Senators Propose Near-Total Ban On Worker Noncompete Agreements (arstechnica.com) 109
An anonymous reader quotes a report from Ars Technica: A bipartisan pair of senators has introduced legislation to drastically limit the use of noncompete agreements across the U.S. economy. "Noncompete agreements stifle wage growth, career advancement, innovation, and business creation," argued Sen. Todd Young (R-Ind.) in a Thursday press release. He said that the legislation, co-sponsored with Sen. Chris Murphy (D-Conn.), would "empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand." Noncompete agreements ban workers from performing similar work at competing firms for a limited period -- often one or two years. These agreements have become widely used in recent decades -- and not just for employees with sensitive business intelligence or client relationships.
"We heard from people working at pizza parlors, yogurt shops, hairdressers, and people making sandwiches," Massachusetts state Rep. Lori Ehrlich told us in an interview last year. Ehrlich was the author of 2018 Massachusetts legislation limiting the enforcement of noncompete agreements. Several other states -- including Oregon, Illinois, and Maryland -- have passed bills on the subject. These state reforms focused on reining in the worst abuses of noncompete agreements. Some prohibit the use of noncompete clauses with low-wage workers. Others require employers to give employees notice of the requirement at the time they make a job offer. The Young and Murphy bill goes much further, completely banning noncompete agreements outside of a few narrow circumstances -- like someone selling their own business.
"We heard from people working at pizza parlors, yogurt shops, hairdressers, and people making sandwiches," Massachusetts state Rep. Lori Ehrlich told us in an interview last year. Ehrlich was the author of 2018 Massachusetts legislation limiting the enforcement of noncompete agreements. Several other states -- including Oregon, Illinois, and Maryland -- have passed bills on the subject. These state reforms focused on reining in the worst abuses of noncompete agreements. Some prohibit the use of noncompete clauses with low-wage workers. Others require employers to give employees notice of the requirement at the time they make a job offer. The Young and Murphy bill goes much further, completely banning noncompete agreements outside of a few narrow circumstances -- like someone selling their own business.
Don't limit them, enforce compensation (Score:5, Insightful)
Re:Don't limit them, enforce compensation (Score:5, Informative)
Which my understanding is considered to be about 2x your salary. I wouldn't complain about being offered that.
Re:Don't limit them, enforce compensation (Score:4, Interesting)
That California law makes sense to me.
After all, if I stop working in my chosen profession for a couple of years, it would introduce a serious gap in my resume. And while everybody would understand that gap, it would also mean that it would be much harder for me to get back into that profession and find a job at the same level I had originally left at.
Re:Don't limit them, enforce compensation (Score:5, Insightful)
I think most companies would balk at the idea of having to pay someone twice their salary not to work somewhere else. If it's someone who's worth using that kind of non-compete option on, then surely they're worth paying to work for the company. But then again if management did things that made sense they wouldn't be management.
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There's even more to non-competes in California than compensation levels. Here's a legal analysis from late 2018. To summarize my reading of it, the non-compete is valid only if the signer had independent legal counsel, and the firm was domiciled outside California.
https://www.gtlaw.com/en/insig... [gtlaw.com]
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Generally, the best way to deal with non-compete agreements is to make them treated as paid vacation. If your employer wants to enforce the NCA, it should be require to continue to pay the salary for that time. Works wonders in making them apply only where sensible.
I'm a union guy, this is exactly our position.
Re:Don't limit them, enforce compensation (Score:5, Insightful)
I'm a union guy, this is exactly our position.
It shouldn't be.
Your position should be 1.5 times or 2 times your original salary.
After all, you will be getting older, but you won't be getting promotions/pay raises and your skills/experience/knowledge at your chosen profession will also stagnate during that time.
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Wrt compensation, the policy is (in rough translation, I'm not us) always "We should take as much as we can get, but not more". To be realistic about it, if you could get 1.5-2 times the working salary for not working, a lot of things should probably be reconsidered.
Re:Don't limit them, enforce compensation (Score:5, Interesting)
Well having to pay such a high salary might make your employer come to the realization that if they want to retain quality employees they should treat them well and that no company has a monopoly on talent. If you're worried that someone is going to leave you and join a competitor and they're so talented that they will make a difference, then perhaps you should invest more effort into finding out why that person wants to leave in the first place - surely that is someone worth hanging on to.
But no - these non competes are just another way for HR departments to treat employees as cattle. The first ones start getting signed in economic downturns when people are desperate for work and will do/sign anything to get that job. Then suddenly everyone is doing it and it becomes standard practice and employers start to think there's something wrong with you if you don't want to sign... good I wish them luck with this legislation.
Re:Don't limit them, enforce compensation (Score:5, Interesting)
if you could get 1.5-2 times the working salary for not working, a lot of things should probably be reconsidered.
That's my very point.
If you're a waitress, a welder, or a hairdresser, I don't care how good you are, they shouldn't be forcing a non-compete on you in the first place.
But if you do happen to be worth the hassle of a non-compete, let's say you work as a scientist in R&D, then they need to pay you for both your loss of income and the potential temporary stagnation of your career.
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The non competes I've seen only limit you to the field of direct competition, if you're working as a waitress, welder, hairdresser you could be flipping burgers or going to school while compensated, seems like a pretty good deal to me.
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Maybe that's old-fashioned thinking nowadays.
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Then you come to an arrangement to agree what the cost of "making you good" will be, and how that cost will be dealt with if you leave shortly after training. This isn't a "no compete" agreement.
I've run into this several times in my career, it's not that big of a deal, if done properly the exact costs you'll be on the hook will be spelled out, and those costs will generally be prorated over some reasonable period of time (a few years). My experience being under these has always been that if someone wants t
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No reasonable company is investing in developing their team under the misconception that every individual being developed will stay on board until their ROI nets out. Not doing it at all is about as painful as doing it and losing its object.
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If you're a really awesome welder, or a really awesome hairdresser, because of the training they provided. That means that all your remaining co-workers are going to be just as good as you and they shouldn't worry about losing all their existing customers to you if you leave to go to a competitor.
Also, let's face it. The professions of welders or hairdressers are not six-months-old. Your employer didn't create all the lessons of welding, or hairdressing, by itself. It may have improved on one of those profe
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You could also start a competing company
Just like that. Everyone who starts a business is successful and becomes a millionaire.
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A trillionaire in Zimbabwe dollars.
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Your skills wont stagnate if you keep them up to date.
If you want an increase in salary, it would be perhaps 2% every 6 month, not a silly 1.5 or 2.0 factor ...
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Or you could use some of that additional disposable income and free time to do some relevant courses, maybe a few hobby projects depending on your field, and make sure to put those on your resume and bring them up in interviews once you start looking for new work and the subject inevitably comes up. Maybe even go back to school and do a Masters or similar? I c
Say goodbye to on job training. (Score:2, Interesting)
While I agree that is sounds like they are being hugely over applied. There is one big issue
If I, as a business owner, spend $$$ and time training a staff member to upskill, where is my protection that as soon as I have finished they wont jump ship to another competitor, taking with them my investment?
The alternative will be to make them sign contracts whereby the staff will repay training costs if they leave before a certain time, or not provide such training?
This strikes me as a feel good 'solution' which
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Perhaps if they're laid off or otherwise terminated without cause, the NCA is void. Never liked the idea you can get laid off to save the company's ass and not be able to clothe your own. Of course, in right to fire states... er, I mean hire (since it's always used in the context of firing people)... employers can find a reason to fire you and make it really difficult for one to defend themselves. That brings up a deeper issue, one I hope we explore more: the interests of little hard working Joe/Jane Sch
No, say hello to reimbursement of costs (Score:4, Insightful)
If I, as a business owner, spend $$$ and time training a staff member to upskill, where is my protection that as soon as I have finished they wont jump ship to another competitor, taking with them my investment?
Your problem is recovering the investment that you made so figure out that cost, decide on a reasonable time that they should work for you so you can recoup it and then have a term in your contract that if you leave the company before X years passes the employee will reimburse you that cost (pro-rated for the years they did serve). Preventing an employee from working elsewhere is not the solution to ensuring you are reasonably compensated for any training you provided.
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No. I'm not signing that.
If you want me to stick around after the training then pay me a decent salary and make it a nice place to work.
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Re:Say goodbye to on job training. (Score:5, Insightful)
Re:Say goodbye to on job training. (Score:5, Insightful)
Exactly...
And if an employee is willing to take the training and then immediately leave, then you're managing your company wrong. Why don't you consider the reason that employee would leave?
Clearly your working conditions are not up to scratch, so the employee feels they will be better off somewhere else. So why not improve the conditions so that they're willing to stay?
I've encountered many greedy and arrogant companies who think they can get qualified staff cheap by training them rather than paying the market rate... For example, a given certification might typically command a salary thats $20k higher on the open market, so the employer pays $5k to train an existing staff member thinking they've saved $15k...
But that employee is now being paid below market rate for his skillset, he's going to see job postings online, he's going to be contacted by recruiters and he's going to speak to his peers working in similar roles at other companies.
He's not going to be kissing your ass because he thinks you were benevolently providing him training... He's going to see that you're abusing him by trying to get his skillset on the cheap.
Cheaper to not train, in that case (Score:2)
Certainly non-competes have been abused and there is a body of law around that. The abusive non-competes probably aren't enforcible anyway, but that's a tangent. I'd like to respond to what you said.
> For example, a given certification might typically command a salary thats $20k higher on the open market, so the employer pays $5k to train an existing staff member thinking they've saved $15k...
But that employee is now being paid below market rate for his skillset, he's going to see job postings online
So
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Wasn't this why the apprenticeship system was a thing?
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If your company is concerned about employees leaving for other competitors and taking their valuable intellectual property with them, you can file patents and then defend those patents. If the employee takes intellectual property from their employer to their new employer, it's called intellectual property theft, and can typically be demonstrated via digital forensics.
An engineer who has spent a significant portion of their career developing knowledge on a specific skill shouldn't be prevented from working f
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Employees receiving on-the-job training can sign an agreement stating that the training reimbursement is contingent upon them continuing to work for the company for X months/years. If the period is not completed, they can go after the employee to recoup a portion (or all) of their training cost.
Or just use golden handcuffs. If it's good enough for the C suite it's good enough for the proles.
Re:Cheaper to not train, in that case (Score:5, Insightful)
So the employer's options would be:
Hire someone for $20,00 more (no training cost)
Pay $5,000 for training and then pay the person $20,000 more
You forgot one: Pay $5,000 for training, pay the person $15,000 more. Now you have the skills, a person who already knows your business processes, and a loyal employee who appreciates your investment in them.
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If I, as a business owner, spend $$$ and time training a staff member to upskill, where is my protection that as soon as I have finished they wont jump ship to another competitor, taking with them my investment?
By not being a shitbag. If all your investment is on customer attainment and not customer satisfaction you deserve to lose them regardless. Businesses don't exist to make an individual money, they exist to fill a role required by society. The fact the business owner makes a profit is great when they are doing well, but if their relations are so flimsy that they can disappear (or their working environment is so atrocious that a critical mass of employees want to leave to go elsewhere) that minority of sle
Re:Say goodbye to on job training. (Score:5, Insightful)
Re:Say goodbye to on job training. (Score:4, Insightful)
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Having a one sided non compete is extremely detrimental for most people...
Many people are simply not provided any training at work, many companies invest nothing but the salary in the staff.
If you work in a particular profession, then that's where your skillset is, it's what you are qualified to do and what you are good at. Why should someone who could earn decent money in their profession go to flipping burgers for 1-2 years while riding out a non compete? I certainly wouldn't want to do that...
In many pla
Re: Say goodbye to on job training. (Score:4, Interesting)
Your âoeprotectionâ would be the fact that everyone else is in the same boat and you can poach from other companies the same as they can poach from you. You can also treat your people well and pay competitively... including keeping your salary and compensation packages up with the rest of the industry. People donâ(TM)t change jobs on a mere whim. Itâ(TM)s usually because they feel mistreated or undervalued. And under compensating people vs their peers in the industry is a good way to tick both of those boxes.
Noncompetes are already nearly totally illegal here in California. And if you think hurt economy or keep businesses from being successful, you might try taking a drive down 101 or 280 sometime.
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Why do you need legal protection for this scenario, outside of a few narrow high value cases?
Most workers are not going to casually jump ship if you are investing in them, unless the competitors offer much better places to work. Your average non-psychopath will want to pay you back for your help unless you otherwise act in such a way that makes them hate your guts and just want to get out ASAP.
While it is true that larger players can offer salaries that small businesses typically can't match without getting
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I'm assuming you're in the us where education isn't available for free, now you know how employees and employers have reasoned when accepting higher taxes in exchange for free education.
Trade secrets are a regulated by law but ymmv.
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How about paying them a reduced rate while they complete training, and then giving them proper pay for their level when they've completed training?
I very much like what another here said: if you're losing employees, it's because you're losing employees, not because you're spending money on training them. Hell, they'll generally be thankful and grateful for you investing in them, and have some loyalty toward such an employer. (I've never been trained by an employer, but I have had a lot of experiences, and I
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We said goodbye to job training years ago, even in places where non-competes are everywhere. If non-competes were really just about recouping training costs, they would expire at some point leaving the employee free to change jobs. They would also be void in the event of a layoff. They wouldn't even come up for near minimum wage jobs and would be a condition of additional training, not just simple employment.
Meanwhile, employers demanding a 4 year degree plus experience for an "entry-level" position puts t
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Re:Say goodbye to on job training. (Score:4, Insightful)
Treat your employees well and they are less likely to leave for a better opportunity. And it's not always about salary. You can pay an enormous salary and still bleed jobs because you are an unbearable boss.
Three simple rules.
1. Pay a competitive salary and benefits.
2. Understand that working for you is not their entire reason for existence.
3. Don't be an asshole.
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I would say 1 is the least important of those. I know people who have taken significant paycuts (like by a factor of 4, maybe more at my estimate), going from banking to not becuase the former job maxed out 2 and 3.
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Okay, but banking. High-end salary to ordinary salary isn't the same thing. Not by a long shot. Sorry, but for those of us in the somewhat close to median level of income, this isn't even remotely realistic. This bill needs to pass, whether compensation-based costs to the employer, or outright ban. I favor the former, but that's a personal position. The general need is as close to non-opinion factual as one can readily get.
Also, yes, would drive wages up for sensitive positions and free up people to go wher
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This bill needs to pass,
Eh? I'm not arguing against the bill, if I was arguing about it, I'd be arguing strongly for it.
I was just commenting on how money isn't an especially good motivator. Banking was one example; lots of people will trade money for working environment. And I'm not talking about actual bankers here, the person I was thinking of was a sysadmin.
whether compensation-based costs to the employer, or outright ban. I favor the former, but that's a personal position.
I'm undecided. If I was to
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That must be the reason why there was never any on-job training before NCAs became common!
And also why companies in countries where NCAs are uncommon never invest anything in employee skills.
I've wondered about those. Thanks for explaining.
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If someone you've invested a significant amount of money in training jumps ship like that, they have just done you the greatest service imaginable - they've let you know that your business is a terrible place to work at, while you've still got time to fix that.
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Your problem is not providing an incentive for the employee to stay after receiving training. Did you increase their salary for completing training to be on par with competitors? Do you have a good working environment?
What I've seen in my years is that the employers that don't want to pay for training, fearing that workers may leave, are usually paying sub-par salaries or have poor working conditions. They hire people without sufficient skills on purpose because they can get them for a below average sala
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My experience over the last decade or more of my employment (IT/tech industry) was that the practice of a business "investing" in staff through training had largely disappeared already. Even as a manager, when I suggested that we should institute a regular practice of encouraging staff development through a program of reimbursement of training expenses, I was basically ignored (given lots of "we'll look into it" responses without anything ever developing). Then, when I myself was looking for a new positio
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Generally, the best way to deal with non-compete agreements is to make them treated as paid vacation.
Why is that the best way? It sounds terrible. I leave job X because I can get better paid at new job Y. But under your proposal I sit out of my chosen profession for two years, stalling my career, earning less money than I would if I could work at Y.
I'd probably get promoted within two years were I working at Y. Maybe make Principle or Director. That'd be much better than getting paid to do nothing.
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If you're overskilled for your position, agreeing to a fairly compensated lock in clause probably isn't for you. You'll find it very hard get someone to hire you for a job with with the need for a particular skill set, but compensate you for a higher skill set. It takes two parties to meet to constitute a contract, and legislating against voluntarily agreed conteacts is something that should be done only with great care.
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That is how it is done in Germany.
And "non compete" can only apply to highly special jobs anyway.
California Uber Alles (Score:1)
Once again, the rest of the nation struggles to keep up with California.
Pity about Cheeto Mussolini and the EPA
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Once again, the rest of the nation struggles to keep up with California.
Pity about Cheeto Mussolini and the EPA
Occasionally even CA gets one right. Probably twice a day in fact.
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Nah, if they caused cancer, we'd put a Prop 65 warning label on them like most things in a grocery store.
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I know that lots of other companies do use them, but it seems to be a particular affliction in that sunny state. It stands to reason they would desire to do something about it first.
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I have not followed the issue real closely, but most of the news (the complaints) I've seen about non-competes involves silly-con valley tech startups, and in particular the FAANG crew...
We already have protection from non-competes, though, so this isn't for us. This is for everyone else. Either that, or it's actually a way to weaken our protections, I haven't actually read it. If the feds make law on this, ours can't contradict it...
about time (Score:3)
Instead, give these ppl green cards and require that businesses can not use these ppl for contracting work for at least 2-4 years.
I will say that it should be allowed for companies to limit IP transfer. IOW, somebody should be made to sign an agreement to NOT transfer technology that they know about from the past company.
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I'd like to work for you (Score:3)
I'd like to come to work for you some time.
You spend $5 million building an R&D facility and stocking it with all kinds of exotic materials. You pay me $150,000 / year to do R&D. If my work doesn't end up making a cool new product in five years, you've paid me $750,000 to try, and you're also out the other $5 million in costs.
If your investment DOES pay off, and the work you're paying me for results in an invention worth $7 million - well I get the patent. You're still screwed. You're just scre
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The bigger
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There really is a lot of abuse in the AMerican work arena these days. Sadly, the cause of it is CONgress and they refuse to do the right things.
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I will say that it should be allowed for companies to limit IP transfer. IOW, somebody should be made to sign an agreement to NOT transfer technology that they know about from the past company.
That one is a tough one.
That clause too gets abused by companies not wanting to let go of their employees all the time.
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Nope. They need to allow H[12b] visas - but tax the company equal to 30% of what they pay the Visa recipients. Typically the H12bs pay get paid about 20% less.
This allows companies to still use them to get workers they can't find in the US, but prevents them from making a profit by limiting wages.
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The simplest solution is to allow H1B workers to easily change jobs. It shouldn't any more difficult than registering the new employer online with x days of switching jobs. Currently, it's very difficult for an H1B worker to change jobs and employers take huge advantage of this. While the law states that the workers must be paid the same salary, it's proven to not be the case. Plus, H1B workers tend to not get pay raises or bonuses, work much longer hours, and tend to not complain about abuses. Making
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Look, by killing the H[12]B program, but adding greencards( say 1/2 of current H[12]Bs), we make it possible for others to come here AND STAY. Right now, H12Bs are only allowed a short stay and both programs being horribly misused. Worse, many companies are paying the H12Bs HORRIBLE and H2Bs are out and out treated horribly.
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By adding 25-50K, more greencards that are specific for fields that America is hurting in, means that they can move here and stay here.
And if these ppl are nof allowed to contract out, then many issues solved.
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H1/2B was designed to bring down the wages and it does just that.
No. H1/2Bs were designed to maintain wages, rather than generate a shitstorm during a worker shortage. They were *abused* to bring down wages, partially because the implementation of the visa is silly.
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Now, get rid of H[12]Bs, which were also designed to limit wages, etc.
Just because you happen to be working in a career where the process was abused doesn't mean H1Bs need to be gotten rid of in general. Yeah they probably shouldn't apply to run of the mill IT, but there are many fields where there is just a plain shortage of qualified people in the country, there are also plenty of companies who rely on these Visas for staff mobility which is not the same as stealing jobs or limiting wages.
As a specialist immigrant myself (not to the USA though) I am often accused by ignoran
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As to H2Bs, much of that can and should be taken by automation or local ppl. For example, trump's hotel simply has to raise the price that they pay the locals to get good workers. They just do not want to do that.
Out of curiosity, what field are you in?
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so... (Score:2)
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no-poach is already technically illegal in many cases.
https://www.mwe.com/insights/u... [mwe.com]
Sure that is not going to stop it because there is no real teeth against them, but there could be a big payday for a working finding themselves on the winning side of them.
Most laws against businesses are just limiters for businesses with little money and influence. Big Business can afford to repeatedly break the law and additionally still make money doing it. The amount of money saved enacting no-poach agreements is li
too logical (Score:2)
Itâ(TM)s a start... (Score:2)
But âoe Near-Totalâoe isnâ(TM)t good enough. The ban should be absolutely total. And no-poaching clauses need to be illegal as well.
What's the catch? (Score:2)
This coming from our lawmakers, I can't help but wonder: what's the catch? This just makes too much sense for there to not be any catch.
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Hollywood will lobby that one - HARD (Score:2)
jimmy john's got smacked down for doing to min wag (Score:5, Informative)
jimmy john's got smacked down for doing to min wage workers.
https://www.reuters.com/articl... [reuters.com]
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Was a crap place to work though.
counter (Score:5, Funny)
As long as everything is fair and even, I don't mind the free market.
So, in this case, I'll be happy to sign a mutual non-compete agreement. I won't work for another company in your field for three years if you don't hire anyone with my skillset for three years. Deal? No? Why?
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Don't worry, they won't find another one with your skill set anyway, only a subset :P
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I'll be happy to sign a mutual non-compete agreement. I won't work for another company in your field for three years if you don't hire anyone with my skillset for three years. Deal? No? Why?
I'm trying to figure out a reason that's not actually as ridiculous as it sounds, and for the life of me I can't come up with anything. [golf clap]
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Non-competes are already illegal in California (Score:1)
This is... (Score:2)
Long overdue
Good Example of the Fallacies of Libertarianism (Score:2)
Under the theory of Libertariansim all contracts are made between equals - Walmart and the prospective employee have equal power to set terms in reaching an rigorously enforced contract - as the only legitimate function of government, beyond dealing with property and violent crime, is contract enforcement. Of course the vast majority of applicants have no power at all, and must sign the contract on a take it or leave it basis. And once you throw in the tendency of businesses across sectors to adopt the same
Many States Don't Uphold Them (Score:2)
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It may be that a state won't enforce a non-compete agreement on an employee who leaves, but the mere existence of the non-compete agreement decreases the employees bargaining position with their employer. Sure, you may be pretty certain that the company won't sue you if you take a job with someone else, and you may be pretty certain that the courts wouldn't rule in the company's favor, but: a) you won't be 100% certain, and b) you will have the psychological cost of breaking an agreement - going back on yo
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How much money will business pay? (Score:2)