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Too Many Workers Are Trapped By Non-Competes (bloomberg.com)
Why have wages been so slow to rise at a time when demand for workers has pushed the U.S. unemployment rate to its lowest point in nearly half a century? One answer: contracts that tie millions of unspecialized workers to their jobs. Bloomberg reports: In far too many cases, these so-called noncompetes are an unwarranted restriction on freedom to transact and a drag on growth. If Congress won't act to narrow their scope, states should take the lead. The desire to keep workers from defecting to rival employers is as old as employment itself. As far back as the 15th century, English masters, such as dyers or blacksmiths, made apprentices promise not to set up shop nearby. Courts often refused to uphold such agreements, viewing them as coercive. As a House of Lords decision put it in 1893, "There is obviously more freedom of contract between buyer and seller than between master and servant or between an employer and a person seeking employment."
More than a century later, the idea is back in vogue, as companies exploit the power that comes with increasing size and market concentration. In the U.S., new employees are commonly required to sign contracts that forbid them to work in the same industry for a given period. The practice makes sense for highly paid jobs involving big investments in training, and for staff with valuable proprietary knowledge. But it isn't being limited to those kinds of employees. A 2014 survey found that about two in five workers were or had at some point been bound in this way, including workers such as security guards and camp counselors. Some 12 percent of employees without a bachelor's degree and earning less than $40,000 a year were tied down.
More than a century later, the idea is back in vogue, as companies exploit the power that comes with increasing size and market concentration. In the U.S., new employees are commonly required to sign contracts that forbid them to work in the same industry for a given period. The practice makes sense for highly paid jobs involving big investments in training, and for staff with valuable proprietary knowledge. But it isn't being limited to those kinds of employees. A 2014 survey found that about two in five workers were or had at some point been bound in this way, including workers such as security guards and camp counselors. Some 12 percent of employees without a bachelor's degree and earning less than $40,000 a year were tied down.
Companies should be forced to pay the full salary + benefits + average bonuses for the non-compete period. So if they don't want you working for a competitor for 12 months, then they should give you a full salary for 12 months while you are on gardening leave.
Non competes are hardly enforceable. It might be a legal battle if you are a CEO that ran off with trade secrets to start a new company, but a guy making 40k? Please, no one gives a fuck what you do, they only wrote it in the contract because people fall for it.
Those, along with arbitration agreements, should be considered abjectly invalid agreements in terms of being asked to give up important fundamental rights to important freedoms in any society.
Rather, going forward, groups that demand you sign such invalid contracts should be considered to be committing an act of fraud by pressuring you with 'agreements' involving you giving up such important access to important rights and freedoms.
The focus should rather be on making the justice system itself more accessible, less expensive and filled with delays. Less focused on basically ruining lives for the sake of vengeance and filling jails, and more on making society function with less harm over time, and more companies shut down for bad intentions or deception.
Ryan Fenton
1) These kinds of contracts that are completely one sided toward the employer are unethical business practice and should be limited.
2) In many cases, it's not really about training, it's about poaching. Take, for example, service techs. Service techs are very often the front lines of a company's sales. They have the client's ear better than anyone else, and often clients like working with a company specifically because they like working with a particular service tech who is reliable and efficient and they trust. If Company B can poach that service tech, then they can often also poach a lot of potential clients. In reality, that's the primary reason why these contracts exist, companies don't want to lose employee investment to competitors, but the REALLY don't want to lose clients.
3) Rather than enslavement contracts, companies should handle this problem by making sure their employees are happy in their current jobs and are very difficult to poach.
Non-competes are a problem, yes, but not the cause of wage stagnation. Job mobility is higher than it's ever been, despite the rash of non-compete contracts. Changing jobs (or threatening to) is often the only way to get a raise now, but it wasn't always this way. The main problem is that companies no longer value experience (except perhaps at hiring time but often not even then) and believe every employee with similar education is interchangeable.
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jimmy johns had an non compete for min wage works and they dropped it after an lawsuit.
In Belgium (and probably the rest of Europe in some form or another) a non-compete clausule is possible. However it is limited to those who make serious money (thing CxO) if generic and pretty limiting when it is more specific to the function if not.
If you are working in a distribution center lifting boxes, it will be meaningless.
And if you have one, it will be said that the fine is e.g. 6 months pay. What many people do not know is that the fine is for the company to pay.
i.e. if I work at Microsoft as a webdeveloper on their website and I quit and go work for the postal service, I would be allowded to do so, as it is not the competition.
Not only that (here comes the kicker) the company I left must pay me 6 months as signed by them. The excuse that can be said is that I was unable to work for the competition and they pay me for that. See it as a sort of severance pay.
I used to work for a company where I had something like that in my contract. The day I was let go, the also retracted that part of the contract.
As always, if you are in a situation like this, consult a lawyer that is knowledgable with these kind of laws. The one who did your divorce will not know enough about this.
So to make it enforcable, they will need to pay. If you still went to the competition AND they have a problem with it, you wil loose your job as of immideately.
Again: IANAL, I just followed some courses concerning the matter. Contact a real one. If you take legal advice on /. you are legally an idiot.
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In many states non-competes are DOA from a legal perspective and serve only as a scare tactic. However, you need to know the applicable law and your rights before signing any kind of contract. For example, would you sign a loan agreement without knowing the interest rate and your legal obligations?
Even if it's enforceable, unless you're taking a couple million worth of accounts or technology with you to a competitor the legal costs of enforcing a non-compete doesn't make it worth the trouble.
I came to the datacenter drunk with a fake ID, don't you want to be just like me?
10 years ago, non-competes were invalid under Georgia law. Then we had a referendum on a ballot to put them in. You'd think that normal people would vote against this, right? But here's how it was worded (from ballotpedia.org) on the November 2, 2010 ballot:
And 68% of the idiot voters fell for it.
Perhaps that's a little unfair to the voters. The wording was clearly insanely misleading; to the point where if I were challenging a non-compete in court, I'd probably start with attacking the validity of the ballot referendum as fraudulent (probably a hopeless avenue, I know).
t might be a legal battle if you are a CEO that ran off with trade secrets to start a new company, but a guy making 40k? Please, no one gives a fuck what you do, they only wrote it in the contract because people fall for it.
While it's true that usually companies don't much care, the terms are in there to give them the option to act if they decide they have a reason to care. And someone making 40K isn't going to be able to afford the lawyers to fight that fight so the threat alone tends to be enough to have the desired effect that most companies want. Plus, it's fairly unusual for someone making low wages who isn't doing anything involving trade secrets or sales relationships to be asked to sign a non-compete.
I don't agree that non-competes are what is currently stopping employees from jumping ships. I know plenty of friends not under any contractual loyalty, that could easily switch companies for higher salaries, but never will.
We live in a much different world than 25 years ago.
In the past, when you wanted more money out of your career, you wanted that more money for something real. Maybe you wanted to pay for a boat. Or a car. Or a wife. Or a child.
But these days, most of what people want in their l life is pretty cheap. Watch movies from home. Music collections cost nothing. Good speakers cost little. Cars are way cheaper, and alternative transportation is too -- zipcars, scooters, bike rentals, ride-sharing. Houses are cheaper in that mortgage interest rates are a tenth of what they used to be. Air travel is way cheaper and more accessible. Vacations are cheaper, especially with airbnb options.
In short, going through the effort to change jobs, and the risk that the salary won't actually be higher, and the risk that there might be a week without pay between jobs, isn't worth the actual pay increase at the end of the day -- no one with an existing job is missing out on any popular cultural opportunity.
If you already have all the music in the world, all the movies you want, all the knowledge on the internet you want, all the transportation that you need, and can afford your mortgage payments, well then who really cares to put in the work to get more money? What you want is more time to enjoy your stuff.
Hey, I'm in that position in a very different way. I've owned and operated my own small business for those same 25 years. I've amassed enough hobbies to fill a full year. I'm not looking for more work to make more money. I'm not even working full-time on the work that I have now. I'm desperately searching for more time to enjoy the hobbies that I have waiting for me -- most of which cost nearly zero dollars at this point -- I already own the toys/cars/instruments/hammocks/gardens/tvisions/computers/games, and it costs almost nothing to play with them all; but it costs a lot of time to play with any of them.
Non-competes are a problem, yes, but not the cause of wage stagnation.
As a general proposition this is correct. Most people aren't asked to sign non-competes.
Job mobility is higher than it's ever been, despite the rash of non-compete contracts.
Recent data seems to dispute your assertion. Non-competes are an issue in some places but they aren't a systemic problem because most people never sign one.
The main problem is that companies no longer value experience (except perhaps at hiring time but often not even then) and believe every employee with similar education is interchangeable.
They value it but experience does have limits to its value. Some companies perhaps don't adequately value experience like they should - usually to their long term detriment. On the other hand some workers think their experience is worth more than it really is. Remember that experience does not equal performance. I know lots of people with long experience who still somehow manage to be pretty bad at their job.
People that switch jobs the most are young people with the least experience. I don't think you'll find any hiring manager who thinks that people are interchangeable. That said they do have some constraints on how much pay differential they can offer for doing the same work. Experience doesn't matter once you are hired unless it translates into measurable job performance results.
Come to California, where it's always sunny, and non-competes are laughed at by the courts.
I wonder if Jimmy Johns (or rather anyone high up enough to enact such policy) actually cared, or if the dickbag lawyers just put it in there to create more work for themselves when someone eventually brought a lawsuit against the company.
I'm trapped by our healthcare system. With the ACA under attack I can't risk leaving, and even is I could I'd be without healthcare for the 90 to 180 days most jobs make you wait for benefits. I'm not saying noncompetes don't suck, but I've got bigger fish to fry.
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The practice makes sense for highly paid jobs involving big investments in training, and for staff with valuable proprietary knowledge.
No it doesn't. Here in the Netherlands, non compete clauses can only be enforced in a few very specific cases. Pay doesn't (and shouldn't have) anything to do with it. Neither does training: if a company invests a lot of money in your training, they usually add a clause that you have to partly refund the cost of training if you leave within x number of years, the cost being written off during that period. For proprietary knowledge there are things like NDAs. And in most cases a judge will invalidate overly broad clauses: you can keep someone from working for a direct competitor for a reasonable amount of time, not ban him from the entire industry for years.
There are a few things for which one might consider a non compete clause to be valid: having a valuable client network (e.g. such as someone in Sales would have built up during his employment), or knowledge of corporate working practices and processes. For the first, companies here generally a different clause that only forbids you from taking your clients to your new employer (judges usually uphold those). As for the second issue: non compete clauses are generally limited to a period of time too short for that knowledge to become obsolete, but way too long for a person to go without employment. As such it is pointless and unreasonable, and in its current form serves only to keep the employee chained to his desk.
The fair thing would be to allow companies to enforce non compete clauses in cases where there is a danger of a direct competitor benefiting from proprietary knowledge, but to require the company to continue to pay wages to the employee if they choose to enforce it.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
In general, non-competes for non-executive employees are not enforceable. I can't think of a single case where a noncompete against a developer has been upheld in court.
Oh, how wrong. I got sued over a non-compete and where it never went to court, just paying the legal fees alone about bankrupted me. They ARE enforceable in some jurisdictions if they are properly written and even if you think it would be stupid to sue over, that doesn't mean your former employer sees it the same way. My advice to you is to pay a LAWYER for advice if you intend to break a non-compete, no matter where you live or how bad the agreement seems. Understand what you are risking in your jurisdiction and don't take legal advice from Google or Slashdot posts, get a lawyer and pay them, then follow their advice.
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If you never tell them what new company you're working for, how can they sue you?
I've abandoned my search for truth; now I'm just looking for some useful delusions.
The biggest problem is how broad a non-compete can cover.
I can see the problems they can have if I worked for Microsoft on the Windows 10 Kernel team, and I went over to Apple to work on OS X Kernel. However If I Worked on Windows 10 Kernel, and went to Apple iOS Kernel development, the non-compete shouldn't be in play. Because Windows 10 doesn't directly compete against iOS because Microsoft has stopped their mobile device development. And Windows 10 primary market is Desktop.
A Non-Compete shouldn't be broad, but very particular.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Hard to think of any job for which this is justified (someone with access to the classic Coke formulas maybe?), but it's super silly for web dev jobs.
I've been asked to sign contracts that assert that the employer would be irreparably damaged if I walked away to a competitor with their super secret proprietary knowledge ... of what? It didn't specify, but what the heck could it be? PHP? JavaScript? C#? You've got to be kidding me.
As others have noted, the real goal is to keep me from walking off with the clients.
Very simple: If you don't want someone to take a job, you have to pay them "reasonable compensation". A judge will tell you what the "reasonable compensation" is. Typical it's the amount of money not earned, or possibly more if some prestigious job is lost. I'm a software developer.
You can force me to work at McDonalds for a year, but you pay the difference between McDonald's annual pay and the annual pay I could have received. Plus some on top for me to keep up-to-date in my real profession. And the way German courts work, you are going to pay for the court and for my lawyer.
It can take months to get the paperwork done. Good friend tried to get it between jobs and by the time the paperwork came the new job's insurance kicked in. It was lucky they didn't need insurance at that time.
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There are limits to what contracts can stipulate. For example, you can't write a contract that says, "if you violate our terms of employment, we can shoot you in the head." An employer doesn't have an absolute right to impose conditions on their employees, especially if they're no longer being paid. Fuck off with your corporatism.
There is already precedent for compensation requirements for non-competes. Here is a link to some information about a supreme court decision in 2016: https://eela.org/news/the-empl...
I was offered a job, and made to sign a non-compete. They then didn't actually hire me. Since I was never ACTUALLY hired (2+ years later they are claiming they are still waiting on funding), that invalidates it, doesn't it?
-Myke
I had changes made to my non-compete clause when I was hired at my current job.
It said I couldn't work for or own another security company *while* working for my new employer. It just so happens that the company I worked for two companies prior, I still owned. I hadn't worked for the company in years, but I still owned it. We struck the ownership clause and put in a clause limiting my involvement in the old company to an advisory role.
The point of this being, it is a negotiation. Read the clauses and if something needs to be adjusted, perhaps be made more specific, bring it up and maybe propose some new wording. The company has a legitimate interest in you not taking their proprietary technology directly to their closest direct competitor, and you have a legitimate interest in being able to work in your field. Find some wording that protects both. Ideally, you can think about what kind of company you want to be working for in 5-10 years and what kind of worknyou want to be doing. You can keep that in mind while adjusting the contract as needed.
If Congress won't act to narrow their scope, states should take the lead.
This is a huge issue. When you refuse to act, take a stand, whatever, on your own, or collectively through, oh I dunno, that odd foreign concept called unionization... anyway, yeah.. stop leaning on Government to solve all your problems.
Unionize. Stop accepting these NDA's/Non-compete agreements. You all made this bed, you get to lay in it until you decide otherwise. Government shouldn't be expected to rescue you from yourselves.
Yup, you are most assuredly correct, Good Citizen, and this is yet another red herring/disinformation scam in the endless list of such ploys: wage stagnation began long before this, in good times and bad: offshoring grew and grew over the past 50 years, along with the dramatic growth in replacing American workers with foreign visa workers and/or undocumented workers --- add to this the now Uberized economy of endless Uber-type part-time jobs with zero benefits, etc., and there you have it!!!!!
Thanx again . . .
Welcome to the Corporate Kleptocracy. Corporations know these non-compete agreements are bogus and unenforceable (for the most part). It doesn't matter.
Corporations use these to cow and intimidate their workforces. They can 'threaten' to enforce an unenforceable non-compete. They can even take it to court. They can lose. What does it matter to them? All they have to do is intimidate some of the workforce, bankrupt another portion of it. Any losses the corporation sustains (legal and economic and political) are simply a cost of doing business and no biggie.
This is what happens when a society puts corporations on par with Capitalism, with Freedom, with Human Rights. Worship your corporate Gods, and Reap What Ye Sow.
Oh, how wrong. I got sued over a non-compete and where it never went to court
You realize you didn't actually test its enforceability then, right? The phony IRS scam phone calls aren't enforceable, either, but that doesn't really matter when people hand over the money willingly.
I knew a contractor that refused an "updated" contract that changed the non-compete agreements. It essentially covered anything to do with software or devices that used software. And the company wasn't even in the software business. Since he worked on multiple contracts he couldn't afford to agree to it. It was a boilerplate agreement and HR wouldn't budge, and legal wouldn't allow any changes to the boilerplate, even after the VP of R&D claimed that it was essential that they retain this contractor.
I thought that the US Supreme Court - back in ~1998 ruled these are not valid. They CAN keep you from sharing trade secrets, but they CANNOT prevent you from seeking work in the same job sector.
I vaguely remember this because I was exiting a company at that time. The company lawyer was also the HR manager (or at least the guy who made you sign all of the "we talked about this" papers). The court ruling had been made about that time. Vaguely -- I think it was a guy at Intel who had sued, he went to work for AMD. His education, skills & training were EE and building Processors. Any job in this sector would be obvious, as long as he didn't share any secrets "this is how we designed cache/cpus at Intel."
I remember him saying in part "that section of your contract is void...but you can't share trade secrets & plans" I wasn't exiting so much as the company was being bought - so I was given an extra caveat - "we aren't likely to even take an interest unless you start producing the same product"
Meaning -- they have to notice...and care..and want to spend the money.
Yeah it took some layers of approvals for me.
A while back I started looking at want ads for jobs I'd like to qualify for in a few years. I made tick marks for the keywords that often appeared in ads for jobs I wanted, mainly at companies I wanted to work for. After gaining exactly the skills and credentials that employers were asking for, I was worth the hassle to them.
Oh, how wrong. I got sued over a non-compete and where it never went to court
You realize you didn't actually test its enforceability then, right?
That's not the point. My point is you CAN get sued, even if the agreement is flawed and unenforceable. In my case, the agreement failed a number of sanity tests. For one thing, it was boiler plate and they had changed the geographic limits to "the continental USA" and it didn't have a severability clause. They where being idiots and from the best I can tell where suing to spite me, not because they where going to collect a dime.
The issue with this is when you get sued, you have to pay a lawyer to defend yourself, even if the suit isn't going to prevail in court. Coughing up $50/hour to a lawyer, even one who is not trying to soak you for as much as they can (like mine), it doesn't take long to rack up thousands of dollars of fees. Trust me, if you are not rich, it's hard to keep writing checks.
Winning in court is great, but getting your legal bills paid is quite another thing. So in civil law, it's not all about who prevails in court, but can be about the pain of the process. Unless you just like pain, don't go there.
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You may not be entirely covered.
You can sign a credit card receipt "Kermit Frog" - they never check, but you still have to pay for your food if you order it and eat it. The payment is in exchange for the food, the signature is just *evidence* of a transaction that already exists.
In law, an agreement isn't enforceable based on a signature, but rather based on "consideration" - each side gets something from the other. The non-compete is something you give them, their side is giving you a paycheck. The paper just provides evidence that you got a copy of the policy that you have to follow *in exchange for a paycheck*. If you make any mark on the paper copy of the policy, that's evidence you got it.
If you don't sign *and you don't accept a paycheck from them*, there is no enforceable agreement (contract) and you're covered. If you take the paycheck the company has done their part, a judge may very well expect you to do your part.
Not signing, or writing "I don't agree", may put you in a *slightly* stronger position than if you sign, but don't think it means you can do whatever you want and there's no way anyone can do anything to you.
Let me restate my point in a slightly different way.
Sure writing "I don't agree" will give you an argument you can make. You might think it's a bulletproof argument, but the judge may disagree.
How do I know that the judge may disagree?
It's somewhat likely I'll run for election as a judge.
So I could be the judge in your case. Depending on the circumstances, I might rule against you. Therefore, I know that the judge *might* not be persuaded by your argument.
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