Non-Compete Agreements

[ygolo]

https://www.npr.org/2024/04/23/1246655366/ftc-bans-noncompete-agreements-lina-khan

I don't know why this was so political. If you are serious about capitalism (instead of cronyism), it seems like you need to compete for labor too and not force people to sign a legal agreement to keep them going elsewhere.

In fact, congress ought to pass an explicit anti-monospony law instead of just anti-trust.

 

[Kephalos]

I have mixed feelings about this. It could (further) discourage firms from offering their employees specific specialized training which, for some reason or another, are considered important for them to have and which could, absent the security of a non-compete agreement, harm the firm commercially were some employee or employees with very specific, hard-to-acquire skills and knowledge to leave (or be fired) for any reason. It's true that companies and even non-incorporated firms abuse these agreements, requiring them for (no doubt) generic activities, to insulate themselves from competition -- after all, homogeneity in the goods produced and sold is usually one of the requirements economists use to define competition. But, they are unjustified and unjustifiable otherwise, since it gives very highly skilled (and highly compensated) employees an unfair advantage over their employers, raising (further) the cost of employing such people or of training the employees they already have to do that work. Not to mention that it would make protecting perfectly legitimate intellectual property rights harder and more costly.

I dislike and oppose any kind of producerism, be it in international trade (protectionism), in public finance (giving tax breaks and outright subsidies for production, what is usually called "State aid"), in capital markets (for example artifically encouraging investment in this or that sector of the economy), in labor markets (such as banning non-competes, allowing trade union labor monopolies, wage controls, excessive immigration and emigration controls), or in land (natural resources) markets (such as State monopolies on the exploitation of such resources). Producerism is based on the mistaken (and all too common) overappreciation of "making stuff" (industrialism) at the expense of other economic activities -- and it is ofen vulnerable to being used as a cover for xenophobic and other prejudices against social classes or ethnic groups not particularly prominent in the "good manufacturing" sector.

 

[Julius_Van_Der_Beak]

It seems like companies owning their employees. They should be illegal. I'm not holding my breath.

 

[The Cat]

It seems like companies owning their employees. They should be illegal. I'm not holding my breath.

Say now Tom, that sounds like some dangerous thinking. You best stick to your work.

 

[Coriolis]

I have mixed feelings about this. It could (further) discourage firms from offering their employees specific specialized training which, for some reason or another, are considered important for them to have and which could, absent the security of a non-compete agreement, harm the firm commercially were some employee or employees with very specific, hard-to-acquire skills and knowledge to leave (or be fired) for any reason. It's true that companies and even non-incorporated firms abuse these agreements, requiring them for (no doubt) generic activities, to insulate themselves from competition -- after all, homogeneity in the goods produced and sold is usually one of the requirements economists use to define competition. But, they are unjustified and unjustifiable otherwise, since it gives very highly skilled (and highly compensated) employees an unfair advantage over their employers, raising (further) the cost of employing such people or of training the employees they already have to do that work. Not to mention that it would make protecting perfectly legitimate intellectual property rights harder and more costly.

I dislike and oppose any kind of producerism, be it in international trade (protectionism), in public finance (giving tax breaks and outright subsidies for production, what is usually called "State aid"), in capital markets (for example artifically encouraging investment in this or that sector of the economy), in labor markets (such as banning non-competes, allowing trade union labor monopolies, wage controls, excessive immigration and emigration controls), or in land (natural resources) markets (such as State monopolies on the exploitation of such resources). Producerism is based on the mistaken (and all too common) overappreciation of "making stuff" (industrialism) at the expense of other economic activities -- and it is ofen vulnerable to being used as a cover for xenophobic and other prejudices against social classes or ethnic groups not particularly prominent in the "good manufacturing" sector.

The better way for companies to retain employees who have received specialized training is through incentives: good pay, benefits, and working conditions. Employees leave because they get a better deal elsewhere. Employees whenever possible should vote with their feet and refuse jobs that require noncompete agreements. That is just like event venues that prohibit people from bringing in their own snacks, in an attempt to force them to use on-site vendors. Those vendors should have to earn their business by providing a good product at a reasonable price.

 

[Maou]

Most of these are non-sequiturs. This is just another attack on small business. Sure, there are shitty small businesses, but that doesn't mean you should ban all of them.

 

[ygolo]

Most of these are non-sequiturs. This is just another attack on small business. Sure, there are shitty small businesses, but that doesn't mean you should ban all of them.

I feel like non-competes are very much pro-small business. Small businesses generally can't execute legal actions needed to enforce non-competes. It's the larger chains that can execute.

 

[ygolo]

This sort of thing has happened for years and keeps happening:

The Silicon Valley cartel

Mark Ames on Silicon Valley's conspiracy to drive down workers' wages: In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact...

www.metafilter.com

 

[Tomb1]

non-compete agreements don't matter with employees who have integrity, but its not always easy for business owners to tell whose got integrity and whose just a conniving weasel...so I get it but i don't like them....i wouldn't use it. they are too stuffy and formal....it jades leadership

 

[The Cat]

If companies paid with the kind of integrity they want from their employees, they wouldn't be necessary either. Guess the only thing that really trickles down is greed. Shame, with all that money you'd think more wealthy folks could afford to buy a clue.

 

[Tomb1]

If companies paid with the kind of integrity they want from their employees, they wouldn't be necessary either. Guess the only thing that really trickles down is greed. Shame, with all that money you'd think more wealthy folks could afford to buy a clue.

They would still be necessary for (1) small businesses who pay decent, livable wages but cannot afford to pay what big corporations pay wanting an assurance that they won'tt be left high and dry by a weasel employee who connived their way into the job on the pretense of a longer-term commitment, (2) companies that pay market value but deal in sensitive information that competitors would head-hunt employees for without a non-compete agreement in place and (3) companies that pay over market value wanting assurances that the employees are not going to utilize what they learn about the company to organize a rival faction and set up shop down the street.

 

[The Cat]

Sounds like no matter which way you slice it, corporate greed is bad.

 

[Tomb1]

Sounds like no matter which way you slice it, corporate greed is bad.

Indeed. Unrestrained greed by corporations constitutes a pervasive problem at all levels of society and also indicts the legal and regulatory processes through which corporations exist. Corrupt and apathetic regulatory agencies play a part as well. The problem will still persist whether or not you have non-compete agreements. The reasons for a non-compete agreement encompasses more situations than just corporate greed....as in the case of the weasel employee that uses their position to steal clients and business for themselves. That said, there are better and more exacting ways to deal with such people than through non-compete agreements but that's a matter of preference. Ultimately, corporate greed is best addressed by decentralizing regulation and platforming blockchain reputation systems....imo

 

[ygolo]

They would still be necessary for (1) small businesses who pay decent, livable wages but cannot afford to pay what big corporations pay wanting an assurance that they won'tt be left high and dry by a weasel employee who connived their way into the job on the pretense of a longer-term commitment, (2) companies that pay market value but deal in sensitive information that competitors would head-hunt employees for without a non-compete agreement in place and (3) companies that pay over market value wanting assurances that the employees are not going to utilize what they learn about the company to organize a rival faction and set up shop down the street.

I understand this frustration. But I think it's an overblown concern.

Also, if you were running a small business and someone "took your secrets" (again the claims for what were "secret" were getting ridiculous), would you really spend your resources on trying to enforce a non-compete?

It's the big businesses that can afford to spend money like that, keeping small businesses from starting up.

 

[Tomb1]

I understand this frustration. But I think it's an overblown concern.

Also, if you were running a small business and someone "took your secrets" (again the claims for what were "secret" were getting ridiculous), would you really spend your resources on trying to enforce a non-compete?

It's the big businesses that can afford to spend money like that, keeping small businesses from starting up.

It's troubling that you are taking an oppressive stance towards a business' right to protect confidential information in a competitive market. Of course a company is behaving in a rational manner to want to protect confidential information with a non-compete agreement. Of course I can understand why a company would enforce a non-compete agreement. Yes, if an employee used their position of trust to pilforate and exploit confidential information you bet I'd enforce a non-compete agreement....mercilessly

It's not an "overblown concern" at all if you have worked in a competitive market and dealt in confidential information...I wouldn't bullshit you. I can think off hand of four different examples of conniving weasel employees, one of which ended up serving time in federal prison.

I get why you call it an overblown concern because the chance of its occurrence is statistically unknown. But that doesn't make something an overblown concern. That would be like saying firewall on your computer is an overblown concern...

Let's take an example closer to home. Look at what happened years back about a decade ago when personality forums were more popular. Personality forums got hacked....and it was more than once. You wouldn't call it an overblown concern when they forum owners implemented better measures to prevent reoccurrences. likewise, its not an overblown concern for a business owner to implement a noncompete agreement in order to prevent a reoccurrence of confidential information being pilforated and exploited out from under them by a conniving weasel employee.

Lets turn to a disinterested source ChatGPT to find out whose instincts are right according to the advanced algorithms of Artificial Intelligence (if you and Cat are right ChatGPT will just answer corporate greed; if I'm right then there will be reasons that have nothing to do with corporate greed and will focus instead more on the employee).

Question to ChatGPT: why would a company want to execute a non-compete agreement with a new employee who they don't know

Answer from ChatGPT:

• Protection of Confidential Information: Companies want to protect sensitive business information, trade secrets, and proprietary processes. A non-compete agreement can help ensure that an employee who gains access to this information does not use it to benefit a competitor.
• Mitigation of Risk: Even if they don’t know the new employee well, companies want to mitigate the risk of potential future competition. This is especially relevant in industries where employees have the potential to leverage their knowledge of the company's strategies and client base.
• Talent Investment: If the company invests significant resources in training and developing an employee, a non-compete agreement can help ensure that the investment is not undermined by the employee joining a competitor immediately afterward.
• Business Relationships: Employees often have access to important business relationships and client contacts. Non-compete agreements can help prevent the poaching of clients or business opportunities.
• 
  
• Legal and Competitive Landscape: The company might operate in a highly competitive market where non-compete clauses are more common to protect against potential competitive threats.

Sounds pretty rational: protection of confidential information, mitigation of risk, talent investment, business relationships and legal and competitive landscape. Those all overlap with the three reasons I provided that you quoted and called "overblown concern" and I only know this stuff because I have actually been inside the trenches and seen it firsthand. You may not have the same experiences but using logic, do you really believe those are not rational reasons for a company to want to execute a non-compete agreement and that ChatGPT is actually being irrational? If so, give me a break.

 

[ygolo]

It's troubling that you are taking an oppressive stance towards a business' right to protect confidential information in a competitive market. Of course a company is behaving in a rational manner to want to protect confidential information with a non-compete agreement. Of course I can understand why a company would enforce a non-compete agreement. Yes, if an employee used their position of trust to pilforate and exploit confidential information you bet I'd enforce a non-compete agreement....mercilessly

It's not an "overblown concern" at all if you have worked in a competitive market and dealt in confidential information...I wouldn't bullshit you. I can think off hand of four different examples of conniving weasel employees, one of which ended up serving time in federal prison.

I get why you call it an overblown concern because the chance of its occurrence is statistically unknown. But that doesn't make something an overblown concern. That would be like saying firewall on your computer is an overblown concern...

Let's take an example closer to home. Look at what happened years back about a decade ago when personality forums were more popular. Personality forums got hacked....and it was more than once. You wouldn't call it an overblown concern when they forum owners implemented better measures to prevent reoccurrences. likewise, its not an overblown concern for a business owner to implement a noncompete agreement in order to prevent a reoccurrence of confidential information being pilforated and exploited out from under them by a conniving weasel employee.

Lets turn to a disinterested source ChatGPT to find out whose instincts are right according to the advanced algorithms of Artificial Intelligence (if you and Cat are right ChatGPT will just answer corporate greed; if I'm right then there will be reasons that have nothing to do with corporate greed and will focus instead more on the employee).

Question to ChatGPT: why would a company want to execute a non-compete agreement with a new employee who they don't know

Answer from ChatGPT:

• Protection of Confidential Information: Companies want to protect sensitive business information, trade secrets, and proprietary processes. A non-compete agreement can help ensure that an employee who gains access to this information does not use it to benefit a competitor.
• Mitigation of Risk: Even if they don’t know the new employee well, companies want to mitigate the risk of potential future competition. This is especially relevant in industries where employees have the potential to leverage their knowledge of the company's strategies and client base.
• Talent Investment: If the company invests significant resources in training and developing an employee, a non-compete agreement can help ensure that the investment is not undermined by the employee joining a competitor immediately afterward.
• Business Relationships: Employees often have access to important business relationships and client contacts. Non-compete agreements can help prevent the poaching of clients or business opportunities.
• 
  
• Legal and Competitive Landscape: The company might operate in a highly competitive market where non-compete clauses are more common to protect against potential competitive threats.

Sounds pretty rational: protection of confidential information, mitigation of risk, talent investment, business relationships and legal and competitive landscape. Those all overlap with the three reasons I provided that you quoted and called "overblown concern" and I only know this stuff because I have actually been inside the trenches and seen it firsthand. You may not have the same experiences but using logic, do you really believe those are not rational reasons for a company to want to execute a non-compete agreement and that ChatGPT is actually being irrational? If so, give me a break.

I think you'd need to run the numbers to be fully rational.

The amount of time and money needed to enforce a non-compete is what I question.

Also, ChatGPT learns the preferences of its user- so not disinterested. It also sucks at mathematical reasoning by default and will answer based on how you ask the question.

ChatGPT - Cost-Benefit Non-Compete Analysis

Shared via ChatGPT

chatgpt.com

 

[ceecee]

https://www.npr.org/2024/04/23/1246655366/ftc-bans-noncompete-agreements-lina-khan

I don't know why this was so political. If you are serious about capitalism (instead of cronyism), it seems like you need to compete for labor too and not force people to sign a legal agreement to keep them going elsewhere.

In fact, congress ought to pass an explicit anti-monospony law instead of just anti-trust.

The reason this was so political is because of Lina Khan - pretty sure some billionaire sack of shit just demanded she be gone. She's easily the best appt. Biden made.

Anyway I just wanted to share this because it seems the list of states banning non-competes is growing.

Minnesota’s ban on non-competes marks historic change for low- and moderate-income workers | Federal Reserve Bank of Minneapolis

A prohibition on enforcing non-compete contracts could support job mobility and ease some workers’ uncertainties

www.minneapolisfed.org