I think below some certain salary, non competes are obviously terrible.

I also think if I pay enough whatever enough is, I should damn well be able to make sure the person I hire doesn’t take everything they learned from me and turn around and play for another team.

This is off the cuff. I have no idea what that ceiling would even be, or whether this is a terrible idea.

You want to keep me from working for someone else?

Keep me in payroll.

E.g. a type rating for a business jet might cost $150k or more to obtain. If a firm pays for a type rating for a pilot, that pilot is immediately more valuable to every other employer with that jet. The optimal strategy from a game theoretical point of view would be to let another employer pay for the rating, and then pay the pilot say $40k/year more than the original employer could afford to pay.

So reasonable terms that require repayment of pro-rata portion of genuine training, etc, for some small number of years can make sense.

Or, be honest about the whole deal and make it an overt loan to the pilot. That's how it works with my employer -- if I want to get trained in a specialty that benefits my employer, they will partially cover the cost and extend me a loan for the rest.

If I leave employment before I've repaid the loan, I'm still on the hook to repay it -- but I have not been turned into an indentured servant.

Sure-- these terms have to be disclosed to be binding. So you can say-- we'll pay for your type rating but if you voluntarily leave within 3 years you must pay back the pro-rata portion of the training.

(This is better for the employee than a straight loan because if they are e.g. laid off they can just walk away).

It's my understanding that the current cost of type ratings for G-IV/G-V are ~$120k.

You spend $100k on the type rating + increase their pay to $n per year.

Someone else poaches them for $n+1 per year and saves the $100k.

Employers who poach instead of paying for training win in a market like this.

The only way to prevent this is to make employees bear the cost of the training / investment in their skillset-- either explicitly (Go take out a loan and get a type rating!) or implicitly (Pay us back if you leave before N time). The latter can be more employee friendly, because it removes some of the risk from the employee's point of view.

When an employee knows they are more valuable getting paid $0/yr extra lets them know they are guaranteed to be leaving money on the table, vs increasing their salary by some amount which let's them know they are getting some sort of value out of their new skills. Its not like the training is free of effort or time investment on the employee's part either. US companies try to be so cut throat with their employee's and make sure they don't leave a dollar they could have extracted out of them. I don't get why they are surprised that when they've put zero effort into the relationship for decades, that the employees treat them the same. They need to put in some up front effort or collateral to prove there's loyalty there and behavior like, I will invest in a skill that takes time for you as an employee to learn, and is only worth it to you because it will let you command a higher salary, but I am not going to give you a higher salary, is the type of behavior that incentives jumping ship and makes the strategy of "poachers" viable.

Also as an aside, I hate the term poaching. I'm entering into business relationships with other businesses when I change employment. When managers or companies use the term poaching its a little too on the nose with how they view me as their property.

The employer that doesn't incur the large cost can afford to pay the employee much more and still come out ahead versus hiring an employee who still needs the rating. The Nash eq outcome is that no one pays for type ratings and externalizes the cost completely to prospective employees.

> They need to put in some up front effort or collateral to prove there's loyalty there and behavior like, I will invest in a skill that takes time for you as an employee to learn, and is only worth it to you because it will let you command a higher salary

This doesn't work for the business jet case. If you have a Gulfstream V that you want to fly, you need to either hire someone with a GV type rating or immediately get the new guy the GV rating. Hence, you tend to put in the offer letter a requirement to repay.

This assumes that such a system would actually produce enough people willing to bear the cost instead of underproducing resulting in reverting to prior strategies in order to continue existing with the primary successful strategy being successful long term relationships with workers including paying them the new market rate after training is complete to make "pouching" non trivial.

> including paying them the new market rate after training is complete

This structure doesn't work. If a pilot is worth $100k to a firm that pays for training, surely he is worth more to a firm that won't have to pay that expense. There is no "market rate" that you can select that doesn't incentivize employers to try and "just grab trained employees" from other employers. It's a classic case of the free rider problem.

Everyone is both looking to grab other firms already trained employees and train their own.

Exclusively using the former strategy is only a useful strategy in markets full of shitty employers. Functional good employers will lose no more on average to poaching than they gain from it.

If employer A pays $100k to increase the value of new employee B over a span of a couple weeks... a big proportion of the time new employee B will decide to divide the value of that $100k with employer C, no matter how nice employer A is. People very often choose to act in their own economic interest. This is especially true when they don't have a longstanding relationship with employer A.

> Exclusively using the former strategy is only a useful strategy in markets full of shitty employers.

Here, you need a pilot or two. Paying to train without any kind of security is a very risky strategy versus paying a somewhat higher price for an already trained employee.

Undergoing any sort of training imposes a mental and time cost on the employee and if their current employer does not increase their compensation at all, then they are shouldering a cost for no benefit. The employer offering the training doesn't need to match what other companies could offer if they don't pay for training, they just need to offer enough that the newly trained employee doesn't care to switch.

No, I'm treating them as rational actors seeking to maximize their compensation. It may not always be so, but it is an assumption that will be true at least some of the time of a new hire that you're going to immediately invest $100k in.

> Undergoing any sort of training imposes a mental and time cost on the employee

Generally they are paid for their time doing the training.

> and if their current employer does not increase their compensation at all

Odds are they make more money in the new type, but not quite as much as an employee showing up with the rating already in hand.

My kneejerk reaction is that I disagree but I can't explain why and that's not a good enough reason.

Maybe more people should be contractors and this would be written in as part of the agreement.

To me it seems that non-competes are a very blunt instrument to lazily solve problems that could be solved more focused solutions.

For example, let's say a company hires an employee and pays for them to learn how to drive a forklift (or whatever). They can't place "how to drive a forklift" under NDA to prevent that employee from driving a forklift at another company.

They do specifically request comments on how to handle highly paid or highly skilled workers.

I agree in general, but it should probably be in X% of reasonably achievable total compensation (i.e. at least the blocked industry's average, or matching the offer if the former employee has one), where X >= 100, since you'd be essentially blocking someone from working in the industry they're experienced in.

People leaving to play for other teams has led to beneficial competition and innovation, starting from the very beginning with Fairchild spawning AMD, Intel, and a ton of other companies.

You don't buy people and you don't own their skills. You pay them enough to stay, or you let them leave.

Stealing trade secrets is already illegal and that isn't going to change.

General skill improvement, though? Not so much. Noncompetes don't really address that anyway. It's not like the employee will have forgotten what they've learned by the end of the noncompete, and it's not like the noncompete compensates you. It's just a bit spiteful.

Also, every employer benefits from what their employees have learned at the companies prior anyway. Presumably, that's part of why experienced people command higher salaries. So in that view, it's a bit of a wash.

I'd love to see them go the way of the Dodo, but failing that I'd at least like for some hard requirements on what forms non-competes may take so that they could be more equitable for employees:

1. Require non-competes compensate the employee for the salary they've been denied when enforced. If someone with key knowledge is a big enough issue to sue over and an organization hasn't done the work to retain said employee, the employee shouldn't have to bear the burden of extended unemployment for valuable skills or knowledge they may have.

2. Require non-competes have maximum durations. A non-compete for more than 6 - 12 months is likely excessive and can used to discourage job mobility.

3. Require non-competes be scoped to knowlege, know-how, or skills specific to that employee. Many non-competes I've seen say something along the lines of "you can't work for a competitor" without elaboration. If you work at a large organization or one with subsidiaries in multiple industries, "competitor" becomes a large swathe of potential industries you could feasibly work at. This also prevents one from working at a similar company in a completely different role.

I get the desire to discourage job hopping, but that is rarely what these agreements are used to do in effect and there are better ways to take legal action in cases where proprietary info or know-how is stolen.

Using noncompetes is a sign of a lousy business, that doesn't deserve to survive the market.

> ...

> Training-repayment agreements (TRAs), a type of liquidated damages provision in which the worker agrees to pay the employer for the employer’s training expenses if the worker leaves their job before a certain date. [35]

> 35 See, e.g., Norman D. Bishara, Kenneth J. Martin, and Randall S. Thomas, An Empirical Analysis of Non-Competition Clauses and Other Restrictive Post-Employment Covenants, 68 Vand. L. Rev. 1, 13 (2015); Uniform Law Comm’n, Uniform Restrictive Employment Agreement Act, Draft For Approval (2021) at § 2.

----

That should impact companies like Revature which have a notorious repayment of "training".

Notably US employers provide far _less_ training than employers in Europe do. Likely that's driven by employees moving jobs more frequently in the US; something this would worsen.

Even if you think the proposal is a good one, there are second-order downsides...

Perhaps a third-order incentive is that US employers will now start offering better working conditions, including higher pay and better PTO, to stop people from moving so frequently.

I think businesses around here that want to retain employees already make an effort in the form of generous PTO and healthcare policies.

Most don't.

I'm not so sure this would have a large effect. Employer-provided training tends to be focused on the specific skills that employer requires. People who want to expand their skillset would usually have to change jobs to do it anyway.

Rather than "we're going to invest time and training into this person to get them" it will likely move to "we expect these skills from the applicant."

If the front end developer wants to learn back end, they will need to do it on their own rather than applying as a junior position and learning as they go. If the sysadmin is moving to an environment with kuberentes, they better have explored it on their own home lab.

I expect companies to be much less willing hire someone, and have them do some training no longer being able to make sure they stay after they've skilled up with the associated threat of training reimbursement.

The jump of value for the employee when investing in an entry level employee with no skill to some skill is often quite a bit. This means that entry level will be given a wage that matches their skills rather than their potential skills over the period of time when they're assured to be working. The "we're hiring someone with low skills and hoping to train them up" will be harder to come by.

Secondly, the expectation for mid and senior devs to be able to acquire skills and knowledge on their own will be more of a thing. The front end person getting trained on the company account to learn Java for back end and then getting a new job six months later as a Java developer later is going to be in the mind of every manager. The solution to this is removing the "on the company account" part. You want to learn Java? Go ahead and do it on your own.

The perk of education accounts is going to be a harder thing to find.

And with that, my crystal ball has gone cloudy again.

Second order effects, indeed. More like third or fourth order effects.

With the dot com boom and the (effectively) gambling on stocks that came with the highs, the ability to jump jobs and make way beyond what your former employer could afford to pay you started what we see now.

No matter how well you treat your employees, if there's a company out there that has a ceiling of 2x or 3x (or the gamble of what it could be with stocks at a startup) of what your revenue per employee is - there's no way to really keep someone and no reason to really invest in them either.

The "training and tie them down with clawbacks if they try to leave" was a way that companies would try to retain the lower skilled employees that they trained. That may be harder for them to do and thus harder to justify any investment now. It's awful, it's exploitive - but it was one of the few tools that they had remaining.

Treat them well and they won't leave only works if you're fairly near the top of the pay scale and they're not looking to settle down.

The city where it's based out of has a median household income $55,000 and a per capita income of $30,000. When I was working there on the wages that I got I was comfortably above what my neighbors were making - and way below what you'd make at a more profitable tech company.

Tech companies are easily making $500k to $2M revenue per employee. Microsoft has a profit per employee of $315k and a revenue per employee of $918k. If I was to go to work for Microsoft instead, there is no way that the small logistics company could pay me enough to be competitive with that offer and remain profitable.

https://www.bls.gov/oes/current/oes151252.htm (from which you can get a customized table)

Columns are percentile wages in dollars. Data is for "multiple occupations for one geographic area (nation)"

    Occupation (SOC code)    10th     25th    median     75th     90th
    Overall (151250)         60820    79320   102930     132070   167810
    Computer Programmers     47560    62840    93000     122600   155240
    Software Developers      64470    90870   120730     151960   168570
    Software Quality Testers 48960    71910    98220     124550   153250
    Web Developers           38280    51100    77030     100670   129760
    Web Designers            38550    57220    79890     126110   168200

For the median developer, a big tech job will always be able to out compete others on wages. And the big tech job is (up until recently) always hiring. Much of levels.fyi represents that 75th and above percentile compensation. But most developers are not working there when looked at on a national view rather than a west coast view.

https://www.npr.org/2023/01/18/1149870147/long-haul-trucking...

(You might measure it wrong and end up with an increase to GDP if it’s not in your market basket.)

> And if they are to exist at the federal level, then it is Congress's job to do: not the FTC's.

Congress did that already when it created the FTC and vested it with the power to decide what makes sense for trade and commerce. That is the role of agencies.

No, that's not how the U.S. Constitution works. The FTC is a member of the executive branch. The executive branch cannot arbitrarily make up laws and invalidate legal agreements. The FTC was vested with limited authority, to execute regulations that have been passed by Congress, not to make up their own laws as they go and as administrations change.

The FTC was created by Congress through the Federal Trade Commission Act, and it is explicitly empowered to regulate anything that would harm free competition, including passing rules like this one.

Congress is also free to decide that this sort of thing is an overreach and to further regulate the agency or narrow its scope, of course.

That said, this may fall under the purview of the FTC, although it strikes me as more of a Labor Department area.

I live in State A. I work for an employer who has little or no presence in State A, and they are based in State B.

I leave them and go to work for a new employer in State C, all while still remotely working from home.

Why should I be beholden to the laws of State B, that I've never resided in, as it determines my ability to conduct TRADE with a company in State C from State A?

And that's also why the FTC is involved. My professional work output is the service I have to offer. And I offer it in trade for an income. The FTC oversees more than just 'sale of consumer goods and product'.

If you lived in State A, where non-compete agreements are legal, and signed a non-compete agreement with your employer, then that should be enforceable, because the employer can always take you to court in State A. That's how everything is done in this country with regards to legal differences between states.

I'm not sure why you're capitalizing the word TRADE. It's as if you think because the FTC has the word trade in it, that it has the authority to enact laws and invalidate legal agreements that have to do with any kind of trade.

https://www.law.cornell.edu/wex/nondelegation_doctrine

Without a broad ruling that says that Congress isn’t allowed to establish agencies and delegate their power, which might happen with this court, this is pretty much the process.

I agree with chrisco255 that things this important need to be done right. Nobody can rely upon it until it is properly done.

Only Congress can make (federal) laws. Regulations are needed in order to functionally implement laws. If congress disagrees with a given regulation by pretty much anybody, they are perfectly able to make a law to nullify it.

another interesting question is - should contracts that [disallow simultaneous full time employment] or [ban moonlighting/side projects] be allowed?

Beyond that it is another matter IMO.

Why should the company be able to restrict your ability to do other work beyond the ability to fire you for cause if it's interfering with your ability to do your job?

In other words, should an employer require you to have work life balance by not having more than 8 hours of work obligation per day?

The common answer to this is “it doesn’t matter as long as the work gets done” but I don’t buy it. Engineering isn’t like flipping burgers at McDonald’s. Output is impacted by overworking.

You find it funny that different people have different needs and wants?

> In other words, should an employer require you to have work life balance by not having more than 8 hours of work obligation per day?

An employer should get what they pay for -- which is the value of the labor and time of the employee. No more and no less.

How I choose to spend that time is none of their business so long as I don't do anything that can be construed in a way that implies I represent them.

For example, if I say, to be silly, work at hotdog on a stick and do adult dancing with the company provided uniform, that would probably cross the line. If they then fire me and I continue to do the dancing in uniform, fair game.

The difference is in my obligations to my employer, which are released when I am.

I'm certainly not a lawyer and this is all totally unfounded intuition. But that was also the terms of the discussion

I tried to check whether Hotdog on a Stick had Class 41 registration, but USPTO's TESS has got to be the worst trademark search system I've ever used. I've seen more distinct error pages than useful results, and can't even find their Class 43 registration.

There isn't really any problem with them if they are properly compensated. Which isn't to say they are a great idea, but not worth banning if it is a contractual agreement on both sides.

In practice it means companies only enforce their non compete on people who they really don’t want working for competitors, but they get to make that decision at the point of the employee quitting, rather than having to make the decision up front. It’s minorly worse than just blanket banning non competes but not enough that I think it’s worth the Massachusetts legislature to spend time on it, especially if the feds end up doing a blanket ban

I like my non-compete. I'm a highly paid professional with rare skills/experience, I negotiated hard on my employment contract with multiple rounds of edits in consultation with my employment attorney, I will generate and be exposed to valuable trade secrets during my employment, and I look forward to being paid millions of dollars to sit on my ass for a couple of years if/when I eventually leave.

Should it be banned? Seems fair to me. Or you just mean noncompetes that don't include monetary consideration, or which don't establish protectable interests? In many jurisdictions those are already unenforceable.

Sir or Madam, you question my good faith!

Executive level employment contracts are kind of not relevant to this thread.

Totally different situation that you can’t compare to the average non-executive worker.

There is already plenty of precedent for overly lopsided/one-sided contracts not being valid/enforceable (and indeed many noncompetes actually aren't valid for exactly that reason), so I would have no problem with a law that makes the standard explicit, rather than relying on litigation and jurisdictionally variable case law to sort it out as happens today. Compared to a blanket ban, requiring employers to pony up some "fair" cost and to weigh that against the benefits to them of a noncompete may actually be better for workers overall.

For example, you could ban blanket non-competes but not ban non-competes where very strict criteria are met, or having an exec agree to pay a [an insanely large penalty] if they choose to go work for a competitor.

Just like our famous orange-colored VC-backed forum posts, most of the comments do not reflect any serious reading or digesting of the source material.

https://www.regulations.gov/document/FTC-2023-0007-0001/comm...

There are many service Industries that implement noncompetes. For example - doctors.

Banning non competes Will add an additional cost to established practices to bring on a new fellow or recently licenced doctor.

Most new doctors are a loss for the new independent practice for the first 2 years. If noncompetes were abolished, the money losing doctor would simply open a new practice once he has a steady book of patients.

I predict lack of noncompetes would push many independent doctors to not hire as many new licenced doctors. Those doctors have to work somewhere, and that means hospitals.

The inevitable results seems to be higher Healthcare costs for all americans

All practices simply cannot just not hire enough doctors unless they want to be unable to service business and lose our long term they have to hire collectively they can't all afford to insert their heads into their anus so smart money is they simply keep hiring like before and nothing changes.

Doctors, unless they are high end specialist surgeons in hospitals, do not make net even close to $100 per 10 minutes. That's nonsense.A doctor making $100 per hour would represent $600 per hour x 166 hours = $1.2M in revenues per year. There is no specialty in the US that will drive that much collections in the first 2 years.

But, don't take my word for it. Go look up the avg reimbursement for Level 3 office visit, which is defined as 30 mins. This varies by state and specialty, but its around $90 for medicare or $130 for privates. Again , that is 30mins

Now, consider are talking gross revenue, not actual net profit. So now, lets' talk losses.

The reality is the doctor is really making at best 1/3 of your speculative amount in the 1st year, but only if he's a good doctor with a hot speciality that pays well. SO say $400k best case. If we are talking your avg Pediatrician, slice that by half. The former doctor's salary is somewhere between $250k-300k, the latter prob $200k depending on your market.

That leaves $150k best case, or $0 , respectively.....before COGS and OPEX.

What profit are you thinking about ?

In my experience, doctors will plateau somewhere around year 3 unless they are actively iterating around software/personnel for smaller improvements.

In addition, the new doctor does not have an established footprint in the community, online (social media, ads) or a trail of good reviews> In short,no book of patients.

The established practice will help filling the schedule of a new doctor, but ultimately it comes to skill with referrals + word of mouth + time.

Plus, my example specifically mentioned revenue. Factoring in procedures, you are still not even close to hitting the per minute profit that was mentioned by parent.

I was only trying to make a point with easily relatable numbers without getting into the thick of it with procedures , reimbursements, specialty avgs, utilization, etc.

Insurance may set the amount to pay. But Doctors set the terms of the relationship. Doctors know they don't have to accept crumbs. Doctors are free to reject (and some already do) insurance payments, and also are the only real supplier in the ecosystem positioned to push downward pressure on pricing, particularly vs hospital pricing.

If independent doctors go down, the whole ship goes down.

That seems much fairer than banning the doctor from medicine.

Non solicit covers employees and clients by the contracting parties. It doesn't cover the new doctor opening an office across the street.

The new doctor doesn't run afould a nonsolicit, if all he's literally doing, is opening across the street (and taking clients in the process).

https://www.thebalancemoney.com/non-solicitation-agreements-...

None of your points are accurate here from my perspective. Personally, I was profitable within 3 months of my hiring. The longest I've heard of it taking for a physician to become profitable is around 6 months and that's going completely independent. The idea that a doctor is a money-loser for 2 years is absurd. The need for physicians so greatly outstrips demand that I don't see this applying even in large metropolitan areas.

To your second point. The way private practice used to work was a new physician would take a low initial salary in order to be offered the opportunity to become a partner in the practice. The assumption being that for the first few years the new physician is making the partners money. There are a lot of advantages to being a partner in a practice rather than being completely independent and it was worth a few years of a depressed salary in order to be able to purchase equity in an established practice.

What's much more common now is for senior partners to recruit young physicians and then flip their practice to an equity firm after binding them with a non-compete, essentially canibalizing the future of independent private practices in order to ensure themselves a nicer retirement.

Relevant to the discussion is the fact that equity firms, and to a lesser degree hospitals, must chase growth at all costs - inevitably driving up the cost of healthcare. I think this is something that we agree on.

The short answer is that non-competes take power away from independent physicians and give it to equity firms and hospitals. If you sincerely want to see independent physicians flourish then these need to go away as soon as possible. If you read the comments submitted to the FTC you'll see that my perspective is common.

I think you sunk your point right with that statement. If there's a non-provider entity entangled in the cap table, by definition, you are not independent.

https://www.natlawreview.com/article/nlrb-confidentiality-an...

That will separate “legitimate” non competes from bs wage reduction contracts.

But yes, I would want to say +X% loss of experience + advancement but no idea what X would be, but again the goal is to stop it just being a free wage suppression lunch.

Company Alice buys out Company Bob, along with all of Bob's clients. Bob's CEO "retires", but then just starts a new company and calls up his old clients and starts poaching them back, essentially double dipping on the company purchase price.

This totally theoretical situation may or may not be occurring to a friend of mine who is in Company Alice, and I wondered how a banishment of non-compete clauses would affect acquisitions.

“The proposed rule would include a limited exception for non-compete clauses between the seller and buyer of a business“ [1].

[1] https://downloads.regulations.gov/FTC-2023-0007-0001/content... page 5

CA blocks non-competes b/c you can't prevent someone from using their skills to make a living.

Poaching clients back undermines the value of the thing you _just_ sold.

It might be different if/when it's not a voluntary sale, and I bet there's ways to contract out of it - I've certainly idly daydreamed about clauses along the lines of "if you fuck up the product I just sold you enough, I can make it again and you can't stop me" - but TBH that probably just ends up as a "can't release a competing product within a year".

You’re paying me for my experience. I’ve gotten that experience at a previous employer, that’s how the market works. I didn’t get to this point in my career doing it for free in my spare time.

So if I’m willing to sign this broad non-compete right now, it means I can’t use the experience I get here again in the near future. But you know I’m going to get a job doing this thing, look at my work history. This thing you want me to sign away, it’s all I do. Which means if I’m willing to sign this without a compensation package that compensates me for not working during the non-compete, you know I’m going to break it.

Further, by signing this clause that’s fairly common, you can be fairly sure I’ve probably seen and signed a similar agreement already in my career that I’m breaking now.

So, again, unless you’re going to bake the value of the non-compete into this contract, you really can’t trust any employee that was willing to sign it.