Non-Compete Pacts Called Bad For Tech Innovation 190
carusoj writes in with NetworkWorld reporting from a panel at Harvard last week. It concluded that employee non-compete agreements have stifled tech startup development in Massachusetts, where the pacts are aggressively enforced, but failed to hold back the tech industry boom in states like California, where they are mostly unenforceable. We've discussed non-competes often here in the past; Techdirt made much the same point a year and a half back.
I guess, "No Duh", might be redundant... (Score:5, Insightful)
Innovation is incremental and people are collaborative. Whenever you stifle that collaboration, the economy as a whole suffers...
Re:I guess, "No Duh", might be redundant... (Score:5, Interesting)
Exactly! And no industry is quite so guilty as games and entertainments I think. They are actively destroying the lifeblood on which they thrive. Take an industry that absolutely depends on pushing the boundaries and cultivating the brightest and most talented. Tie up the practicioners in chilling NDAs and wicked intellectual property landgrabs. Get them to sign non-compete agreements to turn their careers into cul-de-sacs. Make sure they isolate themselves in a monoculture. Ensure you're using arcane, expensive proprietry tools that students and educators don't have access to. Make sure the people who've paid for access to the inner circle are too selfish or fearful to engage outside. Work against standards that would create portable skillsets. Abuse the patent system to breed anti-commerce knowledge monopolies. Reduce the image of the industry to something you "break into". Spit on the ideals of a professional meritocracy by putting work out to unpaid spec, so those with the self respect to value their work get passed over. Replace fundamental principles like mathematics and physics with toy push button instant mash potatoes TV dinner plugins. Not invented here syndrome. Paranoid, insular, self-defeating.
And then turn around and say "We've got a skills shortage".
http://news.slashdot.org/article.pl?sid=08/06/19/1719206 [slashdot.org]
http://news.bbc.co.uk/1/hi/technology/7460870.stm [bbc.co.uk]
No shit? Perhaps if you were't so full of yourselves and treated your employees with respect they might stay.
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FIST SPORT (Score:5, Funny)
So business school cunts and lawyers are detrimental to the progress of society?
Who would have thought it?
HAY I KNOW, GUYZ (Score:4, Funny)
Let's have an inane discussion about what WE think overused partisan cliches mean!
I bet then everyone will thank us for being so (+5) Insightful!
Yes, but (Score:5, Insightful)
The point is not to enhance innovation, but to enhance corporate (ok, and shareholders as a side effect) profits. If there happens to be innovation, that's a nice addition.
Isn't that capitalism? (Score:5, Insightful)
Capitalism is presented as being a healthy economic model because it provides a fitness function that weeks out the unhealthy players. That's fine until people game the system in various ways: monopolies, no competes, undercutting....
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Oil companies could do themselves a world of good by stopping much of their activities in making fuel. They'd not have all the regulatory headaches and they'd still have a market for their product. It is a moments tweaking to crack feedstock rather than fuel.
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So maybe capitalism is bad ?
I am NOT saying I want a controlled economy with a 'do what we need' approach to labor or anything... just a thought.
We've had markets since before we had money (the one was needed for the other to be invented), trade (and yes free trade) is ancient. There were a few deviations along the way like Feudal systems...
The first corporation was the East India Company and that wasn't until the 1600's.
I am seriously starting to think Capitalism isn't working.
It's turning into just anothe
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Not necessarily.
Investing in development is a complex undertaking which is very risky, so even a huge potential payout may have a low expectation at the planning stage.
Bribing your government to setup the market rules your way, and passing enforcement costs onto the taxpayer on the other hand is simpler to execute, guaranteed to last (legislation doesn't change as quickly as the market), and without cost to you even if it fails, so it could look like a much better deal to the prospective investor.
The actual detriment to innovation (Score:5, Insightful)
apropos (Score:5, Interesting)
He would have been out of work for 18 months with no compensation and no recourse had he not been lucky enough to find something in a non-related area. Even companies in california (where non competes are illegal) declined to hire him because they said they could be sued in MA.
Re:apropos (Score:5, Informative)
And since the CEO was such a prick, I have no second thoughts about disclosing the company name: Intelligent Biosystems in waltham MA. Please work there if you want to be under payed, sued and have a prick for a boss :)
Re:apropos (Score:5, Funny)
Steven Gorgoon
CEO Intelligent Biosystems
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You misspelled 'Gorgon'.
Re:apropos (Score:5, Interesting)
Re:apropos (Score:5, Interesting)
Every large corporation has these types of clauses.. especially big corporate type information technology firms.
It's pretty simple, you don't decline the job, you talk to the HR team and tell them about your concerns. In my situation, I've run a rather successful online business for quite some time and always negotiated T&C's that let me keep all IP and $ from my existing entities. It's a matter of crossing out clauses in the contract, initialing, and having an officer of the corporation do the same. In my case this included IBM as a company... whom I worked for many years. They are the mother of all patent-hoarding-mommas.
Now, if you think you are going to come right out of school with no professional experience and a bunch of great ideas and expect that your efforts in the evening are going to be protected... you better detach yourself from the yoke and either find funding, VC, or talk to Mr. VISA. Otherwise, SOMEONE is bankrolling your efforts... and they expect a payback of at least principal or they expect to reap the rewards.
I would too if I employed you.
Re:apropos (Score:5, Interesting)
Yes, someone is bankrolling my efforts; however that isn't the company I would work for. It's me.
A company pays you to work for X hours a week. What you do in your own spare time is totally up to you, and none of your company's business. The company isn't bankrolling your company, it is simply paying you for an honest day of labour. What you do with those funds is up to you (buy a new car, invest or start a company).
Now I could understand that your company wouldn't be glad if you set up a direct competitor, but anything that doesn't compete with the company interests should be fine. NCA's and the like are simply arbitrary arrangements to get more than those X hours a week from an employee. If you want me not doing anything besides my job, you'll have to pay me for 168 hours a week, and not a minute less.
As someone who's running a small business, I wouldn't mind an employee setting up a side-business. Such a person is likely to be much more proactive in his work, probably gets more work done and brings in new knowledge from his side-business. Instead of badgering him with a legal battle (which means he'll be gone right away) I'd rather follow such an employee closely. It might even mean new business opportunities for the whole company by partnering with him. If he were very successful, I would look around for a replacement but as long as he does his regular job well I wouldn't want to kick him out.
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You do, the difference is that in the Eastern US (you know, IBM territory), those contracts are generally legally enforceable and actually enforced. In the western US (you know, Adobe, Microsoft, Google, et al) these contracts are either not legally enforceable, or they are but never actually enforced.
The west coast doesn't just luck-into having great tech companies, there's a legal and philosophical environment in place which makes it a great place to open a tech company.
(Being from Europe, you might be un
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It's a shame he signed such a shitty contract -- perhaps this can be a lesson to read your contracts wisely instead of complaining about clauses you don't like after the fact.
By the way, since I presume your friend is an intelligent chap, I wouldn't dare insult him to insinuate that he is incompetent to enter into a binding contract. It seems much more plausible that he made an error of judgment, that's all.
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Who decides who is a competitor? Or if the position you're going to take is involved in the competition? You want court battles over these?
Like any other legal tactic, these contracts can be abused and misused and the small fish is shit out of luck. I guess if you've never been in the position you wouldn't know then
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I'm really surprised by this, because in 18 years of working in Massachusetts I've only ever been asked to sign a noncompete once, and it was only for three months, and I showed it to a lawyer and they advised me to go ahead and sign it on the grounds that it was not enforceable unless I quit. (The company ended up laying me off, and the boss threatened to sue me if I went to any of their competitors, but I told him what the lawyer said and left, and that was that.)
I also talk with many of my former colleag
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the problem is that getting your legal rights can be expensive, tens of thousands of dollars, is your house... to a CEO, it's just "doing business". That shows a severe problem with our legal system where non-enforceable things can be argued anyway simply because the other side has more money.
I think my state Michigan strikes a good balance. I've seen the HR legal magazines that come out and we tend to enforce some non-competes, but the courts have ruled quite strictly on duration, and narrowed the scope
Re:apropos (Score:5, Insightful)
Re:apropos (Score:4, Insightful)
Yes, because it's well known that during employment negotiations, prospective employees hold all the cards, especially during a recession.
Did it occur to you that the "recession" you mentioned--that is, a condition in which the supply of labor exceeds demand--means that you aren't worth as much as during times of tight supply?
Why is it that people lose the ability to understand simple economics as soon as the commodity is labor?
Re:apropos (Score:4, Insightful)
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Which must be why my French friends often go over a year between jobs, whereas my American friends tend to simply jump straight from one job to the next. Must be that wonderful European idea of non-commoditized labor.
Re:apropos (Score:4, Insightful)
Re:Us unwashed? Ever stand by a French woman? (Score:5, Funny)
We didn't call you "unwashed" old chap, if anything the plumbing is the best system in the United States. We called you "uneducated Barbarians" and could also have used "Philistine" as opposed than "Barbarian" to denote you lack of culture and sophistication.
Hope this has cleared up this little matter my good man.
Tisk, tisk, look at the time, I'm late for tea.
Cheerio.
PS, we Europeans don't like the French either.
PPS, the Romans beat you to a Representative government by 2000 years.
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I love you :)
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Productivity is NOT a virtue unto itself. Also just because you (I'm pretty sure erroneously) think that we got democracy before all those damn Eurpeans does not mean we are BETTER... They could have, you know, learned from out mistakes (one of which is the protestant work ethic).
Oh, and am I the only one that finds it ironic that any European would consider an Amarican an "unwashed barbarian"? Ever try standing next to a French woman? She'll have hairy legs and armpits and often reek due to lack of deod
Re:apropos (Score:5, Informative)
So when the recession ends and your value goes up, you just find a new job at the new market value, right?
Oh, wait -- the non-compete says you can't, and instead have to keep working at your old, now undervalued, rate or starve to death on the street!
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Did occur to you that that is completely irrelevant to the topic of whether people should be treated as objects, rather than human beings?
Re:apropos (Score:5, Insightful)
It doesn't matter what the market conditions are, slavery is wrong, and that's basically what a non-compete is: slavery. To get a decent job today, you need to spend years of your life, and thousands of dollars, just to get in the door. And then, for the privileged of working for a company, you're supposed to sign a piece of paper that says, essentially, "if you aren't working for us, you aren't allowed to work at all"?
I honestly don't care about the market effect of no-competes. No-competes are inherently immoral. These kinds of studies are just tools to help get rid of them.
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Why is it that people lose the ability to understand simple economics as soon as the commodity is labor?
Oh no, people lose that ability when the commodity is fuel also. Thus all the hand-wringing over Exxon's record profits (wow, they sold a record amount of gas and therefore made a record profit-- duh!), and the people crying out about gouging when a gas station ups the price of gas.
Re:apropos (Score:5, Insightful)
Why is it that people who have a little money never give a damn about people who don't?
YEAH YOU MORON WE F***ING KNOW WE"RE NOT AS VALUABLE NOW AS WE USED TO BE. DID IT EVER OCCUR TO YOU THAT WE STILL HAVE TO PAY THE BILLS AND FEED OUR FAMILIES?
When you have no job and the unemployment office says there's 98% unemployment in your field and you are facing eviction and maybe you have a kid to feed and an employer offers you a job but it comes with a non-compete that could *theoretically* put you out of work for 18 months someday in the future, YOU F***ING SIGN IT BECAUSE YOU HAVE NO CHOICE. DON'T WHINE AT US ABOUT SUPPLY AND DEMAND AND TELL US IT'S OUR FAULT.
Re:apropos (Score:5, Insightful)
We the people with little money ALSO don't give a rats ass about you, we the people with a little money. Perhaps you should realize that most Americans are two pay checks away from being homeless and uninsured. As our economy tanks further and further, you are closer and closer to being on of the folks with no money.
I'm sick of the social Darwinism fallacy. A lot of poor people aren't poor because they chose to be, or because they want to be, or because they made bad choices. A lot of people are just STUCK there, and some of them for no reason besides bad luck. Some of them can get out of it, some of them can't, but most of them are there because society failed them. Don't use this version of the internal attribution error to justify greed, be honest about it at least.
But then again I put individuals above the corporations that hire them. Corporations are a construct, as is economy, on the other hand people (and their life, liberty and happiness) are REAL things. I don't read the Declaration of Independence as an individual manifest, but as a collective statement, we ALL have those rights, and we asserted these rights AS A NATION. They are not an excuse for individual greed and callousness, but follow the tradition of John Locke, and J.S. Mill. Meaning we have these rights, UNTIL they hurt someone else.
I'm getting sick of the term "rights" though. Where did these damn things come from? Rights are a subjective term. Also, your right to greed is suplanted by the more basic rights of others, the right to survival (health, food, water), why aren't these rights? Money and property is a right (somehow), but life isn't? Explain this, please?
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That's right, I'll say it. We don't give a flying rats ass about you because we didn't put you in your situation, you did. I think the whole notion that the rest of us have to pay more taxes or change the way we do business so that nobody ever has to be in dire straights is bullshit. Socialism doesn't, hasn't, and will never work in a free country. Sure, Sweden is great, go live there. I want freedom, and dire straights is inherent to having freedom.
Wow, just wow. I'd make some sort of snarky comment, but I
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We don't misunderstand the economics. We have notions of structuring the rules of a market around certain rights such as "An employment contract may not regulate what the employee does with their non-working hours."
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Certain rights are inalienable... that means society cannot allow you to sign them away! That means it should be illegal to ASK, but we have free speech so we only make such clauses unenforceable, we don't punish people for trying to put illegal clauses in contracts like they do in Europe.
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Why do you assume it doesn't do that in the pay its offering? This is EXACTLY the problem the original poster made. It's very likely the compensation was structured in such a way to account for that. The person elected to take the compensation + the covenant as good enough at the time. Only later once the person wanted something else to do did he decide the deal is not what he wanted.
If you don't like non-
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Why do you assume it doesn't do that in the pay its offering?
Because it's mathematically not possible to do that, since you don't know in advance how long your employment is going to last.
What if they decide to fire you after 6 months, with an 18-month NCA ? That means your pay should be about four times of what it would be without the NCA. Not going to happen.
What about 3 months ? 12 months ? 24 months ? Or the worst case ... 1 month ?
The only way to come somewhat close to an adequate compensation is some
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Yes, because it's well known that during employment negotiations, prospective employees hold all the cards, especially during a recession.
Did it occur to you that the "recession" you mentioned--that is, a condition in which the supply of labor exceeds demand--means that you aren't worth as much as during times of tight supply?
Why is it that people lose the ability to understand simple economics as soon as the commodity is labor?
So if the "market value" of a given job, the maximum $/year a person holding that job is currently able to make (including other, similarly-paid jobs that person is doing to make ends meet), is less than the absolute minimum $/year that person requires for sustained living, then what?
Re:apropos (Score:5, Insightful)
I agree with your perspective, and live in California. I think these agreements should be legal in all states, but only at the executive level, and perhaps at the professional level if the company is serious enough to make certain the professional be represented by their own attorney.
Anyway, I digress. It is ordinary for the person being offered such an agreement to request pay for the non-compete period.
I knew someone once who had that kind of agreement draw up. Later, the company, a large one, sort of forgot about it. There was a layoff.
See where this is going?
They tried to un-lay him off, half-heartedly.
No go.
Nice long paid vacation. He worked in an adjacent field for a while. :-)
C//
Re:apropos (Score:5, Interesting)
It may not be as simple as you are stating it to be. I can see a lot of people that would be very lucky to have even 6 months to live without a steady paycheck. You add some kids to the mix, and you have a LOT of pressure to find work quickly.
Waiting for the good job is not always a luxury that Americans can afford, especially in a recession.
Other than that, I do agree with you. A company that I worked for, my only W-2 in my entire life, tried to force one of those contracts on me too.
I flatly refused. Actually, I did not refuse, but I countered them with my own contract which specified certain technologies and products that were exempt. They would not sign mine, I would not sign theirs.
About every 6 months the general manager and company lawyer would get together and try and throw their weight around to get me to sign it. I never budged, even with threats of dismissal.
My value though was very high. I headed a department that the entire company depended on 24/7. My department screwed up, and everything was down. That might have had something to do with it.
I would say never sign those contracts period, but then again I am in a position that affords me to do just that.
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Let me say this, an 18 month non-compete is a bit excessive. But, we also don't know the details: level of the position, scope of the exclusion (geographic, types of positions), etc. There are lots of factors that go into the reasonableness of a non-compete; not just duration.
Nevertheless, my point was simply that just about every argument set forth in the grandparent is just wrong.
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This is simply NOT true. This comment is why discussions like these are frustrating on Slashdot. The economics are simply not true. First, your friend's compensation priced in this non-compete. If your friend didn't like it, he should have asked for more.
The reality of your argument is, because of consolidated hiring, where employers have more power, there are two answers. The first is regulation that prevents companies from requiring employees to sign away their rights. The second is workers' unions, to have consolidated labor equal to consolidated hiring. In my mind, the latter has shown how dangerous such consolidation of power is, while the former is inefficient and prone to abuse by the government and anyone who can buy it.
Re:apropos (Score:5, Insightful)
Here's the problem with your argument: for every person who actually does read and understand the non-compete and tries to negotiate, there's N dumbasses who don't. So, essentially, smart people's bargaining power is being eroded by everyone else's stupidity. This externality is not compensated for by the "free" market.
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This externality is not compensated for by the "free" market.
Isn't it, though? Presumably the "smart" people who read and understand the non-compete are worth more to the company than the dumbasses who don't.
So, yeah, you have less bargaining power because of all the people who will sign anything you put in front of them, but that's mitigated somewhat because the people who pay attention to that sort of thing would theoretically be more competent.
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I think it's much more to do with having the confidence to object.
It can also be very difficult if all the local employers have similar terms. Unless you're something special - which by definition most people aren't - your options can be very limited.
One of the big advantages of collective bargaining is that it gives people more power to stand up for themselves. Conditions may be a lot better than they were a century ago, but this sort of thing shows that there's still a place for unionisation in some for
nonsense: Re:apropos (Score:3, Insightful)
First, your friend's compensation priced in this non-compete.
Care to back it up? Are you saying that companies with non-competes pay more on average than companies without non-competes.
Seems like a total nonsense to me. The premium would be very high. With an average duration of employment being 2-3 years, an 18 month non-compete would require a 50-80% salary premium. If you take taxes into account, the premium would go to more than 100% (there is a big tax penalty if you get your 3 year income in just 2 years).
Not everything you can put your signature on is consid
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PEOPLE ARE FREE TO STRUCTURE THEIR EMPLOYMENT AS THEY WISH.
With Uncle Sam having tied health insurance to employment and specifically your unique employer's unique plan, your statement is not as true as it otherwise would be.
Re:apropos (Score:5, Informative)
There have been a number of times in the last couple decades when unemployment for geeks in Massachusetts was so high that you darned well took whatever job was offered to you because the alternative was starving. And if they said "sign this", you asked for a pen, not more money, because you damn well knew that the employer knew that there were 500 people desperate for the job you just got who would be delighted to sign if you wouldn't.
I had several periods of being unemployed for 18 months. I had one in which I lost my home and had to live on a friend's couch for six months. When I finally got a job, my employer advertised an open position for my staff, paying 1/4 of what the "market rate" for that job was, and they got 2000 applications.
Turning down a job over a non-compete is something people can do when times are great. For techies in Massachusetts, that hasn't always been an option lately.
Re:apropos (Score:5, Insightful)
Third, and most importantly, PEOPLE ARE FREE TO STRUCTURE THEIR EMPLOYMENT AS THEY WISH. Whether a person has the clout to get different terms is a factor of their value. The company doesn't have to hire someone and someone certainly doesn't have to work for a company.
No they're not. People and companies are bound by the law, which still applies. Putting it in caps doesn't make it so. People modding you up for such a stupid statement doesn't make it so. All it takes is proof by counter example and you've got egg on your face. So...
For example, everywhere as far as I know, a company can't offer you a contract that requires you to give them any children you conceive while working for them. Likewise I can't imagine a condition of employment being that you go out and murder your neighbours being legally binding (with perhaps the exception of an extremist military regime that also holds power).
So no, people are not free to act as they wish. That isn't the definition of freedom. Freedom does not mean you're allowed to do whatever you want no matter how it impacts others. You still have to be at least benign to the society in which you live, based on the laws that society has passed. At least that's the theory. I'm guessing you're American? When America's founding fathers fought for freedom they did not fight for lawlessness and hedonistic disregard for their fellow man.
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A contract is not a good contract just because its a contract. I find the whole "non compete" idea unethical. I can see not selling what you developed FOR your employer as an okay stipulation, but things developed while AT your employer is rather moronic.
Say I work for company X, and while in my basement, on my free time (i.e. having nothing to do with company X) I make a really nifty product, that has nothing to do with what I do at company X, now why can company X claim my product as their own?
To put th
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Yes, and if we drop corporate tax breaks, make it illegal to operate overseas where labour conditions and safety laws make labour cheaper, drop any program that amounts to using foreign labour as indentured servants, remove all tariffs on goods and services, stop illegal use of monopoly power to manipulate markets, drop any and all laws pertaining to trade secrets, cancel any government mandated monopolies and end limited liability then we can talk about labour.
I will compete globally if everyone else has t
this might be a small part of it (Score:5, Interesting)
Clearly after being quite competitive with Silicon Valley in the '70s, Mass. has fallen far behind its rival in terms of the number and quality of startup companies, at least in the IT sector.
Anna Lee Saxenian [amazon.com] got a lot of it right in her book comparing Route 128 with SV. Her main thesis was that eastern Mass. companies tended to have an NIH, all-encompassing, soup-to-nuts mentality (Apollo Computer, and Ken Olsen's DEC were prime examples), whereas SV has more of a ecosystem where engineers, capital, and ideas flow relatively freely between companies.
Of course, this handicap is not unique to Massachusetts. For example, Microsoft is known to have been strongly influenced by DEC - in fact the Windows NT project was seeded by top engineers from the VAX project.
Re:this might be a small part of it (Score:4, Informative)
But DEC then sued MS:
http://www.businessreviewonline.com/blog/archives/2005/10/index.html [businessreviewonline.com]
"Microsoft hired Cutler, who immediately started work on what would become Windows NT. DEC sued because it believed Cutler had put Mica or even VMS code in NT, and Microsoft eventually paid up $150m. As part of the settlement Microsoft agreed that Windows NT and its BackOffice applications would offer support for DEC's Alpha processor, which is why DEC Alpha was the only RISC chip that supported both Digital's version of Unix and Windows NT - quite a coup for DEC."
And
http://www.vanwensveen.nl/rants/microsoft/IhateMS_1.html [vanwensveen.nl]
"As a result, many design principles found in the VMS kernel ended up in Windows NT. (The number and splitting of priority levels in the scheduler, the use of demand-paged virtual memory and the layered driver model are only a few examples of many, many similarities.) The first version of VMS was released in 1977. Without trivializing the efforts of Cutler and his team (they did a lot of work on the project) one has to wonder what Microsoft really means with "New Technology". To illustrate, in a little known out-of-court settlement Microsoft paid DEC $150 million in compensation for using portions of old Digital OS code in Windows NT."
As an employer, I abhor them (Score:5, Insightful)
I have a business consulting corporation (founded in 1993, incorporated in 1997) that works in large scale construction and tech. We will never require an employer to sign a non-compete. We don't even require them to sign anything preventing them from "stealing" our business. What you do on your own time is yours. If you go off on your own and take our customers, all it does is teaches us to be more efficient, competitive and effective for our clients. I openly motivate my own employees to discover how to become their own bosses: save money, learn basic business skills, gain confidence, discover a niche market. Capitalize.
A true capitalist welcomes competition, and also pushes themselves, not their employees, to be a motivator and an expert in their field. I would refuse employment if I had to sign anything that stifles my freedom to produce, invent or perfect a current product or service.
Re:As an employer, I abhor them (Score:5, Insightful)
That's the right way of doing it.
The easy way is to abuse laws to protect your biz.
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A true capitalist can and will be utterly destroyed by a company in China that miraculously reverse-engineers every product produced by said true capitalist's corporation.
If you have an employee that leaves the company and then takes a suspicious "personal vacation" to Shanghai or Shenzhen while taking along engineering samples of your products that he was not meant to take with him when he quit, expect your company to fail and fail quickly.
A non-compete might scare the guy into not doing that. Maybe. Eit
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Bullshit.
If you aren't incompetent, you should be able to compete with a company that's late to market with a knockoff of your product.
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Yeah, but...
People in some positions -- senior designers, engineers, and so on -- have enough inside knowledge, gained over time at one employer, that makes them more valuable to a competitor than to their current employer, as they've already learned some things that the competitor hasn't. It's even worse for salespeople, who can take contacts and relationships built up over year
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Yeah, if you aren't incompetent, you should be able to survive a disgruntled employee torching your corporate headquarters too, because you have backups and insurance, right? Just because it's survivable doesn't mean it doesn't hurt. The Chinese company may be late to market and with a cheap knockoff, but since they didn't have to pay for millions in stolen R&D, they can sell it for less and cut into your margins.
So yes, it's great if your company is flexible enough to deal with bad situations, but unle
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I want a job at your company and I would like to subscribe to your newsletter.
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Smart. It's almost never worth it to fight for customers who want someone else or are too price fixated.
You've just gone a step further and realized that if you don't fight they'll both remember you well, referring other customers and employees to you.
I'm not in your market, but I think I'd like to work on a project with you anyways.
Despicable (Score:5, Informative)
I really hate non-compete agreements. In an at-will employment state they are indefensible, and Massachusetts would do well to make them unenforceable.
BUT I think that conclusions of this article are very far fetched. With the exclusion of Silicon Valley, Metro Boston is the #1 startup hotbed in the United States. It is one of the best places to create a startup, with immense intellectual capital available from the biggest concentration of 4 year universities in the world. And the geography of the startup area covers 4 states, not just Massachusetts - NH, CT and RI as well.
The article gave no numbers, and no comparisons of the laws of the various states in the region and their effects. Where are the facts, Jack? The article is just speculation without substance to back it up.
I call Bullshit.
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People would want to live there because it's a really good place to live. And yes you did mention taxes. Twice. Get a clue.
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Then don't live there.
How about Silicon Valley? That would be cool. Let's see... higher taxes than Massachusetts, check. Higher real estate prices, check. MUCH worse traffic, check.
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If your employer covers you with health insurance (as mine does) or if your spouse has insurance that covers, you then you need not purchase insurance.
It's much cheaper to buy a house here than in California.
The weather's worse, not much to be done about that, but you can avoid the non-compete's here by working for a California company. And yes, some I've negotiated, some I've signed, and one I turned down after failing to g
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In fact, the article specifically states:
I agree with you: imbecilic story, even if the conclusion is actually true.Re: (Score:2)
I've noticed further east the terms are more onerous than as you move west. In my state Michigan they make non-competes strictly specify duration, narrow field of business, and geographic area. The contracts like you see for video games where they specify "North America" would never hold up. Nor would skills that are too broad... computer programmer would never hold up... it'd have to be specific like Sales of X-Ray machines or something. Trying to apply it to people like production workers with no say wo
Thank you Captain Obvious (Score:3, Insightful)
Re:Thank you Captain Obvious (Score:4, Insightful)
They aren't trying to inform you, they are trying to paint the ground. If people in Mass. start thinking that the law is costing them jobs...
Re:Thank you Captain Obvious (Score:4, Insightful)
Well yes, that's the market idealist's view. Market idealism falls over and breaks in three on its first encounter with a fluffy ol' feather.
The real deal is that more often than not, non-competes are applied with a breadth that cannot be described as anything but abusive. In general an US-style non-competition agreement bars one from practicing his profession at any company other than the one that the person happens to be working at. Thus the employee is restricted from applying e.g. market forces to gain things such as higher pay: a switch of companies means a switch of careers unless the employer happens to go under for good and doesn't get bought out.
Of course the practice tends to spread. Any company that does not require a non-compete of all employees soon finds itself in a worse position in labour negotiations. Therefore there's no realistic chance to "just find a contract that doesn't involve a NCA": chances are that within a state that permits them every company abuses them in exactly the same manner.
And just so you know, this is one of the reasons why Europe laughs at the US. The right to profession is basically enshrined in every EU member country's contract law. Only extremely specific and time-limited forms of non-competition agreement are permitted, such as concerning a company's existing clients for up to six months after resignation (or immediately after termination).
Sounds like a form of slavery... (Score:5, Interesting)
that fortunately does not exist in Germany. Here the law is simple: A company that wants an N.C.A. to be enforceable, it has to pay at least 50% of the former wages of the employee, otherwise the N.C.A. is void. It also has to be very specific, the new company must be competitor, being an IT-company is not enough, you basically have to provide the same product to the same custumers. It is also limited in time to one year.
When I once left a company that didn't want to let me go I happily told them I would love to sign an N.C.A., but when they saw what it would cost them and would bring them (I would be gone anyway), they quickly reconsidered.
p.
you're awesome, now starve (Score:2)
If you move to where your job was outsourced, is it considered noncompetative? :)
You have to picture what noncompetes come down to as this statement:
"You are good at what you do, someone with valuable skills -- and since we don't want you to do it for us anymore or you have chosen not to do it for us anymore, we don't want you to do it for anyone else. Have a nice day."
And in other exciting news, gravity exists. (Score:5, Insightful)
I'm sorry, but as a former consultant, occasional inventor*, and business owner, I've always thought that non-competes were mostly b.s. If you're afraid that they'll steal your IP, register and enforce your IP. If you're afraid that they'll provide better services, well then, best you do a good job there, cobber. Seems to me that non-competes usually just protect those with lots of lawyers against those competing on the basis of value for the dollar.
*See patent 4,808,204.
Non-competes CAN BE legal in California (Score:3, Interesting)
In short, this guy signed an "Exclusivity" contract. Apparently that's different from a "Non-compete", though how in the world that's possible is beyond me.
Perhaps someone other than the IANAL types can educate me here. But, in short, if this one holds up, you can bet that you're going to see Exclusivity Contracts start popping up among software and hardware designers, instead of just doll designers.
I'm through with the East Coast (Score:5, Interesting)
The whole eastern seaboard, at least from Massachusetts to Florida, is a cesspool of snobby lawyers and greedy big money people. But the southeast is worse than anywhere; it is especially laughable that so many states proclaim the "right to work [blogspot.com]" (without a union, possibly for peanuts or for a tyrannical boss) but you don't actually have a legal right to work in your occupation if you've signed a broad non-compete that forbids it. These are often "at will" states as well, where your employer can fire you and hire someone else to do what you do, but you can't necessarily work for another company doing what you know how to do.
I've lived in VA and in PA most of my life, and I'm just about finished with the eastern US forever. My next home will be either in Europe or west of the Mississippi. By the way, the states that will not enforce non-competes include CA, OR, CO, MT, ND, SD, OK, LA, and probably a couple others. Nearly all of them are in the western US.
As for the most ridiculous non-compete ever, how about a membership agreement for an outdoors club [outdoorsocial.com] that forbids former members not only from operating a competing club, but even using a google group to organize similar activities? The original version [stashbox.org] was even worse, if you want to read some lawyerspeak that will make your head spin, and prompted this article [readthehook.com] in a local newspaper.
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but you don't actually have a legal right to work in your occupation if you've signed a broad non-compete that forbids it.
Generally, contracts of the form "you can't do X because you willingly and knowingly signed an agreement not to do X" are a reasonable exchange of one thing of value for another. Non-competition is a service just like any other -- one that individuals ought to be free to sell for whatever price they see fit. Or do you presume to tell others what they can and cannot do with their time?
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Collective bargaining (aka unions) is a legitimate negotiating tactic. Banding together to increase your aggregate leverage is just smart capitalism.
And yet there are states where this is not allowed.
Or do you presume to tell others how best to negotiate a business deal?
The East Coast Sucks (Score:2)
Just to elaborate on this wonderful theme. I'm starting south from Mass. and leaving Maine and New Hampshire out of this, although at least NH probably sucks too.
Massachusetts: You did read the article, right?
<strike>Rhode</strike> Rude Island: A crummy little shithole with some of the worst labor laws [wikipedia.org] to be found anywhere outside the South. Population is split between a boring old city with the most pretentious of the already pretentious Ivy League universities, a bunch of pricey beach towns fo
Zero sum game. (Score:5, Insightful)
As an employer, you lose as much (in terms of failing to recruit experienced staff from your competitors) as you gain in terms of preventing the loss of experienced staff to your competitors.
In an industry where these clauses are common, everyone would be better off if there were to be a law disallowing them.
The trouble is - if you're the only employer who doesn't do it, you lose staff and can't easily recruit replacements.
It's a classic "crisis of the commons" issue - and that means that you need a law to prevent it.
Mod parent up plz (Score:2)
I'd do it myself but have already posted in this discussion.
I was hit with one of these (Score:5, Interesting)
Luckily, my company doesn't have any history of trying to enforce these idiotic things, and I have no plans on doing anything dumb like jumping ship and taking company-specific info or customers with me, but I do wonder how enforceable these boilerplate contracts are. From what I've researched, they're not very enforceable if they aren't rather specific (what the actual 'competition' would be, the competitive region, etc) , or if alternate methods would have sufficed (say to prevent stealing proprietary info or customers).
I do wonder of the legality of hitting somebody with this *after* the job offer has already been given and accepted. I had requested the contract before moving but had assumed that it was more or less in the offer.
Re:I was hit with one of these (Score:4, Insightful)
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I guess one other question would be, if you've been given an employment offer containing various terms of the employment, signed and accepted it, how free should they be to
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So you got hit with a classical case of "bait and switch" ?
tools of the trade (Score:4, Insightful)
Always take a red pen to negotiations (Score:5, Interesting)
When I was foolish enough to work for wages, I always took a red pen to the salary negotiations. With it, I struck out every non-compete clause before signing the employment contract. Some HR folks freaked out over it, but it never cost me the job.
If it had ever cost me the job I was seeking, I would have considered it a very cheap exit out of what could otherwise have been a very expensive experience.
Never (Score:2)
My policy is that I never, ever, under any circumstances even consider thinking about signing an NC. Period. End of story. They are a deal-breaker.
I don't trust anyone who doesn't trust me.
Sure, but keep paying me (Score:5, Insightful)
How non-compete agreements ought to work is that they can prevent you from getting a competing job, but they have to pay your salary during this period. This would prevent damage to a worker's livelihood when a company invokes these, and provide a monetary disincentive to invoking a privilege that is damaging to the industry.
Not that I expect this to happen...
Re:Sure, but keep paying me (Score:4, Informative)
That is exactly how it works in Belgium, and many other European countries.
Your previous employer has to pay your salary for the time during which you are not allowed to compete. Failure to include such a clause, or any of the other specific and mandatory details will void the entire non compete section and you are free to do what you want.