Noncompete clauses and the free market in labor

Discussion in 'Politics, Religion, Social Issues' started by jnpy!$4g3cwk, Jun 9, 2014.

  1. macrumors 6502a

    jnpy!$4g3cwk

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    #1
    Non-compete clauses used to apply to people who had unique insider knowledge. No longer. Now, even some camp counselors are required to sign non-compete clauses to get hired:

    http://www.nytimes.com/2014/06/09/business/noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?rref=national&module=Ribbon&version=origin&region=Header&action=click&contentCollection=U.S.&pgtype=article

    It is funny how businesses always cite free-market prices for labor as the explanation for why they shouldn't pay more, and yet, suppress that very free market when it suits their own interests.
     
  2. macrumors 65816

    Southern Dad

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    #2
    Non-compete clauses are part of the employment contract. An employee is free to refuse to sign them and go to work for someone that doesn't require them. The job belongs to the employer not the employee. Companies do not want to train an employee only to have them go to work for a competitor.
     
  3. thread starter macrumors 6502a

    jnpy!$4g3cwk

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    #3
    Good point. In fact, perhaps we should bring back indentured servitude. After all, you can't have people that you have trained to dig ditches and do laundry wandering off the farm and going to work for your neighbor.
     
  4. macrumors 65816

    Southern Dad

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    #4
    We're not talking about indentured servitude but thanks for taking it to the extreme. There are many employment positions today that now take a skill level that is higher than before. We don't want to invest in training to have a person go to work for the competitor. Is it unreasonable to ask that an employee not go to work for a competitor for at least a period of time? One year or six months.
     
  5. macrumors G3

    Huntn

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    #5
    Philosophically do non-compete clauses get your stamp of approval? Give them a min time contract instead! In this way they will get their investment back before the employee can leave.

    No, why? Because employers want to tie the hands of employees but not have their own hands tied, that's why. This seems to be another example of employers taking advantage of their position to meddle in employees lives. After you have filled the terms of your contract, you the employee should be free to go within out restriction. IMO non-compete clauses should be sharply restricted.
     
  6. Huntn, Jun 9, 2014
    Last edited: Jun 9, 2014

    macrumors G3

    Huntn

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    Is it unreasonable to ask an employee not to work in their profession for a year or move out of the area? Absolutely. Yes it is unreasonable because it is one sided versus a fair two sided agreement, a contract if drafted properly, serves both parties. This would be more equitable. But you see, when it comes to employees, employers don't like to be held to terms and conditions. :p If I recall correctly, in the medical profession, I have heard of non-compete clauses for 2years.
     
  7. macrumors 68040

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    #7
    What needs to happen is a law that requires a verbal explanation of certain criteria. Or maybe a law that imposes a minimum grace period to sign.

    She was a barley legal 18yrs when she signed her employment contract. Most people that age would sign anything quickly just to get locked in.
     
  8. macrumors G3

    Huntn

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    #8
    The non-complete clause is primarily an anti-competition mechanism which only serves the employer, and it does nothing to guarantee they will save on training costs as a thread participant has been arguing.
     
  9. macrumors G4

    Eraserhead

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    #9
    Non compete clauses are completely ridiculous and fortunately here they are almost completely unenforcible. I can't really see how a non compete clause would be valid in this case.
     
  10. macrumors 68040

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    #10
    I've walked away from potential jobs in the past cause employers had a "now or never" attitude when it came to signing employment agreements.

    My point is .... You should either have clear verbal explanation of what your signing, or be allowed a grace period to sign.
     
  11. macrumors 65816

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    #11
    Most blanket non-compete clauses employers try and use would not stand up in court.

    Generally speaking the non-compete needs to meet three standards:

    1) It can be no stricter than necessary to protect the Employer's legitimate business interests.

    2) It cannot impose unreasonable hardship on the Employee.

    3) It cannot be injurious to the General Public.

    Most N/Cs fail test #2.

    If you've made your career selling hydraulic pumps, the technical know-how and personal contacts you've made are such that you cannot hope to make a similar income selling - for instance - agricultural machinery or imported cars.

    Employee non-disclosure or confidentiality agreements are another thing entirely. You cannot give proprietary technical information, customer lists, cost data, etc. to a new employer. But the former employer cannot usually pro-actively prevent you from taking a job with a competitor.
     
  12. macrumors 603

    thekev

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    #12
    They are mostly unenforceable in California.
     
  13. macrumors G3

    Huntn

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    #13
    It could be that in a city where these agreements are common place, it may not ever have to go to court if other employers are hesitant to hire you based on one existing, and the likely case that you as a former employee won't get a good letter of recommendation from your former employer if you break the agreement. It's better if these things did not exist.
     
  14. thread starter macrumors 6502a

    jnpy!$4g3cwk

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    The camp counselor case shows exactly how a larger company, in this case a chain of for-profit camps, can use the clause to its advantage despite its unenforceability. It intimidates its smaller competitors in the area, because they know that the bigger company can afford to sue the smaller company, and, it drives down wages that it has to pay. And the company had the chutzpah to claim not just an investment in training, but, "intellectual property" no less.
     
  15. macrumors G3

    Huntn

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    #15
    I imagine this would be the case in any pro-labor State, better described as fair-labor, but my impression is that fair-labor as a standard is fading as conservative values rebound from the New Deal days.
     
  16. macrumors 65816

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    #16
    All true.

    But no one ever said the cause of liberty was going to be easy. And sometimes part of being an outstanding human being means telling an overly aggressive employer or competitor: So sue me.

    America today is full of bullfaeces artists and greedheads. Ever has been.
     
  17. macrumors 6502a

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    #17
    I've been in the computer industry over 20 years and have signed dozens of these over the years and have never heard of an employer pursuing legal action when these contracts are broken and I'm sure I've broken several of them. Most of the time a previous employer or an employer I was on contract to does not even know what company I went to after I left.

    These type of contracts to me seem to be more of a CYA (cover your ass) for an employer to give them some legal recourse for someone who really burns a bridge if they leave early. Generally I've only seen these tied to higher compensation and information sensitive jobs. So I'm not really sure if it is financially worth pursuing enforcement of these when they are broken for lower paying jobs like a camp consoler or an intern.
     
  18. thread starter macrumors 6502a

    jnpy!$4g3cwk

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    #18
    Absolutely. But, who would she utter those words to? It was the other employer who withdrew the offer because they didn't want to get sued.
     
  19. macrumors 65816

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    #19
    This is where the outstanding human being needs to call on her resources of creativity.

    There are probably a thousand avenues to pursue: She could start out by quietly calling her former employer and asking to be released, in writing, from the N/C. Its amazing what you can get if you ask for something with a smile. She could also say, sotto voce that it sure would be a shame if a former camp counselor started dropping nasty stories about what goes on at their facilities on Facebook, etc. Or she could simply say: If you are going to prevent me from working for your competitor, I expect to be offered a job with your organization in return.

    In my experience, it is almost always in everyone's interest to part as friends with a former employer. At least publicly.
     
  20. macrumors 6502

    tgara

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    #20
    Non-compete clauses are often used at the higher levels of a company, so that the founder, for example, doesn't go off and start a competing business in the same area. I never liked them, and I really don't like them at the lower employee level. These are not the folks that the non-compete is really targeted for. On the other hand, I think a nondisclosure agreement would be the more reasonable way to go at all levels. With an NDA, the employee simply promises not to disclose the business methods or confidential intellectual property of their former employer to their new employer or anyone else. It does not prevent them from working for a competitor and earning a living. This is especially important today where people jump from employer to employer, particularly in the tech/computer industry.
     
  21. zin
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    #21
    In a Free Market™, anti-competitive practices wouldn't exist.

    Wait...
     
  22. macrumors G3

    Huntn

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    #22
    It's completely obvious to any reasonable person that non-compete clauses are completely over the top for rank and file employees.
     
  23. macrumors 65816

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    #23
    And we're not talking a CIO, a project manager, or even a bookkeeper. We're talking about a freaking camp counselor, or any of hundreds of other jobs where a non-compete clause is completely pointless and serves no purpose. It is actually the antithesis of free-market, and the irony is not lost on me that most free-market supporters probably support non-compete clauses as well.

    Seriously...a camp counselor is a seasonal job. On the last day of camp, they should have no control over what you do following that, for any reason at all.

    I'm not surprised in the slightest that you would support this, however.
     
  24. macrumors 603

    thekev

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    #24
    NDAs are much more reasonable, and they prevent certain distortions in the labor market. Non-compete agreements, especially those that are in effect for a period of time after an employee leaves a certain company have the effect of potentially depressing wages and salaries. In the case of an NDA, it ensures that companies can't purchase the IP of another company by hiring their employees. In that sense they have opposite effects.
     
  25. macrumors 6502a

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    #25
    I think it's pretty obvious:

    1) Whoever runs these camps and made up this non-compete policy is an idiot
    2) If they are a private company, they should be allowed to be idiots.
    3) We don't need laws shielding people / companies from being idiots. The market / karma will take care of that.

    Moving along.

    -t
     

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