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'Send Noncompete Agreements Back To the Middle Ages' (bloomberg.com)
Stephen Mihm, Bloomberg contributor and associate professor of history at the University of Georgia, argues against the use of noncompete agreements (NCAs) because they limit the free flow of employees and discourage innovation. An anonymous Slashdot reader shares an excerpt from his report: The agreements, known as NCAs, forbid workers from taking valuable skills acquired from one employer to a competing firm. They first appeared in the Middle Ages, when master artisans required them of apprentices because they didn't want to face direct competition once their proteges set up shop on their own. Courts eventually sanctioned these restraints, provided they didn't harm the public interest, establish a monopoly or unduly restrain an employee's right to work. But this trend toward wider use of the contracts, which gathered steam from the late 18th century onward, conveniently omitted that they originally applied to skilled laborers operating in a pre-capitalist society. Yet employers increasingly used noncompete clauses to limit the mobility of unskilled wage laborers along with skilled workers.
Have NCAs helped or hindered economic growth? The most famous study looked at California, one of only a handful of states that do not permit NCAs. The de facto prohibition of the agreements affected skilled and non-skilled workers alike, and employees high and low could jump from job to job without any fear of legal reprisal. The mobility seems to have disseminated innovation very swiftly from company to company, creating the kind of dynamism and technological spillover that helps foster long-term success. The prohibition of NCAs clearly benefited Silicon Valley. Further proof was provided by the comparison to another claimant to high-tech supremacy: Route 128 in Massachusetts. The conclusion was that California's ban -- and the embrace of the agreements in Massachusetts -- helped tilt the balance of power to California.
Have NCAs helped or hindered economic growth? The most famous study looked at California, one of only a handful of states that do not permit NCAs. The de facto prohibition of the agreements affected skilled and non-skilled workers alike, and employees high and low could jump from job to job without any fear of legal reprisal. The mobility seems to have disseminated innovation very swiftly from company to company, creating the kind of dynamism and technological spillover that helps foster long-term success. The prohibition of NCAs clearly benefited Silicon Valley. Further proof was provided by the comparison to another claimant to high-tech supremacy: Route 128 in Massachusetts. The conclusion was that California's ban -- and the embrace of the agreements in Massachusetts -- helped tilt the balance of power to California.
Workers should be protecting themselves. Don't sign such agreements. Work for companies that don't require such agreements. If you are forced to because of circumstances beyond your control, leak the sensitive information to the internet anonymously when you leave. In general, the people that whine for more regulation to protect workers are the second tier talent that feel like they should be able to call their own shots but whose knowledge and abilities don't carry enough worth to allow that to happen. Ironically, many of these same people are the ones who will claim the there are too many government regulations and vote for morons like Trump.
It isn't always an option. My wife had to sign a contract with a NCA. Her choice was really sign it or don't work as no other company in the immediate area for her skill set at the moment. However we did check first with a lawyer and they verified that the NCA was completely unenforceable given she is the one bringing the skills to the business and they aren't providing any additional compensation for the 12 months she would be unable to work after leaving them. Lawyers advise was sign it as it was basically a meaningless unenforceable clause that amounted to unfair restriction of trade.
Non-competes have nothing to do with protecting actual enforceable IP. There are laws for that. Trademark, Copyright, patents and some methods that I am probably not aware of.
None of those require NCA to be protected. The primary place that I have seen NCAs litigated is with sales people and consultants. The plaintiff is mainly concerned with silly stuff like client lists and relationships.
If the company sucks enough that the customer will follow a consultant and/or the account manager, rather than sticking with the parent company for value adds (such as leveraged knowledge, larger available workforce, economies of scale with regard to cost controls) then the parent company isn't doing their job anyway, and probably deserves to lose the business.
Those who say NCAs are used to attempt capture the employees are absolutely correct, everyone else seems to have swallowed corporate line.
Sad.