Discussion

sheikhnbake: Big ups for pro-working class legislation

Analemma_: It always baffles me how much resistance there is to banning noncompetes every time this is proposed, and how that resistance lives right alongside “we want to be the next Silicon Valley”, even though pretty much every analysis of “what’s Silicon Valley’s secret sauce” cites the unenforceability of noncompetes as one of the most important factors. But maybe the ship is turning very slowly.

anon291: Non-competes are almost always unenforceable. Never take money (although even then, they're still mostly useless), and just ignore them and no one is going to do anything. That was what my business law professor taught us. No court is going to enforce a non-compete if it means the person who cannot compete is going to be unable to support themselves. The only time it'll be enforced is if you're already independently wealthy.In other words, a completely useless scare tactic.

toomuchtodo: People in control of orgs and capital want to telegraph thought leadership via "we want to be the next Silicon Valley" without actually giving up control of workers. For a parallel, see how Jamie Dimon says "AI could help bring about the 4 day work week." [1] Is JPMorgan Chase trying to move to a 4 day work week? No, of course not. Jamie likes to be important and have his proclamations disseminated, not actually make the change being used to chase clout and status (because once wealthy, there is nothing left to chase if one wants to chase something).TLDR Talk is cheap, work and change is hard and painful (broadly speaking).[1] https://finance.yahoo.com/news/jpmorgan-ceo-jamie-dimon-says...

mwigdahl: The problem is it won't get as far as trial, if the old company gets wind of it early enough (and they often do). The old company will reach out to the new company and politely inform them they believe they have grounds for a noncompete suit. The new company will either indemnify the worker, or (far more often) drop them as not worth the hassle, and take their #2 choice.The legislation needs to change. The situation as it stands is ripe for barratry and bullying.

smnrchrds: You may not even get as far as an interview. More and more, I see job applications asking whether you are subject to non-competes, alongside asking about visa etc. I imagine answering yes will unceremoniously move your application to the reject pile.

kccqzy: It just means your start date is delayed. No different from interviewing a student whose graduation date is a year away or interviewing a foreigner who might require a few months of paperwork to get a work visa.

x0x0: I lost a job because of one. In nyc. Company made some threats and the offer was pulled.

lateforwork: The flip side should be considered as well. There should be some sort of protection for small startup companies. A big company should not be able to steal an innovative startup's technology by hiring away the employees that worked on the product. That used to happen a lot when Bill Gates was running Microsoft, for example.Patents provide some protection, but it is flawed because a big company can put you out of business if you get into a patent war. An employee should be able to leave at any time and work for a competitor, but maybe should not do identical work, otherwise startups will have a hard time protecting their IP.

johnnyanmac: No big company is going to bother poaching that way. They are either going to purchase the company outright or undercut them with their own competing product to kill it off through attrition. We're not in the 2010's anymore where people are banging at the door for singular SWE's.

ramraj07: I know at least one person who joined a Michigan startup, moved over, got sued by non compete, and the new employer just didnt want any hassle and laid them off. This person had to leave country then.The take home is dont take tech jobs in states where non-compete clauses are still legal.

anon291: Sue them back. Represent yourself. Get compensatory damages. They will lose unless you can support yourself. Do you think any state is going to let someone go on unemployment and withdraw from the public dole just because some private company wants to gain some competitive advantage. LolBut I do agree in general, never take compensation upon leaving a company, for whatever reason. Then everything is certainly unenforceable.As for leaving the country... even if a non-compete is found to be enforceable (due to you being self-sufficient, or sufficently compensated), then the scope cannot be country wide. It has to be limited to a particular reasonable geography and a particular reasonable field.

calvinmorrison: acquhire practicies show that yes - sometimes people really ARE the company. However, i think for the average C# developer, or Epson printer specialist or wordpress or Bosch controller analyst, these arent really true.

observationist: Companies need to put more care into who they trust, and maybe incentivize skin in the game. If leaving for a competitor means you lose equity, agency, ownership, or some intangible, that can outweigh bigger paychecks.The market should be able to solve this problem without the government setting arbitrary rules, and people should be allowed to sign contracts that limit or restrict their freedom, so long as it involves informed consent from all parties.If Microsoft wants to hire an AI expert for a million dollars a year, and restrict him from competing for 2 years after leaving Microsoft so as to avoid losing market advantage, that seems like a reasonable thing for Microsoft to want. If all Apple has to do to get all the Copilot secrets is hire the chief copilot engineer for 1.5 million, seems like that creates a toxic dynamic and all but guarantees acquihires and a near immediate turnaround in a startup to corporate pipeline for raiding IP.Maybe we should be limiting businesses to doing business at a scale they can responsibly handle. If you can't get human customer service for your computer issues because Windows and Mac have scaled far beyond the number of users they could ever hope to handle, maybe that market needs regulation, and unless they scale customer service accordingly, they don't get to target a majority of the world's population as their customer base?That'd certainly create jobs and opportunities for Linux and induce a revolution in software markets, and it'd limit the incentives for MS and Apple and big tech to do shitty things to suppress the markets overall.

softwaredoug: It’s not the noncompetes that’s the problem, it’s confidentiality agreements with extremely broad language.Learn about the legal principle of “inevitable disclosure”. It’s the idea you can’t work for a competitor because you can’t help yourself but violate an NDA

Aurornis: Is there actually substantial resistance to this? Or just a few manufactured counter-arguments from news outlets trying to do a both-sides take on this?Non-competes have been heavily limited or outright voided in California. That's an easy and obvious rebuttal to the Silicon Valley argument.

toomuchtodo: Yes. The US Chamber of Commerce is particularly noteworthy in their attempts to slow the deployment of this policy. They of course act on behalf of their members as a reputational laundering operation, so their members do not have to engage in this lobbying directly (potentially exposing them to reputational risk).U.S. Chamber of Commerce and business groups file lawsuit challenging FTC noncompete ban - https://www.fmglaw.com/employment-law-blog-us/u-s-chamber-of... - April 26th, 2024> Less than 24 hours later, the U.S. Chamber of Commerce, Business Roundtable, the Texas Association of Business, and the Longview Chamber of Commerce filed a lawsuit against the FTC in the U.S. District Court for the Eastern District of Texas alleging that the consumer protection agency lacks the authority to issue rules that define unfair methods of competition, and instead, the FTC Act only allows it to bring cases challenging particular practices. The Chamber’s Complaint also contends that even if the FTC possessed such authority, the “noncompete rule would still be unlawful because noncompete agreements are not categorically unlawful under Section 5.” The lawsuit further argues that the rule is “impermissibly retroactive” and reflects an “arbitrary and capricious exercise” of the FTC’s power.> The Chamber of Commerce is seeking an order “vacating and setting aside the noncompete rule in its entirety” and an order permanently enjoining the FTC from enforcing the rule. The plaintiffs are also seeking an order to delay the effective date and implementation of the noncompete ban until the conclusion of the case.(and so, state by state enactment is the path forward until regime change can potentially speed federal enactment and enforcement of this policy)

johnnyanmac: There's a lot of opposition to pretty much any nigh objectively good thing for the people. Just follow the money. It usually comes down to1. lobbyists vying for a company who wants to keep power2. the legislature having its own vested interest from relationship/deal/lobbying3. the minority of constituents are the ones who constantly call in and go to townhalls, because they have the time, money, or energy to do so compared to someone who's at work during a townhall.

bluGill: You can sue the old company for that. You had a job that they are not allowing you to do. Courts don't like it when someone isn't allowed to support themselves, and so generally place narrow limits on what a non-compete tan cover. You should sue for the sake of the rest of us who might be next when this tactic is found to work.

wbl: Have fun trying that in CA.

remarkEon: What's the actual steel man argument for why noncompetes are good? I've never really encountered one, just seen the corporate advocacy that they don't want to deal with high employee turnover.Best I can do: Non-competes are (possibly) unenforceable anyway, so signing one maybe acts as a value signal for the employee? "I'd have to violate my non-compete, so in order to do that and permanently burn the bridge with my current company, you need to pay me $X + $Y."Frankly I don't buy it, though, because it assumes too much about the rationality of all actors involved and the savviness of the employee during negotiations.

otterley: Small startups in California (where many, if not the majority, of tech startups are headquartered) do just fine without enforceable non-compete agreements.It's also already unlawful to steal another company's assets when you leave. Besides, companies should file provisional patent applications as soon as they invent valuable proprietary technology to prevent the sort of subject matter leakage you mention.

fhrow4484: Haven't followed this one, but ~a decade ago, Lobbies representing Microsoft, Amazon, and hospital industry had substantial resistance and came for in-person public hearing to oppose it.It did resulted in water down the prior attempt at banning non compete:https://news.ycombinator.com/item?id=19954458Originally it should have been a total non compete ban, but got nerfed to only apply to anyone making more than 100k/year

jeffreyrogers: The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.

josephg: Why? They started one successful business. It seems good for society if they go on to start another.

cowsandmilk: Often an acquisition of a company is for the set of customers. If I sell my lawn care business and then turn around and email all my former clients offering them lawn care via my new company, I’ve just undercut what I just sold.Noncompete shouldn’t be so broad that I couldn’t move to another city and start a lawn care business there, but I shouldn’t be able to compete directly with the business I just sold using my insider information of that business.

hedgehog: There's also a big difference between starting a competing business like your example, and being barred from say working on "cloud infrastructure" because your previous employer also worked on "cloud infrastructure". It can be blurry for executives, but in general noncompetes seem to be used to push pay down more than for any legitimate business purpose.

dismalaf: > What's the actual steel man argument for why noncompetes are good?It makes it possible to confidently buy a business that's mostly or all goodwill. Otherwise the previous owner can simply poach all the clients.Also lots of jurisdictions allow non-competes as long as the employee is paid for the duration of the non-compete clause. Obvious win there: paid vacation or double up your salary by working for a non-competing firm.Non-competes on employees without compensation are obviously bad.

SilverElfin: WA has bigger problems like crazy overspending at the state level and many cities, leading to a spiral of new taxes, even if they are unconstitutional. This won’t be enough to make the state more attractive to workers and businesses.

matthest: A win for Adam Smith capitalism.

jkingsbery: Not sure if this is meant sarcastically or not, but it is - it helps reduce transaction costs of changing employers. Anyone who has ever signed a contract with wide non-competes knows that it is hard for an individual to negotiate against it on an individual basis, but they are rarely enforced in practice, which leaves open individuals to worries about "maybe I'm one of the unlucky few?" These clauses then primarily only increased transaction costs, so eliminating them aids free exchange.

matthest: Not sarcastic. Anything that helps keep markets optimally competitive is good for capitalism.

coredog64: Personally I think the way to go about this isn't to ban non-compete agreements but instead to get a couple of highly public cases where said non-compete is voided because the employee didn't receive anything of value for it. Once case law is clear that it requires 80% of the employees salary for the term of the lockup, companies will only require it where it makes sense rather than applying it willy-nilly due to the essentially free nature.

Beestie: Non-competes are restrictions on employees by their current employer. A non-compete agreement between a seller and buyer is perfectly fine.

otterley: Why wait until 2027, instead of making it effective immediately?

SilverElfin: Especially when WA’s ruling party regularly uses false ‘emergency’ declarations to make new laws become effective immediately and because this lets them make new legislation immune to voter initiatives (yes they abuse this loophole all the time). They could do the same here. If they don’t, it’s a choice made on purpose.

dragonwriter: Washington has a 2/3 threshold in both houses of the legislature to pass emergency legislation, and the majority party is short of a 2/3 supermajority in both houses, so it is actually impossible for them to unilaterally pass emergency bills. Also, emergency laws in Washington are not immune to initiative (repeal or amendment by subsequent laws passed by the voters), but are immune to referendum (popular veto by the voters before going into effect).

mzi: Here in Sweden non-competes without a financial agreement is void. And those that offer some financial are probably OK, but haven't been tried extensively.The non-competes I've signed have offered 60% of my base pay for six months (the length of the non-compete) if I cannot find a job because of the contract if the company exercise it.They never have exercised it for me.

cortesoft: Those sorts of agreements are generally still allowed with these anti non-compete laws. If there is a specific non-compete contract that is signed, with money being paid for it directly, that is fine. That is a normal contract where both sides trade something of value.The types that are banned are ones that set the restriction as a part of a normal employment contract, where there is no specific compensation given for accepting the non-compete and where the employee can't decide to abandon the non-compete in return for not getting the extra money.

mzi: Yeah, those contracts are not valid here as the right to livelihood will trump that contract.So even if you sign that clause you are not bound by it.

tzs: The article covers this, but probably worth having it mentioned here too: Washington already had partially banned noncompete agreements.They were banned for employees who made more the $127k/year or contractors who made more than $317k. Those numbers were adjusted annually for inflation.

curuinor: Less than, not more than

dismalaf: This feels a tad heavy-handed and will make it tougher to sell a business without hard assets.It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

hedgehog: Why would it affect selling a business?

dismalaf: Previous owner can start the same business immediately and poach all the clients, reducing the value of the sold business to zero. Buyers obviously anticipate this and won't buy the business without the non-compete.

hedgehog: That would violate a non-compete attached to the sale.

SilverElfin: It’s pretty close to a supermajority - over 60% in each house. And also keep in mind, some of the members of the other party are opposition in name only due to the districts where they compete. The share doesn’t really matter - the main issue is that it is overused. There shouldn’t be a hundred emergency clauses in each legislative session.As for the voters’ constitutional right to repeal - I’ve updated the terminology. From https://www.washingtonpolicy.org/publications/detail/time-to...> Despite the name, the real reason for these supposed emergencies is not that the state faces some immediate threat. Legislation that includes an emergency clause can only be repealed using an initiative, which requires twice as many signatures as a referendum to put on the ballot for the voters to keep or reject. Referenda also face fewer legal challenges because they consist of a simple up or down vote on a piece of legislation.It doesn’t change the fact that the abuse of these emergency clauses is anti democratic and an abuse of power