skill acquired as part of the job unless that is so secret as to amount to a "trade secret".
In this case, Mr Fowler knew where to sell chicken (from having done so). While this was confidential, he was able to use that information (not being a trade secret) in setting up a competing frozen chicken sale network.
The core idea is that you can't stop someone plying their normal trade.
That's the default. Obviously if you sign an agreement that imposes post-contract confidentiality obligations it can go further than Faccenda Chicken, but if it went too far, it would also be vulnerable to the rule against restraint of trade.
In short:this sort of "you cannot work in the industry" idea is very unlikely to work in England and Wales (and I suspect the rest of the UK - though I am strictly only an English lawyer).
That said: there is still value in reading your contract of employment carefully and making sure that you are happy with it.
I don't even think that non-competes should be allowed for higher level employees/executives. Everyone deserves the right to change jobs whenever they want to.
Is it messed up? If you're a salesperson, and you've built the relationships with these customers is their loyalty to you, or to the company that you worked for? I had a personal trainer for a little while and he took all his clients to a new gym when he decided to contract with a different gym.
I don't know the answer to this. But it doesn't seem as clear cut to me.
But I think the way I look at it is in a sort of "work product" type way. If I'm employed by a company to write software, I'm the one who wrote it, but I agree that the software I write is the property of the company, and I can't take it with me when I leave.
Is a salesperson's "work product" those relationships, and does that make them the "property" of the company? I don't think it's reasonable to say that those relationships are solely between the customers and the salesperson; those relationships wouldn't work out in that way if the salesperson's company was selling garbage, or even just a product that those customers didn't want. That is, the good customer-salesperson relationship is both a function of the salesperson's personal skills, and of the good fit between the company's products and the customer.
Ultimately, though, whatever you agree to in writing when you start the job is what you should honor. I'm fine with the law protecting people from predatory practices by employers (of which I think non-competes qualify, and employees shouldn't be able to sign away a right to change jobs like that), but if an employee signs something that says any customer relationships belong to the company, then that seems like a reasonable thing to me.
Companies that are serious about noncompetes for professionals (rather than hourly shift workers) generally do garden leave. I'd take a noncompete for a garden leave company seriously, and would maybe roll my eyes at a broad noncompete from a random tech firm.
(Don't sign anything you're not comfortable with.)
If you're not copying internal wikis, and poaching customers what are you even doing?
You are required to hold confidential stuff for life, like business contracts, but you can use your know-how, if it does not violate any patents, in a competing company as you see fit. This knowledge is a part of you and cannot hold you against employment. Even if you do decide within those two years to employ yourself in competing company, this can be held back by your original company only if they give you X% of your pay at them (X can be 80, or as low as 50, as my friends inform me).
Enforcement can maintain litigation longer than you can maintain solvency.
California bans anything that is effectively a non compete.
So the callout to be wary of them is totally legit... but it doesn't look like they are going to be enforceable when such things go through the courts.
I’d rather not carry the cost of learning it’s not enforceable.
Not sure how that's going.
"Defendant has never worked in any other industry. He has three kids. He's gotta work."
(That's for regular employees--it's a different issue with founders who may have significant equity stake and such.)
The worst is that they can delay the case for years, leaving you in a legal limbo. Or go after your employer, involving them in the discovery process.
Never, EVER sign a contract without reading it first, and having your lawyer review it.
That presupposes that people have a lawyer, and one specialized in employment law at that, which is highly unlikely to be the case for 99% of the population.
I never did, though. I just crossed out the clauses I didn't want to accept and initialed them.
Places like Zoho or Verisign don't let you do that.
This whole “bUt WhO hAs A lAwYeR” nonsense I’m being blasted with in my comments is exactly why these sorts of contracts, grifts, and scams are allowed to exist and succeed.
Know your rights, get a lawyer, and then share that knowledge with others. It’s Organizing 101 stuff.
It's difficult to have legal help with your contract responsive within the timeframe that you have available for signing it before the business rescinds their offer and moves on.
Because that’s how I found mine. $200 later, and I had total confidence in what I was signing and a lawyer on my side if things went pear-shaped in the future.
I mean even patent has 20-year limit
I work in the Robotics industry. While the algorithm for our path planning would be a trade secret, how path planning is pursued is not. It's a fundamental concept in robotics. To extend the metaphor, it would be as if my company thought that any robotics work that involved path planning would violate their IP, because I did path planning work with them. It's nuanced to be sure, but some companies are very aggressive as to prevent you from having mobility in your career. Sometimes in a genuine effort to protect their IP, but also sometimes to reduce your negotiating power or punish you.
[1] https://www.thisamericanlife.org/427/original-recipe
Protagonist gets to open the vault of secret formula after decades working their way to the top. Inside is a Coke label with the ingredients part unprinted.
It was always the brand.