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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.
He would have been out of work for 18 months with no compensation and no recourse had he not been lucky enough to find something in a non-related area. Even companies in california (where non competes are illegal) declined to hire him because they said they could be sued in MA.
Liberty.
Clearly after being quite competitive with Silicon Valley in the '70s, Mass. has fallen far behind its rival in terms of the number and quality of startup companies, at least in the IT sector.
Anna Lee Saxenian got a lot of it right in her book comparing Route 128 with SV. Her main thesis was that eastern Mass. companies tended to have an NIH, all-encompassing, soup-to-nuts mentality (Apollo Computer, and Ken Olsen's DEC were prime examples), whereas SV has more of a ecosystem where engineers, capital, and ideas flow relatively freely between companies.
Of course, this handicap is not unique to Massachusetts. For example, Microsoft is known to have been strongly influenced by DEC - in fact the Windows NT project was seeded by top engineers from the VAX project.
that fortunately does not exist in Germany. Here the law is simple: A company that wants an N.C.A. to be enforceable, it has to pay at least 50% of the former wages of the employee, otherwise the N.C.A. is void. It also has to be very specific, the new company must be competitor, being an IT-company is not enough, you basically have to provide the same product to the same custumers. It is also limited in time to one year.
When I once left a company that didn't want to let me go I happily told them I would love to sign an N.C.A., but when they saw what it would cost them and would bring them (I would be gone anyway), they quickly reconsidered.
p.
Without order, nothing can exist. Without chaos, nothing can be created.
Exactly! And no industry is quite so guilty as games and entertainments I think. They are actively destroying the lifeblood on which they thrive. Take an industry that absolutely depends on pushing the boundaries and cultivating the brightest and most talented. Tie up the practicioners in chilling NDAs and wicked intellectual property landgrabs. Get them to sign non-compete agreements to turn their careers into cul-de-sacs. Make sure they isolate themselves in a monoculture. Ensure you're using arcane, expensive proprietry tools that students and educators don't have access to. Make sure the people who've paid for access to the inner circle are too selfish or fearful to engage outside. Work against standards that would create portable skillsets. Abuse the patent system to breed anti-commerce knowledge monopolies. Reduce the image of the industry to something you "break into". Spit on the ideals of a professional meritocracy by putting work out to unpaid spec, so those with the self respect to value their work get passed over. Replace fundamental principles like mathematics and physics with toy push button instant mash potatoes TV dinner plugins. Not invented here syndrome. Paranoid, insular, self-defeating.
And then turn around and say "We've got a skills shortage".
http://news.slashdot.org/article.pl?sid=08/06/19/1719206
http://news.bbc.co.uk/1/hi/technology/7460870.stm
No shit? Perhaps if you were't so full of yourselves and treated your employees with respect they might stay.
In short, this guy signed an "Exclusivity" contract. Apparently that's different from a "Non-compete", though how in the world that's possible is beyond me.
Perhaps someone other than the IANAL types can educate me here. But, in short, if this one holds up, you can bet that you're going to see Exclusivity Contracts start popping up among software and hardware designers, instead of just doll designers.
The best way to predict the future is to create it. - Peter Drucker.
The whole eastern seaboard, at least from Massachusetts to Florida, is a cesspool of snobby lawyers and greedy big money people. But the southeast is worse than anywhere; it is especially laughable that so many states proclaim the "right to work" (without a union, possibly for peanuts or for a tyrannical boss) but you don't actually have a legal right to work in your occupation if you've signed a broad non-compete that forbids it. These are often "at will" states as well, where your employer can fire you and hire someone else to do what you do, but you can't necessarily work for another company doing what you know how to do.
I've lived in VA and in PA most of my life, and I'm just about finished with the eastern US forever. My next home will be either in Europe or west of the Mississippi. By the way, the states that will not enforce non-competes include CA, OR, CO, MT, ND, SD, OK, LA, and probably a couple others. Nearly all of them are in the western US.
As for the most ridiculous non-compete ever, how about a membership agreement for an outdoors club that forbids former members not only from operating a competing club, but even using a google group to organize similar activities? The original version was even worse, if you want to read some lawyerspeak that will make your head spin, and prompted this article in a local newspaper.
I have one of these, and I haven't been impressed with it. First of all, it's very generic, without being specific as to what knowledge I can't use in future employers, etc. It was also handed to me *after* I moved across the country about 4300km to my new employer, and after I had received and accepted the job offer (which I had before I left). Since I had already quit my former job and moved 4300km, there wasn't much I could do but accept. I even asked to append more specific details and was turned down.
Luckily, my company doesn't have any history of trying to enforce these idiotic things, and I have no plans on doing anything dumb like jumping ship and taking company-specific info or customers with me, but I do wonder how enforceable these boilerplate contracts are. From what I've researched, they're not very enforceable if they aren't rather specific (what the actual 'competition' would be, the competitive region, etc) , or if alternate methods would have sufficed (say to prevent stealing proprietary info or customers).
I do wonder of the legality of hitting somebody with this *after* the job offer has already been given and accepted. I had requested the contract before moving but had assumed that it was more or less in the offer.
State tax in Mass is lower than California. Sales tax, I think, is lower as well. Car insurance is lower than California. Yeah, the winters suck, but the ground doesn't wiggle so much and there's way less wildfires. There's also working public transit (at least to American standards) and housing's not all that horribly expensive.
I've lived all over the us, and just can't figure out the Taxichusetts bit. 5% state tax, which is lower than Kansas, California, Maryland and Missouri (to take just those states I've lived in).
When I was foolish enough to work for wages, I always took a red pen to the salary negotiations. With it, I struck out every non-compete clause before signing the employment contract. Some HR folks freaked out over it, but it never cost me the job.
If it had ever cost me the job I was seeking, I would have considered it a very cheap exit out of what could otherwise have been a very expensive experience.
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What incentive is there to come up with a better way to do something if you won't be able to use the idea on your next job?
So maybe capitalism is bad ?
I am NOT saying I want a controlled economy with a 'do what we need' approach to labor or anything... just a thought.
We've had markets since before we had money (the one was needed for the other to be invented), trade (and yes free trade) is ancient. There were a few deviations along the way like Feudal systems...
The first corporation was the East India Company and that wasn't until the 1600's.
I am seriously starting to think Capitalism isn't working.
It's turning into just another form of sharecropping. The power that it's given corporations bennifit only the corporations that are there - first to market counts for a lot more than quality or even cost in this system... and the entirety of society suffers (I will not now, nor ever, willingly refer to myself as a 'consumer' - I do not exist to use stuff up which other people make).
The reason we invented capitalism in the first place was not to create a system that would allow corporations to grow at the EXPENSE of society, it was meant to be a way for corporations to exist in order to benefit society.
Maybe it even worked, somewhere for a little while. It definitely isn't working now.
Of course the moment you say 'benefit society' people cry 'socialist' and switch you off: pity because I'm not a socialist do I do think socialism raises some valid points and some more socialist countries have far more successful economies than the US (if you measure success by low levels of poverty and unemployment plus high levels of worker satisfaction and national health with the resultant benefits of low crime rates and so on rather than purely by 'total money made'). I suppose you could say that socialist countries actually have a much better rate of success with getting the money made by companies to actually trickle through the system to the all the economic players than trickle-down capitalism did... it ended up more like storage-tank socialism with everybody except a select-few being ever more impoverished.
So yeah, socialism makes some valid points, but it also isn't quite there -because socialism has a tendency to encourage laziness and reduce actual quality of work (the most successful socialist economies are those in nations with very long histories of strong excellence based cultures which can counteract this tendency).
So socialism leads to reduced quality because of lack of motivation to excel.
Capitalism is leading to impoverishment as well as ever reduced quality because of myopic focus on short-term profits.
And it's not like it's entire point of existence (motivation) is surviving this trend, cost-cutting and 'headcount reduction' has led to a world where most workers in capitalist economies have worse morale than in socialist ones.
I think that it's high time we seriously reconsider how economies should work. Neither of those extremes have it right, and who knows - maybe this time we could correct it BEFORE it implodes if enough people realize that.
I would start by removing all rights from corporations except the basic right to trade goods or services. There is no reason why companies should have human rights - they are not human. If companies don't have freedom of speech - then we can REQUIRE them to ONLY make ads that can verified with FACT. No psychological manipulation, nothing but simple statements of neutral facts allowed.
"Buy our product because it costs X and does Y" and if any claim cannot be backed up by peer reviewable methods applicable to the specific field then you cannot say it.
Just imagine if all those homeopathic remedies were NOT ALLOWED TO CLAIM IT DOES ANYTHING unless DOCTORS AND MEDICAL SCIENTISTS in general AGREE with the claim !
Or how about, if BMW was NOT allowed to make an ad that strongly implied that if you drive the new FOO series you will get laid easier ? If the only things that they could say were the provable facts about it. Price, economy, performance etc. ?
How about this one. Even though lobbying or campaign contributions ar
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