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Senators propose near-total ban on worker noncompete agreements
A bipartisan pair of senators has introduced legislation to drastically limit the use of noncompete agreements across the US economy.
"Noncompete agreements stifle wage growth, career advancement, innovation, and business creation," argued Sen. Todd Young (R-Ind.) in a Thursday press release. He said that the legislation, co-sponsored with Sen. Chris Murphy (D-Conn.), would "empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand."
Noncompete agreements ban workers from performing similar work at competing firms for a limited period—often one or two years. These agreements have become widely used in recent decades—and not just for employees with sensitive business intelligence or client relationships.
"We heard from people working at pizza parlors, yogurt shops, hairdressers, and people making sandwiches," Massachusetts state Rep. Lori Ehrlich told us in an interview last year.
Ehrlich was the author of 2018 Massachusetts legislation limiting the enforcement of noncompete agreements. Several other states—including Oregon, Illinois, and Maryland—have passed bills on the subject. These state reforms focused on reining in the worst abuses of noncompete agreements. Some prohibit the use of noncompete clauses with low-wage workers. Others require employers to give employees notice of the requirement at the time they make a job offer.
The Young and Murphy bill goes much further, completely banning noncompete agreements outside of a few narrow circumstances—like someone selling their own business.
[...]At least one leading presidential candidate, Sen. Elizabeth Warren (D-Mass.), is interested in this issue. Last year, Warren co-sponsored a noncompete reform bill with Murphy and Sen. Ron Wyden (D-Ore.). So expect this issue to get attention in the next few years if Warren captures the Democratic nomination and the presidency.
(Score: 2) by Runaway1956 on Friday October 18 2019, @10:54PM (8 children)
Snowflake employers need this protection, don't they? I mean, they aren't doing anything truly innovative. They aren't providing any thing that can't be provided by another person. So, they have to be protected from that evil, COMPETITION!!
Had anyone ever suggested that I sign such a thing, I would have laughed in their faces. It takes a damned fool to sign away his future ability to earn a living. Sorry if I have offended all the damned fools who frequent Soylent.
(Score: 2) by RamiK on Saturday October 19 2019, @12:11AM (7 children)
On the individual employee level, yes. It's more competitive to abolish non-competes. But, in a market dominated by deep pockets that suffers from a quality workforce scarcity, you're effectively reducing competition by starving out all the small players from the ability to hire qualified personal.
I think most people and markets will benefit from abolishing non-competes. But in heavy industries like hardware design and pharma, there's definitely a few companies that could go under when the industry giants out-hire their employees.
compiling...
(Score: 3, Interesting) by anubi on Saturday October 19 2019, @12:29AM (6 children)
I made a lot of "bad impressions" with the hiring managers due to my refusal to sign these things.
I had to tip my hand. I am not always a yes man who does anything for money.
They held out till someone else who would sign it came around.
While I collected unemployment.
It was my belief that if they had the gall to ask me to sign such a thing, I should at least ask they retrain me to do something else.
Or I retain all rights to doing whatever it was I did, however ludicrous. Which is just as ludicrous as having me sign such a thing in the first place.
What is it with business people anyway? They love making everyone else sign crap, but won't tolerate it one bit if someone fights back in kind.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by GDX on Saturday October 19 2019, @01:19AM
At least here in europe they are more tamed and rare an some can be clearly good.
Even if normally I don't like them in my previous job I signed one really good that was basically:
24 month if I leaved the company and only in the specific field/product.
9 month at the end of contract receiving the equivalent of the salary of those 9 month.
0 month if fired but negotiable to be like a normal end of contract.
That was one of the 2 that I ever signed but trully I don't know how many times I declined a job due to a NDA or a NCC.
(Score: 4, Interesting) by bzipitidoo on Saturday October 19 2019, @05:38AM (3 children)
How often have employees actually been sued for breaking a non-compete? They're like EULAs. If there's no teeth, a former employer can't do a thing about it. First they have to learn of the violation, and just that much might be hard to do.
The real problem is not the non-compete. That's bad, but it's just a symptom. it's the illegal collusion between employers that allows them to know that a job candidate is under a non-compete. I once lived in a small city of about 25,000, with 2 large employers. No worker could switch from one to the other big employer. The other one simply would not hire that former or soon to be former employee. The employers never actually met and discussed such an agreement, not that I ever heard. Nor did they insist on their hires signing non-competes. Didn't have to. They spoke to one another through their actions. It was very much a Nash equilibrium.
(Score: 2) by DavePolaschek on Saturday October 19 2019, @11:50AM
I’ve had several friends get "vacations" as a result of non-competes. They got hired at the competitor, but basically sat on the sidelines for months while either the clock ran out on the non-compete, or while the lawyers negotiated their ways to large fees, and theoretically an agreement allowing the worker to work.
As to how often it actually makes it to court, that I don’t know. All I’ve ever seen is a letter, “hey, you’re breaking the noncompete” followed by legal negotiations and possible a paid vacation. My suspicion is, similar to almost all legal issues nowadays, very few actually make it into a courtroom.
(Score: 3, Interesting) by Hyperturtle on Saturday October 19 2019, @01:31PM (1 child)
Do you work in IT? I'm surprised you'd say that, but maybe you have it good where you are at. The employer can sue if they want to; it doesn't mean they will win, but it can scare a lot of people into compliance.
I have to say half of my associates have had this misfortune of having such bullying tactics applied, and things have become worse over the years. It is as if the same small business legal firms colluded to copy and paste updated boilerplate default contracts available online for employer/workplace legal guidance websites and the like*.
As a contractor, I've sometimes been presented these non-competes, and when I point out that I am a contractor -- I by default compete to work for companies--unless they want me to go to the courts to say I demand benefits because they treat me like an employee, I can't sign stuff like that (nor would I want to even if I wasn't a contractor...). That almost always gets it retracted, but usually after someone talks to 'legal counsel' to reiterate my statements. It is usually the owner of the business that makes the strongest whine about how its a standard and everyone is doing it why am I refusing to cooperate, etc. Sometimes I have had to walk away; a short term gig for some project at a company that spends so much time trying to screw me over with the contract is often not worth the hassle if they can't see that they cannot reasonably expect a non-compete for a traveling contractor that prevents contracting for a year to accept a 3 month assignment... but it happens, some businsses won't relent for whatever reason.
Before it got as bad as it is now (its profilerated from what I have seen), about five years ago or so, a company that employed a friend/associate of mine had cried foul when he quit and got another job doing the same thing. A few days prior to this, they threatened to fire him for insubordination (wouldn't pad the billable hours with trip time and so on because in writing the guy's hours would exceed 24 hours a day if the clients he visited and the hours he drove all were calcuated independently and billing each one for the same trips in the car between them)...
They'd put in writing they intended to fire him (they wouldn't change the timesheets themselves, of course... have to let a subordinate take that hit later), but changed their mind and called it a breach of contract when he quit before they could fire him--and it was even more galling to them that he had ended up working at a competitor that hired him and agreed to pay for any legal fees resulting from the non-compete.
He was/is a highly skilled IT guy. "cloud migrations" were new and exciting, all the cool kids were starting to do it. He had earned his skills, studied the latest trends and tried to learn outside of work whatever he could if it sounded promising, and also many of the certifications he had earned were accomplished on his own time--for that company that sued him, he had no training or other sort of on-the-job knowledge gain that could feasibly require being paid back if he left before a time was up. There wasn't a chain except for the non-compete.
He'd been accused in the lawsuit of working at a competitor within 50 miles of the service area; and a number of discplinary issues etc to try to make him look bad. (Maybe he was bad, but it didn't make sense that they called him a bad employee and then sued him for leaving). The judge had even stated that it is quite untenable to restrict someone from working in areas that the company didn't even advertise in or service (the website had stated they served a roughly 25 mile radius around their physical office to help keep workers happy and at your site on-time as a result of predictable commute times...)
His case was ruled in his favor for a number of reasons; I don't recall them all. However, if he had to pay for the defensive legal representation himself, it would have been quite expensive for the judge to rule the contract was bogus. Nothing was brought up about the billing, incidentally--there was nothing in writing as to policy requirements to bill like that, and his lawyer suggested he not try to bring up unrelated topics even if a discovery or other such processes were introduced to 'turn the tables'. Plus--he had a new job: his new employers were eager to get him out of trouble, not prolong a case they were generously providing him with his legal defense.
*I'm not a lawyer, but I've dealt with a lot of firms and people that would have benefitted from speaking with one.
(Score: 2) by bzipitidoo on Sunday October 20 2019, @12:40AM
Closest I got to non-compete legal trouble was when I moved from contracting with an IT business to contracting directly with their former customer. I told the customer that there was a non-compete that could be trouble. They completely squashed the IT business and talk of non-compete, as the IT biz had screwed up the project badly, and if they didn't want to be sued for that, they were told to leave me alone. I never heard a peep from the IT business after that.
Your story sounds like typical control freak "businessthink" so to speak, in which establishing total dominance over employees and contractors is more important than almost anything else. Yeah, I'm acquainted with that type. They don't say it outright, but they would really prefer slaves over free workers. Didn't get the memo that the slave side not only lost the Civil War, but thanks in large part to slavery was so backwards economically that they never had a chance outside of the Union not having the stomach for fighting. No, psycho boss has to show the minions who is boss, even if that kills all enthusiasm, motivation, spirit, and morale, and reduces productivity to 1/10th what it could be. Keep them scared. Even if that means the hit to the bottom line is bigger than anticipated. I think that angle is perhaps the number one reason behind the massive age discrimination in IT. Younger workers are less economically secure and less experienced with the ways businesses think, lie, and cheat, and with what is a reasonable condition and what is not, and therefore are easier to bully and scare. That "everyone does it" lie is one of the nastier ones. Trying to make yet another way to be unfair to workers the new norm. Good on you for refusing to bow to unreasonable wishes.
(Score: 3, Insightful) by RamiK on Saturday October 19 2019, @02:40PM
There's nothing ludicrous about it. If anything, it's not enough. When a person is let off an engineering job and has a non-compete enforced against them, it means they're being robbed of major career advancement opportunity that could pay off many times his education and past salaries.
At the very least, I'd expect a non-compete's enforcement to be regulated to require a full reimbursement of past income and educations expenses. So, a developer in his later 30s being pushed out of the business should be paid a few millions at least. And being fair, that's not enough since it doesn't cover that future managerial position he could have gotten or the startup he can join...
But yeah. Nothing ludicrous about it.
compiling...
(Score: 3, Touché) by krishnoid on Friday October 18 2019, @11:25PM (4 children)
Glad this isn't affecting people in high-tech! That would be really bad.
(Score: 3, Insightful) by Runaway1956 on Friday October 18 2019, @11:29PM (1 child)
But, Krishnoid, you don't seem to understand that pizza delivery is high tech today! And, yogurt, and cutting hair, and, oh yeah, SUBWAY SANDWICHES are very high tech! Yeah, I do get a chuckle from the idea that our "service economy" is a high tech thing.
(Score: 4, Informative) by krishnoid on Friday October 18 2019, @11:58PM
You go on vacation for a month and a half and forget everything.
My God, what was I thinking?
(Score: 2) by meustrus on Saturday October 19 2019, @06:26PM (1 child)
People in high-tech will be OK with a meaningful depression in wages. We already make significantly more than everybody else. Wage depression is pretty bad for the economy though, but that's not the point here.
The point is that some sandwich worker making minimum wage can't really handle the wage depression. Non-competes for low-wage workers also ramp up the potential for management abuse.
At a more macro level, they also break the free market. Companies with bad workplace policies should find themselves starved of talent as anybody worth more than entry-level will make their way to a better business. Non-competes prevent this process and prop up ineffective business models.
The macro problems aren't as pronounced in high-tech because the typical turnover is much lower. It's still a problem, but one that's probably manageable as long as it's used reasonably. Though exclusion from an entire metro area goes a bit past "reasonable".
The point is, though, that non-competes for low-wage workers are significantly worse for workers and significantly worse for the economy. There's also no reasonable point to it. Sandwich makers and hairdressers don't have trade secrets that need protecting; if they did, non-competes wouldn't help anyway. There's a reason KFC sends its seasoning blend to franchises pre-mixed from a secure location.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 2) by krishnoid on Sunday October 20 2019, @06:54AM
Not trade secrets, no -- it would probably be more for-hire copyright assignment, if you take the "sandwich artist" [mysubwaycareer.com] title seriously.
(Score: 2, Interesting) by Ethanol-fueled on Saturday October 19 2019, @12:37AM (2 children)
Say you're a large tech employer who uses temp agencies to do the whole temp to hire thing. One or more of those temp agencies also places staff for every other fucking tech employer in the city.
Now here's the kicker: those temp agencies have contracts with employers such ttht they can't place employed people looking for another job as long as the person seeking jobs is working for one of the temp agency's "clients" whether or not the person looking for a new job Is with any temp agency. And if that handful of agencies has every single fucking tech employer in the area as a "client, " then its pretty much impossible to leave since more and more employers are using staffing firms even for professionals or going the H1-B route. And if you quit before finding another job, those same firms will hold that against you anyway.
Im going to expose this niggling problem publicly when given a sounding board.
(Score: -1, Offtopic) by Anonymous Coward on Saturday October 19 2019, @01:46AM
Niggling problem? What do pickaninnies have to do with this?
(Score: 2) by krishnoid on Sunday October 20 2019, @06:56AM
Do you have it written up? You may want to submit it to the appropriate legislature/s with some lead time, considering how slowly the wheels of justice (and legislation?) turn.
(Score: 3, Insightful) by Revek on Saturday October 19 2019, @01:42AM (2 children)
Now I have to be nice to that guy who has 90 percent of my business in his head? Thats not american!
This page was generated by a Swarm of Roaming Elephants
(Score: 1) by anubi on Saturday October 19 2019, @04:06AM
Nah, think like an executive.
You don't want people under you that know more about how your stuff works than you do. If so, your superiors may keep him and fire YOU!
Money changes hands when the thing is delivered. Whether this thing works or not Is not your department.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by krishnoid on Sunday October 20 2019, @06:59AM
Not as long as you have biopsy rights to his brain. Check his employment contract and retroactively amend it; he won't notice, since that probably got pushed out when he was filling his head with your company's backup schedule and license renewal dates.
(Score: 2) by Rupert Pupnick on Sunday October 20 2019, @05:50PM
In tech, at least, most measures companies use to protect their Intellectual Property are mere window dressing when you consider how much detailed technical information gets moved around between businesses to bring anything to market today. Anyone serious about stealing IP can grab whole databases easily at most places. To really close off all those IP leaks, a company should start by discontinuing the use of low cost contract manufacturers (as in China, a target of frequent IP theft accusations). This, of course, would really hurt margins, and so is not seriously considered a way to protect IP. Imposing a non compete on a job applicant, on the other hand, costs almost nothing apart from the risk of losing the applicant. The actual protection value to the company is almost zero.
Another point to consider is that if the recipient of stolen IP tries to bring it to market, they will always be behind whomever they stole it from, and can never leapfrog the competition. It just isn’t sound business strategy, even in a world of no legal consequences. Yes, the Chinese were able to greatly benefit from IP theft years ago when there was a much larger technological gap, but today that gap has far less value.
In most cases outside of tech, I can’t see any legitimate business justification for non competes. Make the businesses compete for employees instead of handcuffing them.