I think the Chinese law is effective in this regard: in order to maintain any non-competition agreement, the company must continue to pay you a monthly compensation amount equal to 30% of your total monthly income when you were at the company. Whenever the payment stops, the non-competition agreement is automatically void.
Or the Brazilian law, that requires 100% compensation, and puts the onus on the company to prove that the non-compete is necessary before it can be enforced.
If you ever see one of those contracts here, it's usually usually for a very reasonable situation and a well paid position.
I generally ask for 150% - usually on the expectation that it’ll make the non-compete go away.
It’s not at all a ridiculous ask, either. I’ve made a career out of going after high-impact roles in whatever is the fastest growing area of technology at the time. The non-compete isn’t just asking me to sacrifice the income from my next role, it’s asking me to sacrifice the experience as well. It also limits my ability to renegotiate comp while on the job, because they know your BATNA isn’t to just go get a better offer from a competitor.
If a company wants me to give all of that up, I’m sure as shit not doing it just for the privilege of working for them.
If it's 100%, I'd rather the noncompete not go away. If I am able to live off the salary, why not take the free paid vacation if it's offered? I can spend the time doing and learning things for myself, rather than the company.
In principle, if you are changing jobs, it's because you found one with something like a raise or better working conditions. Being unable to look for those has a cost.
The free movement of workers is important to having an efficient economy. The US could do a lot better here; we have bad safety nets, non-competes, "trade-secrets".
When workers move freely and spread trade-secrets, this results in all companies performing better, on average. This is good for everyone except the lazy owners who would lose money to those who perform better.
While the US worries about limiting the free movement of workers, non-competes, and "trade-secrets", China is going to build approximately a billion homes and factories.
If we take the "free" out of "free market", then we're just a market, and far from the most efficient one.
I think the lack of universal healthcare is a very significant limiter to freedom of job movement in the US, especially if your whole family depends on the health insurance you get from work.
Oregon at least makes it 50% IIRC. Anything less than 100% seems useless though. Usually when taking a new job in the same industry you expect a pay bump, so even a 100% rate is likely leaving money on the table.
I would welcome an opportunity to walk away from the entire tech industry with a guaranteed-for-life income, allowing me to pursue dreams without them needing to be financially viable. Setting up as a high end timber boat builder without ever needing to turn a profit while still having the same income I do now is something I'd jump at immediately.
Except it's not "for life". It's until they feel free to lift the non-compete. My guess is that most information you take from a company is irrelevant in a couple years. Maybe 5 tops?
Plus it'd almost certainly end with zero notice. You'd get a email saying "you're free to go". Suddenly. After say 26 months.
So it's not like a "pension for life" - just a gap in your employment history.
Oh no, ah jeez, slightly more than one year of income for zero effort, darn.
Any employment gap can be easily explained by saying "I was under a non-compete and being paid garden leave while working on personal projects to keep my skills fresh". It's very common in e.g. the finance world, I believe.
I suspect most people with that sentiment don't have a mortgage/kids/etc. I have known youngish people who got a very nice severance package back in the day and essentially took a 6 month sabbatical. I don't really see a problem for getting future jobs so much. But it is a loss of significant income (assuming you were well-compensated even if you're still being paid something) and may not have great alternatives for income though, if you're in the position to do so, you can of course travel or whatever.
There's perhaps significantly lower total compensation and potential uncertainty. A lot of people just aren't in the position to travel the world (or whatever) for a year. Or even work on an open source project that may or may not even be within the bounds of the non-compete depending in the company.
it's not necessarily about fully compensating you. It's about making the non-competes actually cost the company something so they can't use them as free leverage to get you to accept shitty conditions today because quitting means not being able to work in your field at all for x years even if someone wants you around.
In Portugal is generically the same - non-compete clauses require the payment of a monthly compensation for the duration of the non-compete clause; If non-compete clause exists, but no specific compensation is specified in the contract, the employee may demand the full salary during the specified period (I know at least one case).
I’ve seen this is France and UK but it lasts only a few months and no you can’t refuse the payment - but the company can refuse to pay and set you free.
In UK it's called gardening leave. A period when you are still employed but not at work and can't join another company without agreement.
Uk law generally is that non compete clause is ok, if the length of time is reasonable. But you can't stop a person with a trade from applying that trade unreasonably.
Most tend to be 3-6 months.
Normally it's to stop a person leaving from stealing clients.
US finance has the same thing, and also calls it gardening leave. In our case I think it's reasonably common for it to be as long as a year.
Downside for finance folks is that the usually make a decent chunk of their compensation through bonuses, not their base salary. So their gardening-leave pay ends up being quite a pay cut, and while they're "gardening", they're out of the game for a year and their skills/knowledge becomes a little out of date.
> reasonably common for it to be as long as a year
Absolutely not. For ibanks, less than VP is one month. VP/ED/MD is three months. Sometimes it is six months for an MD, but that is extreme. The longest that I ever heard was someone who left Citadel as a portfolio manager had a TWO year gardening leave. How can that make any financial sense for Citadel? Before the HN crowd jumps in about that Citadel example being "reasonably common": There are probably less than 1,000 people globally who would fall under such an extreme contract.
I know an example of a garden leave for 2 years for an engineer working on trading algorithms. Maybe he falls into that 1000 people category (PhD in math).
for senior people whose alignment an employer needs to maintain after separation, it seems a lot more common to use some sort of advisory or consulting contractual relationship to keep them close as long as necessary…
The "non-solicitation" agreements are so stupid. There is a cottage industry in headhunters where you tell your next employer who you want to recruit, then they ask a 3rd party recruiter to go track down that person after X months... and invite them to interview. I have seen it so many times in career.
It's definitely fuzzy. I mean, someone like an account rep or a financial advisor (and their clients) can't unknow somebody. So even if someone isn't taking their client list and calling/emailing everyone, there's inevitably going to be an element of client "poaching" so long as they're still in the same business.
fyi there are clauses in contracts that try to control the use of residuals in “unaided memory” , trying to refer to stuff you just happen to know by dint of having been exposed to them, even though they’re in no explicit notes.
Then the employee is only making 30% and presumably not working elsewhere or that would defeat the purpose. So how is this a good approach? I would get 80% or more but don’t see how this is effective.
This is the first I’ve heard of this so I’m just rolling it around… but I suppose this would make it cost-prohibitive for companies to insist on non-competes unnecessarily.
As the employee, it’s still clearly a bad position for me unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.
> unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.
This clearly depends on your role and industry. I can write code in a bunch of industries I've actually never had 2 jobs in the same industry. If I were an oil pipeline engineer it would be different.
I'd think it isn't about employee getting 30%. It is about the companies would be paying money really for nothing in most cases, and thus forcing the companies to avoid blanket enforcement (and unpredictable at that as it avoids the company having the free option of coming after you nilly-vanilla when they feel like it years later) - and such avoidment is great for innovation industry-wise. If your confidentiality agreement is really meaningful, then probably you can negotiate much better payment.
I believe this is the interpretation that most closely reflects the intent of the legislation. This is not a form of income, but rather a means of discouraging companies from acting recklessly.
Bad if you leave for a competitor. I've never really done so. Fintech, social media, recipes, bidding, e-commerce, fashion, saas, mental health, games, and so on. There's just a wide range of fields you can go into that don't compete and still use the same skills.
Unless the previous employer is slow and incompetent, if you've done good work, they'd probably be ahead and better funded. I'd take the money.
Imagine if Tesla had been able to stop Andrej Karpathy working at Open AI just by spending 1/3 of what his salary was when he was on Autopilot. That sounds like a terrible idea.
Non-competes (including stealth non-competes like the OP mentioned) are being abused by US employers seeking leverage over their employees.
In fact, 12% of hourly workers earning $20 or less had to sign non-competes. These workers do not have access to corporate secrets. It simply reduces their power to negotiate with their employer.
Australia is straight up banning non competes for anyone earning under $175k, for this reason.
They are also tightening up the contract law around non competes to reduce the impact of the scare tactics employers have been using to bind low level employees with unenforceable, but still litigable, contract terms.
And scare tactics are really all they are (in this country), because even before they do this the courts have a track record in this country of looking very dimly on overly broad or restrictive non compete 'agreements'.
Not only in the US; without going into too much detail, many countries in south America and Africa have strong business connections with the US, and it is quite common to see the ever-abusive dumb dumb US contract templates being used in those countries, even when local law differs significantly. Usually, the posture is "we can do whatever you want and you keep your mouth shut, or else we'll sue you for everything". I loathe organizations with these kind of contracts.
If the law has specific clauses about this that the contract disrespects, these conditions are not worth the paper they are written on.
At least in Brazil you can't enforce something the law doesn't allow in a contract - that clause would be considered void without nullifying the contract. And Labour law in Brazil leans (or used to lean) more in favor of the employee,so yes, the law would win. Another aspect there is that unions are more common than in the US, and they will help in such cases.
>If the law has specific clauses about this that the contract disrespects, these conditions are not worth the paper they are written on
Unless the law also has severe penalty for including such terms, of course they are. They don't need to dissuade 100% of people from breaking 100% of the terms to be of use to the company.
On a personal note, I once was presented with such a (US) contract that also required me to list every NDA I had signed to date; Since then, I always assume most US lawyers are beyond incompetent.
That's funny. Some NDAs I've signed prohibit you from mentioning any contact with the company involved (thus you're not allowed to mention the NDA) so my answer would be;
"Under the terms of NDAs I have signed I am not free to disclose that list."
I would literally have no idea what NDAs I've signed as many are at partner meetings or conferences I haven't given a second thought to. I couldn't tell you the last NDA I signed.
We have been sued over signed contracts many times over the 3 decades we are in business. Almost only by US companies, but well, shitty for them, Dutch judges (and lawyers) rather laugh about those overbearing things in those contracts. We don't even need a lawyer before we sign them as we know they are worth nothing here. And that's been tested many times now. Fyi; we didn't break them; it's just that we are tech troubleshooters-for-hire and we work for many companies (1000s) over time; the suing is always the paranoid delusions were the contract states we cannot provide our services for any competitors of them or even companies that are not competing but in the same market forever and ever. F offfff. But yeah, it costs them a lot of money and we are insured for it (which is cheap compared); we don't waste any time or money on this.
I'm not sure what conclusions you think we should draw from that. California's advantage over Washington is primarily one of size - Washington's GDP per capita is actually about 3% higher than California's. The most generous interpretation I can think of is that you're crediting the non-compete difference for California's far larger population, which is tenuous at best.
Seattles weather does nothing to lower the denominator. The PNW is rainy and somewhat cold, but not cold enough to kill homeless on the street in large numbers which is what folks seem to think lowers the denominator. And yes I do live in the PNW.
WA is busy losing its way on taxation vs value provided for taxes paid and reporting burden. so imo these IP issues are almost second order effects at this point. i personally expect a continued exodus over some of the latest tax hikes for example taxing cap gains beyond a certain amount at an additional 7%. as if niit was not bad enough. if residents could at least see some value from these added taxes maybe it could be something. also the estste tax there kicks in quickly and has hidden gotchas even for people who no longer live there.
Washington's non-compete laws are pretty mild these days, although it is true that it's not California.
I'm also not sure where you heard that Washington is "business friendly." B&O Tax, labor laws, Seattle city politics and the institution of income tax have all driven significant exodus from WA elsewhere over the last ten years.
But, Biden admin + WA laws in 2020 and 2024 make it a relatively low employee load for non-competes, as far as I know. Duration limited to 18 months, auto canceled if an employee is laid off, $120k-$300k income floor under which they are not enforced, details must be offered before job offer made (including a verbal job offer), no venue shifting regardless of location of employer, new employers are granted presumptive standing to sue on behalf of a new hire, agreement only allowed against current customers of the company, not enforceable when selling equity of up to 1% of a company to competitors of the company..
These are not your father's east-coast non-compete agreements! Combined with broad federal support that a non-compete cannot stop you from earning your living, e.g. banning a doctor from working for a competing healthcare system is likely no-go on its own.
I'm pro-California and anti-noncompetes, but I'm not sure if this evidence demonstrates much. The banning of non-competes in California is a very recent thing, and if we're doing a correlation thing, California saw the vast bulk of its growth when non-competes were in effect.
On the other hand, moving between (and founding) minicomputer companies was a thing for a long time in spite of Massachusetts being fairly non-compete clause friendly until very recently. And arguably, current laws enacted against some fairly strenuous tech company opposition force companies to put some skin in the game but are still a pretty raw deal for employees who can't afford to sit on the bench for 50% of their former base. (Which is what I think relatively recent legislation calls for.)
I'm against non-competes except in narrow cases. But a lot of people probably give the general inability to enforce non-competes in California too much credit for CA tech success in spite of one story in particular.
OTOH, beware letting yourself be intimidated by scary looking but unenforcable clauses that are all over contracts. In doubt, spend a bit of money on a lawyer to figure out what your real situation is.
I know of several cases where lawyers said "don't bother arguing with them about clause X, just sign it and ignore it".
Society would be better if we could, and we would all benefit.
Looking at what the growth trajectories are of countries with high corruption, it’s not great, so our growth is probably still reduced by the corruption or lawlessness that still exists.
Why do you think having billionaires at all is of benefit to society? Or do you just mean that the people inclined to break rules to accumulate unreasonable wealth would just follow them instead if that worked as well and that is what would benefit society?
Because in a well organized society where wealth accumulation is not by corruption, then by definition it would be by creating value, which benefits everyone.
The alternative is something like oligarchs that extract wealth because of state granted monopolies, corporatism that strangles competition with anti competitive regulation, etc. The accumulation of wealth is all out of proportion and possibly not even correlated in those cases with the production of actual value.
This is pretty much the advice every lawyer has given me in the past. The likelihood of it coming up is very low. Sometimes it's good to not be special.
The one time I had to sign a non-compete--because my company was acquired--I just signed it because it was quite specific and I wasn't going to be an exec of a storage company anytime soon. Probably didn't matter much because I left a few months later anyway.
What are the keywords for finding a lawyer who can advise on non-competes?
Asking because it turned out nearly impossible to find a local lawyer to advise on a dispute couple months ago - with 9 out of 10 telling me they only do divorces or real estate or immigration. I was literally calling one by one from a list based on what I believe were relevant search criteria on State Bar website.
> What are the keywords for finding a lawyer who can advise on non-competes?
If you're in California, try the following; they all know their stuff and aren't in supercostly BigLaw firms (although I think most are BigLaw alumni):
I had a non-compete cause in a contract, I wound up in a dispute over unemployment insurance and the contract came up, the judge told me that the non-complete cause didn't make any sense at all but that's because it was poorly written.
So happy my union managed to ban broad non-competes in my country ~8 years ago. Now it needs to be very specific if they want to enforce it (not just "development work in the same industry" which most contracts had back when I graduated), only applicable for maximum a year, and they have to pay your salary for the time they stop you working somewhere else.
The economy may be well-boosted by the oil, but note that all the money is put into a fund and invested globally, and only a small percentage may be used in the government's budget each year. So no, free healthcare isn't funded by oil. https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
And while I don't support our continued extraction of oil, I feel like your comment is quite weird. How is it relevant in this context? Lots of other nations have public health care without having oil. Besides, the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
Whatever beef you have, please don't include me in it.
I guess I'm missing it. You linked to wikipedia which says it's called "Oil Fund" (Oljefondet). Further down it says "As of June 2011, it was the largest pension fund in the world, but it is not a pension fund in the conventional sense, as it derives its financial backing from *oil profits*, not pension contributions"
> the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
The US isn't funding health care through oil profits. If it was going to fund public health care (which it does) it does it through taxes.
You basically have a free money fountain and get free stuff it (while you burn down the rest of th world) and then you come on here and say "things are great over hear! surprised they aren't great over there" without acknowledging that you have a free money source.
Yes, you're not understanding how it works: The oil profits go into the fund, not government budgets. So we're also not funding health care through oil profits, that oil money is locked away for the future in that fund.
I do think your attacks are quite unwarranted. Every time something good about the US is mentioned, should I then swoop in and mention how you're bombing the world, the tech profits are made on algorithms destroying society, your constant one-day delivery is flooding the world in plastics? How is that even relevant?
Also note, I only mentioned how the union here managed to remove non-compete clauses. Then someone else brought in health insurance and then oil. Not me.
For the record, I have been voting for the green party, that wants to disallow opening new oil rigs. Your beef isn't with me, don't harass a whole country, that's just unfair of you.
How is a union any different in that respect than a corporation? I mean on a theoretical level. A true free-market firm would just be an association of individuals making individually negotiated transactions, with no employee-employer relationship, and no coordination on the side of purchasing labor. Of course that's very inefficient outside of pure theory. A corporation acts as a coordinating body that collectively negotiates the purchasing of labor contracts, and a union collectively negotiates on the selling side.
A few years ago an American company that approached me (UK based) about a job opportunity insisted I sign an NDA before I could interview with them. I refused and they couldn't understand why so they even put me in contact with one of their lawyers. I still refused, and they eventually relented, but I could never understand why I'd need to sign an NDA to attend a job interview. There's literally no benefit to me in doing so.
At the time I was working for a competitor and I figured they could use the fact that I interviewed with them to argue that I - either intentionally or unintentionally - gained proprietary knowledge of their product and my current employer gained from it.
If you’re an employee under NDA, and your company considers almost everything about your work to be confidential, you can’t effectively paint a detailed picture for the role.
The NDA gives them some protection to answer your questions openly and transparently.
You had to know your response would get no love here on HN. You seem to be missing the point that this is like a free option for the interviewing company. Did they offer to compensate this person... say 1000 USD per hour to interview? I doubt it. As a result, the person signing this NDA has 100% of the downside, with no upsides except a "potentially lucrative job offer". That seems like a wildly unequal offer.
You know, in moments like these, you have an opportunity to build a connection — to meet someone in the middle who sees the world a little differently, who is perhaps indoctrinated into a disrespectful aspect of capitalism and is unable to see through it yet, or who perhaps offers a perspective you don’t have yourself.
And you slam dunk any chance of connection for what seems to be the sake of argument and posture. All because of a difference in opinion? Because you have the mighty all-seeing eyes of an objective opinion we should all see through too?
I “had” to know my response would get no love? The only mistake I made here is my continued thought that this was a place for some kind of industry togetherness: It is just a constant stepping over each other for no apparent reason than to satisfy a kind of unfulfilled ego.
I wasn’t concerned with how much you would love my response. I didn’t cater it for you. You are not the only person in my god damn universe. It was meant to be my authentic perspective, to be helpful, or to invite conversation and debate if I missed another perspective unhad.
But with responses like these, gosh, why bother? What a waste of my love.
I think the argument you made is just an entirely different one. The inequality in your argument is basically whether you should be compensated for interviewing with a company — which, I don’t know what’s economically fair there and I’m not making an argument about. I’d love to be paid to interview :) I don’t know the economic impact of it though. I wonder if it would just lead to more selective hiring practices and worser mutual fits.
Requesting payment for just the NDA is weird to me. Without something like this, you’re asking the company to provide detailed specifics of the role you’re interviewing for, but you won’t give them any legal peace that you won’t run away with the secrets you learn: It’s a free and permitted distribution of anything your interviewers go and share with candidates.
It leads to interviews where you have no idea what the role actually is and what you’ll be doing on the job. Every question stonewalled with a generic answer so the employee doesn’t get in trouble. An atmosphere of curation and inauthenticity, to gauge how you will potentially spend years of your life.
Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
i personally consider bad legal clauses in employment contracts a seriously negative sign about the employer. if they’re trying to pull that sort of thing at hiring, what are they going to try to do later when you’re fully committed?? is executive leadership simply unaware or do they condone that sort of thing??
Well, yes. That's how we do business in the USA. It's literally unavoidable unless you can afford to spend a year or three declining offers until you find a unicorn with a sane contract.
Approximately all businesses explictly try to exploit workers to the full extent of the law. That's what capitalism is and it's how we've structured our society.
social media shaming has worked in a few high profile companies like openai recently. especially when founders are still around and feel some personal culpability when their company’s values are on display.
but i think your broader societal point stands though. especially with horrible language in vendor contracts that people click through because who has time for that garbage. i hope llms will help people push back in somewhat more concerted and systematic fashion.
Having probably signed such a contract, how do I find out if it is enforcable?
Probably talk to a lawyer, but how do you find one that gives you a straight, but correct, answer to such a complex topic. For me it is even more complex since I'm a fake employee (contractor) in another country working for a US company.
The answer to those questions might be really unsatisfying in practice, since it breaks down to a cost calculation by the sueing company (if the company leadership is rational). So in case you get sued you have to fight defensively and bleed them enough so they give up or something.
Having talked to lawyers about this sort of case, be prepared to speak to several to find a match, or read between the lines - when you ask questions like, “If I break this clause, what sorts of liabilities am I exposing myself to, and how often in your experience does that happen?” Be prepared for, “as my client, I don’t advise you to do that.” Not super helpful in my case, as I was trying to understand the possible outcomes and likelihoods.
The best advice I got was from a business mentor which was, “if you don’t rub it in their face, they probably won’t notice, and probably won’t care.”
Which is, as you mentioned, a probability calculation.
What I would personally guess [not legal advice] is that you rate the likelihood of your employer suing higher than they do (absent anything egregious).
From my experience with contract lawyers, most of them aren't worth their fee. They just give you absurdly conservative legal advice that you could have guessed on your own. Once you start paying a lot more for legal advice, you will get more nuanced advice like, "if you want to take more risk, you should consider this option".
Oh my god: This is utter nonsense. They weren't kidding when they said don't take legal advice from randos on the InterWebs. Most companies outsource their employment contract authoring to an external law firm, then have (internal) senior HR go over your signed copy with a fine-toothed comb to catch exactly these kinds of "tricks". If your company is that stupid to allow it, then you don't worry about the shitty (potentially unenforcable) clauses in your employment contract.
That’s not really a trick. It’s how contract law has worked for years.
Of course, doing it without telling the new employer is a great way to get an offer rescinded.
Also, if you modify it after the other side signed, then you’ll want them to initial the changes.
If you modified it, then they signed without noticing the modifications, then I guess ask a lawyer.
I don’t see what outsourcing has to do with it. If they have power of attorney to an external HR firm, that seems like their problem. (I’ve never encountered a company dumb enough to do that though.)
Since it would be difficult to prove when changes/strike-outs occured relative to signatures, any such changes to the pre-printed agreement should be initialed by all parties.
I once declined a job offer because the non-compete made no sense. (It was many pages, claimed that I would be paid during the non-compete period, and impossible to read.) I basically concluded that they (the company) had a lawyer that was basically wanking off.
I don't where HN gets its information about investment banks, but it is wrong much more than 50% of the time. (Dart throwing monkeys could do better, I fear.) This is no longer true for non-FO (front office) head count after 2008. In markets (not investment banking/M&A/IPOs), front office is sales, trading, structuring, and a miniscule number of quants. In 2025, The vast majority of working stiffs at the world's top 15 investment banks are being paid an annual bonus that is max 25% of base salary, but 10-15% is more likely. Also, for most FO, when laid-off or leaving, they start gardening leave on the same day. Also, anyone worth anything (as FO) will negotiate with their next employer to have a guaranteed first year bonus that meets or exceeds their last bonus. For non-FO, they are required to work for their entire notice period.
They're not obligated to enforce the non-compete. If you don't have any sensitive information to take to a competitor, they might not give you any garden leave.
OTOH, I've seen non-competes as long as 2.5 years from places like Citadel.
What's worse is actually those non-competes with a variable period. The company doesn't have to tell you in advance how long it will be; only when you hand in your resignation letter will they tell you. It entirely serves to make your job hunt more difficult.
> I've seen non-competes as long as 2.5 years from places like Citadel.
Congrats: You are part of the 0.01% of the industry. Did they also offer to pay your bonus during that period? Else, it looks like a shitty deal that I would never accept. I heard that Florida now has some weird state-specific rules about high income people with non-competes.
> They argue it would be impossible for you to work elsewhere in this industry during your entire career without violating confidentiality with the technical and business instincts you bring to that domain
In that case you need to ask for a lifetime worth of salary, including growth from being in position to be put in escrow before you sign the dotted line. Otherwise they can hire you and fire you immediately and you'd never be able to work in your field that you spent years/decades training for.
Precisely. And, at least in the US, any contract which makes it impossible for a worker to take a new job in their field is extremely likely to be found unconscionable. It doesn't matter whether the contract is cast as a non-compete or as a NDA; if its effect is to say "you must work for us, or not at all", it's unlikely to hold up.
Maybe. I've known companies in the IT industry that took a very hard line on non-competes. Whether they won in court, I don't know. But I've know people who took a year off rather than involving the lawyers. Small pretty well-defined segment of the industry and a couple of the big players apparently did take it seriously. (Never worked for either.)
This is exactly what the company is hoping for. In actuality, you can put literally anything in a contract. Sell your first born baby, sacrifice a goat, whatever. Signing a piece of paper doesn't make it true or required.
Companies are really banking on people making the value decision that doing the legal stuff is too much work, time, and money, so they're hoping for self-enforcement. It's the same reason we still see companies commonly doing things like terminating employees before maternity leave. They know a new mother (who is now jobless) isn't going to bother with the trouble of a potentially multi-year wrongful termination suit.
From what little I know, they were reasonably well-compensated people and they were just in a position to say, whatever. I'll just take a 6 month vacation or whatever and start things anew rather than have a court fight. Which I'd probably do as well.
"Just semi-retiring" is a pretty sensible option at some point.
sounds crazy. in my country, adding anything that prevents you from finding work in the future to a contract is kind of invalid.
you do get non competes etc., but it never holds up in court as you can easily prove it prevents you from finding jobs.
i wish for you in your legislation there might be a similar law, otherwise these things are really evil. i mean, its like prison in some fields niche enough, and those are exactly the fields prone to such overly protective clauses
> adding anything that prevents you from finding work in the future to a contract is kind of invalid.
Here it's six months top, and it only applies to management and specialists with critical domain knowledge - and this also has to be reflected in their wage.
"Unconscionability is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract."
In common law jurisdictions, there's a term of art in law -- "unconscionable". It's when a contract is so egregiously one-sided that no reasonable person would agree to it, and it could be ruled unenforceable.
It's not reasonable to expect an employee to build up a body of expertise in a field, and then agree to be bound never to work in that field again after leaving your current job. IANAL, but confidentiality agreements that act like lifetime noncompetes are good candidates for being found unconscionable, even absent an explicit anti-noncompete statute in your jurisdiction. (Other clauses you may rightly consider unfair, I don't know about.)
Making things worse for the companies implementing such contracts is the fact that things change so fast now that they are unable to substantially benefit from such a contract. The contract is purely a CYA move.
If you have agreed to lifetime noncompete terms, you may wish to speak to an employment attorney about how enforceable the contract actually is in your area.
This is a state level thing. As is whether IP produced outside of your job, on your own equipment, is yours.
I moved from New York to California a bit over 20 years ago in large part because I personally encountered this (the IP ownership bit), and preferred to live under California's rules.
It is worthwhile to read https://www.paulgraham.com/america.html. Point 7 talks about how easy it is for regulations to accidentally squash startups. I believe that the fact that California makes neither mistake causes us squash fewer startups. It is not sufficient to have made Silicon Valley a startup hub, but it was likely necessary.
I usually add this at the end of the agreement and if they wont go for it, I move on:
This agreement shall not apply to any inventions, conceptions, discoveries, improvements, and original works of authorship that [my name] developed entirely on their own time without using [the employer](s) equipment, supplies, facilities, trade secret information, or anything not based on or received from [the employer].
Agree it varies by state. My only first-hand experience was in a relatively conservative "red" state over 20 years ago. I paid for an hour of legal advice and the lawyer said that in general non-competes cannot be so broad that they prevent you from working in your profession or skill.
Is there any precedent for this yet? This sounds like some overeager lawyers talking out of their ass hoping you don’t call them out for it? It sounds like it’s for a very specific situation that really doesn’t apply to most people.
If I understand it right, those NDAs work as non-competes if “confidential” is defined as restricted just on the basis of some relationship to the business, which is pretty weird attack of legalese on common sense. Let’s say I used some relatively simple chain of thought to derive X about my job at Z. The fact that Z uses or does X is probably confidential, and that’s ok. This would be how I understood a broad definition. But what kind of reasoning would conclude that X is confidential per se, preventing me to use or do X elsewhere, effectively making doing my job impossible? It just doesn’t make sense.
They can say that all they want, but that isn't what the statutes or case law about trade secrets says. in California state courts take a very dim view of this sort of overreach.
That is exactly what I'm wondering about. At least a few states have severely limited noncompetes and even outright banned them in specific contexts. I have to wonder if a nondisclosure twisted for use as a noncompete would survive the courts in one of those states.
I'm also skeptical how enforceable this theory is in general. Have there been any noteworthy cases of employees getting screwed over that rested on it?
I wish "inevitable disclosure" were totally turned on its head. If I were in charge, proving inevitable disclosure would happen would result in nullifying the NDA instead.
Hot take: Sign these agreements without worry. When you change employers in the future, make no public announcements about it -- don't post anything on social media, including LinkedIn. Do your best not to transfer any IP between employers. You will be fine.
Finally: Yes, I think these agreements should be illegal. I recently signed a new employment contract that requires me not to disparage my new employer... forever. Literally: There is no end date. I could be an old man in a squeaky rocking chair that says something bad about my (then) former employer, and they have the right to sue me for breaking a non-disparagement agreement. I laughed to myself when I signed that contract.
Yeah, good luck being the odd one out who wants special individualized contract. This might work for unicorn value level employees that are poached from one FANG to another but not for the average Joe.
In my experience, as a normal non-unicorn employee at a large corp, I was able to have my contract modified. It required advice from an employment law lawyer that cost a few hundred dollars and a couple emails with the company’s general counsel.
You can change these contracts. Hiring people is difficult and once the company has made that decision they don’t want to lose you over a contract clause.
As an average Joe, I was able to negotiate employment contract changes every place I worked in the tech industry in California in the early 02000s. I don't remember having been faced with contract clauses that I felt needed alteration as an entry-level tech employee in the 01990s.
If you are negotiating terms you are not an average Joe. Average Joe’s don’t even interact with people capable of requesting someone higher up to approve the change. Average Joe’s get given a take it or leave it deal
White collar workers are the average Joe? And the average white collar worker negotiates terms of their employment?
It’s anecdata on my part but whenever a white collar worker tells me they don’t need a union because they can negotiate a better deal, they get real angry at me when I ask them the last time they negotiated a better deal for themselves
I never said I want an individualized contract, but I reserve the right to reject the offer, and I have, when the contract is unreasonable. What I want to know is when exactly to reject it wrt the confidentiality agreement.
ianal but: don't perform personal work while you are employed by an employer in the same industry. Or at least make it like you didn't do that to any observer.
You may have misunderstood the topic, which, I'll remind you, is confidentiality agreements that act as lifetime non-competes, which means for the rest of your life after you are employed by an employer in the same industry, not while you are employed by an employer in the same industry.
That's the terrible Wikipedia article. It says nothing at all about juridictions in which it's considered a valid legal principle. I notice that someone seems to have just flagged it "unclear".
To chime in on how English law approaches this (and perhaps amplify some of the good points already made): the common law position is that any restraint of trade is contrary to public policy and so should not be enforced unless some exception can be shown.
Post employment restrictions fall under the doctrine of restraint of trade - which explains why we use "gardening leave". While you are employed you and your employer have a relationship which includes a duty of loyalty by you to your employer. They have duties such as a duty to pay you for your work. By default they should also be offering you work, so a specific "gardening leave" clause is required to keep you at home, bound by restrictive covenants but without work and being paid.
After employment, it is much harder to make restrictions that will bite. Typically an employer must show there is some legitimate interest they are protecting and that it is reasonable to do so.
Hence: non-solicitation of clients tends to be easier to justify, though only if an employee actually had some kind of relationship with or knowledge of those clients. Whereas a non-compete is much harder to justify. It is also harder to make reasonable, hence time/space/sectoral limitations.
Looking at confidentiality: the default established in the amusingly named Faccenda Chicken v Fowler (Mr Fowler was a frozen chicken sales lead). It is that you are bound by the usual duties of confidentiality that arise when anyone has confidential information but that you cannot be prevented from using information gained while working that is part of your normal skill acquired as part of the job unless that is so secret as to amount to a "trade secret".
In this case, Mr Fowler knew where to sell chicken (from having done so). While this was confidential, he was able to use that information (not being a trade secret) in setting up a competing frozen chicken sale network.
The core idea is that you can't stop someone plying their normal trade.
That's the default. Obviously if you sign an agreement that imposes post-contract confidentiality obligations it can go further than Faccenda Chicken, but if it went too far, it would also be vulnerable to the rule against restraint of trade.
In short:this sort of "you cannot work in the industry" idea is very unlikely to work in England and Wales (and I suspect the rest of the UK - though I am strictly only an English lawyer).
That said: there is still value in reading your contract of employment carefully and making sure that you are happy with it.
IF you go to an interview, and nothing was divulged to you, this NDA does not mean anything. But if youwork at a competitor, and you get an interviewer tell you things that the company does not want to divulge, company has some protection. Not all laws and processes are bad.
Non-competes should be illegal. If someone is so valuable that them leaving for a competitor would severely damage the business, then pay them more. Do their laundry. Hire someone to drive them around. Give them a personal chef. Etc.
So tired of this garbage. I think non-competes (and the legal concept of inevitable disclosure) should just be banned completely. Sure, some things (like taking customer lists when you leave a company) are messed up and should be barred, but companies should just be required to accept the fact that their employees will take some "proprietary" knowledge/information with them to their next job.
I don't even think that non-competes should be allowed for higher level employees/executives. Everyone deserves the right to change jobs whenever they want to.
> Sure, some things (like taking customer lists when you leave a company) are messed up and should be barred
Is it messed up? If you're a salesperson, and you've built the relationships with these customers is their loyalty to you, or to the company that you worked for? I had a personal trainer for a little while and he took all his clients to a new gym when he decided to contract with a different gym.
I don't know the answer to this. But it doesn't seem as clear cut to me.
But I think the way I look at it is in a sort of "work product" type way. If I'm employed by a company to write software, I'm the one who wrote it, but I agree that the software I write is the property of the company, and I can't take it with me when I leave.
Is a salesperson's "work product" those relationships, and does that make them the "property" of the company? I don't think it's reasonable to say that those relationships are solely between the customers and the salesperson; those relationships wouldn't work out in that way if the salesperson's company was selling garbage, or even just a product that those customers didn't want. That is, the good customer-salesperson relationship is both a function of the salesperson's personal skills, and of the good fit between the company's products and the customer.
Ultimately, though, whatever you agree to in writing when you start the job is what you should honor. I'm fine with the law protecting people from predatory practices by employers (of which I think non-competes qualify, and employees shouldn't be able to sign away a right to change jobs like that), but if an employee signs something that says any customer relationships belong to the company, then that seems like a reasonable thing to me.
Of course this depends on the country. This is a non-issue in France for instance where this topic is strictly regulated and heavily leaning towards the employee.
For what it's worth, a noncompete that makes it effectively impossible for you to apply your profession anywhere for your entire career is unlikely to be enforceable in any state in the country.
Companies that are serious about noncompetes for professionals (rather than hourly shift workers) generally do garden leave. I'd take a noncompete for a garden leave company seriously, and would maybe roll my eyes at a broad noncompete from a random tech firm.
(Don't sign anything you're not comfortable with.)
Too bad. I routinely reapply the exact same business logic across competitors. I even have proprietary source code collections I use for reference. If you don't like it, write your own software. Business methods are literally unpatentable.
If you're not copying internal wikis, and poaching customers what are you even doing?
IANAL and I don't know about other countries, but in EU (definitely the country I live in and am pretty sure it goes for the rest as well) any non-compete agreement after two years is void by law.
You are required to hold confidential stuff for life, like business contracts, but you can use your know-how, if it does not violate any patents, in a competing company as you see fit. This knowledge is a part of you and cannot hold you against employment. Even if you do decide within those two years to employ yourself in competing company, this can be held back by your original company only if they give you X% of your pay at them (X can be 80, or as low as 50, as my friends inform me).
I've actually dealt with this in third-party IP cases I've consulted on. Of course a lot of "bench advice" best practices (use a debugger as a silly example) shouldn't cause a problem--or maybe even some various specific experiences about practices that worked. A file dump of corporate strategy and business plan presentations or code--even if they probably get pretty stale after a few years--probably not.
I didn't see any references in the article you linked to any cases where it had been enforced. I see a lot of commentary that validates the concern, and a listing of half a dozen states where they are being struck down.
So the callout to be wary of them is totally legit... but it doesn't look like they are going to be enforceable when such things go through the courts.
Technically, maybe, but effectively, nobody is going to be able to withstand BigCorp's 100 lawyers whose mission is to bury you in legal fees if you push back. By the time that you confirm these things are unenforceable, you've spent your life savings on $millions in legal fees, and possibly gone into crippling debt. In the legal system, might (wealth + lawyer quantity) makes right.
Have an employment attorney always look over said agreements before signing. A local acquaintance who did work for an MSP had said MSP try such a ploy, only for the employment attorney to sue and get it thrown out as unreasonable and unenforceable.
Never, EVER sign a contract without reading it first, and having your lawyer review it.
That presupposes that people have a lawyer, and one specialized in employment law at that, which is highly unlikely to be the case for 99% of the population.
We're talking about negotiating a contract with a value on the order of a million dollars (say, US$200k total compensation per year for five years). Even if you don't have a lawyer normally, it may be worth the few hundred dollars it costs to hire one for this purpose, unless you have no savings.
I never did, though. I just crossed out the clauses I didn't want to accept and initialed them.
A good employment law lawyer is A) not at all hard to find in major metros, B) charges reasonable rates for quick turnaround times, and C) is something more people need to have on their side in general, rather than elevating them as some snooty thing only the elite have.
This whole “bUt WhO hAs A lAwYeR” nonsense I’m being blasted with in my comments is exactly why these sorts of contracts, grifts, and scams are allowed to exist and succeed.
Know your rights, get a lawyer, and then share that knowledge with others. It’s Organizing 101 stuff.
Yeah, as far as I know, I've never needed one (aside from very routine real estate) but I've had to get a couple lawyers recently for different purposes--through my neighbor. I know lawyers but not in the field I need. Sort of a PITA but just something you need to do sometimes.
I understand that your advice is in good faith - but if we touch grass for a second, only the tiniest fraction of even professional workers have a lawyer at hand. And one that specializes in contract law? Even less.
It’s not that difficult to have legal help with your contract. Call your local bar association and ask for an employment law specialist. It will likely cost a couple hundred for them to review your contract.
> It’s not that difficult to have legal help with your contract.
It's difficult to have legal help with your contract responsive within the timeframe that you have available for signing it before the business rescinds their offer and moves on.
I understand that your advice is in good faith - but if we touch grass for a second, we can easily find recommendations for employment law attorneys who work at very reasonable rates with fast (sub-1wk) turnaround times.
Because that’s how I found mine. $200 later, and I had total confidence in what I was signing and a lawyer on my side if things went pear-shaped in the future.
So if you are against this, you are okay with Coca Cola’s secret to be divulged by any employee to any competitor? If you cannot let companies maintain trade secrets, you may as well close them down.
This implies that any employee at Coca Cola knows and has access to the secret formula, which is of course, not true. And even if it were true, there's a substantial difference between a specific, limited piece of information (such as the recipe for Coca Cola) and broad concepts about operating in an industry.
I work in the Robotics industry. While the algorithm for our path planning would be a trade secret, how path planning is pursued is not. It's a fundamental concept in robotics. To extend the metaphor, it would be as if my company thought that any robotics work that involved path planning would violate their IP, because I did path planning work with them. It's nuanced to be sure, but some companies are very aggressive as to prevent you from having mobility in your career. Sometimes in a genuine effort to protect their IP, but also sometimes to reduce your negotiating power or punish you.
There is a difference between trade secrets and non compete. If you can compete with the company without using trade secrets, like make a drink that people like without using Coca Cola secret, it is fine.
Getting off topic, there's an interesting This American Life story about the Coca Cola formula, and why there are many extremely close formulas, but no exact replicas.
My head canon of the secret recipe is the Kung Fu Panda ending.
Protagonist gets to open the vault of secret formula after decades working their way to the top. Inside is a Coke label with the ingredients part unprinted.
Brand takes money to build. IF an employee took the secret to their rich uncle when coke was small, we would not be talking about Coke. Whatever small the formula was.
I think if the extremely close replicas ever threatened Coke's existence, they would sue. Especially if a former employee started it. I think trade secret protection is the only thing that enables a company to operate. Especially small companies, otherwise only large companies can operate. Any employee with a rich uncle can finish the small company off without this protection.
there are a million different manufacturers of, for example, hot dogs, and those hot dogs basically taste all the same to everyone, and yet they're all making basically identical hotdogs and doing fine
why downvote this? I have gone through this route and can vouch this is for a good cause, this conversation may mislead people into believing stealing is okay.
Maybe it is not, you need much more context about the OP to declare this as a straw argument. Confidentiality agreements are generally very boilerplate. If someone is thinking that this is preventing them from working at something, they are possibly just not understanding what stealing means. This guy possibly had similar understanding of laws: https://www.justice.gov/usao-ndca/pr/former-uber-executive-s...
I think the Chinese law is effective in this regard: in order to maintain any non-competition agreement, the company must continue to pay you a monthly compensation amount equal to 30% of your total monthly income when you were at the company. Whenever the payment stops, the non-competition agreement is automatically void.
Or the Brazilian law, that requires 100% compensation, and puts the onus on the company to prove that the non-compete is necessary before it can be enforced.
If you ever see one of those contracts here, it's usually usually for a very reasonable situation and a well paid position.
I generally ask for 150% - usually on the expectation that it’ll make the non-compete go away.
It’s not at all a ridiculous ask, either. I’ve made a career out of going after high-impact roles in whatever is the fastest growing area of technology at the time. The non-compete isn’t just asking me to sacrifice the income from my next role, it’s asking me to sacrifice the experience as well. It also limits my ability to renegotiate comp while on the job, because they know your BATNA isn’t to just go get a better offer from a competitor.
If a company wants me to give all of that up, I’m sure as shit not doing it just for the privilege of working for them.
If it's 100%, I'd rather the noncompete not go away. If I am able to live off the salary, why not take the free paid vacation if it's offered? I can spend the time doing and learning things for myself, rather than the company.
In principle, if you are changing jobs, it's because you found one with something like a raise or better working conditions. Being unable to look for those has a cost.
Speaking of China:
The free movement of workers is important to having an efficient economy. The US could do a lot better here; we have bad safety nets, non-competes, "trade-secrets".
When workers move freely and spread trade-secrets, this results in all companies performing better, on average. This is good for everyone except the lazy owners who would lose money to those who perform better.
While the US worries about limiting the free movement of workers, non-competes, and "trade-secrets", China is going to build approximately a billion homes and factories.
If we take the "free" out of "free market", then we're just a market, and far from the most efficient one.
U.S doesn't have a hukou system.
I think the lack of universal healthcare is a very significant limiter to freedom of job movement in the US, especially if your whole family depends on the health insurance you get from work.
You mean a billion homes that no one lives in and ends up being a Ponzi scheme?
https://www.newsweek.com/what-happened-china-ghost-cities-20...
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Oregon at least makes it 50% IIRC. Anything less than 100% seems useless though. Usually when taking a new job in the same industry you expect a pay bump, so even a 100% rate is likely leaving money on the table.
Well, yes, but you don't have to work.
More like you are not allowed to work. Loss of work experience, loss network, not even accounting for inflation.
I would welcome an opportunity to walk away from the entire tech industry with a guaranteed-for-life income, allowing me to pursue dreams without them needing to be financially viable. Setting up as a high end timber boat builder without ever needing to turn a profit while still having the same income I do now is something I'd jump at immediately.
While I agree with the sentiment, you could lose that income at any time should they close to drop to non compete.
Plus, nobody says you can't work in any other field you like, just not whatever you used to do.
Net present value of 50% of salary for the next 30 years is something like a million dollars for most HN commenters, I'd guess.
Except it's not "for life". It's until they feel free to lift the non-compete. My guess is that most information you take from a company is irrelevant in a couple years. Maybe 5 tops?
Plus it'd almost certainly end with zero notice. You'd get a email saying "you're free to go". Suddenly. After say 26 months.
So it's not like a "pension for life" - just a gap in your employment history.
Oh no, ah jeez, slightly more than one year of income for zero effort, darn.
Any employment gap can be easily explained by saying "I was under a non-compete and being paid garden leave while working on personal projects to keep my skills fresh". It's very common in e.g. the finance world, I believe.
I suspect most people with that sentiment don't have a mortgage/kids/etc. I have known youngish people who got a very nice severance package back in the day and essentially took a 6 month sabbatical. I don't really see a problem for getting future jobs so much. But it is a loss of significant income (assuming you were well-compensated even if you're still being paid something) and may not have great alternatives for income though, if you're in the position to do so, you can of course travel or whatever.
I've no argument with the severance cash, I'm saying that you can't just revert to a hobby because you have an "income for life."
The uncertainty means you're still out on the job market looking for a real job.
There's perhaps significantly lower total compensation and potential uncertainty. A lot of people just aren't in the position to travel the world (or whatever) for a year. Or even work on an open source project that may or may not even be within the bounds of the non-compete depending in the company.
And loss of negotiating power -- the company knows your BATNA is garden leave, and probably not a better offer.
For a lot of people, taking 50% of base salary (absent bonus/RSU/etc.) isn't very practical. Even if there's some alternative like Starbucks.
Doesn't mean you don't have to make the mortgage payment.
it's not necessarily about fully compensating you. It's about making the non-competes actually cost the company something so they can't use them as free leverage to get you to accept shitty conditions today because quitting means not being able to work in your field at all for x years even if someone wants you around.
In Portugal is generically the same - non-compete clauses require the payment of a monthly compensation for the duration of the non-compete clause; If non-compete clause exists, but no specific compensation is specified in the contract, the employee may demand the full salary during the specified period (I know at least one case).
I guess corporations don't write the laws in China?
can you choose to refuse these payments to avoid the responsibility?
I’ve seen this is France and UK but it lasts only a few months and no you can’t refuse the payment - but the company can refuse to pay and set you free.
In UK it's called gardening leave. A period when you are still employed but not at work and can't join another company without agreement.
Uk law generally is that non compete clause is ok, if the length of time is reasonable. But you can't stop a person with a trade from applying that trade unreasonably.
Most tend to be 3-6 months.
Normally it's to stop a person leaving from stealing clients.
US finance has the same thing, and also calls it gardening leave. In our case I think it's reasonably common for it to be as long as a year.
Downside for finance folks is that the usually make a decent chunk of their compensation through bonuses, not their base salary. So their gardening-leave pay ends up being quite a pay cut, and while they're "gardening", they're out of the game for a year and their skills/knowledge becomes a little out of date.
I know an example of a garden leave for 2 years for an engineer working on trading algorithms. Maybe he falls into that 1000 people category (PhD in math).
Exactly: That person falls into the 0.01% of the finance industry.
for senior people whose alignment an employer needs to maintain after separation, it seems a lot more common to use some sort of advisory or consulting contractual relationship to keep them close as long as necessary…
> Normally it's to stop a person leaving from stealing clients.
I have a lot more sympathy for "you may not take clients with you" clauses than for "you may not work in the same industry" clauses.
There is a difference between non-solicitation and non-compete. In the US, the former obligation might be acceptable while the later might not.
The "non-solicitation" agreements are so stupid. There is a cottage industry in headhunters where you tell your next employer who you want to recruit, then they ask a 3rd party recruiter to go track down that person after X months... and invite them to interview. I have seen it so many times in career.
It's definitely fuzzy. I mean, someone like an account rep or a financial advisor (and their clients) can't unknow somebody. So even if someone isn't taking their client list and calling/emailing everyone, there's inevitably going to be an element of client "poaching" so long as they're still in the same business.
fyi there are clauses in contracts that try to control the use of residuals in “unaided memory” , trying to refer to stuff you just happen to know by dint of having been exposed to them, even though they’re in no explicit notes.
Then the employee is only making 30% and presumably not working elsewhere or that would defeat the purpose. So how is this a good approach? I would get 80% or more but don’t see how this is effective.
This is the first I’ve heard of this so I’m just rolling it around… but I suppose this would make it cost-prohibitive for companies to insist on non-competes unnecessarily.
As the employee, it’s still clearly a bad position for me unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.
> unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.
This clearly depends on your role and industry. I can write code in a bunch of industries I've actually never had 2 jobs in the same industry. If I were an oil pipeline engineer it would be different.
That actually sounds bad, since after the payments end you can basically speak about IP and its as if you're encouraged to do so after payments stop.
That's a terrible law.
30% of your total monthly income as it was, when you are likely leaving for more money at a competitor or to start your own company...
I'd think it isn't about employee getting 30%. It is about the companies would be paying money really for nothing in most cases, and thus forcing the companies to avoid blanket enforcement (and unpredictable at that as it avoids the company having the free option of coming after you nilly-vanilla when they feel like it years later) - and such avoidment is great for innovation industry-wise. If your confidentiality agreement is really meaningful, then probably you can negotiate much better payment.
I believe this is the interpretation that most closely reflects the intent of the legislation. This is not a form of income, but rather a means of discouraging companies from acting recklessly.
Bad if you leave for a competitor. I've never really done so. Fintech, social media, recipes, bidding, e-commerce, fashion, saas, mental health, games, and so on. There's just a wide range of fields you can go into that don't compete and still use the same skills.
Unless the previous employer is slow and incompetent, if you've done good work, they'd probably be ahead and better funded. I'd take the money.
Only if you're a generalist. What if you're an expert on some specific tech?
I mean I would probably take the money and temporarily switch fields too but I don't think it's quite that simple for a lot of people.
So do it four times and retire.
Hmm… in four different industries, though… Yeah okay there might be some issues.
Imagine if Tesla had been able to stop Andrej Karpathy working at Open AI just by spending 1/3 of what his salary was when he was on Autopilot. That sounds like a terrible idea.
I'm betting AK was clued up and would negotiate that out. He was hot property from the get go.
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I mean under the current rules they could have stopped him for 0/3 of his salary.
Wasn't he in California? If so, they couldn't have.
Would be very interested to read more about that. Do you have a link?
Non-competes (including stealth non-competes like the OP mentioned) are being abused by US employers seeking leverage over their employees.
In fact, 12% of hourly workers earning $20 or less had to sign non-competes. These workers do not have access to corporate secrets. It simply reduces their power to negotiate with their employer.
https://www.minneapolisfed.org/article/2021/non-compete-cont...
Australia is straight up banning non competes for anyone earning under $175k, for this reason.
They are also tightening up the contract law around non competes to reduce the impact of the scare tactics employers have been using to bind low level employees with unenforceable, but still litigable, contract terms.
And scare tactics are really all they are (in this country), because even before they do this the courts have a track record in this country of looking very dimly on overly broad or restrictive non compete 'agreements'.
Australia fair work is a beast. They just keep adding to it.
Not only in the US; without going into too much detail, many countries in south America and Africa have strong business connections with the US, and it is quite common to see the ever-abusive dumb dumb US contract templates being used in those countries, even when local law differs significantly. Usually, the posture is "we can do whatever you want and you keep your mouth shut, or else we'll sue you for everything". I loathe organizations with these kind of contracts.
If the law has specific clauses about this that the contract disrespects, these conditions are not worth the paper they are written on.
At least in Brazil you can't enforce something the law doesn't allow in a contract - that clause would be considered void without nullifying the contract. And Labour law in Brazil leans (or used to lean) more in favor of the employee,so yes, the law would win. Another aspect there is that unions are more common than in the US, and they will help in such cases.
>If the law has specific clauses about this that the contract disrespects, these conditions are not worth the paper they are written on
Unless the law also has severe penalty for including such terms, of course they are. They don't need to dissuade 100% of people from breaking 100% of the terms to be of use to the company.
On a personal note, I once was presented with such a (US) contract that also required me to list every NDA I had signed to date; Since then, I always assume most US lawyers are beyond incompetent.
That's funny. Some NDAs I've signed prohibit you from mentioning any contact with the company involved (thus you're not allowed to mention the NDA) so my answer would be;
"Under the terms of NDAs I have signed I am not free to disclose that list."
Couldn't the employer convert that into a filter?
I'm not sure I'm understanding your point. Can you elaborate?
From a prospective employer’s perspective: Is the candidate going to respect the NDA you’re planning to ask them to sign?
Similar to asking the candidate what they dislike about their previous boss. Their response may indicate how they’ll talk about you someday.
Oh, right. Yes I agree. We don't get employees to sign NDAs, but the signal about talking about previous employers is definitely something I notice.
So yes, if you get employees yo sign an NDA then this is a filter as well.
I would literally have no idea what NDAs I've signed as many are at partner meetings or conferences I haven't given a second thought to. I couldn't tell you the last NDA I signed.
We have been sued over signed contracts many times over the 3 decades we are in business. Almost only by US companies, but well, shitty for them, Dutch judges (and lawyers) rather laugh about those overbearing things in those contracts. We don't even need a lawyer before we sign them as we know they are worth nothing here. And that's been tested many times now. Fyi; we didn't break them; it's just that we are tech troubleshooters-for-hire and we work for many companies (1000s) over time; the suing is always the paranoid delusions were the contract states we cannot provide our services for any competitors of them or even companies that are not competing but in the same market forever and ever. F offfff. But yeah, it costs them a lot of money and we are insured for it (which is cheap compared); we don't waste any time or money on this.
Is it more common in certain industries?
It's funny how states like Washington are notorious for enforceable non-competes, to be "business friendly".
Meanwhile California bans non-competes, and its GDP is 4th largest in the world if it were a country!
"incumbent friendly" vs "startup friendly"
I'm not sure what conclusions you think we should draw from that. California's advantage over Washington is primarily one of size - Washington's GDP per capita is actually about 3% higher than California's. The most generous interpretation I can think of is that you're crediting the non-compete difference for California's far larger population, which is tenuous at best.
Shockley -> Fairchild -> Intel, AMD couldn't have happened with non-compete. So Silicon Valley couldn't have happened in Washington.
https://en.wikipedia.org/wiki/Traitorous_eight
Per capita isn't a good measure here, as Washington's weather helps lower the denominator (I say this as a former Seattle resident)
Seattles weather does nothing to lower the denominator. The PNW is rainy and somewhat cold, but not cold enough to kill homeless on the street in large numbers which is what folks seem to think lowers the denominator. And yes I do live in the PNW.
Eastern Washington is what lowers the denominator.
Source: grew up there.
I can bet they happened with NDAs. Noncompete is another story, that is not the OPs problem here.
WA is busy losing its way on taxation vs value provided for taxes paid and reporting burden. so imo these IP issues are almost second order effects at this point. i personally expect a continued exodus over some of the latest tax hikes for example taxing cap gains beyond a certain amount at an additional 7%. as if niit was not bad enough. if residents could at least see some value from these added taxes maybe it could be something. also the estste tax there kicks in quickly and has hidden gotchas even for people who no longer live there.
One is friendly to existing wealth and the other to innovation and disruption I suppose.
Or maybe it is the inverse. The different states enforcement plan depends on the types of companies they have?
Washington's non-compete laws are pretty mild these days, although it is true that it's not California.
I'm also not sure where you heard that Washington is "business friendly." B&O Tax, labor laws, Seattle city politics and the institution of income tax have all driven significant exodus from WA elsewhere over the last ten years.
But, Biden admin + WA laws in 2020 and 2024 make it a relatively low employee load for non-competes, as far as I know. Duration limited to 18 months, auto canceled if an employee is laid off, $120k-$300k income floor under which they are not enforced, details must be offered before job offer made (including a verbal job offer), no venue shifting regardless of location of employer, new employers are granted presumptive standing to sue on behalf of a new hire, agreement only allowed against current customers of the company, not enforceable when selling equity of up to 1% of a company to competitors of the company..
These are not your father's east-coast non-compete agreements! Combined with broad federal support that a non-compete cannot stop you from earning your living, e.g. banning a doctor from working for a competing healthcare system is likely no-go on its own.
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I'm pro-California and anti-noncompetes, but I'm not sure if this evidence demonstrates much. The banning of non-competes in California is a very recent thing, and if we're doing a correlation thing, California saw the vast bulk of its growth when non-competes were in effect.
It’s not a recent thing. Search for 1872 here, https://www.purduegloballawschool.edu/blog/news/california-n...
Some form of a ban on noncompete enforcement in CA has existed since then.
It has long been codified in CA business code 16600, https://leginfo.legislature.ca.gov/faces/codes_displaySectio...
California has banned non competes since 1872. You might be thinking about non solicits which was 2024 also reaffirming the ban on non competes
The Traitorous Eight would only have been possible in California, not Washington, because of the position on noncompetes.
On the other hand, moving between (and founding) minicomputer companies was a thing for a long time in spite of Massachusetts being fairly non-compete clause friendly until very recently. And arguably, current laws enacted against some fairly strenuous tech company opposition force companies to put some skin in the game but are still a pretty raw deal for employees who can't afford to sit on the bench for 50% of their former base. (Which is what I think relatively recent legislation calls for.)
I'm against non-competes except in narrow cases. But a lot of people probably give the general inability to enforce non-competes in California too much credit for CA tech success in spite of one story in particular.
OTOH, beware letting yourself be intimidated by scary looking but unenforcable clauses that are all over contracts. In doubt, spend a bit of money on a lawyer to figure out what your real situation is.
I know of several cases where lawyers said "don't bother arguing with them about clause X, just sign it and ignore it".
I suspect our primary school upbringing of “follow the rules” holds a lot of people back.
Seems like a lot of successful people in business know exactly how far they can step over the line without suffering serious consequences.
Societies where no one has any regard for rules aren't great either.
You can't make billions of dollars by following rules...
Society would be better if we could, and we would all benefit.
Looking at what the growth trajectories are of countries with high corruption, it’s not great, so our growth is probably still reduced by the corruption or lawlessness that still exists.
Why do you think having billionaires at all is of benefit to society? Or do you just mean that the people inclined to break rules to accumulate unreasonable wealth would just follow them instead if that worked as well and that is what would benefit society?
Because in a well organized society where wealth accumulation is not by corruption, then by definition it would be by creating value, which benefits everyone.
The alternative is something like oligarchs that extract wealth because of state granted monopolies, corporatism that strangles competition with anti competitive regulation, etc. The accumulation of wealth is all out of proportion and possibly not even correlated in those cases with the production of actual value.
Wealth is accumulated by capturing value, not by creating it.
Technically true, but ideally it would be capturing a portion of value created by them, rather than a portion of value created by others, is my point.
Ideally less people would be attaining that kind of personal wealth. Companies should be scaled back as well IMO.
This is pretty much the advice every lawyer has given me in the past. The likelihood of it coming up is very low. Sometimes it's good to not be special.
The one time I had to sign a non-compete--because my company was acquired--I just signed it because it was quite specific and I wasn't going to be an exec of a storage company anytime soon. Probably didn't matter much because I left a few months later anyway.
What are the keywords for finding a lawyer who can advise on non-competes?
Asking because it turned out nearly impossible to find a local lawyer to advise on a dispute couple months ago - with 9 out of 10 telling me they only do divorces or real estate or immigration. I was literally calling one by one from a list based on what I believe were relevant search criteria on State Bar website.
https://g-s-law.com/flat-fee-employment-agreement-review/
I had them recommended to me. I have used them and was pleased.
Thank you! Not my states but seems spot on and I can extract keywords from there.
> What are the keywords for finding a lawyer who can advise on non-competes?
If you're in California, try the following; they all know their stuff and aren't in supercostly BigLaw firms (although I think most are BigLaw alumni):
- Betsy Bayha - https://www.linkedin.com/in/betsy-bayha-560107/
- George Grellas - used to post here a lot, not so much recently - https://grellas.com/our-team/george-grellas/
- Sean Hogle - https://www.linkedin.com/in/epiclaw/
- Kyle Mitchell - https://kemitchell.com/
Thank you!
I had a non-compete cause in a contract, I wound up in a dispute over unemployment insurance and the contract came up, the judge told me that the non-complete cause didn't make any sense at all but that's because it was poorly written.
So happy my union managed to ban broad non-competes in my country ~8 years ago. Now it needs to be very specific if they want to enforce it (not just "development work in the same industry" which most contracts had back when I graduated), only applicable for maximum a year, and they have to pay your salary for the time they stop you working somewhere else.
What about health insurance?
We don't need health insurance in Norway. ("universal health care" or what's it called in English?)
Isn't Norway's government is funded by gas and oil? Burn down the planet so we can have free health care
The economy may be well-boosted by the oil, but note that all the money is put into a fund and invested globally, and only a small percentage may be used in the government's budget each year. So no, free healthcare isn't funded by oil. https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
And while I don't support our continued extraction of oil, I feel like your comment is quite weird. How is it relevant in this context? Lots of other nations have public health care without having oil. Besides, the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
Whatever beef you have, please don't include me in it.
I guess I'm missing it. You linked to wikipedia which says it's called "Oil Fund" (Oljefondet). Further down it says "As of June 2011, it was the largest pension fund in the world, but it is not a pension fund in the conventional sense, as it derives its financial backing from *oil profits*, not pension contributions"
> the US produces many, many times more oil each year than Norway, so your argument is a complete non sequitur.
The US isn't funding health care through oil profits. If it was going to fund public health care (which it does) it does it through taxes.
You basically have a free money fountain and get free stuff it (while you burn down the rest of th world) and then you come on here and say "things are great over hear! surprised they aren't great over there" without acknowledging that you have a free money source.
Yes, you're not understanding how it works: The oil profits go into the fund, not government budgets. So we're also not funding health care through oil profits, that oil money is locked away for the future in that fund.
I do think your attacks are quite unwarranted. Every time something good about the US is mentioned, should I then swoop in and mention how you're bombing the world, the tech profits are made on algorithms destroying society, your constant one-day delivery is flooding the world in plastics? How is that even relevant?
Also note, I only mentioned how the union here managed to remove non-compete clauses. Then someone else brought in health insurance and then oil. Not me.
For the record, I have been voting for the green party, that wants to disallow opening new oil rigs. Your beef isn't with me, don't harass a whole country, that's just unfair of you.
To add to this, the government fund also deliberately avoids investing in oil, tobacco, military weaponry and a few similar industries.
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How is a union any different in that respect than a corporation? I mean on a theoretical level. A true free-market firm would just be an association of individuals making individually negotiated transactions, with no employee-employer relationship, and no coordination on the side of purchasing labor. Of course that's very inefficient outside of pure theory. A corporation acts as a coordinating body that collectively negotiates the purchasing of labor contracts, and a union collectively negotiates on the selling side.
I don't care about the free market, I just want food and shelter for my family.
Sounds like the union negotiated a heck of a deal for the parent poster
Care to back up that definitive statement? Or is it just a pavlovian reflex?
So are corporations.
A few years ago an American company that approached me (UK based) about a job opportunity insisted I sign an NDA before I could interview with them. I refused and they couldn't understand why so they even put me in contact with one of their lawyers. I still refused, and they eventually relented, but I could never understand why I'd need to sign an NDA to attend a job interview. There's literally no benefit to me in doing so.
At the time I was working for a competitor and I figured they could use the fact that I interviewed with them to argue that I - either intentionally or unintentionally - gained proprietary knowledge of their product and my current employer gained from it.
If you’re an employee under NDA, and your company considers almost everything about your work to be confidential, you can’t effectively paint a detailed picture for the role.
The NDA gives them some protection to answer your questions openly and transparently.
You had to know your response would get no love here on HN. You seem to be missing the point that this is like a free option for the interviewing company. Did they offer to compensate this person... say 1000 USD per hour to interview? I doubt it. As a result, the person signing this NDA has 100% of the downside, with no upsides except a "potentially lucrative job offer". That seems like a wildly unequal offer.
You know, in moments like these, you have an opportunity to build a connection — to meet someone in the middle who sees the world a little differently, who is perhaps indoctrinated into a disrespectful aspect of capitalism and is unable to see through it yet, or who perhaps offers a perspective you don’t have yourself.
And you slam dunk any chance of connection for what seems to be the sake of argument and posture. All because of a difference in opinion? Because you have the mighty all-seeing eyes of an objective opinion we should all see through too?
I “had” to know my response would get no love? The only mistake I made here is my continued thought that this was a place for some kind of industry togetherness: It is just a constant stepping over each other for no apparent reason than to satisfy a kind of unfulfilled ego.
I wasn’t concerned with how much you would love my response. I didn’t cater it for you. You are not the only person in my god damn universe. It was meant to be my authentic perspective, to be helpful, or to invite conversation and debate if I missed another perspective unhad.
But with responses like these, gosh, why bother? What a waste of my love.
I think the argument you made is just an entirely different one. The inequality in your argument is basically whether you should be compensated for interviewing with a company — which, I don’t know what’s economically fair there and I’m not making an argument about. I’d love to be paid to interview :) I don’t know the economic impact of it though. I wonder if it would just lead to more selective hiring practices and worser mutual fits.
Requesting payment for just the NDA is weird to me. Without something like this, you’re asking the company to provide detailed specifics of the role you’re interviewing for, but you won’t give them any legal peace that you won’t run away with the secrets you learn: It’s a free and permitted distribution of anything your interviewers go and share with candidates.
It leads to interviews where you have no idea what the role actually is and what you’ll be doing on the job. Every question stonewalled with a generic answer so the employee doesn’t get in trouble. An atmosphere of curation and inauthenticity, to gauge how you will potentially spend years of your life.
Lovely.
You should probably keep to LinkedIn for this kind of crap.
https://news.ycombinator.com/newsguidelines.html
In some countries that's illegal. So when presented with a contract that contains such claims, I have 2 options:
1) ask them to remove it... and so I risk not getting the job
2) don't say anything, and sign it
If I'm really interested in the job, I'll go for option 2 because I know they cannot enforce such claims, so I'll be fine.
i personally consider bad legal clauses in employment contracts a seriously negative sign about the employer. if they’re trying to pull that sort of thing at hiring, what are they going to try to do later when you’re fully committed?? is executive leadership simply unaware or do they condone that sort of thing??
Well, yes. That's how we do business in the USA. It's literally unavoidable unless you can afford to spend a year or three declining offers until you find a unicorn with a sane contract.
Approximately all businesses explictly try to exploit workers to the full extent of the law. That's what capitalism is and it's how we've structured our society.
social media shaming has worked in a few high profile companies like openai recently. especially when founders are still around and feel some personal culpability when their company’s values are on display.
but i think your broader societal point stands though. especially with horrible language in vendor contracts that people click through because who has time for that garbage. i hope llms will help people push back in somewhat more concerted and systematic fashion.
The fact that something isn't enforceable does not mean it won't be a giant headache to prove it in a court in a foreign country.
Having probably signed such a contract, how do I find out if it is enforcable? Probably talk to a lawyer, but how do you find one that gives you a straight, but correct, answer to such a complex topic. For me it is even more complex since I'm a fake employee (contractor) in another country working for a US company.
The answer to those questions might be really unsatisfying in practice, since it breaks down to a cost calculation by the sueing company (if the company leadership is rational). So in case you get sued you have to fight defensively and bleed them enough so they give up or something.
[not legal advice]
Having talked to lawyers about this sort of case, be prepared to speak to several to find a match, or read between the lines - when you ask questions like, “If I break this clause, what sorts of liabilities am I exposing myself to, and how often in your experience does that happen?” Be prepared for, “as my client, I don’t advise you to do that.” Not super helpful in my case, as I was trying to understand the possible outcomes and likelihoods.
The best advice I got was from a business mentor which was, “if you don’t rub it in their face, they probably won’t notice, and probably won’t care.”
Which is, as you mentioned, a probability calculation.
What I would personally guess [not legal advice] is that you rate the likelihood of your employer suing higher than they do (absent anything egregious).
This is good to know!
What are the other options than contract lawyers… IP? M&A? Employment?
There's option 3, and that's: don't say anything, strike some passages and sign it.
Whether that's a good idea, that depends on the circumstances but I'm just noting it as an option.
That’s not really a trick. It’s how contract law has worked for years.
Of course, doing it without telling the new employer is a great way to get an offer rescinded.
Also, if you modify it after the other side signed, then you’ll want them to initial the changes.
If you modified it, then they signed without noticing the modifications, then I guess ask a lawyer.
I don’t see what outsourcing has to do with it. If they have power of attorney to an external HR firm, that seems like their problem. (I’ve never encountered a company dumb enough to do that though.)
Since it would be difficult to prove when changes/strike-outs occured relative to signatures, any such changes to the pre-printed agreement should be initialed by all parties.
Not possible in some employment contracts.
I once declined a job offer because the non-compete made no sense. (It was many pages, claimed that I would be paid during the non-compete period, and impossible to read.) I basically concluded that they (the company) had a lawyer that was basically wanking off.
In finance, it is common to be paid your base wage during your non-compete. Or at least that is how mine worked.
Since a huge chunk of comp in finance is bonus, especially if you're a rainmaker, I don't see how this is a win.
I don't where HN gets its information about investment banks, but it is wrong much more than 50% of the time. (Dart throwing monkeys could do better, I fear.) This is no longer true for non-FO (front office) head count after 2008. In markets (not investment banking/M&A/IPOs), front office is sales, trading, structuring, and a miniscule number of quants. In 2025, The vast majority of working stiffs at the world's top 15 investment banks are being paid an annual bonus that is max 25% of base salary, but 10-15% is more likely. Also, for most FO, when laid-off or leaving, they start gardening leave on the same day. Also, anyone worth anything (as FO) will negotiate with their next employer to have a guaranteed first year bonus that meets or exceeds their last bonus. For non-FO, they are required to work for their entire notice period.
Yup, garden leave.
That seems like something ripe for being gamed. How do they protect from someone just quitting and continuing to get paid?
They're not obligated to enforce the non-compete. If you don't have any sensitive information to take to a competitor, they might not give you any garden leave.
OTOH, I've seen non-competes as long as 2.5 years from places like Citadel.
What's worse is actually those non-competes with a variable period. The company doesn't have to tell you in advance how long it will be; only when you hand in your resignation letter will they tell you. It entirely serves to make your job hunt more difficult.
Jesus: What jurisdiction is this? And what dummy signs a contract like that?
New York and the company in question is none other than Citadel.
The kind who likes money. Lots and lots and lots of money.
> They argue it would be impossible for you to work elsewhere in this industry during your entire career without violating confidentiality with the technical and business instincts you bring to that domain
In that case you need to ask for a lifetime worth of salary, including growth from being in position to be put in escrow before you sign the dotted line. Otherwise they can hire you and fire you immediately and you'd never be able to work in your field that you spent years/decades training for.
Realistically, most places ban ‘unconscionable’ contract clauses, either explicitly or by making them unenforceable.
At least in theory, any judge that saw clauses like that should throw it out for that reason alone in those jurisdictions.
Precisely. And, at least in the US, any contract which makes it impossible for a worker to take a new job in their field is extremely likely to be found unconscionable. It doesn't matter whether the contract is cast as a non-compete or as a NDA; if its effect is to say "you must work for us, or not at all", it's unlikely to hold up.
Maybe. I've known companies in the IT industry that took a very hard line on non-competes. Whether they won in court, I don't know. But I've know people who took a year off rather than involving the lawyers. Small pretty well-defined segment of the industry and a couple of the big players apparently did take it seriously. (Never worked for either.)
This is exactly what the company is hoping for. In actuality, you can put literally anything in a contract. Sell your first born baby, sacrifice a goat, whatever. Signing a piece of paper doesn't make it true or required.
Companies are really banking on people making the value decision that doing the legal stuff is too much work, time, and money, so they're hoping for self-enforcement. It's the same reason we still see companies commonly doing things like terminating employees before maternity leave. They know a new mother (who is now jobless) isn't going to bother with the trouble of a potentially multi-year wrongful termination suit.
From what little I know, they were reasonably well-compensated people and they were just in a position to say, whatever. I'll just take a 6 month vacation or whatever and start things anew rather than have a court fight. Which I'd probably do as well.
"Just semi-retiring" is a pretty sensible option at some point.
Just because the employer ‘takes it seriously’ doesn’t mean the court won’t laugh at them.
In my experience, the more the employer puts up a show, the more unenforceable it is.
As I say, no personal experience. But people I know took fairly serious actions because of the threat.
That is why they do it.
sounds crazy. in my country, adding anything that prevents you from finding work in the future to a contract is kind of invalid.
you do get non competes etc., but it never holds up in court as you can easily prove it prevents you from finding jobs.
i wish for you in your legislation there might be a similar law, otherwise these things are really evil. i mean, its like prison in some fields niche enough, and those are exactly the fields prone to such overly protective clauses
> adding anything that prevents you from finding work in the future to a contract is kind of invalid.
Here it's six months top, and it only applies to management and specialists with critical domain knowledge - and this also has to be reflected in their wage.
"Unconscionability is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract."
https://en.wikipedia.org/wiki/Unconscionability
New definition for the word Irony:
AI companies protecting their IP.
In common law jurisdictions, there's a term of art in law -- "unconscionable". It's when a contract is so egregiously one-sided that no reasonable person would agree to it, and it could be ruled unenforceable.
It's not reasonable to expect an employee to build up a body of expertise in a field, and then agree to be bound never to work in that field again after leaving your current job. IANAL, but confidentiality agreements that act like lifetime noncompetes are good candidates for being found unconscionable, even absent an explicit anti-noncompete statute in your jurisdiction. (Other clauses you may rightly consider unfair, I don't know about.)
Making things worse for the companies implementing such contracts is the fact that things change so fast now that they are unable to substantially benefit from such a contract. The contract is purely a CYA move.
If you have agreed to lifetime noncompete terms, you may wish to speak to an employment attorney about how enforceable the contract actually is in your area.
Civil law jurisdictions also have protections against one-sided contracts.
Indeed, but I believe in common-law countries, unconscionability is one of those common-law things that apply even absent a statute spelling it out.
This is a state level thing. As is whether IP produced outside of your job, on your own equipment, is yours.
I moved from New York to California a bit over 20 years ago in large part because I personally encountered this (the IP ownership bit), and preferred to live under California's rules.
It is worthwhile to read https://www.paulgraham.com/america.html. Point 7 talks about how easy it is for regulations to accidentally squash startups. I believe that the fact that California makes neither mistake causes us squash fewer startups. It is not sufficient to have made Silicon Valley a startup hub, but it was likely necessary.
Just looking this up but appears NY finally caught up here in 2023 https://newyork.public.law/laws/n.y._labor_law_section_203-f
Thanks for the correction.
It was only 20 years too late to help me.
I would love to hear whatever you’re comfortable sharing of your (anonymized) story, if you’re up for it!
I usually add this at the end of the agreement and if they wont go for it, I move on:
This agreement shall not apply to any inventions, conceptions, discoveries, improvements, and original works of authorship that [my name] developed entirely on their own time without using [the employer](s) equipment, supplies, facilities, trade secret information, or anything not based on or received from [the employer].
Agree it varies by state. My only first-hand experience was in a relatively conservative "red" state over 20 years ago. I paid for an hour of legal advice and the lawyer said that in general non-competes cannot be so broad that they prevent you from working in your profession or skill.
It also depends on the laws governing your contract, not just where you live.
Is there any precedent for this yet? This sounds like some overeager lawyers talking out of their ass hoping you don’t call them out for it? It sounds like it’s for a very specific situation that really doesn’t apply to most people.
If I understand it right, those NDAs work as non-competes if “confidential” is defined as restricted just on the basis of some relationship to the business, which is pretty weird attack of legalese on common sense. Let’s say I used some relatively simple chain of thought to derive X about my job at Z. The fact that Z uses or does X is probably confidential, and that’s ok. This would be how I understood a broad definition. But what kind of reasoning would conclude that X is confidential per se, preventing me to use or do X elsewhere, effectively making doing my job impossible? It just doesn’t make sense.
IANAL but as I was told by some who are:
They can say that all they want, but that isn't what the statutes or case law about trade secrets says. in California state courts take a very dim view of this sort of overreach.
That is exactly what I'm wondering about. At least a few states have severely limited noncompetes and even outright banned them in specific contexts. I have to wonder if a nondisclosure twisted for use as a noncompete would survive the courts in one of those states.
I'm also skeptical how enforceable this theory is in general. Have there been any noteworthy cases of employees getting screwed over that rested on it?
I wish "inevitable disclosure" were totally turned on its head. If I were in charge, proving inevitable disclosure would happen would result in nullifying the NDA instead.
Right, as in "I literally cannot comply with this"? Makes sense.
Hot take: Sign these agreements without worry. When you change employers in the future, make no public announcements about it -- don't post anything on social media, including LinkedIn. Do your best not to transfer any IP between employers. You will be fine.
Finally: Yes, I think these agreements should be illegal. I recently signed a new employment contract that requires me not to disparage my new employer... forever. Literally: There is no end date. I could be an old man in a squeaky rocking chair that says something bad about my (then) former employer, and they have the right to sue me for breaking a non-disparagement agreement. I laughed to myself when I signed that contract.
What exactly should one be on the lookout for? Practically every company has an IP confidentiality agreement.
Yeah, good luck being the odd one out who wants special individualized contract. This might work for unicorn value level employees that are poached from one FANG to another but not for the average Joe.
In my experience, as a normal non-unicorn employee at a large corp, I was able to have my contract modified. It required advice from an employment law lawyer that cost a few hundred dollars and a couple emails with the company’s general counsel.
You can change these contracts. Hiring people is difficult and once the company has made that decision they don’t want to lose you over a contract clause.
Some companies are literally legally barred from individualising employment contracts due to active union or government contracts they have.
As an average Joe, I was able to negotiate employment contract changes every place I worked in the tech industry in California in the early 02000s. I don't remember having been faced with contract clauses that I felt needed alteration as an entry-level tech employee in the 01990s.
If you are negotiating terms you are not an average Joe. Average Joe’s don’t even interact with people capable of requesting someone higher up to approve the change. Average Joe’s get given a take it or leave it deal
It's worse than that for the average Joe. The offer can be rescinded altogether if one raises too many concerns about the offer.
You evidently have no idea what you're talking about.
Then please provide me sources. What non single digit percentage of the workforce regularly has the ability to negotiate clauses in work agreements?
Like, every single white collar worker?
White collar workers are the average Joe? And the average white collar worker negotiates terms of their employment?
It’s anecdata on my part but whenever a white collar worker tells me they don’t need a union because they can negotiate a better deal, they get real angry at me when I ask them the last time they negotiated a better deal for themselves
I had every single one of all my contracts (as employee and one-nerd-business) adapted in minor or major ways.
I am good at what I do, but no unicorn and not FANG "level".
But then again, I don't live in the US
I never said I want an individualized contract, but I reserve the right to reject the offer, and I have, when the contract is unreasonable. What I want to know is when exactly to reject it wrt the confidentiality agreement.
ianal but: don't perform personal work while you are employed by an employer in the same industry. Or at least make it like you didn't do that to any observer.
You may have misunderstood the topic, which, I'll remind you, is confidentiality agreements that act as lifetime non-competes, which means for the rest of your life after you are employed by an employer in the same industry, not while you are employed by an employer in the same industry.
That's the terrible Wikipedia article. It says nothing at all about juridictions in which it's considered a valid legal principle. I notice that someone seems to have just flagged it "unclear".
To chime in on how English law approaches this (and perhaps amplify some of the good points already made): the common law position is that any restraint of trade is contrary to public policy and so should not be enforced unless some exception can be shown.
Post employment restrictions fall under the doctrine of restraint of trade - which explains why we use "gardening leave". While you are employed you and your employer have a relationship which includes a duty of loyalty by you to your employer. They have duties such as a duty to pay you for your work. By default they should also be offering you work, so a specific "gardening leave" clause is required to keep you at home, bound by restrictive covenants but without work and being paid.
After employment, it is much harder to make restrictions that will bite. Typically an employer must show there is some legitimate interest they are protecting and that it is reasonable to do so.
Hence: non-solicitation of clients tends to be easier to justify, though only if an employee actually had some kind of relationship with or knowledge of those clients. Whereas a non-compete is much harder to justify. It is also harder to make reasonable, hence time/space/sectoral limitations.
Looking at confidentiality: the default established in the amusingly named Faccenda Chicken v Fowler (Mr Fowler was a frozen chicken sales lead). It is that you are bound by the usual duties of confidentiality that arise when anyone has confidential information but that you cannot be prevented from using information gained while working that is part of your normal skill acquired as part of the job unless that is so secret as to amount to a "trade secret".
In this case, Mr Fowler knew where to sell chicken (from having done so). While this was confidential, he was able to use that information (not being a trade secret) in setting up a competing frozen chicken sale network.
The core idea is that you can't stop someone plying their normal trade.
That's the default. Obviously if you sign an agreement that imposes post-contract confidentiality obligations it can go further than Faccenda Chicken, but if it went too far, it would also be vulnerable to the rule against restraint of trade.
In short:this sort of "you cannot work in the industry" idea is very unlikely to work in England and Wales (and I suspect the rest of the UK - though I am strictly only an English lawyer).
That said: there is still value in reading your contract of employment carefully and making sure that you are happy with it.
Not just employment contracts, some companies require NDA just for interviews.
IF you go to an interview, and nothing was divulged to you, this NDA does not mean anything. But if youwork at a competitor, and you get an interviewer tell you things that the company does not want to divulge, company has some protection. Not all laws and processes are bad.
Seems like the company should not opt to divulge that information then.
Non-competes should be illegal. If someone is so valuable that them leaving for a competitor would severely damage the business, then pay them more. Do their laundry. Hire someone to drive them around. Give them a personal chef. Etc.
So tired of this garbage. I think non-competes (and the legal concept of inevitable disclosure) should just be banned completely. Sure, some things (like taking customer lists when you leave a company) are messed up and should be barred, but companies should just be required to accept the fact that their employees will take some "proprietary" knowledge/information with them to their next job.
I don't even think that non-competes should be allowed for higher level employees/executives. Everyone deserves the right to change jobs whenever they want to.
> Sure, some things (like taking customer lists when you leave a company) are messed up and should be barred
Is it messed up? If you're a salesperson, and you've built the relationships with these customers is their loyalty to you, or to the company that you worked for? I had a personal trainer for a little while and he took all his clients to a new gym when he decided to contract with a different gym.
I don't know the answer to this. But it doesn't seem as clear cut to me.
Yeah, that's a fair interpretation.
But I think the way I look at it is in a sort of "work product" type way. If I'm employed by a company to write software, I'm the one who wrote it, but I agree that the software I write is the property of the company, and I can't take it with me when I leave.
Is a salesperson's "work product" those relationships, and does that make them the "property" of the company? I don't think it's reasonable to say that those relationships are solely between the customers and the salesperson; those relationships wouldn't work out in that way if the salesperson's company was selling garbage, or even just a product that those customers didn't want. That is, the good customer-salesperson relationship is both a function of the salesperson's personal skills, and of the good fit between the company's products and the customer.
Ultimately, though, whatever you agree to in writing when you start the job is what you should honor. I'm fine with the law protecting people from predatory practices by employers (of which I think non-competes qualify, and employees shouldn't be able to sign away a right to change jobs like that), but if an employee signs something that says any customer relationships belong to the company, then that seems like a reasonable thing to me.
Of course this depends on the country. This is a non-issue in France for instance where this topic is strictly regulated and heavily leaning towards the employee.
I thought a few states maybe California or New York effectively made non compete not enforceable
Has anyone been caught by this? As in sued or prevented from working?
What happend to you?
most country's employment law would hold up against NDA/non-competes if they do try to sue
For what it's worth, a noncompete that makes it effectively impossible for you to apply your profession anywhere for your entire career is unlikely to be enforceable in any state in the country.
Companies that are serious about noncompetes for professionals (rather than hourly shift workers) generally do garden leave. I'd take a noncompete for a garden leave company seriously, and would maybe roll my eyes at a broad noncompete from a random tech firm.
(Don't sign anything you're not comfortable with.)
once you're - in you're in. we found we were bound like rats.
Too bad. I routinely reapply the exact same business logic across competitors. I even have proprietary source code collections I use for reference. If you don't like it, write your own software. Business methods are literally unpatentable.
If you're not copying internal wikis, and poaching customers what are you even doing?
Like.. has anyone been sued for the violation of the non compete?
...but are they enforceable?
IANAL and I don't know about other countries, but in EU (definitely the country I live in and am pretty sure it goes for the rest as well) any non-compete agreement after two years is void by law.
You are required to hold confidential stuff for life, like business contracts, but you can use your know-how, if it does not violate any patents, in a competing company as you see fit. This knowledge is a part of you and cannot hold you against employment. Even if you do decide within those two years to employ yourself in competing company, this can be held back by your original company only if they give you X% of your pay at them (X can be 80, or as low as 50, as my friends inform me).
I've actually dealt with this in third-party IP cases I've consulted on. Of course a lot of "bench advice" best practices (use a debugger as a silly example) shouldn't cause a problem--or maybe even some various specific experiences about practices that worked. A file dump of corporate strategy and business plan presentations or code--even if they probably get pretty stale after a few years--probably not.
To riff Keynes,
Enforcement can maintain litigation longer than you can maintain solvency.
And that’s our judicial system: whoever has more ability to sustain prolonged cash flow wins.
So far it seems maybe?, but according to the article some courts and agencies are pushing back. Well the FTC was at least in 2023.
California bans anything that is effectively a non compete.
Well since OP's giving that warning he might've been impacted and could tell us more.
I didn't see any references in the article you linked to any cases where it had been enforced. I see a lot of commentary that validates the concern, and a listing of half a dozen states where they are being struck down.
So the callout to be wary of them is totally legit... but it doesn't look like they are going to be enforceable when such things go through the courts.
Yeah the warning is: you may, like me, find a litigious paranoid former employer who freaks out at everything :-/
I’d rather not carry the cost of learning it’s not enforceable.
They tried: https://www.ftc.gov/news-events/news/press-releases/2024/04/... (see top note)
Not sure how that's going.
Technically, maybe, but effectively, nobody is going to be able to withstand BigCorp's 100 lawyers whose mission is to bury you in legal fees if you push back. By the time that you confirm these things are unenforceable, you've spent your life savings on $millions in legal fees, and possibly gone into crippling debt. In the legal system, might (wealth + lawyer quantity) makes right.
As I recall from John Akula's Corporate Law class, judges in the US tend to be sympathetic to the following argument:
"Defendant has never worked in any other industry. He has three kids. He's gotta work."
(That's for regular employees--it's a different issue with founders who may have significant equity stake and such.)
The "bury in litigation" is overstated. Since it's the _company_ that is going to sue you, there's a limited amount of shenanigans they can do.
The worst is that they can delay the case for years, leaving you in a legal limbo. Or go after your employer, involving them in the discovery process.
It sounds like moving to California for a year would be way cheaper.
You'll probably still end up in court even if the plaintiff will likely lose. Maybe cheaper, maybe not.
Have an employment attorney always look over said agreements before signing. A local acquaintance who did work for an MSP had said MSP try such a ploy, only for the employment attorney to sue and get it thrown out as unreasonable and unenforceable.
Never, EVER sign a contract without reading it first, and having your lawyer review it.
> your lawyer
That presupposes that people have a lawyer, and one specialized in employment law at that, which is highly unlikely to be the case for 99% of the population.
We're talking about negotiating a contract with a value on the order of a million dollars (say, US$200k total compensation per year for five years). Even if you don't have a lawyer normally, it may be worth the few hundred dollars it costs to hire one for this purpose, unless you have no savings.
I never did, though. I just crossed out the clauses I didn't want to accept and initialed them.
> I just crossed out the clauses I didn't want to accept and initialed them.
Places like Zoho or Verisign don't let you do that.
Sometimes general employment law is not enough and you need someone who specializes in executive contracts for upper management.
A good employment law lawyer is A) not at all hard to find in major metros, B) charges reasonable rates for quick turnaround times, and C) is something more people need to have on their side in general, rather than elevating them as some snooty thing only the elite have.
This whole “bUt WhO hAs A lAwYeR” nonsense I’m being blasted with in my comments is exactly why these sorts of contracts, grifts, and scams are allowed to exist and succeed.
Know your rights, get a lawyer, and then share that knowledge with others. It’s Organizing 101 stuff.
Yeah, as far as I know, I've never needed one (aside from very routine real estate) but I've had to get a couple lawyers recently for different purposes--through my neighbor. I know lawyers but not in the field I need. Sort of a PITA but just something you need to do sometimes.
Money can be exchanged for goods and services.
I understand that your advice is in good faith - but if we touch grass for a second, only the tiniest fraction of even professional workers have a lawyer at hand. And one that specializes in contract law? Even less.
It’s not that difficult to have legal help with your contract. Call your local bar association and ask for an employment law specialist. It will likely cost a couple hundred for them to review your contract.
> It’s not that difficult to have legal help with your contract.
It's difficult to have legal help with your contract responsive within the timeframe that you have available for signing it before the business rescinds their offer and moves on.
I understand that your advice is in good faith - but if we touch grass for a second, we can easily find recommendations for employment law attorneys who work at very reasonable rates with fast (sub-1wk) turnaround times.
Because that’s how I found mine. $200 later, and I had total confidence in what I was signing and a lawyer on my side if things went pear-shaped in the future.
isn't this illegal?
I mean even patent has 20-year limit
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So if you are against this, you are okay with Coca Cola’s secret to be divulged by any employee to any competitor? If you cannot let companies maintain trade secrets, you may as well close them down.
This implies that any employee at Coca Cola knows and has access to the secret formula, which is of course, not true. And even if it were true, there's a substantial difference between a specific, limited piece of information (such as the recipe for Coca Cola) and broad concepts about operating in an industry.
I work in the Robotics industry. While the algorithm for our path planning would be a trade secret, how path planning is pursued is not. It's a fundamental concept in robotics. To extend the metaphor, it would be as if my company thought that any robotics work that involved path planning would violate their IP, because I did path planning work with them. It's nuanced to be sure, but some companies are very aggressive as to prevent you from having mobility in your career. Sometimes in a genuine effort to protect their IP, but also sometimes to reduce your negotiating power or punish you.
There is a difference between trade secrets and non compete. If you can compete with the company without using trade secrets, like make a drink that people like without using Coca Cola secret, it is fine.
as far as i can tell there are a million sodas that are extremely close to coca cola and coca cola is still doing just fine
Getting off topic, there's an interesting This American Life story about the Coca Cola formula, and why there are many extremely close formulas, but no exact replicas.
[1] https://www.thisamericanlife.org/427/original-recipe
My head canon of the secret recipe is the Kung Fu Panda ending.
Protagonist gets to open the vault of secret formula after decades working their way to the top. Inside is a Coke label with the ingredients part unprinted.
It was always the brand.
Brand takes money to build. IF an employee took the secret to their rich uncle when coke was small, we would not be talking about Coke. Whatever small the formula was.
I think if the extremely close replicas ever threatened Coke's existence, they would sue. Especially if a former employee started it. I think trade secret protection is the only thing that enables a company to operate. Especially small companies, otherwise only large companies can operate. Any employee with a rich uncle can finish the small company off without this protection.
That’s my whole point. They are not using Coke’s formula
But they are using functionally equivalent formulas and Coke is still fine.
if coke did not have deep pockets, it would have gone under without this protection.
there are a million different manufacturers of, for example, hot dogs, and those hot dogs basically taste all the same to everyone, and yet they're all making basically identical hotdogs and doing fine
But none of them would end up becoming Coca Cola. At least not just by selling hot dogs.
why downvote this? I have gone through this route and can vouch this is for a good cause, this conversation may mislead people into believing stealing is okay.
because it's an obvious straw man.
Maybe it is not, you need much more context about the OP to declare this as a straw argument. Confidentiality agreements are generally very boilerplate. If someone is thinking that this is preventing them from working at something, they are possibly just not understanding what stealing means. This guy possibly had similar understanding of laws: https://www.justice.gov/usao-ndca/pr/former-uber-executive-s...