Get them to sign on the line which is dotted
December 6, 2007 10:32 AM   Subscribe

The earliest recorded noncompete case was brought in England in 1414. Since then their power and utility has depended on which line you were signing. While some have shown they impede mobility of "superstar" talent could it also be they prevent entire geographic areas from maximizing their potential?
posted by zap rowsdower (7 comments total)
Human Capital

posted by nervousfritz at 10:36 AM on December 6, 2007

I saw Matt present his stuff before (the "have shown" and "power" links), it is a neat analysis. He and his co-authors show that non-competes depress mobility of workers, especially star innovators. The unanswered question is whether this is net good or net bad for the economy, as companies may be less willing to do innovative work if they know that their innovators can easily go to other firms. So it is about balancing individual productivity vs. firm productivity.

Another open question is about the enforceability of noncompetes - in California, for example, blanket noncompete agreements are almost unenforceable.
posted by blahblahblah at 11:00 AM on December 6, 2007 [1 favorite]

Man, Fred Wilson, the VC who said they "did more good then harm" is a total wanker. When people started talking about the capital gains tax loophole for VCs and Hedge Fund managers he started whining about how, sure it was ridiculous for Hedge Fund managers but VC's Invest their time!!!

He strikes me as the kind of person who agrees that bad things are bad except when they benefit him, because of course he's true of heart. It would be impossible to legislate the changes he recommends to Non-competes. Essentially he says that they ought to be restricted to "real" competition. But how on earth could you determine what amounts to "real" competition ahead of time? Does Microsoft Compete with Adobe? What about with Google? Microsoft does search, but no one cares. The only way to tell would be a long court case.

The only way to excise the problems is to get rid of them, there is no way Wilson's ideas could be implemented
posted by delmoi at 11:26 AM on December 6, 2007

As far as noncompetes go, I think they'd be fine as long as the company agrees to pay your salary and benefits for the duration of the noncompete.

Otherwise they're just a form of indentured servitude. You go to college, get skillset X, and get a job using skillset X. Great. Except to get the job you've got to sign a piece of paper saying that if you quit or are fired you aren't allowed to use skillset X for years. What, exactly, are the victims of noncompetes supposed to do while they wait for their noncompete to run out? Flip burgers?

So they wind up stuck. Can't leave because if they do they're prohibited from using their marketable skills, so if the company says "work long hours for no overtime", its either go along or flip burgers. Sounds like a terrible deal to me.

If, as the corporations say, those noncompetes are so vital, so dreadfully important, then surely it'd be worth it to pay people for the downtime you (the company) insist is so vital to your survival.
posted by sotonohito at 1:10 PM on December 6, 2007

sotonohito: What you describe is actually the case in Germany. The ex-employer must pay the departing employee at least 50% of their total compensation (salary, bonus, benefits, etc) for the duration of the non-competition clause. This is set off against any new income that exceeds 110% of the prior income. (link goes to a PDF; relevant section is at the bottom of page 11)

All in all a very fair system. Employers can enforce non-competes but they have to pay for it.
posted by jedicus at 1:28 PM on December 6, 2007 [1 favorite]

"Venture capitalist Fred Wilson responded by disagreeing and suggesting that noncompetes do more good than harm."

First, do no harm.
posted by Harkins_ at 6:24 PM on December 6, 2007

jedicus: All in all a very fair system. Employers can enforce non-competes but they have to pay for it.

It's still BS. They only pay half, and meanwhile you're still flipping burgers and not getting any experience in your field.

Personally, I think they should be banned. Once you're off the job, they should have no say in what you say or do ever again - period.
posted by Mitrovarr at 8:38 PM on December 6, 2007

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