The tech industry in California does just fine without noncompetes.
In fact, lack of noncompetes is probably one of the biggest reasons Silicon Valley was able to take off in the 1950s-60s when people were constantly leaving their jobs to start new chip companies, starting with the original "traitorous 8" who founded Fairchild Semiconductor.
There just aren't good arguments for noncompetes. People often bring up trade secrets, but that's not convincing -- there are already laws against stealing trade secrets, so you don't need noncompetes for that. Look at Anthony Levandowski as a high-profile example of someone who stole trade secrets in California and got nailed.
The main argument for non-competes comes from banking/professional services (thinks accountants or lawyers). It's to stop you taking all your clients with you when you jump ship. It's typically only enforced for partners or really senior managers and the theory is, it allows the company time to cement their relationship with the client while you're out of the market.
I have often seen it enforced as, you can go (after your notice period/gardening leave) but you have to stay away from a set of clients for the period of your non-compete.
That's a reasonable argument, however, without strict legal restrictions that gets stretched as far as fast food employees being prohibited to go work at another restaurant, which is ridiculous on one hand and very understandable on the other - they have little bargaining power to refuse the clause, and a non-compete means they'll be less likely to leave so it allows the employer to keep wages low.
Yes, companies can have non-solicitation agreements which are IMO quite reasonable so long as they cover a reasonable time period and AFAIK are generally enforceable.
> There just aren't good arguments for noncompetes. People often bring up trade secrets, but that's not convincing -- there are already laws against stealing trade secrets, so you don't need noncompetes for that.
Technically yes, but to play devil's advocate: it's easy for someone to provide trade secrets to a new employer without leaving a trail of evidence behind, and it's a lot easier to prove someone worked for a competitor than it is to prove someone gave a competitor trade secrets, so there is a valid argument for why employers might want to enforce non-competes.
Whether that justifies their enforceability or not is a different question.
> Look at Anthony Levandowski as a high-profile example of someone who stole trade secrets in California and got nailed.
I'm reading his Wikipedia page:
> While working at Google, Levandowski established other companies as side projects,[17] including 510 Systems and Anthony's Robots, which were later bought by Google.[18]
tl;dr: he certainly has some balls! Any idea why he even left Google? It sounds like they paid him a total comp of some 120 mil, and he worked there for just 9 years, that's an average of 13 mil a year, not small change by any measure (although I guess that might include the price they've paid for the companies he founded).
I guess he wanted them to keep buying his new companies again and again?
> There just aren't good arguments for noncompetes.
I think the standard argument isn't trade secrets. The standard argument is that you want to incentivize employers to train employees.
If I, as an employer, train you for 6 months, then you leave at month 7 for a higher salary (which you can demand cause you have more training/experience), I lose out. So I have no incentive to train you. So training or hiring of people without experience never takes place (or does so at a lower rate).
If you are someone without experience, and there was a way for you to credibly commit to not moving to a new job (e.g. by signing a non-compete), then you might want to make that bargain - it's worth it for you to sign away some freedom in order to get some advantage (which is kind of the basis for all contracts).
That's the theory, anyway. I have no idea how much it holds up in the real world.
> The tech industry in California does just fine without noncompetes.
Obviously, the counterargument is that it could be doing even better, we just don't know it.
Note that if the standard argument is correct, then there's a chance that the biggest group of people hurt by lack of noncompetes are people without experience. You might not necessarily be feeling their pain, depending on your social circle (e.g. if you're a working developer in an SV company, you're surrounded by the people who did make it, not by the possibly numerous people who faced closed doors because of this).
> The standard argument is that you want to incentivize employers to train employees.
Charge tuition for training and offer "student loans" with no payments or interest while you're working for the company which are forgiven if you stay for five years or whatever. Then if somebody wants to poach you right away, that's fine, they can just pay off your training loan.
This sounds like the most American solution I've ever heard. Incentivize employers to train people by charging employees money for training and letting them pay off their debt by working?
That’s the stick way. The carrot way is to offer a bonus if the employee stays for a year. Even more effective is to give the bonus immediately, but require they repay it (or forfeit final wages) if they leave earlier than a year.
> If I, as an employer, train you for 6 months, then you leave at month 7 for a higher salary (which you can demand cause you have more training/experience), I lose out. So I have no incentive to train you.
Pay higher than others and employees won’t leave you.
Make delayed payments part of compensation, so employees get the money only if they stay long enough.
Don’t hire employees who change jobs too often.
There are many ways to keep employees from leaving without damaging their careers.
> If I, as an employer, train you for 6 months, then you leave at month 7 for a higher salary (which you can demand cause you have more training/experience), I lose out. So I have no incentive to train you.
If you train me and I get better at my job, I deserve more money. If you don't give it to me, I will work for someone else who will pay me more.
Good companies train their employees and also do what it takes to retain them. It's a two-way street. Why should you get to extract more labor value from me without paying me more?
In fact, lack of noncompetes is probably one of the biggest reasons Silicon Valley was able to take off in the 1950s-60s when people were constantly leaving their jobs to start new chip companies, starting with the original "traitorous 8" who founded Fairchild Semiconductor.
There just aren't good arguments for noncompetes. People often bring up trade secrets, but that's not convincing -- there are already laws against stealing trade secrets, so you don't need noncompetes for that. Look at Anthony Levandowski as a high-profile example of someone who stole trade secrets in California and got nailed.