A clause I frequently see (as one who performs a lot of contract work) is a restriction on accepting an offer of employment from the client of the consulting firm I'm contracting with. Whenever I see this clause, I redline it out and advise the consulting firm to fashion a buyout clause* with the client. I'm very firm that the consulting firm cannot restrict my employment opportunities.
* The buyout clause is between the client and consulting firm and roughly compensates the consulting firm for the lost profit of the rate diff over the remaining term of my contract with the consulting firm.
I've had a buyout clause used while consulting before. The company was ending their relationship with the contracting company and wanted to keep a handful of individuals.
From what I understand, the contracting firms don't like (reasonably-priced) buyouts because it allows clients to cherry-pick the best 'talent', and basically use the contractor as a 'farm team'.
yes, it's unfortunately common for employers to abuse their workers by keeping their pay and work conditions as awful as possible and using any means possible to prevent them from leaving to better conditions and pay
The article covers this, but probably worth having it mentioned here too: Washington already had partially banned noncompete agreements.
They were banned for employees who made less the $127k/year or contractors who made less than $317k. Those numbers were adjusted annually for inflation.
The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.
I was just forced to sign one of these after already being employed. I, very clearly, pointed out that I didn't actually agree but that I needed a job. Often people don't see these things until it is too late to back out like at on-boarding or even later, as in my case. It is bad enough to have non-compete clauses, they are evil and should be banned, but then to sneak/force them after as if your employment is a TOS that can be changed at any time is beyond wrong.
If you really are a good place to work people will stay. If you really are paying enough for the value you provide, people will stay. If you aren't then people will leave, for the competition likely since that is the industry they know. Non-compete is really just a power play that enables companies to pay employees less and it is an abuse of power.
It’s not the noncompetes that’s the problem, it’s confidentiality agreements with extremely broad language.
Learn about the legal principle of “inevitable disclosure”. It’s the idea you can’t work for a competitor because you can’t help yourself but violate an NDA
If you had asked me in 1995 what was the one thing[1] that Boston could change in order to compete with Silicon Valley I would have told you "Make non-compete agreements illegal" Companies in the Bay Area whined about it all the time but it kept the ecosystem vibrant and a lot of technology exists because of that. In the late 90's early '00s a big reason for a lot of 'high profile' people quitting their cushy job and setting out in a startup was because 'management' wouldn't allow them to move forward on an idea that they felt would "disrupt our own business." Those same people could quit, create a start up, and make that idea real anyway. So this is excellent progress for Washington State. I wonder how many ex-Microsoft employees this effects.
[1] I vacillated between this and California law giving ownership of what you worked on in your own time on your own equipment yours, except the latter was pretty effectively neutered by big corps defining their businesses more vaguely.
It always baffles me how much resistance there is to banning noncompetes every time this is proposed, and how that resistance lives right alongside “we want to be the next Silicon Valley”, even though pretty much every analysis of “what’s Silicon Valley’s secret sauce” cites the unenforceability of noncompetes as one of the most important factors. But maybe the ship is turning very slowly.
I am moving my business out of state because of this. Already had a problem with this, I had an employee stealing clients and he even said on a recording he made for his roommate and the roommate made me that he stole them. You can not run a business in Democrat states anymore.
I think it's reasonable to prevent your employee from working for your competitor at the same time they are working for you. Or even an employee creating a startup themselves with AI and then mailing all of your clients.
WA has bigger problems like crazy overspending at the state level and many cities, leading to a spiral of new taxes, even if they are unconstitutional (at the state level). This new noncompete law won’t be enough to make the state more attractive to workers and businesses. It has nothing to really offer above California.
The flip side should be considered as well. There should be some sort of protection for small startup companies. A big company should not be able to steal an innovative startup's technology by hiring away the employees that worked on the product. That used to happen a lot when Bill Gates was running Microsoft, for example.
Patents provide some protection, but it is flawed because a big company can put you out of business if you get into a patent war. An employee should be able to leave at any time and work for a competitor, but maybe should not do identical work, otherwise startups will have a hard time protecting their IP.
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* The buyout clause is between the client and consulting firm and roughly compensates the consulting firm for the lost profit of the rate diff over the remaining term of my contract with the consulting firm.
> I'm very firm that the consulting firm cannot restrict my employment opportunities.
Great point! NCA are essentially a limitation on your ability to work -- especially in niche industries or fields.
They were banned for employees who made less the $127k/year or contractors who made less than $317k. Those numbers were adjusted annually for inflation.
Edit: less/more mixup fixed
If you really are a good place to work people will stay. If you really are paying enough for the value you provide, people will stay. If you aren't then people will leave, for the competition likely since that is the industry they know. Non-compete is really just a power play that enables companies to pay employees less and it is an abuse of power.
Learn about the legal principle of “inevitable disclosure”. It’s the idea you can’t work for a competitor because you can’t help yourself but violate an NDA
[1] I vacillated between this and California law giving ownership of what you worked on in your own time on your own equipment yours, except the latter was pretty effectively neutered by big corps defining their businesses more vaguely.
https://eig.org/state-noncompete-map/
It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).
Patents provide some protection, but it is flawed because a big company can put you out of business if you get into a patent war. An employee should be able to leave at any time and work for a competitor, but maybe should not do identical work, otherwise startups will have a hard time protecting their IP.