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Comment by vsskanth | Hacker News Reader

This is a big deal. There are many niche industries (ex. Tire manufacturing) absolutely choked by non-compete agreements which force engineers to completely exit their field just to be able to advance their salary or career. This also was a huge barrier to new entrants because all the industry experts are locked up with non-competes. I've also seen these heavily used in the medical industry to lock up prevent medical professionals from moving to a competing hospital. people on work visas were especially hard hit because they can't just move to something outside their field of study.

Hopefully this leads to a more competitive landscape and gives some leverage back to the employee.

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IMO

Non-competes should be a contract for a 'lengthy' severance pay period. It keeps the former employee out of the market, so the duration of the NC contract should be paid for at or above the normal rate of compensation + benefits. Depending on how it's booked for taxes / etc, E.G. if it's "You have to 'work' for us, and no one else, but on mandatory vacation, for X months, we'll pay you in full like that; and also do federal taxes etc."

Otherwise they clearly only provide damage to the employee and 'value' in extortion of that damage to the 'employer'.

I'm glad that's not the opinion the NLRB arrived at. It's an excuse to limit individual freedom. Plenty of other times excuses to limit individual freedom turned out to not be very good.

No. What you're proposing only partially addresses one aspect of the issue: the financial fairness to the (no-longer-)employee. It actually doesn't even manage to do that very well -- because employees can't advance their careers, learn new skills, and get promotions/raises when they're unemployed. So they're still falling behind compared to someone who is employed.

Beyond that, it fails to account for all the other harms of non-competes -- such as the emotional toll it takes on that person (having no work to do is not something everyone considers a blessing at every point in their life), as well as the damage it inflicts on the rest of society as a whole.

> because employees can't advance their careers, learn new skills, and get promotions/raises when they're unemployed

I think an employee could, just not in that industry. In software that's relatively easy, I switch between two different fields and industries every other job. I'd be curious about adjacent fields for engineers working on tires like in GPs example.

I think meaningful work is at least as important to the brain as Omega-3s. My father started experiencing memory issues after retiring, but then he took up some part-time engineering contract work and the memory issues went away.

My mother sank into deep depression after retiring... and not long after that, the dementia started setting in.

It's so much easier to find an occupation that consumes your mental energy if you don't have to think about earning money for some time!

I think the whole point is to call the bluff.

If it’s really valuable IP that they protecting with a non-compete, then it would be worth it to pay someone a mandatory vacation upon leaving.

But how often are non-compete clauses really meant to protect IP? Most of the time it’s a tool to depress wages, they know it, we know it, they know we know it. No one is being fooled here that’s all it is.

If you put a price on non-competes, they will go away.

> If you put a price on non-competes, they will go away.

Unless they calculate that competition would have a higher price, in which case, they might not go away for everyone.

Paying someone not to work is a complete waste of resources. This isn't an area where people should be trying to come up with clever rules-lawyer contracts - someone able & willing to work sitting around not doing something is a huge waste for society, the person and whoever needs the work done.

It is probably going too far to ban the practice all-together, but no company should ever have the ability to stop someone from taking a job at a different company, today, if the pay is right. No union either for that matter, although that is a more controversial stance.

> But how often are non-compete clauses really meant to protect IP?

I would venture never. Or nearly never. A noncompete is a terrible way to protect IP.

That is what they are. If a non compete contract has no monetary consideration, it is virtually unenforceable. Our business law professor in college told us very clearly to simply ignore any non compete and she was general counsel at several major firms. No one is going to waste their time on enforcement. It's all about making the employees scared witless.

"Not enforceable at trial" isn't the same thing as "they aren't going to send your new employer a nastygram that leads to getting fired after legal does a risk/reward analysis and decides to fill your role with the next available candidate"

Non-enforceability is not sufficient in this case, it needs to be prohibited under threat of harsh fines to add them to contracts in the first place.

Businesses know that the clauses are unenforceable, but since they are free to add them and they have some real impact - people not aware of their unenforceability may change their behaviour because of the existence of the clauses, and the threat of a lawsuit for any party involved is going to be a chilling factor in any case.

Time to make the cost of adding the clauses not free, to address the root cause.

This is what happens in banking. You get 3 months or so paid "gardening leave" if you go to work for a competitor to prevent you starting straight away at a rival institution.

FYI, in all jurisdictions I know of, this is already the case. I.e., a non-compete period in which you are not paid to a level commensurate to what you got before is not enforceable. If employers try to enforce them in court, they will lose.

Source: had a non-compete clause in employment contract that had no mention of any pay during period. Employer initially did not want to pay me anything during period. Hired some lawyers and they paid 100% of my salary during that period. All the lawyers did was write some letters, never had to go to court.

Correct. The problem, as with many things in the employee/employer relationship, is the power imbalance. Simply the threat puts fear into the employee because of the potential time and expense to fight.

Unless someone is a high level employee and/or leaves under bad terms, most companies just drop the issue if pushed.

No state enforces non competes that endanger someone's ability to work in their profession unless the company provides compensation during the unemployment period.

Incorrect, in a practical sense: If you would win after fully litigating the non-compete, but doing so would cost millions of dollars, whether or not the state is considered to be enforcing it is a distinction without a difference.

Could that be considered tortious interference now?

If you countersue a former employer that is suing you to enforce a non-compete agreement, that would probably be a significant element of the countersuit, yes.

Hope you have the funds to see that through to completion including all the appeals! It’s not like tortious interference is a crime the state would prosecute—just like violating a non-compete isn’t a crime where the state would prosecute. Civil actions are handled via lawsuits and they’re expensive.

Realistically, I would find a lawyer to work for the certain pay out

No state in the country will force a worker onto unemployment in order to enforce a private party's non compete. None.

Look into the case law. It happens.

And what “certain pay out?” The company sues the former employee, if the employee wins they get to keep their job, effectively making that job cost millions. The employee would have to countersue, and that would carry quite a lot of risk of failure even if the employee wins the original suit.

Presumably the employee could, as a part of the original suit, sue for both lost wages and punitive damages.

But I agree overall that relying on lawsuits to work this sort of thing out is just not practical.

You’re presuming the employee is suing to be released from a non-compete. Usually it’s the other way around, with a former employer suing to hold a former employee to a non-compete.

Ah, good point; I hadn't considered that.

Not really. If you are not being paid, you can just take a new job during the non-compete period and if your previous employer sues you they will lose, and they know it. They could still sue you just to make a point and make you spend money on a legal defense, but it's unlikely you'd spend millions of dollars.

In my case, employer didn't want to pay. Hired some lawyers to send a letter saying that either they paid me or the non-compete was invalid and ended up getting paid full salary for the duration.

But in that case, you're still limited in your choice of new employers, to ones that have both the ability and the will to spend significant sums of money challenging your former employer in court.

That's going to be a pretty harsh limitation in itself.

I’m sure your anecdote will be comforting to all of the people who have worked for a certain Wisconsin EMR company and have tried to work for an even vaguely medically-related company within a few years of leaving.

“If your previous employer sues you they will lose” is not the counter you think it is. You were lucky they didn’t litigate and luckier still that they didn’t consider a non-compete of outsized importance like that Wisconsin company does: Some employers are extremely litigious, and will try to exhaust you in court because they believe they’re protecting internal secrets.

That sort of thing must not be discounted when considering what advice is appropriate in this kind of situation—and especially what the overall policy of a society should be: If the company I referred to above were a California company and you were an employee in California, “they will lose” and “you won’t spend millions” (or at least “you’d recover costs”) would actually be accurate.

You are right that this is state dependent, and I am certainly not a lawyer. I have no direct knowledge about WI. My personal experience concerns NJ/NY.

Still, what I understood at the time is that, if the employer is not paying you at all during non-compete period, they will have a hard time enforcing it anywhere.

I am also surprised by the claim that it could cost millions to litigate about something like this, how confident are you of that number?

(And about CA, my understanding was that noncompetes are simply to allowed there, so it wouldn't even apply)

I’m fairly confident that at least certain employers who have deep pockets and are obsessed with non-competes (like that EMR) company would spend many, many times someone’s annual salary to ruin them for daring to try to work in an even tangentially similar industry (such as wearable health hardware) before their non-compete expires.

That specific company is delusional about where their profit comes from; they (specifically their founder/CEO and the surrounding execs) think it’s because of their awesome “ultra secret” technology and not a combination of regulatory and inertial lock-in. Like, they literally think their MUMPS codebase and the non-relational database backing it are what make them great, rather than something they’re successful in spite of. (And it does, to the degree that it encodes a huge amount of domain knowledge—derivative domain knowledge, based on the law, regulation, and insurance policies…)

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