Non-Competes As the DRM of Human Capital 193
An anonymous reader writes "Techdirt has an interesting look at how non-compete agreements are like DRM for people, doing just as much damage to innovation as DRM has done to the entertainment industry. It includes links to a lot of research to back up the premise, including some studies showing that Silicon Valley's success as compared to Boston's can be traced in part to the fact that California does not enforce non-compete agreements."
Dawn of understanding (Score:3, Insightful)
Hear! Hear! (Score:3, Interesting)
Whether you call it anti-compete agreements, guilds, trusts, or five year plans, the result is the same. Short time gains for a few, long time economic stagnation for everybody.
Anyone wanting the state to enforce non-compete ag
Re:Hear! Hear! (Score:5, Insightful)
Trying to define the "strongest" arguments is itself an additional layer of value judgment, but setting aside that, one should not underestimate the various economic arguments against DRM.
Just to cite one example, the recording industry slit their own throats when they got the Audio Home Recording Act to legislatively mandate DRM be included in all new audio recording devices. It strangled the audio hardware industry, which in turn strangled music sales. The Audio Home Recording Act's imposed DRM in Digital Audio Tape and in the Minidisc and in all technology for an entire decade. It effectively exterminated all new devices and strangled hardware sales and strangled music sales for an entire decade. People sat around holding onto their CD collection and NOT buying (or re-buying) music on DAT formate and Minidisc formate or anything else, because no one owned or wanted a DAT player and no one owned or wanted a Minidisc player or anything else. The DRM-extermination of all hardware and formats since the CD is one of the major contributing factors in declining Recording Industry sales numbers.
The hardware industry was economically devastated and by direct follow-on the content industry economically harmed by DRM for an entire decade. It was only with the introduction of the MP3 player that ANY economic and technological advance has been possible in the audio hardware industry (and the far far too lagged sale of MP3 content), and the sole reason it was possible for the MP3 player to break that DRM-imposed economic wasteland is that the MP3 player slipped through a loophole in the Audio Home Recording Act's DRM mandate. The sole reason that we are seeing economic and technological stimulus in the hardware industry... and the all too delayed stimulus in music industry innovation and sale of old and new content in MP3 format... is exactly because of the escape from the negative economic effects of DRM.
I certainly agree with the "moral" consumer arguments against DRM, but don't let the situation sound like some wishy-washy "moral" anti-DRM battle against pro-DRM economics.
DRM is anti-consumer.
DRM is anti-technology.
DRM is anti-economic.
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We should only use examples and ideas about cars to think about and say things about rocket ships.
We can never use examples and ideas about rocket ships to ever say anything new about cars.
Sheesh, kids these days don't even know cars existed before rocket ships.
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Florida (Score:2, Interesting)
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Yes, state by state.
Some states will enforce non-compete clauses, others will not (on the basis that an employer cannot deny you the right to make a living in your skilled profession, rendering the non-compete clause null and void).
I'm not an expert in the subject, but a do not "solicit any of their clients for 2 years" is less severe than some other non-compete contracts, and that clause might be upheld in some cases and in some states that might nullify a contract whic
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Non-compete (Score:4, Interesting)
I really don't have a problem with extened non-competes with in some limits.
But then the company also has to pay your wages in full during the non-compete period and a generous severance beyond that period.
That is, you allegiance or commitment to any non-compete ends when the pay cheque ends.
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But then the company also has to pay your wages in full during the non-compete period and a generous severance beyond that period.
That's going a bit far. If you quit, why should they pay you severance? The wages during the non-compete period I could see, but what's to prevent an employee from quitting specifically to exploit this? Hot dog! My employer had me sign a four-year non-compete agreement, time for me to go get a master's degree!
Your suggestion is not well thought-out, unless your purpose is really to say "non-competes are okay as long as we make sure that no sane company would ever ask anyone to sign one".
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I mean you work in a given industry doing a given job, if you move companies chances are your going to be doing the same or a similar job because thats where your skill set lies. A no compete clause, if even enforceable (they are illegal in some countries, restriction of trade) basically prevents you getting a job doing whatever it is you do for the duration of the clause.
Therefore, an employer making you sign such an agreement should have an obligation to pay you fo
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Hey! You wanna join the band as drummer? Sure, here, sign this non-compete.
You mean I can't work as a drummer anywhere for 5 years if you kick me out of the band or if it doesn't work out and I leave?
Right! Everyone does it!
all the best,
drew
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The only response to that is by a non-compete reversal: If the company deems that you are too valuable, they SHOULD pay you to not work. After all, it is a contract, which means for a certain loss, there almost always is the opposite gain in another way.
It really comes down to this: Lump it or leave it.
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Lets see... yada yada yada.... according to this clause if I am terminated or I quit I cannot do this same job working for someone else for the next X years. OKEY DOKEY! No problem! I'll sign it right away, I'll just add this other clause in here:
If I am terminated or I quit then your company cannot hire any other programmer during said term.
Okay, I've signed it. Now you sign it too and we've got a contract.
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Your suggestion is not well thought-out, unless your purpose is really to say "non-competes are okay as long as we make sure that no sane company would ever ask anyone to sign one".
Having been under a few, and had to fight one, and won with prejudice I can can say most non-competes are rope around your neck documents. Often they want you to sign after accepting the job or change rules 3 years into employment. Puts people in the situation of having to comply or be on the outs. Fortunately where I live,
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I don't see a problem with people exploiting this. After they've done it enough times, it'll become obvious that they are a scammer and then will become either non-employable or unfit to work with t
Not going too far, already in use (Score:3, Insightful)
Because the value of you *not* working for the competition is more worth to the company than the money in question naturally. It system is actually in use for the upper levels of management, where the people are too smart to sign a non compete agreement with no compensation. It is a significant part of what's behind Golden handshakes.
The problem is that most engineers are lousy businessmen, and thus willing to sign away something
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On the other hand if the employer dismisses the employee, they can'
Don't sign them! (Score:4, Insightful)
Non-compete? Don't sign it!
It's that simple... If a company wants you to sign such an agreement, it says alot about the corporate culture of that company. It means management thinks it completely owns the people who work for them.
It could also mean some people have already left the company to work for competitors and they're trying to protect themselves from this happening again. That tells me it's probably not a nice place to work at, if people leave to go and do the exact same job somewhere else!
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Now, if an employer and employee have the expectation that it is a lifetime engagement and not something terminated at the whim of a quarterly profit projection, a non-compete agreement is much more logical. Not a whole lot of indivi
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Far as I'm concerned, that's the PERFECT legal interpretation of a non-compete agreement. You can pay me full salary to do nothing, or you can piss off and stay out of my way; hey, sure, take your pick, ex-boss!
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drm, retarded patents, noncompetes... (Score:2, Insightful)
it's sort of the opposite of communism, where it was believed that by expelling selfishness as a motiviation in life, all will be enriched. when in reality, communism just makes all of society as poor as its poorest member, as selfishness is a motivation to succeed and do better, and this enriches society in indirect ways
meanwhile, business law thinkers know that innovation is the wellspring of all of their profits. so the idea is t
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As said by Gibbons in Office Space: "It's a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don't see another dime; so where's the motivation?"
yes, 100% true (Score:2)
so any social system: a government, a legal structure, that attemptes to straightjacket human nature as totally selfish or totally selfless fails, because it misses half of human nature. a legal structure must attempt to reflect the nature of the human beings it is forced onto as much as it can. if you instead try to force human nature into unnatural simplistic assumptions, you are automatically weakening the social structure, and the lives
Tragedy of the commons (Score:5, Interesting)
The Tragedy of the Commons crops up all over the place - the most frequently seen cases are things like over-exploitation of natural resources. Generally there are only two ways to deal with the problem; one is to legislate against the behaviour that is detrimental in the longer term and the other is to convince the players to take a longer term view. What's interesting about this debate is that there are people who do have a longer-term interest as well as some sway over the companies: the venture capital firms that invest in not just one start-up but many start-ups over a period of time. They have an incentive to make the environment the best for all companies to thrive. I hope Bijan Sabet manages to convince a few more of them!
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Correlation != Causality (Score:2, Insightful)
San Jose [meteo.fr] has better weather than Boston [worldweather.org]. Maybe people with a choice of where to work choose a nice place to do it.
San Jose [salary.com] pays programmers slightly better than boston [salary.com]. Maybe people like to be paid more.
Why are people always so eager to boil complex situations down to a variance in a single variable in an attempt to prove a point?
Re:Correlation != Causality (Score:5, Insightful)
For example - from the article.
Gilson looks at a few of the other possible explanations for the difference and shows how they're all lacking, leaving the difference in noncompetes as being the key difference between the two regions in terms of the flow of information and ideas leading to new innovations.
You can even follow through and read the sources linked from the original article
eg.http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508
Why are people on the internet always so eager to think that highly qualified economists at world class Universities will have failed to consider the one blindingly obvious thing to consider about a situation, simply based on reading a one line summary of the relevant paper, in order to prove some clearly stupid point?
Re:Correlation != Causality (Score:5, Insightful)
Why are people on the internet always so eager to think that highly qualified economists at world class Universities will have failed to consider the one blindingly obvious thing to consider about a situation, simply based on reading a one line summary of the relevant paper, in order to prove some clearly stupid point?
I call it the "101 phenomenon." It goes something like: "Any moron learned in physics 101 that that's not possible..." Or "This is statistics 101 stuff, what a bunch of idiots..."
People take course XXX 101 and think they are now experts. When in fact, the true experts took not only 101, but 201, 301, 401, and probably all the way to "40001." And then they TAUGHT each of those classes. And then they wrote a book on it. They know all the little places where XXX 101 actually made simplifications or glossed over complex topics, or made statements that were NOT strictly true but did so for the sake of teachability. In other words, they know so much more than you do that they already thought of your petty objection within the first microsecond and addressed it not much more than a millisecond later. They counter your objections in their sleep, with no conscious effort -- literally.
Usually the hard science is left out of the reporting. That doesn't mean it isn't there. But everybody loves to be an expert just because some journalist worded something badly or took it out of context. If your exposure to a topic is only "101 level," you really have no clue at all and certainly no basis to make a meaningful criticism.
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Why not?
The highly qualified biologists at world class Universities have all failed to consider the [various] one blindingly obvious thing that proves evolution wrong and impossible.
Chuckle.
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Somehow, it always falls down to a simple balance: do the people accept a job because it is a good one or because they have no other choice?
Noncompetes not common in Boston (Score:2)
Noncompetes just aren't common in Boston.
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They have an agenda, and it works?
Human nature (Score:2, Insightful)
Patents, non compete agreements, and organized crime are all designed to provide an automatic win without the need for competition.
This is one of those oddities that should be (Score:3, Interesting)
That is to say that if a court can find in favor of the non-compete agreement, you should be able to get a divorce, or sue for compensation. I do not know if this has been tested, but I'd bet a couple of court cases is all that would be required to break that camel's back.
Human Capital?? (Score:2)
Advice for EVERYONE: Don't sign these things, ever. Never, ever sign a non-compete. Just don't do it. I did and luckily it wasn't a super-long term. Also, if a company forces you to use a non-compete, find out BEFORE accepting the job offer. If a company that you've been working for comes along and asks you to sign it, call your lawyer immediately.
Bad Analogies as the DRM of Human Discourse (Score:2)
Two separate things (Score:2)
The second part is assignment of inventions which is almost alway completely separate. Or at least it should be. If you are employed in a "creative"
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The second part is assignment of inventions which is almost alway completely separate. Or at least it should be. If you are employed in a "creative" capacity where it is your job to come up with new things, do you honestly believe that you should have the right to (a) come up with something new that is within the scope of your job, (b) quit, and (c) form a new company to exploit this new idea?
If it's a non-patentable idea, then absolutely, yes. If it's patentable, there's no problem to begin
I don't understand how they enforce them (Score:2)
For "average" techies who have to sign them, how do they know where you go to work when you quit and how much effort will they put forth to actually enforce it?
I work for a small consulting company (20 people) and they made new guys sign non-competes and tried to get existing employees to sign them (I said sure, for $10k consideration and a full salary and benefits guarantee during my non-compete period, they said not to worry about it then).
But if
It's all BS (Score:4, Informative)
Essential Difference (Score:2)
So where's the DMCA equivalent? (Score:2)
a) Contest a plaintiff who sues based on a non-compete agreement
b) Hire a lawyer to get advice about a non-compete agreement
c) Traffic in information about non-compete agreements or laws that concern non-compete agreements (including this law)
How about Washington state? (Score:2)
Where I work is fine (Score:2)
should be null and void if they fire you... (Score:2)
not limited to what you invent (Score:3, Informative)
One outfit I interviewed with was wanting me to sign an agreement which stipulated, among other things, that I not work for any competing companies for a year after termination of employment with them, even if they fire me. I balked. They withdrew their offer. A few years later, they shuttered their operations here.
Is this enforceable? I don't know. But the way I look at it, if they're doing stuff like this during the interview process, what will they be like later?
Depends on the market and business (Score:3, Informative)
One thing I have noticed is NCAs being employed in places you wouldn't expect them. My son went to work for a local paintball field as a game helper and referee. This is a small-time outfit operating out of some guy's house. He had to sign an NCA. He showed it to me and I just laughed.
Warning: Unsafe redirect (Score:4, Informative)
Re:Warning: Unsafe redirect (Score:5, Funny)
Warning: Do not look into goatse with remaining eye.
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Re:Why not.. (Score:5, Insightful)
agreement I got presented.
There is no way I will sign an agreement of that nature without serious modifications.
I've walked away from contract gigs in recent times where the client's HR outsource
insisted that I couldn't start work without signing the document and that there would
be no modifications to the document (Effectively dismissing me before I even started-
the hiring manager went into a panic and went charging around to get permission to
get me to submit an amendment to the agreement that protected their interests, but
by that point in time, I'd already got another comparable contract and was off the
hook from the other. Don't play games with me. You wouldn't tolerate this stuff
out of me, I won't tolerate it out of you as an employer.
In the end, it's standard boilerplate and it's from businesses or their lawyers
thinking they're "clever" and trying to avoid losing anything that might be theirs.
The problem is, for me, it IS indentured servitude- and they're in no way even remotely
paying me enough to lay claim to everything I might come up with, nor could they.
The HR people all invariably say "that's not what we're intending"- BULLSHIT. If you
intended otherwise, you would have put it in the agreement- what is on the paper is
what you intended. If it's not, you need to fire your damn Counsel and find one that
will do what you actually intend.
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"that's not what we're intending" (Score:3, Interesting)
That one is particularly easy, cross out the relevant part of the contract, and write "what they were intending" in the margin.
If have never personally experienced problems with modifying the contracts, usually the "hiring officer" will accept them. The same laziness that makes most people accept the outrageous contracts, also works on the people on the other side of the fence.
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a, never intend to produce anything, just coast along doing their 9-5
b, don't read what they sign
I have refused to sign several such contracts, some companies will be flexible about it but some won't... At the very least, you can get the clause narrowed in scope so that it:
a, only includes inventions which relate to the company business or the business your employed for
b, only count things done on company time (ie things your boss t
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I'll fix that for ya:
It will be quite ------ accepted by people that:
a. have been unemployed for an extended period of time after a previous layoff
b. have a family to support
Ethical high ground comes at a great cost when there are responsibilities involved.
If you have responsibilities, do they share your ethical high ground (even if they are below the age of consent)?
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Such terms can often decrease the talent pool too, people who are more in demand can be more choosy about their contract terms resulting in companies with such terms only being able to employee lower quality staff: (those in less demand, those who have no intention to invent anything and thus don't care, those who are too careless to read the contract etc)
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Re:Why not.. (Score:5, Interesting)
- My rate will increase because I can't use this work elsewhere and could potentially be working at another client where my work could be reused and make me more valuable.
- My time estimates will at least double since I have to recreate everything I've done elsewhere that I had previously planned on using for this project
When companies realize they get a benefit from not using non-competes, they quickly change their mind, and so far, not one has forced their version of the IP agreement on me.Most big companies don't (Score:2)
I believe that non-competes, used appropriately, do more good than harm. However, they are very often abused and on the whole that may not be t
BTW (Score:2)
BTW, one thing my business actively does is provide ideas we have in development to third party businesses free of charge. THe reasoning is: in these cases we are involved in core communities of open source projects, and our competition helps us more than it hurts (because they are downstream of us and this
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The issue of trade secrets is a separate one from the issue of non-competes. Trade secret laws could still be enforced without the need for non-competes. Again, like the article says, look at the Silicon Valley vs. Boston thing.
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Re:Don't feed the competiton (Score:5, Insightful)
So you can't use your expertise to make a living for 5 years? Or does you contract have your employer paying you severance for 5 years? I'm betting it doesn't. I'm also betting that your employer is happy with the knowledge that he doesn't have to pay you market, or give you decent benefits because if you leave you can't compete with him for 5 years. It's just another form of indentured servitude and you're a willing participant.
Competition is the core of good Capitalism and you agreed not to. Oh yes that's great for your employer, no doubt about that.
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If you are a programmer, this is rarely a problem.
If you are a mechanical engineer who specializes in gas turbine engine design, this is a big problem.
Being a programmer, this has never been a problem, but I still will not work for a company who makes me sign such an agreement. Good programmers can find good jobs nearly anywhere.
I have worked in the power industry, telcoms, universities, ba
Re:Don't feed the competiton (Score:5, Insightful)
I don't normally pay attention to anonymous cowards, but in this case it deserves a response.
What this contract really prevents is your employer keeping you happy and on the job. Does your contract guarantee your benefit plan? Your retirement plan? Cost of living minimum yearly raises? Severance should you be released?
A fair contract is one that benefits both parties. A non-compete only benefits the employee if they get something in return for the duration of the non-compete. If the contract only protects the companies interests then your interests are being thrown out the door. Don't accept their word that they will "do the right thing." If it's not in writing they don't have to and most likely won't.
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What the employee gets in return for a non-compete agreement is a job. This offers the opportunity to earn and save money while employed, in order to be able to live off the savings during the term of the covenant not to compete.
</devils-advocate>
reality of non-competes (Score:2)
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If I leave: 6 month non-compete
If they tell me to leave: 6 month non-compete and 6 mont
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A non-compete only benefits the employee if they get something in return for the duration of the non-compete.
What the employee gets in return for a non-compete agreement is a job. This offers the opportunity to earn and save money while employed, in order to be able to live off the savings during the term of the covenant not to compete.
</devils-advocate>
What the employee gets for the non-compete agreement is nothing at all. The salary and benefits are in exchange for the work performed.
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For example, my reading of the non-compete at Microsoft was simple: If you were an Office developer, and you went to Sun to add MS OfficeOpenXML to StarOffice, then that would be a problem. If OTOH, you went to work at IBM building new features for the Linux kernel that would be OK. If the contract distinguishes between using your employer's trade secrets and working for the competition that is one thing. If it doesn't then it is a form of servitude.
Re:Don't feed the competiton (Score:4, Insightful)
Whether you have a non-compete agreement with an employer or not does not address the issue of trade secrets. Unless your former employer gives explicit permission to share trade secrets, you can never share them with any other employer. Period. The same thing applies to source code. Now do people break that rule when they go to another company? Yes, it happens but they open themselves up to litigation. The question is whether non-competes harm innovation by placing an restriction on who can employed.
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The problem is if I hire a developer that comes from a company with a competing product it is highly unlikely the company I hired him away from is going to be able to actually claim something new is the result of "trade secrets" that the developer brought (illegally?) with him. Where would you go to get any sort of evidence of this?
Now, if there is a non-compete agreement that I knowingly violate by hiring the developer, I am putting my company and the developer in trouble. There isn'
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Note the conditional. Absent the conditional, it is a problem. With the conditional, it is *just* a form of trade secret protection.
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Re:Don't feed the competiton (Score:5, Insightful)
That's their motivation for the non-compete: it's better for them. By the same token, not having a non-compete would be better for you, since you could easily turn around that argument saying "why should I fill their pockets with money just to have them lay me off in bad times". If it's OK for an employer to look after their own interests, then certainly it is OK for an employee, too.
TFA, on the other hand, suggests that the practice of non-competes reduces overall innovation. So what's good for an individual employer is not necessarily best for society at large. So society might have an interest here in looking out for its own, also.
BTW, if you view your employees all as potential enemies, you might not be getting their best efforts.
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It's not even necessarily good for an employer, however much he thinks he wants it.
An employer wants a non-compete to cut off harmful "outflow" of value. However if the practice of non-competes is legally enforced, then by definition it also cuts off his own beneficial inflow of value. And the direct benefit to an employer of an
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Or to put it another way, do you think that, with your skillset, you could earn the same or more more working somewhere else that isn't in the same line of business?
If not, then your screwed. Your current company can hold you to ransom, if you decide to leave you can't work in the industry you are trained for and have experience in, you have to do something else for which your not trained, wh
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You're making an incorrect jump in your reasoning, that if the action is beneficial for individual party, it must be beneficial for all parties as a whole. That's not [wikipedia.org] always true [wikipedia.org]. It's possible to have situations where if all individuals choose the action most beneficial to themselves, ev
Sounds dangerous (Score:2)
Wrong attitude. (Score:2)
The problem with your attitude here is, you're thinking about what's good for the company, not what's good for you. While you won't be able to take any trade secrets if they've had that covered properly (NDA, worst case), why not insist that you retain that ability?
In other words, yes, it would suck for that company if you just open up shop across the street. But if you're anything
That's the big difference (Score:2)
Exactly. The fundamental difference between non-compete clauses in employment contracts and DRM is that in most jurisdictions, one of them usually doesn't hold up in law when it matters, while unfortunately the other one apparently does.
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A lot of companies still include them tho, with the intention of scaring people who don't know any better.
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Most often however your non-compete would simply make it difficult to get hired by a new company that clearly was competing over clients with the old company. Unless the new company wants to try to defend in court their decisio
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A lot of people don't realise non compete clauses aren't enforceable, and thus comply with them out of fear instead of doing the proper research.
This deters people from leaving, as they fear they couldn't earn the same level of money elsewhere.
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And software patents are another.
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Capital is a store of value that is used to acquire the means of production (plant and machinery), raw materials and labor that is then used in production of something to be sold on the market.
Human capital actually fits that definition quite well.
Human capital is exactly the recognition that labor is *not* a trivia