Slashdot Mirror
California Lawsuit Wants To Weaken Noncompetes (axios.com)
An anonymous reader shares a report: California already prohibits companies from enforcing noncompetes within the state, but a Bay Area life sciences company is asking a state court to go even further. Veeva Systems is suing three of its East Coast-based competitors and asking a California Superior Court judge to declare that it has the right to hire employees who have signed such agreements. Veeva also wants a court to limit the use of non-disparagement and confidentiality agreements. "Non-compete agreements are bad," the company said in its suit. "These agreements limit employment opportunities. They suppress wages. They keep employees trapped in jobs they do not want, and they keep employees from fairly competing with their former employers. These agreements restrict fair and robust competition for employees."
make the company that makes you sign a non compete pay you full salary for the duration of the non compete, whether you are actually working or not.
have you seen my sig? there are many others like it but none that are the same
Here on the East Coast in the Federal Circuit Courts, non-compete clauses in contracts have been declared invalid and not binding. And this will be why Veeva Systems is trying to sue in California court to make it universal—they do not want to be hauled into a court in a "foreign" state
This is a good strategy for Veeva. It is a pre-emptive move in a court of their own choice
Gods don't kill people, people with gods kill people.
Same reason why it's not legal to sell your heart or lungs.
Awesome furniture, accessories and cabinetry in Santa Rosa, CA: http://humanity-home.com/
I signed an employment contract with an East Coast sub-contractor that was drawn up by a New York City attorney who had no clue about CA labor laws. In particular, a $500 per day fine if I don't give a proper two-week notice ($5,000 max) that wasn't kosher in CA. When a push came to a shove, I told the sub-contractor to run the contract by a CA labor attorney. The contracting agency that hired the sub-contractor bought out my contract to avoid legal hassles. I then got a proper employment contract and a higher pay rate for my troubles.
One of the basis of contract law is that they are void if they require you do something illegal. IE if I sign a contract that makes me your slave it cannot be enforced.
love is just extroverted narcissism
Why does CA think it can unilateral terminate a voluntary contract between an employee and employer?
the contract becomes null and void upon termination of employment, there is no compensation to the employee, the employer has no right to enforce any contract where there is no business being conducted.
Because it's the sixth largest economy in the world.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Well one side of my previous contract basically said if I've walked past the type of work while working for them, I can't perform the work for someone else. The other side said there would be no changes to pay without a discussion involving both myself and my employer. A few days after I started they cut everyone's paycheck 15% across the board. When I left to work for a different division of the customer with someone else, guess which part of the contract was all anyone looked at?
And when the six other people behind you get jobs and you don't, why, you can always eat your principles!
Sometimes egregious behavior needs to be squashed by the courts or legislatures, and not just simply left up to the free market Invisible Hand.
The world's burning. Moped Jesus spotted on I50. Details at 11.
jimmy john's will cut you down to 1 hour / week after you quit / get fired at min wage.
When I had an employer try to get me to sign a non-compete ( months after I stared working there), I said I would agree if he would agree not to hire my replacement when I left for the same period of time. If I can't replace my employer, he can't replace his employee. That ended that discussion. I left a few weeks later.
Why you stupid ass. Have you ever heard of "contract law"? It's one of the biggest areas of the law. Probably half the laws on the books are what's legal in a contract and what's not.
You are welcome on my lawn.
"Voluntary". Let's not bullshit, in almost every job offer situation the employer making the offer has significantly more leverage than the person accepting the job and will press for concessions like a non-compete. A lot of people sign on to the non-compete because they need the job today, and can't worry about the nebulous effects of the non-compete as it may apply in the abstract future. Employers know this and take full advantage of it because once the employee is in the door, that's one more thing keeping them there even if the work environment starts to suck.
Those reasons alone are why it's not a bad idea for CA to void these "agreements".
Employee/Employer relationships are hugely lopsided. It is reasonable for the state to step in and protect the rights of the little guy. Try red-lining and negotiating your terms of employment next time you get a job. Good luck with that.
I find it especially hypocritical that you have large companies who lobbied and won "Right to Work" laws in most states (i.e. at-will employment) to turn around and put in non-compete clauses. If you want to make it hard for employees to unionize and make it very easy/cheap to kick them to the curb to balance the books every quarter, you can't in good faith expect individual workers to have zero job security AND be disallowed to get another job in their area of expertise.
But this is America where trickle down voodoo economics is still held in pretty high regard a good 30 odd years since it was demonstrably wrong and damaging.
I like the idea of requiring 1.5x salary for the duration of any non-compete term. If the feared damage is so great as to deprive gainful employment, then such a sum should be chump change.
Why does CA think it can unilateral terminate a voluntary contract between an employee and employer?
CA is not "terminating" a contract. It is declaring that the contract was not valid in the first place.
What Makes a Contract Invalid? :
When a contract is void, it is not valid. It can never be enforced under state or federal laws. A void contract is null from the moment it was created and neither party is bound by the terms. Think of it as one that a court would never recognize or enforce because there are missing elements.
A contract can be void for the following reasons:
The terms of the agreement are illegal or against public policy (unlawful consideration or object)
A party was not of sound mind while signing the agreement
A party was under the age of consent
The terms are impossible
The contract restricts the rights of a party
Ever see a "severability" clause?
Want to try to sue for specific performance on that 15% pay cut? I bet you really don't, given the chances and amount of any potential win.
Look up Lochner v. New York where SCOUTS basically said state labor laws protecting workers were unconstitutional and all the fall out and abuses it cause till it was overturned by SCOTUS again later..
Oh god, libertarians.
What would you do without the state civil court system?
Duals? Warfare?
Whether or not a contract is voluntary is irrelevant. What is relevant is the authority that can enforce the contract. In this case, that is the State of California and they can modify how contracts are enforced in their civil court system at will.
Plus the fact that Silicon Valley companies have become some of the biggest jerks in history at swinging non-compete, anti-poach and other employee abuse agreements around as wildly as they can possibly imagine.
Sometimes it does, sometimes it doesn't. I'd say, for instance, limiting the number of hours employees have to work per week was a pretty damned good intervention. I'd say overtime rules and the like are pretty good regulations. Is there some reason you imagine that just leaving everything to the free market is going to magically make everything better? Is there some reason you trust largely unaccountable organizations over governments where there is at least some level of accountability at the elected representative level?
The world's burning. Moped Jesus spotted on I50. Details at 11.
Do you think you can operate a business without a license from the local government?
“Common sense is not so common.” — Voltaire
That's not a given, else there'd be no need for severability clauses.
Il n'y a pas de Planet B.
I work in the tech industry and I'm a pretty good negotiator when it comes to payment and other terms for a new job. But I've never been able to refuse to sign a non-compete and still get the job. It is likely impossible for a new college grad to refuse a non-compete, who doesn't have nearly as much power in these situations as I do.
Now if you are a successful executive, then you have way more power and those kinds of things can be negotiated. But I assure you that at least in the Bay Area tech industry, you will find it difficult to negotiate anything like a severance package before your first day.
Now if you're being terminated anyways, you should politely refuse to sign any new paperwork. If they want you to sign something bad enough that's when the severance packages come in. Sadly I've worked at places that cut 10% of their staff to save money, and to save even more money did not give severance to a single one of them. And rather than give them a 2 weeks notice, the company was concerned about employee sabotage and gave no notice other than everyone was invited to a room full of moving boxes and security escort. That's how some of the tech industry operates in my professional experience.
“Common sense is not so common.” — Voltaire
Because the two sides of the contract are not in an equal position to negotiate.
And because California hates business even more than New York.
A voluntary agreement is not sufficient to form a contract. Contracts must also have consideration - something you receive in exchange for something else. Often it's money, but it can also be products or services. For a contract to be valid, there must be consideration given by both sides. e.g. A contract saying all you transfer all your assets to me and that you willingly become my slave until the day you die is invalid, even if you willingly want the contract. I'm getting everything of yours, but you're not getting anything from me. So you are not receiving any consideration, and thus the contract is invalid.
A non-compete requires the employee to give up something (their ability to work in their chosen field for a number of years) in exchange for nothing. If the company continued to pay you for the duration of the non-compete, then it could be valid. But because they company's lawyers are trying to get something for nothing, they refuse to give you any consideration in exchange for your non-compete, thus invalidating the non-compete as a legal contract.
There are already things that you cannot legally contract for. If California wants to expand that list, then so be it. Let's see how that works out.
Non-compete agreements are a protection for the employer, who generally enjoys the position of power in negotiations. The company can already use salary adjustments and other benefits to dissuade employees from competing.
If the person is a high-level executive or has knowledge of trade secrets, then maybe some protection is reasonable.
Otherwise, screw it. Let them compete the way the market intended---with money and other benefits. This country cannot remain an economic leader if we sideline our best and brightest.
---
According to the latest ruleset, this post should be modded as Vorpal Flamebait +5.
He's right though. You asked a very stupid question.
Why can a state enforce some new law? Because it is the role of the state to enact and enforce laws to serve the public interest.
I say make it 1.5x annual salary, PLUS normal benefits as if you still worked there. You know, health insurance (or extended health insurance0, stock options, etc. And they have to pay out your regular PTO, too.
Funny thing about non-competes, it's often applied lopsidedly. I.e., an employee joining you probably came from a competitor who didn't enforce or have a non-compete, but you do. You effectively benefited from it, yet deny it to others.
When David Cutler took his team from Digital to Microsoft (to make Windows NT), the ex-Digital employees balked at Microsoft's non-compete, basically saying the only reason they're at Microsoft right now is that Digital didn't have a non-compete. (This was a time Microsoft really wanted those employees) The non-compete was struck from those employee's agreements.
When David Cutler took his team from Digital to Microsoft (to make Windows NT)
I wonder how things would be different today if someone went back in time and arranged an "accident" for Cutler before he could arrange this transfer. Would MS have become the company it is now? Would they have come up with something like NT, or tried to continue on with the Win95 tech? How far would they have gotten with that?
And you have to be at the gym in 26 minutes too, right? To impress your wife Morgan Fairchild?
I'm going to assume they mean for people coming to work in California.
Well, other state courts will rule the non-competes still apply as state X laws, where it was agreed to, apply.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Ever see a "severability" clause?
Want to try to sue for specific performance on that 15% pay cut? I bet you really don't, given the chances and amount of any potential win.
Yeah, I threatened them, they threatened to send their lawyers after me for breach of the noncompete. I found working elsewhere for a year, then coming back to be cheaper. I've been working for the same customer they said I could work for going on seven years now after the year away.
A Minnesota judge hasn't upheld a non-compete in over 40 years. As long as you're not taking trade secrets with you, feel free to move to the competition.
Libertarians are quite fond of civil courts and contracts, as a general rule. You can read Wikipedia and learn what libertarianism is, if you want. I promise, none of them are hiding under your bed.
"So long and thanks for all the fish."
The overwhelming majority of business in California (and everywhere else) are family owned, and the overwhelming majority of workers are employed at family owned businesses.
My employer is family owned. And we have state regulators come in and dig through our trash cans looking for burnt out light bulbs.
So no, California hates business. All business, but especially profitable business.
In most states, such overly broad agreements won't hold up. They have to be related to actually competing against the prior company by using trade secrets or confidential information, not just using the same basic skills that any company uses. My guess is that since most people won't bother to expend the resources to take it to the courts, that companies just do this as a boilerplate agreement.
As for severance packages, you almost never get agreements on those in advance. The sole point of any severance package is that they're paying you to not sue them for unlawful termination. I've never heard of this being a part of an employment agreement to anyone below a C-level.
I had lawyers from Amazon send my new employer and myself envelopes full of bunch of bullshit about non-compete policies. So they really will go to the effort to do some posturing and intimidation tactics. My HR director told me to ignore it, so I hung onto it for a few months before throwing it in the trash.
“Common sense is not so common.” — Voltaire
In Europe it can mean that either the complete contract is void, or parts of the contracts are void. This will depend from case to case. Basically any contract for work will be an extension of the law and can not be negative for the employee. The decision of the court will always rule in favor of the employee if there is any doubt.
Don't fight for your country, if your country does not fight for you.
And that is why in Belgium the law almost always sides with the employee. An example:
As a manager you will perhaps sign that you will not get any payment for overtime as you already get a premium payment that includes this.
This is not legal and if you get enough proof that you did overtime, when you leave the company, you will most likely be able to force them to pay you these hours. (Ask a specialized lawyer, not the one that did your divorce)
The only thing you need to say most of the time is "I was afraid they would not give me the job if I pointed it out". Case closed, please pay.
Obviously it would not be very wise to do if you are interested in working anywhere else and it might even be immoral to do so, as it was clear that this was the case. Yes, there have been managers/directors that received extra payment.
To me it seems as if California sticks closest to the "For the people by the people" communist/Christian principle.
Don't fight for your country, if your country does not fight for you.
And even on a severable contract, the whole thing will be void if the consideration is an illegal act or a promise for an illegal act.
What Makes a Contract Invalid? : ...The contract restricts the rights of a party
...A contract can be void for the following reasons:
You can absolutely contract rights away, just not those that would cause the court to deem the contract substantively unconscionable.
in this particular instance, the contract restricts the rights of an entity that was not part of the contract (the company that would otherwise hire you).
Yes, of course, in Slashdot saying that you have to abide by your word is "-1 Troll"...
-Styopa