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posted by martyb on Friday March 20 2015, @02:53PM   Printer-friendly
from the tell-that-to-Intel,-Apple,-and-Adobe dept.

Natalie Kitroeff writes at Bloomberg that a new study says the secret to Silicon Valley’s triumph as the global capital of innovation may lie in a quirk of California’s employment law that prohibits the legal enforcement of non-compete clauses.

Unlike most states, California prohibits enforcement of non-compete clauses that force people who leave jobs to wait for a predetermined period before taking positions at rival companies. That puts California in the ideal position to rob other regions of their most prized inventors, “Policymakers who sanction the use of non-competes could be inadvertently creating regional disadvantage as far as retention of knowledge workers is concerned,” wrote the authors of the study "Regional disadvantage? Employee non-compete agreements and brain drain" (PDF). "Regions that choose to enforce employee non-compete agreements may therefore be subjecting themselves to a domestic brain drain not unlike that described in the literature on international emigration out of less developed countries."

The study, which looked at the behavior of people who had registered at least two patents from 1975 to 2005, focused on Michigan, which in 1985 reversed its long-standing prohibition of non-compete agreements. The authors found that after Michigan changed the rules, the rate of emigration among inventors was twice as a high as it was in states where non-competes remained illegal. Even worse for Michigan, its most talented inventors were also the most likely to flee. "Firms are going to be willing to relocate someone who is really good, as opposed to someone who is average," says Lee Fleming. For the inventors, it makes sense to take a risk on a place such as California, where they have more freedom. "If the job they relocate for doesn’t work out, then they can walk across the street because there are no non-competes

 
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  • (Score: 3, Funny) by jcross on Friday March 20 2015, @03:46PM

    by jcross (4009) on Friday March 20 2015, @03:46PM (#160441)

    Yes, they must leave me in peace to run my assembler. Non-competes involving the use of higher-level languages are still constitutional, though.

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  • (Score: 3, Informative) by bob_super on Friday March 20 2015, @04:46PM

    by bob_super (1357) on Friday March 20 2015, @04:46PM (#160464)

    In the states in which I lived, Non-Competes were legal only if they were a condition for an extra sum of cash. Usually a severance agreement.
    I've never personally seen a case where your company could go after you if you rejected the extra and crossed the road.
    People did have to be careful about the appearance of inappropriate behavior (telling company secrets, stealing IP), but if you don't have a clause that says "this chunk of money is because you can't go to work for our competitors right away", you are free to do as you wish.
    Again, i haven't lived in every state.

    • (Score: 3, Interesting) by M. Baranczak on Friday March 20 2015, @07:10PM

      by M. Baranczak (1673) on Friday March 20 2015, @07:10PM (#160533)

      In some countries, non-competes are legal, but if the company invokes the non-compete, then they have to pay you your old salary. This seems like a reasonable compromise. Then again, California proves that there's really no good reason for allowing non-competes at all.

      • (Score: 3, Insightful) by Runaway1956 on Saturday March 21 2015, @02:38PM

        by Runaway1956 (2926) Subscriber Badge on Saturday March 21 2015, @02:38PM (#160780) Journal

        Yeah - that DOES sound like a pretty decent compromise. If my former employer doesn't want me to compete with him, he can continue to PAY ME to not compete. Cool. So, I'm getting the same wages that I was accustomed to while I actually worked for him, and I can take on any old part time minimum wage job for "extra" money. Not bad . . .