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Are America's Non-Compete Laws Too Strict? (nrtoday.com) 167

Slashdot reader cdreimer shared an article from the New York Times: Idaho achieved a notable distinction last year: It became one of the hardest places in America for someone to quit a job for a better one. The state did this by making it easier for companies to enforce noncompete agreements, which prevent employees from leaving their company for a competitor... The result was a bill that shifted the burden from companies to employees, who must now prove they have "no ability to adversely affect the employer's legitimate business interests." The bar for that is so high that Brian Kane, an assistant chief deputy in the Idaho attorney general's office, wrote that this would be "difficult if not impossible" for an employee to do...

For the most part, states have been moving toward making it easier for people to switch teams... The most extreme end of the spectrum is California, which prohibits noncompete agreements entirely. Economists say this was a crucial factor behind Silicon Valley's rise, because it made it easier for people to start and staff new businesses. But as states like Utah and Massachusetts have tried to move closer to this approach, legislators have run into mature companies trying to hold onto their best employees... A recent survey showed that one in five American workers is bound by a noncompete clause. They cover workers up and down the economic spectrum, from executives to hairdressers.

Two economists tell the newspaper that since 2000, U.S. workers have changed their jobs less and less, which is sometimes blamed on strict employment contracts as well as the occupational licensing laws which affect a third of America's workforce. The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."

Are America's Non-Compete Laws Too Strict?

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  • While I understand the need to switch jobs and stay competitive (who pays best, gets the best talents etc.), this isn't likely to be a future scenario. It's more likely that every employee will fight like mad to even have a job.

    Who works 3+ years for the same company these days? Or rather: who manages to KEEP a job for 3+ years? Sure, there is a few - but I bet it ain't the majority, not the ones I've been talking to - not me, I'm almost in my 50s and I can't remember the time I ever worked for a company fo

    • by Z00L00K ( 682162 ) on Sunday July 16, 2017 @10:22AM (#54819361) Homepage

      It depends on the job and the employer if it's worth to stick around.

      But having "non-competitive" laws is almost like Jim Crow laws.

      • But having "non-competitive" laws is almost like Jim Crow laws.

        If you sign a contract with a non-compete clause, the problem is not non-competitive laws, it's non-competitive contracts.

        Tech workers should have unionized.

        • by Z00L00K ( 682162 )

          In many countries such clauses aren't valid.

          • by angel'o'sphere ( 80593 ) on Sunday July 16, 2017 @11:29AM (#54819691) Journal

            In Germany a non competition clause must be:
            o time limited
            o focused on a certain industry
            And: payed!!!

            If I want a certain employee not to compete I have to pay him for the above period if I fire him. And if the job is in a bracket where this makes no real sense, e.g. he is not a researcher/scientist or director, clauses like that are invalid in the contract anyway.

            Other way around, if the employee is quitting, I'm not sure how that is handled.

            • Re: (Score:2, Insightful)

              by Anonymous Coward

              If the law is reasonable, it should be the same: the only one who receives any value from a non-compete is the company (because it's protected from the ex-employee going to a competitor), while the ex-employee bears all the costs (he cannot search for or accept a job in a competitor, so his possibilities are reduced). That means the company should pay the ex-employee for that, whether it was a firing or they quit.

              Then again, expecting the law to be reasonable can be an exercise in futility, sometimes.

              • by Comrade Ogilvy ( 1719488 ) on Sunday July 16, 2017 @12:44PM (#54820013)

                This got hashed out in CA years ago, and IIRC the court ultimately agreed with the ex-employee that in a high skills field the ex-employer would need to pay more than the former salary to compensate for the aging of skills and loss in promotion opportunities. So, effectively non-competes are unenforceable in CA because no employer wants to put in the contract that if the employee chooses to leave the company may decide to give them a big fat raise and pay them for two years to do nothing, i.e. to achieve clear enough "meeting of minds" to make the contract enforceable was too onerous a burden for employers.

                Idaho has chosen to go the other way. Which gives a strong incentive for the most skilled workers to leave the state.

    • by dreamchaser ( 49529 ) on Sunday July 16, 2017 @10:38AM (#54819439) Homepage Journal

      I am fifty. While I have had a couple with brief tenures, the majority of my jobs have been 5-10 years or more. It wasn't even a matter or being stagnant. I got raises, promotions, and challenging work that I enjoy. I would say it depends on the person. Choose the right jobs and have the right skillset and one does not have to jump too often.

      • by Anonymous Coward

        On the West Coast the stigma is that if you're somewhere more than 3 years you aren't good enough to find a better job. In the Midwest the stigma is that if you've not had a position longer than 3 years then you're not competent enough for companies to keep around.

      • If you are genuinely better than the average bear and getting regular promotions, there might not be a good reason to jump jobs.

        It is the people who are perceived as average or below average that companies will happily leave plugged into a nowhere position, where the wages and skills will stagnate. The best way to get out of that rut is change jobs, where they will be forced to stretch themselves in something new.

    • I'm almost in my 50's too. I've worked at Apple, currently in R&D, for the last 13 years. I sometimes poke fun at my boss for being a newcomer, because he's only been here for 12.5 years or so... There are people in my group who've worked there for 20+ years.

    • It really depends on where you work. I'm over 40 and my time on the job has been increasing as I go along
      - first job was 6 weeks (company closed)
      - second job was 20 months (got fed up with trying to work in the system and got a better offer).
      - third job was three years (split between two companies the second one died off)
      - forth job was four years (got a better job and didn't want to do on-site support in the jungles of Guyana)
      - fifth job was six and a half years. (left because they gave my company vital function to experts in the field: 2 new grads in China).
      - Current job is going on 4 years, don't plan on leaving it till I retire

      I'm one of the newest people in my group too. Most people have been there at least 8 years, some at 15+ years. At 42 I'm in the middle of the pack when it comes to age too (we did recently get a bunch of young wippersnappers in their 30s). It is still software engineering. Though I do pay price of it not being very dynamic and bleeding edge it is stable.

      As I and others have said its all depends on where you work. Some places are very unstable, others are stable.
    • None of my last 11 jobs lasted more than 2 years. My current job has lasted me 7 years. The reason is the pay is good and the work is agreeable. And I would never had gotten to this point without non-competes.

  • by Anonymous Coward on Sunday July 16, 2017 @10:13AM (#54819321)

    So, let me know if I have this right:

    Americans need to stay in their jobs to have good health insurance
    American corporations can fire almost anybody anytime, for any reason
    Americans have almost no vacation time away from work
    And now:
    Americans can't move to a different job, if it happens to be in the same field.

    So explain to me why this isn't corporate slavery.

    • by hwstar ( 35834 ) on Sunday July 16, 2017 @10:51AM (#54819523)

      You are correct, but you missed one....

      Americans have been denied access to the courts and a jury trial by the use of binding arbitration by employers.

    • by Anonymous Coward

      Fascism. Odd how such an important part of recent history has been completely forgotten and turned into an empty symbol. Even intelligent discussion (rare but it does happen) gets shut down by the Godwin bots.

      The philosophy and ideas NEVER die after the battles they can not be stopped completely, it is a non-stop fight which has NOT been waged as the very same ideas get implemented in new ways which could manifest in equally bad ways in the future with nobody seeing it coming. History rhymes, it never repe

    • by Brannon ( 221550 ) on Sunday July 16, 2017 @12:22PM (#54819883)
      1. blog posts exaggerate and pick out the extreme cases, just because Idaho passes some bone-headed restrictive law doesn't mean that every state makes it hard to change jobs. In California most non-compete clauses are essentially unenforceable. 2. "Americans have almost no vacation time away from work" : this is hyperbolic. Most Americans in tech positions have 2-3 weeks of vacation plus company holidays. 3. there's a reason that America has 5% unemployment and a thriving economy
    • by Anonymous Coward

      "American corporations can fire almost anybody anytime, for any reason"

      Not quite.

      All companies are banned from firing some based on a reason explicitly listed in Federal law, or their state's laws. That said, it's pretty easy to fire someone for unsatisfactory performance, after setting unrealistic goals, rather than explicitly state they were breaking the law.

      A large number of states have passed the grossly misnamed 'Right to work' laws, better named 'You have no rights' or 'Right to fire'. Meaning that

    • The law prohibits the government from enslaving its people.

      The law practically enables and encourages powerful private organizations to take up that role instead.
    • I'm not a huge fan of the California regulatory environment in general, but banning non-competes outright was, as proven by the ongoing performance of Silicon Valley, a great idea. Let's hope it will be the first state to try allowing competition in the healthcare field to control costs. As with banning noncompetes, this will be vilified as a horrible idea until someone actually tries it.

    • If Americans lived in a state of corporate slavery then why:

      Do corporations only make up half of business activity?

      Would most Americans rather work at a corporate job?

      Are there more people trying to get INTO American than get OUT of America?
  • Companies: No they aren't strict enough. We should ensure that an employee who doesn't want to work for us never works anywhere again!!!

    Employees: Too strict, can't feed family, hate job, help!

  • by swb ( 14022 ) on Sunday July 16, 2017 @10:22AM (#54819357)

    Of course non-competes are ridiculous, a kind of indentured servitude, but does anyone working in a "rank and file" kind of job (say, making less than $100k) have any experience in having them enforced against you?

    My employer once asked that I sign one (after about 2 years of employment). I gave it to a friend who was an employment lawyer and he said that unless I was given "consideration" (title, raise, etc) specifically tied to signing it, it was unenforceable in my state. His advice was just to sign it and know it wasn't enforceable.

    My theory has always been that unless you're some kind of high wage "key player", most of the time it's just not worth an employer's time and effort to enforce them. They have to take some time and effort to figure out where you're working, know enough details about the job to know if its actually competitive (made harder if the new employer is an actual competitor), and if they get that far, actually turn to attorneys to enforce the contract. And none of this takes into account the potential for subterfuge -- quitting to become a "freelancer", moving out of state or a new employer actively furthering subterfuge by hiring you freelance for a period or hiring you under a bogus title.

    I don't see any employer action happening for less than a $10,000 outlay and that kind of spending being just does not seem worth it for "ordinary" employees.

    Of course there may be exceptions, like an "ordinary" employee who happens to work closely with a particularly important trade secret or filling a job in a very narrow field where the opening itself may have been the subject of gossip among the field's community.

    • unless I was given "consideration" (title, raise, etc) specifically tied to signing it, it was unenforceable in my state.

      In most states, "continued employment" counts as consideration.

      • by swb ( 14022 )

        How is that not a contract signed under duress?

        • Because you're completely free to leave. And in at-will employment states, employers are completely free to fire you regardless.

          • P.S. And otherwise every EULA would be unenforceable because they are all accepted under "duress." You don't have any choice but their way or no way.

    • In my field (architectural engineering), the biggest issue is an employee leaving and starting their own company. This could be someone just below $100k, and there is a high chance they would take a client with them.

      But I am in California, so there really isn't much you can do.

    • About 10 years ago a friend with a very rank-and-file job foolishly and truthfully answered "yes" to a prospective employer's question about non-compete agreements; as a result they said they would not hire him until the non-compete period had ended. This is in California, where such agreements are plainly unenforceable—the employer did not want the potential headache (or to piss off a peer-company that served a mostly different market segment).

      More famously, sandwich chain Jimmy Johns made their san

      • Wow. They put up a lot of free market paraphenalia in their stores ... but it sounds like they are more along the lines of feudalism.
    • This happened to me as well, although this was at the time of employment, not after two years (which seems a bit odd to me). I was concerned about some boilerplate legalese in my employment contract, because basically it stated I couldn't be hired in my field for like a year or two after I quit, which is ridiculous. The PR person dismissed it as just that - legal boilerplate, and assured me that it would never be enforced. I was younger at the time, and needed the job, and so signed. A slightly older an

  • The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."

    Which is exactly why employers try to impose them--in order to deny their workers leverage in salary/benefits negotiations. This subverts the free market for labour. Which is exactly why non-competes should be illegal.

    TL;DR: If I'm valuable enough to keep out of the hands of a competitor, then you can pay me like it.

  • depends on your job and where there is virtually no safety net and few governmental services left I'd say the bloody laws shouldn't exist in the first place. That said I'm not naive enough to think I can keep the mega corps from using government to their benefit simply by doing away with the thing (e.g. that anarcho-capitalism that's all the rage with the kiddies nowadays). I'd rather see robust safety nets and social services in place than waste my time fretting about these abuses. As mentioned if your ent
  • by darthsilun ( 3993753 ) on Sunday July 16, 2017 @10:34AM (#54819413)

    IIRC from the BLAW 20x or 30x classes I took a long time ago, for a contract to be binding the two parties have to be equals.

    Someone that needs a job is – generally speaking – not ever going to be the equal of a potential employer that's dangling a contract saying "sign it or no job." Such a contract should be unenforceable AIUI. And you always have the option to strike out that clause as you're negotiating. (Whether the potential employer accepts it is something else.)

    Now, whether a court is going to agree that such a contract is unenforceable is a different question.

    As for me, when I resign from my jobs I don't tell my soon to be ex-exployer where I'm going. When they ask, I tell them I haven't decided and I'm taking some time off before I decide what I'm doing. Well, Saturday and Sunday are time off. It's really none of their business where I'm going next.

    So between a) (that clause of) the contract being generally unenforceable, b) it being none of their business, and c) I'm perfectly capable of not using any of previous employer's IP in my new job, I personally feel like I'm in pretty safe territory. It has served me well for the 30+ years I've been working as a software developer.

    And BTW, IANAL. Ask your own lawyer for advice in your particular situation.

    • by Entrope ( 68843 )

      Like the AC said, you do not remember correctly. Even contracts of adhesion (where one party is sufficiently powerful enough to say "take these terms or leave them", usually as a standard form contract) are generally enforceable, although ambiguous terms are construed against the interests of the drafter/profferor, and very rarely an individual clause will be held unenforceable for reasons of public policy.

  • Screwing over large amounts of your work force is how unions start.
  • What jobs and fields are employers seeking non-compete clauses? I signed a non-compete on my first programming job. Thereafter, I have not done so. In one case I was already working there and new contract paperwork came through and I refused. My boss sided with me and it was fine.

    My hope is that people can simply just refuse to sign them and they will go away. But my experience may be an exception, not the norm. I'd like to hear other people's experiences.

  • by DeplorableCodeMonkey ( 4828467 ) on Sunday July 16, 2017 @10:50AM (#54819515)

    1. Slavery.
    2. Non-competes for 99.95% of workers.
    3. H1B and H2B visas and the current fight over them (see "we won't let you get your immigration service pick until you acquiesce to more cheap labor" as exhibit A).
    4. Outsourcing.
    5. "Free trade" by which we mean, companies are allowed to move production to other countries and leave easily the moment the workers get uppity.

    At the end of the day, it comes down to a simple fact: the elite doesn't want to pay a fair wage, so they'll use state power to drive it down. Some methods are more extreme than others, but it is a more extreme or less extreme on the straight forward sin of treating workers like property that works for you.

    I'm sure some pedantic ass or triggered SJW is going to shriek "muh racism" or "muh free marketz," but the fact remains that the mentality and motives are related.

    • by zifn4b ( 1040588 )

      At the end of the day, it comes down to a simple fact: the elite doesn't want to pay a fair wage, so they'll use state power to drive it down.

      Socialize the cost, privatize the profits.

  • by heson ( 915298 ) on Sunday July 16, 2017 @11:02AM (#54819575) Journal
    In Sweden these are legal, but voided when your employment ends. I.e you can have a non-compete clause, but it is only enforceable as long as you pay the salary.
    • by nnull ( 1148259 )
      That makes a lot of sense to me. How are NDA's handled? I hope they're handled the same way. If you want to protect your IP because I looked at it, better pay me.
  • You can't sign away your freedom in a contract Little Mermaid style. If a company doesn't want you to work for a competitor, it must keep providing you some benefit, such as an annual sum of money, in return for as long as such a contract lasts. And you are free to break the contract and forefeit the benefits.

  • If you work in a company which makes a product Y, and you leave to another company which makes a type of product Y, the only way you hurt the original company is to bad mouth them or out right steal their IP. If you do neither, your okay and hence don't violate a non-compete.
    • by nnull ( 1148259 )

      You'd be surprised how much of the manufacturing business steals from each other. Nobody goes after it because of the huge legal costs involved and nobody even bothers to care. They scare you with big lawyers, but it still goes on because none of them can prove the other didn't invent it themselves. As an engineer, I can pretty much get the gist of your place in about 5 minutes and figure out how to implement it in my facility pretty easily. If I didn't do that, I wouldn't have been able to create what I've

  • I hear a lot, especially from one side, about how excessive regulations are crippling the US's ability to compete but never about this sort of regulation that hampers individual employees.

    How about it, anti-regulation crowd?

    *crickets*

    • by nnull ( 1148259 )
      I find a lot of facilities that want to force me to sign NDA's are the ones that aren't following any regulations, because they don't want you to talk about how shitty their place is.
  • Non compete should have a rule that they can not exceed twice the severance pay period. I.E. If they are giving you 5 months salary, they can give you a non-compete for 10 months. They should also have a geographical range equivalent to their reasonable customer range. If all their clients are in New York, you should be free to do business in Chicago. If all there clients are in America, Canada should be free for you.

  • Many companies in Canada have you sign agreements like this on your first day of work. Almost nothing you sign like this at work is enforceable since your boss has told you to sign it. For it to be valid you had to agree to it and sign it before starting. This does create a problem in promoting someone into a position where they do end up with company trade secrets.
  • Despite evidence that banning non-competes is good for society as a whole, lots of people pop up to defend them or claim that they are unenforceable.

    If they are mostly unenforceable, then banning them would have little effect.

    • There is a difference between legally unenforceable and socially unenforceable. If people think something is legally enforceable when it is not, they enforce it on themselves.

      However, if the contracts themselves were actually banned, with fines and/or compensation associated with violation of employment law, they would pretty much disappear.

  • This is why one should never signed a non-compete clause of ANY contract that did not stipulate that one would be compensated for the time frame that one could not compete. Anybody who accepts a non compete without any compensation in any profession is not thinking it out clearly or just doesn't care. Either way it is not very smart to sign your rights away to not be allowed to make a living.

  • Or at least it should go both ways. If the employer want to keep me, I should be compensated accordingly, and similarly if I want to stay I need to demonstrate sufficient utility for the company.

    Here in California, we are a right to work state. They can terminate me tomorrow, and I reserve the right to leave anytime (with a customary two weeks notice, but that's not strictly necessary). This keeps the balance, so that I keep working, and they provide good benefits, as long as we want to continue the relatio

  • This is probably an attempt to make Idaho more "business-friendly." Problem is, talent that deals with IP is mobile, and good luck getting them to move to Idaho in the first place.

    ITech companies need a pool of talent to draw from - nobody is going to set up business where they can't hire any locals without getting sued. So, Idaho, you just shot yourself in the foot.

    And if you accidentally get suckered into such a deal, just move to a jurisdiction outside Idaho for your next job. Unless you're into potato

    • It does become interesting with Remote Work,

      I live in California. I am a California resident. The company that I work for is incorporated in Idaho. I quit and go to a competitor.

      Now, as a resident of California, I believe I'm protected by California laws. But I have broken the law in Idaho by quitting and going to a competitor. Because this is an interstate issue, I would assume that a Federal court would need to get involved.

      • f the company has ANY connection with your new state of residence (customers perhaps) you can argue for a change of venue. After all, they're doing business there, they're already bound by the laws there. :-)
  • Idaho, with the highest proportion of cattle mutalations in the lower 48, 'cept we call it Bar-B-Q. Idaho, protecting Mormons from the ravages of Canadian beer for 153 years. Idaho state pastime: survivalist rumors. State motto: more further wester than Montana. To paraphrase U Utah Phillips [youtu.be] who probably wasn't the first to say it: Idaho; where the men are men and the sheep are nervous.
    • by eskayp ( 597995 )

      Actually we Idahoans tell jokes about Montana sheep herders.
      Seriously, Idaho's competitive status is quite good.
      You will have to look long and hard to find better onion field labor.
      And lookit the money we've saved by educating our workforce accordingly.
      Them education cuts have allowed some handsome tax incentives for our rich folks.
      After all why should we allow our stoop labor to take all their trade secrets to the San Juaquin valley?

  • by zifn4b ( 1040588 )
    Companies should have to compete over talent just like every other market.

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