When I was interviewing last year, I cut off an interview loop with a company primarily because I don't reside in California and their NDA was, "Anything you say, anything we say, forever." Since I was also interviewing with one of their direct competitors that I really preferred, I didn't want to put myself anywhere near a legal situation where they might try to mess things up for my career.<p>They freaked out when I told them I didn't want to complete the interview loop because apparently I had passed their initial "weeder" interview and they were getting really excited about the possibility of me joining. But I would have had to sign that "everything, forever" NDA to keep going, and they weren't willing to go back to legal or do anything to change it, so that was that.<p>I personally know several people in my state who had their careers impacted due to threats from former employers over an NDA, so I really don't feel like that was an overreaction on my end. And I'm super-happy where I ended up.<p>I just wanted to provide a data point on how NDAs that go overboard ("everything, forever") can cut both ways.
Non-Competes being legal is only acceptable I think if the worker will continued being paid for the period of the non-compete. I can see reasons that non-competes exist, but those reasons don't really make sense in a world where patents and trademarks also exist. The fact that they are essentially illegal in California, and California's economy works shows that they are unnecessary and also don't hinder technological development.
This is a bigger deal then the title suggests since it appears it would be retroactive and nullify existing non competes<p>> The commission’s proposal appears to address this issue by requiring employers to withdraw existing noncompetes and to inform workers that they no longer apply. The proposal would also make it illegal for an employer to enter into a noncompete with a worker or to try to do so, or to suggest that a worker is bound by a noncompete when he or she is not.<p>This is very unclear to me, and seemingly experts, if the FTC has this power, but it would be very far reaching if it were to go into effect. Given the hostility of the current Supreme Court to federal agencies, the pessimist in me says that this would be challenged by an employer go all the way to the supreme court and be used by them to dramatically limit the power of FTC
[Put this in another thread but adding it here since I didn't realize it was a duplicate thread]<p>My Dad was forced to retire early as a network engineer after the small (5 person) RSA consulting shop he was working for actively threatened his livelihood with a non-compete. No one in the industry would touch him because of how aggressively and proactively the owner of the shop was defending the non-compete.<p>I offered my financial resources and network to help him fight it, but he was nearing the end of his career and just didn't have the energy to fight. He now delivers dry cleaning at $15/hr just to get out of the house.<p>Non-competes can't die fast enough.
In Germany we have non-competes, however, the employer has to continue paying the ex-employee (a part of) their salary for the non-compete to have any effect.
I think we're all pretty familiar with the arguments <i>against</i> non-competes. Does anybody have a compelling argument <i>for</i> them, as practiced in 2023 in the US?<p>While we're at it, does anybody have a compelling justification for allowing non-poach agreements, too?<p>From my perspective, they both seem like a non-durable benefit to $current_employer at the expense of a compounding opportunity cost to the greater economy (insofar as it hinders an efficient execution of the labor-employer matching process).<p>Curious if anybody has an interesting argument for why this is OK. The only thing that comes to mind is "trade secrets" arguments, but don't we have separate laws for that?
Would prefer this came from Congress rather than the FTC, because I can see at least two different ways this could get sunk from the FTC:<p>1) The process gets stalled from rollout until 2024, at which point a Republican comes into power, appoints new FTC head, and they roll it back.<p>2) Companies sue, and SCOTUS rules that this exceeds FTC authority.<p>But I'll freely concede that there is no way such a bill would <i>ever</i> make it through Congress.
I understand noncompetes in some fields... but this can be solved in other ways. In my country (slovenia), a noncopete is valid only if you're being financially compensated by some amount while the noncompete lasts.<p>It's a bit complicated here, but ideally companies wanting noncompetes could be forced to pay the difference between what the worker would've earned if they stayed (+ some safety factor for a potential raise elsewhere, eg 20%) and what they earn now with a noncompete.<p>So if a worker earned 100k, with the safety factor for a raise that means 120k, and can only earn 50k due to a noncompete, the company would have to pay the difference of 70k to that worker if they wanted to keep the noncompete valid (for a limited amount of time). Company keeps their 'secrets', but has to pay for the secrecy.
Banning noncompetes would be an awesome policy for economic growth and dynamism. It’s pro-freedom in the useful sense of the word. It’s also incredibly pro-worker.<p>Sometimes you get a win-win-win idea.
I’m surprised it’s taken so long. Companies have abused this practice to an absurd degree. Got a job at a sandwich shop? I guess you are prohibited from getting a different job down the street based on the agreement you signed at the beginning of your employment.
Good.<p>I've seen over and over this harm friends in frustrating ways. Tech aside, non-competes in other industries are completely insane. My wife is an optometrist and all local shops have draconic noncompetes you are forced to sign. If you leave the shop you can't work within 30 miles (or more!) of that location.<p>I've had friends move entire cities just so they can get out of a terrible work situation. Worse, I've had friends stay in bad situations because their noncomplete would force them to move or drive way too far for work.<p>And since everyone does it, they're resigned to "it's just the way it is" and nobody wants to risk being sued.
Non competes are often necessary in the most interesting jobs. A few years ago I took a job at a hedge fund with a 2 year noncompete. I took a calculated risk doing so.<p>In the 2 years I worked in the fund, I learned a tremendous amount thanks to being exposed to the "secret sauce" which would have been really damaging for me to take to a competitor.<p>After I left the fund, I took the 2 year non-compete (ie: don't work in another fund) to explore other industries, ended up in a FAANG and quite happy.<p>Point being, as an adult I weighed the risk of the non competes vs the opportunity of the role and made a decision. I am not sure how this kind of role would work in a world of no non-competes but I suspect it would be suboptimal for everyone.<p>The bottom line is, a non compete is not something that springs on you. It's something you evaluated in context and chose, as a professional. You don't have to take the job.
Definitely one of those obviously broken things that should be stopped. Whatever legitimate usage they theoretically have in practice the vast majority do not protect against a bona fide company risk.
Press release from the FTC: <a href="https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition" rel="nofollow">https://www.ftc.gov/news-events/news/press-releases/2023/01/...</a>
Press release from the FTC (and no paywall): <a href="https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition" rel="nofollow">https://www.ftc.gov/news-events/news/press-releases/2023/01/...</a>
This is a big deal if they can pull this off and I'm very impressed with the FTC being proactive and doing something about it.<p>Noncompetes are a huge incentive for companies to prevent employees from being paid their true market value for their skills, especially true for those who are very specialized and only few employers can make use of their skills.
I disagree with banning noncompetes. The issue IMO isn't noncompetes, it's the fact that an employer doesn't have to pay.<p>The rule should be that they can make you not compete, but you must be compensated monthly at your salary level prior to departure.<p>A non compete without having to pay is having your cake and eating it to so to speak.
Happy to see this. Unfortunately, the business community has completely abused these, with companies like Jimmy Johns requiring its minimum-wage employees to sign non-competes.<p>My state sued them over it and won: <a href="https://www.reuters.com/article/us-jimmyjohns-settlement/jimmy-johns-settles-illinois-lawsuit-over-non-compete-agreements-idUSKBN13W2JA" rel="nofollow">https://www.reuters.com/article/us-jimmyjohns-settlement/jim...</a>
IMO the link should be changed to the FTC's press release, which has no paywall and provides a better summary: <a href="https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition" rel="nofollow">https://www.ftc.gov/news-events/news/press-releases/2023/01/...</a><p>You can read the proposed rule and the full notice and factsheet here: <a href="https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking" rel="nofollow">https://www.ftc.gov/legal-library/browse/federal-register-no...</a><p>Of note, an FTC commissioner (Trump appointee, so a minority voice in the executive atm) released a dissenting statement outlining the strategy that will be used to defeat the proposed rule: <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompetewilsondissent.pdf" rel="nofollow">https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompe...</a> (warning: pdf). In her dissent, she speaks eloquently about how darn important noncompetes are to Business and Competition, and "encourage[s] all interested parties to respond fully to all parts of the NPRM’s solicitation of public comments."<p>Which, well... I'll also encourage all interested parties to respond fully to all parts of the NPRM’s solicitation of public comments! You can do so at regulations.gov
It really does seem to me that the simplest solution would be to require non-competes to be paid at the maximum of the past ~N years total earnings (and benefits value), with a minimum of say $100k/year.
I had a company that had a very vague noncompete. As worded it could be 'Anything, everywhere'. I asked about it and was told 'Yeah,but we never enforce that.' I wanted to work for the company, but that was a full stop. I hired a lawyer a friend recommended. He went over it and confirmed I should be concerned if I did anything outside of work that could create IP that I might want to sell later. He drafted some new language that confined the noncompete for me to industry and specific region for 1 year only, that everything I working on outside of work and on my own resources outside of that industry was mine, as well as some set-asides that clearly noted work I had been working on before coming on and we're my own work. It cost me a little under $1k<p>If you are going for a job that pays $100k or more, get a lawyer (ideally a lawyer in your sector) to look over your employment contract, NDA, Non-compete, etc. It is worth every penny, in my opinion.
Whether or not this goes through, I think a lot of folks on HN should consider refusing to sign non-compete agreements... especially if you are a subject matter expert in your field of work.<p>If a employer wants you to sign a non-compete it should cost them something (extra salary, extra signing bonus, pay for a period of time after you leave the company, etc.). You shouldn't just give away your right to work for nothing.<p>I stopped signing non-competes a number of years ago on the basis that I'm hired for my expertise and know-how and, as such, "I bring everything to table" in my domain of expertise (not my company or they wouldn't have needed me)... it is my experience,knowledge and capability and I should be able to do whatever the hell I want with it, with the exception of stuff specifically covered by trade secret protections, classification, etc.
I mostly think this is a good thing, but there are some fields where I feel like employers will have to take other precautions that are not as nice.<p>Most of us here are in tech where "ideas are cheap" is mostly true and commonly thought, but there are other fields (in particular, finance) where single ideas can easily be worth millions of dollars. (Imagine something like "the stock market goes down on Friday the 13th's".) How are employers supposed to let employees know these ideas? If there aren't noncompetes then I suspect employers will limit employees (and their growth) in other ways.<p>At least here in NY firms will pay ex-employees during their non-compete. My understanding though is that they only have to pay the base salary, which is usually a minority of the total compensation (even guaranteed compensation). Would be nice if that were fixed.
This is obviously great for workers and competition. It's actually good for companies too, even if they are too short sighted to realize it. See: silicon valley.
If businesses think their employees are so valuable that blocking them from working for a competitor is necessary... then how about just giving them incentives to stay? I don't know, maybe a huge bonus, or above-average salary adjustments against the competitor, etc? Or fix the toxic work environment so that they'll actually want to stay?<p>Otherwise too bad, the business created unfavorable conditions for their employees, so workers should have every right to leave and work for anyone else, including competitors. Either employees are that valuable or they're not, can't have your cake and eat it too, Mr. Big Boss.
It's a way of establishing an "intellectual property" claim inside your skull. I put that in quotes because a limited term government grant of monopoly, which is what patents and copyrights actually are, are not "property." There is no property right in that grant of a monopoly. Congress could reset the term of patents and copyrights at any moment, on any terms. That's a much weaker thing than actual property rights.
For those wondering how this relates to hairstylists...<p>People are not a customer of "Awesome Hair Inc". They are a customer of Laura, whom happens to work for said company. Because Laura knows exactly how to do my hair properly.<p>So when Laura switches company or becomes an independent, her customers follow her. Awesome Hair Inc just lost half their regular customers. A source of perpetual drama. Now you know why hairstylists are so excellent at bonding with people. It's how you create forever customers.<p>An interesting variation of this dynamic is found at the very publication of the article: NYT. Some of their journalists have become very savvy on social media, building up an enormous personal following. A following that is loyal to the person, not specifically to NYT. Yet it was NYT that paid for it, as these journalists tweet on the job, as part of their job. At the very least, NYT could hope that this sends a lot of clicks towards their articles, but even that is questionable as increasingly these journalists tweet screenshots of key sections, knowing that nobody on social media actually reads anything.<p>An awkward marriage, to say the least.
Would be interesting to see how contracts in HFT are going to change. From what I heard, when some specialists (e.g. hardware folks) are changing jobs, then the firm is likely to lose an "edge" as competitors will have access to similar technology/knowledge. Garden leave helps to mitigate this effect.<p>If non-competes are banned, then TCs are (probably) going to rise even more.
I recently had to deal with some onerous IP clauses that were essentially a non-compete. Fortunately they agreed to drop it.<p>But for the future: Any advice on finding a good IP lawyer who knows software/media? Lots of IP lawyers around here happy to charge me $300/hr, not so many I'm confident understand the creation of videogame code & assets.
Uncompensated non-compete clauses have been pretty much unenforceable anyway given the cost of enforcement and the actual value to the enforcer (usually less than 6 figures). It's a good step to ban these given that all they do is make people afraid to work somewhere else.<p>Compensated non-competes are a totally different story, and probably better to hold on to.
Non-competes do not protect an organization against IP theft or trade sceret dissemination. Those are protected by NDAs, confidentiality agreements, copyrights, patents, etc.<p>If you see someone making a claim that it's to protect company secrets, that is misinformation used to justify NCs. Please inform them otherwise.<p>Non-competes limit where your staff can go to. Without proper compensation for the time period in which they apply for, they're a very one sided (and in some cases illegal [NCs are legal in IL unless they assert an economic hardship]) way to prevent employees leaving. The claims for them is "training cost is expensive and it's to limit staff from training at one company and leaving" (which as we know.. companies generally don't do training in house)
When I want to leave a company and look for a new job, I hate non-competes.<p>When I want to stay at a company and a good co-worker quits to go work for a competitor, I love non-competes.<p>When I want to stay at a company and a toxic co-worker quits to go work for a competitor I cheer that a non-compete did not block that move. And yes, I’ve been in this situation and the toxic employee was CEO of the start-up. I’m pretty sure the competing start-up he went to failed because he went there. Smartest move the start-up I was at ever made to let him go there.<p>I think the best solution is for companies to make damn sure that good employees don’t want to leave to work for a competitor, instead of making them sign a non-compete, especially before you really know if they are toxic or not.
Recent and related:<p><i>FTC cracks down on companies that impose harmful noncompete restrictions</i> - <a href="https://news.ycombinator.com/item?id=34254183" rel="nofollow">https://news.ycombinator.com/item?id=34254183</a> - Jan 2023 (165 comments)
Im ok with noncompetes.<p><i>However</i>, if my would be ex-employer wants to block me from joining a competitor then he has to pay me 150% of the salary that the competitor would have paid me for the duration of the non compete while I twiddle my thumbs.<p>Fair is fair
Noncompetes are a classic example of employers abusing their position and their ability to lobby for laws such as these in the first place, to benefit their bottom line at the expense of their employees.<p>If you had some sensitive information that an employee knows about and you are worried about losing them, why not just pay them more to stay on then, versus making them absolutely unmarketable in the workplace because all their relevant skills and experiences are illegal to be used again? What are you even expected to do in that case then? Get a job at McDonalds until the noncompete expires and you can actually send your resume out gain?
One of the FAANGs tried to get me, as an independent contractor, to sign a non-compete that exactly described my business. And they wanted a multi-million dollar indemnification for work that amounted to 2+2=4. As in, no one owns the work result, it's a discovery of facts about how the world works. At first they suggested I needed to sign the agreement before they'd pay my invoice, but then quickly paid it and nixed further work planned. I was not going to sign something so blatantly lopsided. Not everyone is in a position to do that though.
Wow, that's a big deal. While NCCs I've signed have generally looked fair, I've seen a few lives destroyed by them. When somebody has expertise in a career in a certain field, and leaves a company, they shouldn't be punished for continuing on with their expertise in another company, even their own. This is called competition. It shouldn't be stifled. Stealing trade secrets is one thing, but competing in a field should be regulated by companies that don't wanna compete.
Does that mean engineers working at FAANG no longer will be subject to noncompetes?<p>Amazon is known for enforcing non competes on employees (especially AWS employees) who leave to join the competition.<p>Their CTO has been vocal about this on Twitter and a quick Google search will reveal a lot more details.<p>What about job offers that require employees do waive away some rights and agree to arbitration as the only avenue to resolve a labor/employment dispute?
I think noncompoetes should be bound on income as in:<p>- illegal if your income isn't majorly above the average (like 50+% above)<p>- in situation where legal bound in maximal time by a combination of how much your income is above average and how long you worked for the company before you stopped doing so<p>- in no situation should it be longer then 1 year<p>- in no situation should it be longer then half the time you worked for a company
I suggest we also implement open source peer reviewed employment contracts.<p>Almost always in the end of the recruitment process are you showed the emploment contract fine print.<p>Been through a non complete clause myself I highly recommend against it. Your skill and work experiance is the most valluable asset to a future employer. Non compete clauses prevent you from seeking jobs in a similar field.
Doesn't this diminish the value of a startup, say, if the buyer hands the principals a mountain of cash in a buyout then the principals use that cash to build in the same industry / market the startup they would have if they had all that cash in the first place? Without having the non-compete with the principals, who would even want to buy your startup?
My understanding is that most non-competes in the US are not enforceable in the first place. So while I think there are situations where non-competes are valid, I think it would be pretty safe to make a rule that says, "if you are not prepared to actually take an employee to court to enforce non-compete, you should be willing to go to court to defend it."
This is both something I support (a huge win for labor), and it will accelerate the tech giants shifting work overseas to save money (incomes will rise as labor is able to more freely act to take advantage of opportunity, big tech will have to pay more for the same labor; to offset, they'll attempt to offshore more aggressively).
I agree with the notion of ridding noncompetes entirely. Former employers should be limited to bringing cases against former employees who actually take something of legal value-i.e. trade secret misappropriation claims which require a higher standard of proof, as opposed to the broad restrictions that noncompetes impose on employees.
If anyone wants to read the rule as written by FTC, could do it here: <a href="https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking" rel="nofollow">https://www.ftc.gov/legal-library/browse/federal-register-no...</a>
Of course, it was entirely hearsay, but I've always heard that non-competes were unenforceable and primarily a scare tactic. It's yet to impact me tangibly, and I understand the need to protect IP, but I don't think non-competes are the way to go about it. I believe this is the right move!
We have various "professional services" folks at my fortune 500, essentially staff aug. Some of those folks I'd like to convert, but there's a non-compete. I wonder if that goes away now? (non California)
My understanding was that this was one of the big competitive advantages for California. I could be totally off, but wasn’t a reason to work in California that you’re not getting stuck with hostile noncompetes?
Fully supportive to this move! However, I am worried if this will change the typical "all source code available to all employees" situation to limited read access to everyone.
Noncompetes in any form should be illegal, in my opinion. They are a form of intellectual slavery - saying the company owns my mind and my mental work products.
I think noncompete clauses have their uses so rather than see them eliminated completely you make a company pay the employee under a noncompete the equivalent salary for the duration. Company wants you to sign a noncompete for five years after you leave? They can pay for you five more years.<p>Companies that truly need the protections will shell out for it. The ones that include it in their employment contracts because that's just what they do, won't.
It's interesting to consider Marx's viewpoint here, namely that businesses are always, even during good times, in a rigorous exploitation contest for the right to stay in business; and so only the businesses that use every possible means of exploiting their workers to the max, and thus piling up the biggest heap of surplus value as liquid assets; will be able to draw on pile that long enough to survive severe economic downturns (thus selecting for max exploitation over the longer run.) (Really a dollar auction, not that he used that phrase.) This seems esp poignant, and accurate, re low-wage and low-skill workers having to sign non-compete clauses. (Downturns were both more frequent and more severe in Marx's day.)<p>However I think Marx would be confounded by the Justice Department fully pushing this initiative, if indeed it does; since he believed the elites had an iron grip on democracies that was not going to be shaken. He would have predicted a far higher GINI than the (kinda high) one we have. More like Russia's, at least.<p>I may be selling him short though, he might view the Justice Dept action as mostly theatre; allowing other forms of exploitation to proceed apace and only addressing abusive clauses that weren't being enforced anyway; and the expansion of skilled and better-paid work in our day as only an apparent exception to his views.
the cynic in me wonders if this, now, is a planned diversion from the seeming universal outrage at SBF being out on bail, with widely documented vanished stolen investor money having been given to politicians (of both parties).
Part of the problem, IMO, is the idea that rules can take the place of integrity.<p>Rules are useful. But they are useful for "other people". We all act with integrity because we are decent people, not because we will be punished if we do not
For some reason I jumped to hoping the title also implied that union-only anti-compete clauses in government contracting were also banned. But that was too optimistic.
Noncompete clauses for workers is the most anti-american, anti-free-market policy anyone could pull. If workers aren't free to switch to better jobs and at the same time are left to fend off for themselves them the economic system starts to resemble feudalism.
This is a huge deal for improving US competitiveness worldwide, can't wait for the comments period to open.<p>This is won't affect early stage startups much: startups have limited negotiating power and non-competes are a <blink> tag: it's such a bad look, entrepreneurs are quickly pulled aside by advisors, lawyers, etc.<p>This might affect California, which used them (their ban) to compete with other states. It's a soft thing along with sunshine, funding (easier, faster, better terms) and the talent pool (larger, better connected).<p>I've been affected by non-competes all my career and it was part of my decision to move from New York to California - the software industry was simply too volatile to attach yourself to one employer. As I graduated, I had companies recruiting me, it was impossible to pick. Decades years later, I have enough power (and savvy) to cross-out NCAs from contracts along with overly prescriptive SOWs, toothless financial promises, etc. But kids, if you're reading this, the negotiation never ends if you want to get paid and earn a living.
When it comes to startups, arent most noncompetes basically in the form of stock compensation? It would be hard to work for somebody while being invested in a competitor, or am I completely off base?
Government intervention is heavy handed and will cause unintended side affects with 100% certainty.<p>What should happen is for:
1) employees to choose to not join companies with contracts that they don't agree with
2) employers offer better incentive to not leave for roles at risk to poaching e.g. RSUs.<p>A natural market response to bad company policy is always preferred to government mandates.