Bill Guarantees 50% Salary For Workers Laid Off With Non-Compete (computerworld.com) 223
Reader dcblogs shares a Computer World report: Non-compete agreements are controversial for many reasons, but what may be worst of all: Even if you are laid off from your job, a non-compete agreement may still apply. California has made non-compete agreements unenforceable, but Massachusetts has not. Some opponents say that's partly the result of lobbying by EMC, which has considerable clout as a major state employer, headquartered in the Boston suburb of Hopkinton. But the pending $67 billion merger of EMC with Dell, and the prospect of merger-related layoffs, is spurring a new attack on non-compete agreements. State lawmakers are considering limiting non-compete agreements to one year, banning them for low-wage workers and for people terminated without cause. The leading legislative proposal will also require an employer to pay at least 50% of the former employer's salary during the period of time the non-compete is in effect. This salary guarantee is called "garden leave" and is in Massachusetts House bill H.4323. In May, the White House released a report about non-compete agreements. It found that 18% of the workforce is now covered by a non-compete agreement, but over the course of a career, some 37% of all workers (PDF) will be subject to them.
Bill (Score:5, Funny)
Bill who?
How is Bill going to afford that? (Score:2)
I mean, he's already behind on child support, and he's selling blood plasma just to make ends meet!
That's Bill through and through - just a lot of big talk.
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I mean, he's already behind on child support, and he's selling blood plasma just to make ends meet!
That's Bill through and through - just a lot of big talk.
That deadbeat better get himself a job before we do like the British and throw him in debtors prison!
Sign 'I don't agree' on all HR paperwork (Score:5, Interesting)
Seriously, nobody ever actually checks that you signed your name. Just write 'I don't agree' somewhat legibly.
HR drones are fucking morons, use it.
Consider signing actual name on IRS and 401K documents, but even there no big deal, nobody checks.
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Seriously, nobody ever actually checks that you signed your name. Just write 'I don't agree' somewhat legibly.
If you want to game the system, there are much better ways than that:
1. Sign NCA.
2. Start your own business on the side
3. Work on your own business while at your day job
4. Get fired for slacking off and not getting anything done
5. Work on your own business full time, using the 50% salary to live on
I live in California, so I can not do this myself. But from personal experience, most NCAs are pointless because 99% of businesses don't have any ideas worth stealing.
Re:Sign 'I don't agree' on all HR paperwork (Score:5, Informative)
Seriously, nobody ever actually checks that you signed your name. Just write 'I don't agree' somewhat legibly.
HR drones are fucking morons, use it.
Consider signing actual name on IRS and 401K documents, but even there no big deal, nobody checks.
IANAL, but AFAIK, just signing an "X" in the presence of the counterparty is enough to "sign" a document. All you need is a meeting of the minds for a contract which is why they make you initial here and there when signing important documents, so you later can't claim you didn't get a chance to read a certain clause. This is why square can let you scribble illegibly on an ipad to charge your credit card.
Actually signing "I don't agree" might work against you in this case (since you are kind of admitting you understand it enough to disagree with it). It might be better to legibly write "I don't understand" or "I am incompetent", but it probably legally doesn't make much of a difference if you actually put pen to paper signalling to the counterparty that the contract terms are closed.
The only real argument you probably have if you have already scribbled on the signature line in the presence of the counterparty is that you signed it under duress. However, if you later accept a check, that might be a hard argument to make.
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Clear text. The person who didn't read it is at fault.
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Interesting == expensive and uncertain.
How much would the severance have to be before the suit would be a good bet? All this assumes HR suddenly gains competence and notices you didn't actually sign.
It would likely not work for a lawyer. How should I know that writing clearly 'I don't agree' is not sufficient.
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How should I know that writing clearly 'I don't agree' is not sufficient.
I believe it is quite sufficient. You clearly intimated, in writing, your disagreement. It is presumed the person doing the exit has agency for the company. If they let it slide, it is on them, not you.
If it were not sufficient, then hand red-lining clauses and sentences in the body of a contract would not be 'legal' either.
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30 years on. No problems yet.
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They cut me a check as part of employment (end of it), and you think they can get it back because I didn't actually sign something?
Re:Sign 'I don't agree' on all HR paperwork (Score:5, Insightful)
Most WILL NOT issue a severance check UNTIL you sign the separation agreement. They WILL issue you your last paycheck, however - they must do that.
I think requiring companies to pay a 50% salary when a non-compete is in effect is brilliant as they can dictate for whom you can work (and, as such, the ability earn a comparable salary).
If a company determines you are no longer of value to them and they release you (fire/layoff, then the non-compete should be voided entirely. If they still deem you of value but have let you go, they need to provide compensation such as in a layoff with option to recall (as in temporary down-size), they need to pay up or release the obligation.
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You sign 'I don't agree', they look at it, don't read it and cut you a check.
Remember what I said upthread about HR drones?
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I think they need to go further and make it so you get the 50% pay even if you quit the job.
If the company doesn't like that, no one's forcing them to require non-competes.
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I think requiring companies to pay a 50% salary when a non-compete is in effect is brilliant as they can dictate for whom you can work
I think it is brilliant, but I would suggest making it the greater of 75% of previous salary and 75% of previous salary Based on a 12-month average excluding the previous 30 days.
That can be reduced to zero by providing the employee a new agreement canceling any non-complete.
Otherwise: If you want to lay people off, just cut their salary first.
Or cut everyone's b
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I agree. I think it's absolutely brilliant, and a way to really prevent abusive practices without an absolute ban. Non-competes really are abused and I think making a company have to pay an ex-employee during the non-compete term is a reasonable measure, considering in a way you and your ex-employer are still legally entwined.
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I think requiring companies to pay a 50% salary when a non-compete is in effect is brilliant as they can dictate for whom you can work (and, as such, the ability earn a comparable salary).
I totally agree. Its pretty scary the power they seem to have in this.
In the UK a non compete (or any restrictive covenant) will generally be held invalid by a court unless they can prove it is reasonable and necessary to protect legitimate business interests. This means they can't prevent you from carrying out your chosen profession, can't have blanket statements such as 'not allowed to work for any competitor' and must only last as long as is required to protect those interests and no longer. It pretty mu
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Most WILL NOT issue a severance check UNTIL you sign the separation agreement. They WILL issue you your last paycheck, however - they must do that.
I think requiring companies to pay a 50% salary when a non-compete is in effect is brilliant as they can dictate for whom you can work (and, as such, the ability earn a comparable salary).
If a company determines you are no longer of value to them and they release you (fire/layoff, then the non-compete should be voided entirely. If they still deem you of value but have let you go, they need to provide compensation such as in a layoff with option to recall (as in temporary down-size), they need to pay up or release the obligation.
Or I can just outsource you all to a less socialistic and more capitalistic country like India where I won't have this problem. Be careful what you wish for as Detroit at one time thought the same thing with automaker and government workers. It is now done in Alabama for minimum wage where workers are happy to work.
H1B1 Visa workers will also be happy to sign them too and since the company is not based in the US the laws do not apply. Just saying.
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They cut me a check as part of employment (end of it), and you think they can get it back because I didn't actually sign something?
Seems risky. If they do notice, you just gambled yourself out of a job.
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Without any signed agreement, all they did was pay me a severance. They have no basis to sue. Sure they still can, but that would require them admitting publicly just how fucking stupid their HR is and is unlikely to get them anything.
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So that was your experience....
A lot of companies severance pay is issued directly in response to review/signing of paperwork at time of termination, not based on your stuff up front.
Of course, non compete is generally the up-front paperwork for companies that do such a thing (since they are mostly worried about people *quitting*, where severance isn't a factor). Extended non disclosure, *specifically* around the nature of the layoff is generally the topic of the paperwork that severance depends upon.
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I've done this on every exit interview and non-disclosure/non-compete I've signed in 30 years of work. That is, the ones they actually made me sign. First pass was always to 'forget' to sign any updated paperwork, 3/4 of the time they never followed up. Typical HR IS that incompetent.
Nobody ever noticed. Not even the 3rd party non-disclosures when working in consulting.
If I caused an HR drone some heartburn, good. I've had to work with the results of their incompetence, so it balances.
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That is my thinking. If you informed them you don't agree to the proposed document, AND they still paid you, Then the money you were paid must be pursuant to a different agreement.
How about attaching an Addendum to the agreement in the middle of the paperwork, and then making a small note when you sign (YOUR NAME) agreed subject to attached addendum.
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Refusing it sign an agreement is not fraud. It's not my job to teach an HR drone how to read.
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They can claim the payment was done in error. But I've got my copy of the close paperwork that shows it's my termination payment.
Good luck to the employer at the labor board.
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Every state has a labor board. They mostly deal with unemployment disputes and pay issues.
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How can he be violating the terms of the agreement if he never agreed to it?
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Most people Direct-deposit their salary.
Generally, there is a clause in the DD agreement which allows an employer to make a correcting withdrawl, if they erroneously pay you something.
So, unless you close the bank account, they can probably just withdraw the $$, if their contention is payment in error.
This is assuming that they discover the mistake in less than 90 days.
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Also, no matter how 'hot shot' you think you are, generally HR and legal trump *everyone* when it comes to dismissing a person. If they want someone gone, they are *gone*, end of discussion.
So yes, they are paying a lot more attention than you realize (generally) and they can kick your ass out if you do not go along.
If you don't like the agreement, however, you can generally negotiate the terms directly and get an amended agreement. If you play by the rules above board, they generally are willing to play
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Yet another reason to avoid large companies with 'professional HR'.
Who would give those morons any authority?
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Proven a fantasy?
You apparently live in a fantasy world with competent HR. As I said I've done this many times and never had a problem.
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Also note: I say professional HR. But even small companies have 'professional HR'. What I mean is avoid larger companies where HR has any decision making role in hiring.
HR should be benefits admins at most, it's all they are competent for.
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it's all they are competent for.
Not even that. Our benefits package could be improved so much by a little "out of the box" thinking, lowering costs and increasing benefits at the same time, for just a small extra effort. I'm talking a huge net benefit to everyone working. Do they do it? No. Why? Because they are lazy and incompetent and cannot think outside the box.
A simple example: Raise the Deductible and Co-Pays to lower the cost of Insurance, use the difference to buy Supplemental Insurance (think AFLAC), with a NET savings, while pro
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Everyone is equally important?
So they all get the same pay? No. Well you're just wrong. How hard are you to replace? If it's easy, you are not important to the company.
Don't sign 'I don't agree' if this is your only option. HR drones, don't do it.
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Fuck off AC. There is a toilet that needs plunging on the first floor. Get to it.
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From your UID, you've been on /. for probably 16 years or so, meaning you signed up when you were born! Damn kid that is exceptional!
How about (Score:3)
I have a better one (Score:2)
How about non-compete pays the salary in the highest offer you were able to obtain, for the duration of non-compete? Every time I changed jobs, I got at least 15% raise, sometimes more than that. I don't see why I should give up this money just so my previous employer could have me not compete against them.
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And the cost of any training to keep the professional skills current, for professions where not doing so can keep you from finding new work.
Re:How about (Score:4, Funny)
And pay for healthcare... and a house... and a pony
Re:How about (Score:4, Interesting)
If the employer wants to prevent you from working, they need to be paying for your time. They're paying money in exchange for the benefit of you not providing your time and labour to another country.
If they're not willing to pay, why should you be willing to do something in return?
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I've never signed one of these but then, I have never been in a position where I had enough inside knowledge to need to sign one.
So these are something hidden and not something you agree to when hired?
I've seen them requested by employers after a layoff but that was after the fact and came with a payout. It wasn't two years wage but it was a voluntary request.
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And pay for healthcare... and a house... and a pony
I'm 6'3" you insensitive clod! I need a beast at least 16-18 hands high. Sheesh.
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If they are preventing you from working, then all of that is fair game really. Slavery has been illegal in this country for awhile now.
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You compare not working to slavery?
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Exactly. Hell, let's make it 10x the employee's last salary.
If employers can't afford that, no problem: they don't have to use non-competes.
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The whole concept is backwards. People don't realize wage-labor costs are costs to the consumer. It's like all the people talking about how Comcast charges way too much for Internet and Cable while Comcast has an average 10% annual profit--meaning *maybe* they could charge $72 instead of $80 and break even.
Bumping costs like this means somebody has to lose their job; we're transferring unemployment as a way to satisfy our sense of fairness (plus increasing costs decreases purchasable products, increasi
Re:How about (Score:4, Insightful)
You have it backwards. It's severance pay. If nobody loses their job, the cost is zero.
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No, not quite.
Increasing the cost of a product by increasing the wages paid in aggregate means that the product's price must hold a higher point. That means fewer products bought, which means fewer jobs making said products.
This is the same reason raising minimum wage causes a net loss in employment.
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This is the same reason raising minimum wage causes a net loss in employment.
Except it doesn't see https://www.dol.gov/featured/m... [dol.gov] from the Department of Labor.
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No, you have the concept backwards.
Why do you think that CA and Silicon Valley in particular, despite the high cost of living, continue to produce startups? It's because non-competes are not enforcible.
Even allowing a paid 1-year non-compete makes it much more difficult to build a startup.
Non-competes are great for legacy, established companies. They don't benefit society as a whole, instead they reduce innovation and provide a drag on economic growth. That's why non-competes should be banned.
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Even allowing a paid 1-year non-compete makes it much more difficult to build a startup.
The problem space given is "non-compete clauses are enforced indefinitely, and so we're proposing a bill to limit them to 2 years and provide 50% severance pay for that period". That's what's actually on the table. As an alternate to the stated problem, I've made zero errors; you have instead said, "Well, uh, the problem doesn't exist, and you're proposing to create a new problem."
At the same time you propose that non-competes are unenforceable, you also propose we should ban them. If they're already
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The CEO wage argument again.
Comcast total employees, 2013: 126,000
CEO's $28 million income: $222/employee/year, comparable to giving everyone an 11 cents per hour wage increase.
$40.8 million total compensation: $324/employee/year or 16.2 cents per hour wage raise for everyone. That's 2.23% of the Federal minimum wage.
What have we learned today, children?
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That is still no explanation why the CEO's job is worth 560 $50k per year workers.
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It doesn't have to be; it only has to explain scale and practical impact.
People imagine things like a billion dollars being a lot; that might be true in the scheme of Rhode Island's 1.06 million people (~$1,000 per person to fit $1 billion into a year's taxes, ~$2,000 with a 50% labor force), but not in the scope of the United States (~$3.29/year per person, or $5.68 per year from every person in the labor force). A billion dollar salary for the CEO of Comcast or even Apple might be a big ask, too; but
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Comcast as a CaTV company is slowly dying (waiting on Netcraft to confirm), they will be relegated to being an ISP very shortly. Our household watches very little actual CaTV programming, most of what we watch are NetFlix and Amazon streams. Channels like HBO are starting to realize that CaTV is also dying, and now are starting to offer HBO Streaming offerings.
The distribution model is broken, by high speed data. That genie has left the bottle, good luck getting it back in.
Seems fair to me (Score:5, Insightful)
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Re:Seems fair to me (Score:4, Insightful)
The problem is most of those companies or contracts claim basically anything and everything, including the experience you've gained, is exactly such information. This can be quite problematic if your financial situation (or even just your pay) were not-so-great.
Keep in mind these are the same types that try to steal our own intellectual property by pretending things we've done on our own time in our own house on our own computer belongs to them because we're under their employ.
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They are two entirely different things, and are handled, as they should be, entirely differently.
Mass moved the non-compete companies (Score:2)
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Just ban them outright. (Score:5, Insightful)
Seriously, just ban con-compete clauses nation-wide and void any contracts that include them. They're only ever used abusively on the part of the company that insisted on them as a way to screw over employees in revenge for leaving. And they don't benefit the overall economy. Just look at California. The illegality of non-competes certainly hasn't caused the tech industry here to collapse in on itself.
Apple and Google got in a world of hurt a few years ago for screwing their employees over with an informal no-poaching arrangement. Well... non-compete clauses screw the employee an order of magnitude worse. And we should drop the hammer... equally hard if not harder... on the companies using them.
Re:Just ban them outright. (Score:4, Insightful)
If it's a contract you sign, then I assume they must be compensating you 'in advance'. I don't see what's illegal about them, it prevents certain people (eg. C-levels and management) from spying on a company and then going to their competitor with the information they collected.
You should get compensated though for them, most people simply don't read their contracts or know that they can disagree to signing a contract. I've disagreed many times to many contracts at jobs. Most of the time HR simply doesn't care that you don't sign and when they do care, I say "I don't agree" and then sometimes there is a small shit storm and a dick waving contest between managers but not something I care about.
If your severance package is good enough to warrant a non-compete, then by all means sign it, but if all you get is a handshake and a sweater, then fuck them.
Interesting twist... (Score:5, Interesting)
What if the company cut your salary before firing you?
"Hey Bill, you've had your salary reduced to minimum wage, but don't worry, we're firing you!"
Non-compete for 1 year price: ~$8,000
Or even better:
"Hey bill, we'll give you severance pay of $X, but you have to sign these papers..."
Included in that pile is an agreement to take a lower base salary for your last pay check, which is then used for non-compete salary calculations.
Re:Interesting twist... (Score:4, Insightful)
If the legislators are smart, they'll make the calculation of base salary depend on salary over the past few years. And making employees sign something to retroactively reduce their base salary could be made illegal for the purpose of the law.
Legislators (or at least their staff) aren't stupid. That's how they get hired into the private sector. They either keep writing laws that are increasingly onerous or business buys them out.
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Then depending on the state you are in any major size cut would allow you to consider that as being fired without cause. So you get the various benefits from that.
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I imagine they may have considered this possibility... Seems pretty easily thwarted--just use the person's salary as their average of the last three paychecks, with the caveat that amounts less than the check previously issued are unusable for this computation (i.e. you can change his salary on the last day, or months ahead of time, but because it's an average tha
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This is why there should be a requirement for all law makers to post their proposals to /. and thwart the obvious holes we find in them! Or to ask an 8 yr old child. Same difference. :)
Min
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Given the way business works (outsourcing, tax loopholes, abusive practices like non-competes" the thing to keep in mind is that companies will just find a way around this.
Manager 1: Fred's making 100k but we need to get rid of him. I don't want to pay Fred 50k next year to not work here.
Manager 2: Well, just demote him and drop his salary to minimum wage and wait for him to quit next month.
Manager 1: That's brilliant? Let's order another martini.
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the salary minimum wage? or the state one? even so fred can quit on the spot and get the non-competes at half his pay + unemployment.
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What if the company cut your salary before firing you?
"Hey Bill, you've had your salary reduced to minimum wage, but don't worry, we're firing you!"
Non-compete for 1 year price: ~$8,000
Or even better:
"Hey bill, we'll give you severance pay of $X, but you have to sign these papers..."
Included in that pile is an agreement to take a lower base salary for your last pay check, which is then used for non-compete salary calculations.
This. You totally nailed it. My previous employer was a company I don't wish to name because frankly, I don't want to give them any publicity. Few have heard of their North American office, who I worked for, and I'd like to keep it that way. During my final year or two there (not sure of the exact time) they forced us to sign a form that went to HR that said that if they laid us off, they agreed to pay us one month's severance pay for each 2 years we worked there but there was a huge catch. Until your s
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What if the employers "price" the non-compete salary into your main salary. Bob used to make $140k before the non-compete pay law was passed. After the law passed, his salary is now in the range $120k to $130k (i.e. pay reduction applied to new hires or employees getting raises). As you can see, unless a lot of employees are laid off under this law, the company does not lose much money. Instead, each employee is paying non-compete severance insurance for his co-workers.
health coverage? (Score:2, Interesting)
What about health and other benefit coverage during the non-compete time period?
This will adversely affect contracting companies (Score:2)
Many contracting companies have an NCA that prevents a contractor from going to a new firm for a job which is also offered by the original contracting company, in addition to requiring a premium fee from a contract-to-hire from the host company.
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My response is tough shit for them.
Any business model that relies on court enforcement of restrictive labor contracts is weak. If you can't provide an incentive good enough to keep your employees at your firm and need to coerce them, you're doing it wrong.
Non-competes are unethical (Score:5, Insightful)
Non-compete "agreements" are hugely unethical in my opinion. If I work at Google and Apple wants to hire me I should have the right to switch employers without further restrictions. If companies want employees to sit on the sidelines they should either pay them enough to keep them on the payroll or pay them market value to sit on the sidelines. Putting a non-compete in front of an employee as a condition of employment should be illegal and unenforceable anywhere in the US.
I like this approach! (Score:5, Interesting)
Non-compete agreements were historically an executive clause, designed to protect a company against having a key man quit and then immediately apply a headful of inside knowledge against the former employer. When such a worker separated with a non-compete in effect, he was usually walking off with a tidy stack of equity shares whose value would be diminished if he were to violate the agreement.
So when a company requires a non-compete from a worker who does not in any way benefit from the clause, let's require compensation in the form of a percentage of former salary.
How often are they actually enforced? (Score:2)
I can see them being actively enforced for people working directly on technologies with a specific competitive value, but it seems like they're used so often for people whose main risk from leaving for the competition isn't threatening privileged information but the hassle to management of losing an employee and having to hire another one, often at a higher wage.
Does anyone really spend any money on these rank and file "blanket NDA" employees?
good, but should be changed a bit more (Score:2)
For involuntary termination? (Score:2)
I still prefer our solution over here in Europe (Score:2)
A non-compete that essentially means you cannot find work is void.
For example, it would be acceptable to say that you cannot work in the same area your current employer is in, provided it isn't too broad and it depends on what kind of job you have. If you work at an investment bank as a database engineer, the non-compete clause "must not work for financial services" can stand because you can find work in a different area (e.g. as a database engineer for a search engine provider). If you were a stock analyst
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I said unpaid interns are fine? Care to find the citation, I would really love to see what context that was in.
And essentially if you so please you can usually buy off any kind of non-compete clause you're under, afaik the maximum "penalty" a company could ask from you is two months income. If that keeps you from getting that awesome new job either that new job ain't that good, they don't want you badly enough to simply pay the pebbles or your income situation is bad enough that one should wonder why the he
Re:Blame the Unions. (Score:5, Insightful)
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Unions caused these non-competes to happen. In an effort to ensure that even the shittiest employees get luxurious lifelong jobs with full pay and benefits, they forced companies to do things like this to stay afloat without unfair competition from other fat cat Union shops. So the next time you get laid off and are forced to sign a non-compete, remember that fat cat Union backed by criminal Democrats like Hillary Clinton are the reason you are suffering.
I'm interested in this because I've never heard those two things connected before. Can you substantiate it please?
The main reason so far as I know why unions exist is that worker productivity has steadily risen since the 1950s while wages have remained stagnant. It's a predictable situation when you have two parties with competing interests, only one of them has a great deal more power, can dictate terms to the other, and generally is holding all the cards. That's where the demand and support for unions
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The main reason so far as I know why unions exist is that worker productivity has steadily risen since the 1950s while wages have remained stagnant.
Unions exist thanks to the rise of Communism in the early 20th Century, which happened in response to the uncontrolled Capitalism of the 1800s (see: Gilded Age). I think that the US would eventually have gone through a Russia-style revolt if not for the rise of unions to curb the worst of the excesses. The Depression and FDR came at just the right time as well -- before it was too late. Ever since the 50s, Union power has been declining, and is almost gone by now.
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In the meantime, young kids that don't remember the cold war or any of the (true) stories about Soviet style living are starting to embrace communism.
Bad economic times don't just give rise to Trumps, they also give rise to Bernies.
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I agree, if they initiate the severance, then they should either release you from the NCA or pay you, benefits included, until the term is up. However, if you leave of your own doing, then the NCA applies.
Actually, if they terminate you, its a pretty good bet you could fight them in court if they tried to enforce the NCA and win. However, that's a huge expensive mess and there is a chance they would win so I'd not recommend going that route unless necessary. But what you can do is move to Cali and let the
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This is not true. Employers enforce non-competes to keep competitors from sucking away their workers and driving wages up, regardless of how you conduct yourself at your new job.
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Re:unintended consequences (Score:4, Insightful)
Because that's what happened in states where non-competes are banned?
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If you think we have a free market in employment you're either not paying attention or you're a shill.
Re:I don't see the problem with non-compete clause (Score:4, Interesting)
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Sorry, my current employment contract don't permit me to reveal who my employer is to anyone.
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If it exists, what is the name of the economic principle that explains why people can't reliably effect policy change by way of boycott?
The situation is a variation of the multi-player "prisoner's dilemma" game. Basic game theory says that the best choice for any individual player is "defect", which in this case means sign the agreement and take the job.
Re: (Score:2)
That is the way it should be. If your employee is valuable enough that this person would cripple your business when they are at a competitor, they should be taken care of. If you want to assure that I don't bring my experience to your competitor even if I don't want to work for you anymore, then you should pay me for that. If you don't want me to work at all in the business for whatever reason, then pay me for the rest of my life including pay raises and promotions I would've reasonably qualified for.