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Are America's Non-Compete Laws Too Strict? (nrtoday.com)
Slashdot reader cdreimer shared an article from the New York Times:
Idaho achieved a notable distinction last year: It became one of the hardest places in America for someone to quit a job for a better one. The state did this by making it easier for companies to enforce noncompete agreements, which prevent employees from leaving their company for a competitor... The result was a bill that shifted the burden from companies to employees, who must now prove they have "no ability to adversely affect the employer's legitimate business interests." The bar for that is so high that Brian Kane, an assistant chief deputy in the Idaho attorney general's office, wrote that this would be "difficult if not impossible" for an employee to do...
For the most part, states have been moving toward making it easier for people to switch teams... The most extreme end of the spectrum is California, which prohibits noncompete agreements entirely. Economists say this was a crucial factor behind Silicon Valley's rise, because it made it easier for people to start and staff new businesses. But as states like Utah and Massachusetts have tried to move closer to this approach, legislators have run into mature companies trying to hold onto their best employees... A recent survey showed that one in five American workers is bound by a noncompete clause. They cover workers up and down the economic spectrum, from executives to hairdressers.
Two economists tell the newspaper that since 2000, U.S. workers have changed their jobs less and less, which is sometimes blamed on strict employment contracts as well as the occupational licensing laws which affect a third of America's workforce. The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."
For the most part, states have been moving toward making it easier for people to switch teams... The most extreme end of the spectrum is California, which prohibits noncompete agreements entirely. Economists say this was a crucial factor behind Silicon Valley's rise, because it made it easier for people to start and staff new businesses. But as states like Utah and Massachusetts have tried to move closer to this approach, legislators have run into mature companies trying to hold onto their best employees... A recent survey showed that one in five American workers is bound by a noncompete clause. They cover workers up and down the economic spectrum, from executives to hairdressers.
Two economists tell the newspaper that since 2000, U.S. workers have changed their jobs less and less, which is sometimes blamed on strict employment contracts as well as the occupational licensing laws which affect a third of America's workforce. The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."
So, let me know if I have this right:
Americans need to stay in their jobs to have good health insurance
American corporations can fire almost anybody anytime, for any reason
Americans have almost no vacation time away from work
And now:
Americans can't move to a different job, if it happens to be in the same field.
So explain to me why this isn't corporate slavery.
Of course non-competes are ridiculous, a kind of indentured servitude, but does anyone working in a "rank and file" kind of job (say, making less than $100k) have any experience in having them enforced against you?
My employer once asked that I sign one (after about 2 years of employment). I gave it to a friend who was an employment lawyer and he said that unless I was given "consideration" (title, raise, etc) specifically tied to signing it, it was unenforceable in my state. His advice was just to sign it and know it wasn't enforceable.
My theory has always been that unless you're some kind of high wage "key player", most of the time it's just not worth an employer's time and effort to enforce them. They have to take some time and effort to figure out where you're working, know enough details about the job to know if its actually competitive (made harder if the new employer is an actual competitor), and if they get that far, actually turn to attorneys to enforce the contract. And none of this takes into account the potential for subterfuge -- quitting to become a "freelancer", moving out of state or a new employer actively furthering subterfuge by hiring you freelance for a period or hiring you under a bogus title.
I don't see any employer action happening for less than a $10,000 outlay and that kind of spending being just does not seem worth it for "ordinary" employees.
Of course there may be exceptions, like an "ordinary" employee who happens to work closely with a particularly important trade secret or filling a job in a very narrow field where the opening itself may have been the subject of gossip among the field's community.
IIRC from the BLAW 20x or 30x classes I took a long time ago, for a contract to be binding the two parties have to be equals.
Someone that needs a job is – generally speaking – not ever going to be the equal of a potential employer that's dangling a contract saying "sign it or no job." Such a contract should be unenforceable AIUI. And you always have the option to strike out that clause as you're negotiating. (Whether the potential employer accepts it is something else.)
Now, whether a court is going to agree that such a contract is unenforceable is a different question.
As for me, when I resign from my jobs I don't tell my soon to be ex-exployer where I'm going. When they ask, I tell them I haven't decided and I'm taking some time off before I decide what I'm doing. Well, Saturday and Sunday are time off. It's really none of their business where I'm going next.
So between a) (that clause of) the contract being generally unenforceable, b) it being none of their business, and c) I'm perfectly capable of not using any of previous employer's IP in my new job, I personally feel like I'm in pretty safe territory. It has served me well for the 30+ years I've been working as a software developer.
And BTW, IANAL. Ask your own lawyer for advice in your particular situation.
This got hashed out in CA years ago, and IIRC the court ultimately agreed with the ex-employee that in a high skills field the ex-employer would need to pay more than the former salary to compensate for the aging of skills and loss in promotion opportunities. So, effectively non-competes are unenforceable in CA because no employer wants to put in the contract that if the employee chooses to leave the company may decide to give them a big fat raise and pay them for two years to do nothing, i.e. to achieve clear enough "meeting of minds" to make the contract enforceable was too onerous a burden for employers.
Idaho has chosen to go the other way. Which gives a strong incentive for the most skilled workers to leave the state.