Another California advantage

[Bob78164]

This story discusses the increasing use of non-compete agreements across the country to prevent employees from jumping ship to make better money. And that, in my view, is another advantage of California. We won't enforce non-compete agreements (except in very rare circumstances that are obviously inapplicable to almost all employees). In fact, our courts won't enforce them even if the contract attempting to impose them selects the law of a state that would enforce them. --Bob

[BackInTex]

How is that an advantage for California?

Does it encourage or discourage companies to start there, stay there, or move there?

Non-compete clauses are appropriate and valuable to employees as well, when the terms are not egregious.

[silverscreenselect]

Non-compete clauses are appropriate and valuable to employees as well, when the terms are not egregious.

I'm curious how employees gain any advantage out of giving away a lot of their bargaining power (the ability to go to another company that's likely to offer the best salary). And, for those like BiT who claim to support small businesses and entrepreneurs, the inability to start one's own business due to a non-compete clause keeps lots of people from striking out on their own.

[BackInTex]

Non-compete clauses are appropriate and valuable to employees as well, when the terms are not egregious.

I'm curious how employees gain any advantage out of giving away a lot of their bargaining power (the ability to go to another company that's likely to offer the best salary). And, for those like BiT who claim to support small businesses and entrepreneurs, the inability to start one's own business due to a non-compete clause keeps lots of people from striking out on their own.

Glad you asked. As an employee of a company, I have a vested in interest in my employer being successful, and a vested interest in knowing that my efforts (or my employer's efforts) to train and improve my associates in their crafts, and increase their knowledge of our business, and improve their ability to attract and retain clients on behalf of my employer who pays me will not be used against the income I earn to feed my family. At least in the immediate future.

Remember, a company is made up of many employees, not just the ones who are dissatisfied. Non-competes protect employees, too. Especially the most vulnerable, those who do not have the ability (either mentally, physically, or financially) to go out on their own.

I do not believe non-competes should be global or permanent. There has to be a defined competitive market and a clock on when they expire.

[BackInTex]

And again, how is that an advantage for California?

[silverscreenselect]

Glad you asked. As an employee of a company, I have a vested in interest in my employer being successful, and a vested interest in knowing that my efforts (or my employer's efforts) to train and improve my associates in their crafts, and increase their knowledge of our business, and improve their ability to attract and retain clients on behalf of my employer who pays me will not be used against the income I earn to feed my family. At least in the immediate future.

Remember, a company is made up of many employees, not just the ones who are dissatisfied. Non-competes protect employees, too. Especially the most vulnerable, those who do not have the ability (either mentally, physically, or financially) to go out on their own.

I do not believe non-competes should be global or permanent. There has to be a defined competitive market and a clock on when they expire.

It's hard to know where to start with this other than to note that if you believe this, you probably also believe in the Easter Bunny. Employees do have an interest in their company being successful. Successful companies are less likely to lay off employees and successful employees are more likely to get raises, promotions, etc. But the days of the "company man" or woman are long gone. Non-compete agreements allow companies to hold their best people hostage, people who are often hemmed in by incompetent or underperforming management. Rather than pay those people what they are worth in a truly open market, they instead are able to lower their top performers to the same salary and benefits level as the go-alongs. Dead enders don't have to worry about non-compete agreements because they are unlikely to get a better offer anywhere else.

It's ironic that the one person on this Bored who claims to be most in favor of a free market system doesn't want successful employees to actually be free to earn what they are worth.

Silicon Valley in California is filled with highly talented, much-in-demand technical employees. One reason they do so well working there is because their employers realize they have to treat them well to keep them.

[Bob78164]

How is that an advantage for California?

Does it encourage or discourage companies to start there, stay there, or move there?

Non-compete clauses are appropriate and valuable to employees as well, when the terms are not egregious.

It's an enormous advantage for start-ups, which know they will always be able to find employees. It's also an enormous advantage for employees, who know that they will always be free to accept a better job should one come along. And the fact of this enormous advantage for employees means that companies also know that the best employees have an incentive to live in California. --Bob

[BackInTex]

the best employees have an incentive to live in California. --Bob

That may be the funniest thing I've read all week...and it's Saturday.

[Bob78164]

the best employees have an incentive to live in California. --Bob

That may be the funniest thing I've read all week...and it's Saturday.

Seems pretty simple to me. Most companies want the right to fire their employees at any time for any reason or for no reason. Fine. But along with that right comes a consequence -- the employee can quit any time for any reason or for no reason, including to go work for someone else who's willing to offer more pay. A company that doesn't like that idea can negotiate a two-way commitment for a term as long as six years (in California).

It works quite well in California. More states should try it. --Bob

[BackInTex]

A company that doesn't like that idea can negotiate a two-way commitment for a term as long as six years (in California).

Are you talking about a non-compete agreement? I'm confused.

[silverscreenselect]

A company that doesn't like that idea can negotiate a two-way commitment for a term as long as six years (in California).

Are you talking about a non-compete agreement? I'm confused.

No, it's an employment contract. They have them in sports all the times. LeBron James can't decide he wants to play for Golden State next year, and Cleveland, if they decide they don't want him any more, would have to pay him a bunch of money.

[Bob78164]

A company that doesn't like that idea can negotiate a two-way commitment for a term as long as six years (in California).

Are you talking about a non-compete agreement? I'm confused.

Simple enough. A non-compete effectively prevents an employee from quitting (at least until he or she is ready to retire). The fair trade-off would be an agreement that likewise prevents a company from firing the employee.

For me, this is pretty simple. What employers are trying to do, when they impose a non-compete, is claim ownership of an employee's skills and experience. As far as I'm concerned, those skills and experience belong to the employee, not the company. Always have. Always will.

And to compound matters, as stated in the article, it's fairly common for the non-compete clause to be sprung on someone in an employment manual on their first day of work. That's simply ridiculous because by then the employee has already turned down any competing offers.

It's not a practical solution to argue that the non-compete has to be "reasonable." The problem is without a bright-line rule, even a non-compete that 90% of judges would find illegal will have the desired effect. An employee can't know for sure that it will be found illegal, and that uncertainty acts as a strong deterrent to an effort to move (though they'll be welcome in California). Similarly, the new employer can't be certain they'll be able to keep the new employee. And either way, someone is going to have to pay to defend the litigation.

In California, even though such clauses are clearly illegal, some companies use them anyway. The California courts have decided that the very attempt to do so is an unlawful business practice. --Bob