Non-Compete Pacts Called Bad For Tech Innovation

carusoj writes in with NetworkWorld reporting from a panel at Harvard last week. It concluded that employee non-compete agreements have stifled tech startup development in Massachusetts, where the pacts are aggressively enforced, but failed to hold back the tech industry boom in states like California, where they are mostly unenforceable. We've discussed non-competes often here in the past; Techdirt made much the same point a year and a half back.

Comments

The actual detriment to innovation

[Anonymous Coward]

The actual detriment to innovation is the business community's failure to regularly bring in new talent. The only folks being offered jobs are those who are deeply entrenched in the business.

As an employer, I abhor them

[dada21]

I have a business consulting corporation (founded in 1993, incorporated in 1997) that works in large scale construction and tech. We will never require an employer to sign a non-compete. We don't even require them to sign anything preventing them from "stealing" our business. What you do on your own time is yours. If you go off on your own and take our customers, all it does is teaches us to be more efficient, competitive and effective for our clients. I openly motivate my own employees to discover how to become their own bosses: save money, learn basic business skills, gain confidence, discover a niche market. Capitalize.

A true capitalist welcomes competition, and also pushes themselves, not their employees, to be a motivator and an expert in their field. I would refuse employment if I had to sign anything that stifles my freedom to produce, invent or perfect a current product or service.

And in other exciting news, gravity exists.

[RustinHWright]

How can anybody be surprised by this?

I'm sorry, but as a former consultant, occasional inventor*, and business owner, I've always thought that non-competes were mostly b.s. If you're afraid that they'll steal your IP, register and enforce your IP. If you're afraid that they'll provide better services, well then, best you do a good job there, cobber. Seems to me that non-competes usually just protect those with lots of lawyers against those competing on the basis of value for the dollar.

*See patent 4,808,204.

Zero sum game.

[Anonymous Coward]

As an employer, you lose as much (in terms of failing to recruit experienced staff from your competitors) as you gain in terms of preventing the loss of experienced staff to your competitors.

In an industry where these clauses are common, everyone would be better off if there were to be a law disallowing them.

The trouble is - if you're the only employer who doesn't do it, you lose staff and can't easily recruit replacements.

It's a classic "crisis of the commons" issue - and that means that you need a law to prevent it.

Re:apropos

[mrchaotica]

Here's the problem with your argument: for every person who actually does read and understand the non-compete and tries to negotiate, there's N dumbasses who don't. So, essentially, smart people's bargaining power is being eroded by everyone else's stupidity. This externality is not compensated for by the "free" market.