It's not most employees, its the employees that an employer would even bother with a non-compete for. And many (most?) of this group would have the leverage to turn down an undesirable offer.
I think it's because most employees just have no interest in diminishing competition. And if they did, most don't have the bargaining power to make it happen. And that to me is what corporate non-competes are generally about: exercising power for gain, and nevermind who it hurts.
If the average person has nothing to worry about then why do all average people have to sign non-competes if they want the job? The fact is that companies see a benefit in threatening all new hires with non-competes, and like I said elsewhere, the only people with enough pull to negotiate out of a non-compete are those highly specialized non-average people who are the least likely to sign the boilerplate contract, who the company will still want to hire when they push back with specific demands.
You are assuming that no employer would ever pay more and be more flexible in exchange for a non-compete; I can imagine many employers in highly competitive industries who would.
There's this HN obsession with negotiating on non-competes. Here's the problem. Say that I work for Acme Corp that makes Fancy Widgets for Bridgettes with 11 Digits and I'm hiring a software engineer. We put out the offer and give them time to respond. They come back saying they would like the offer to be $10k higher. No problem... As the hiring manager, I might already know that we have $10k leeway, or at the most, I'll have to go ask someone a level or two above me.
Another candidate gets an offer and sees the non-compete clause (which is the same across all of Acme Corp's 10k employees) and asks for that to be removed. As the hiring manager, what do I do? My boss leads a division but doesn't have authority to change boilerplate contracts. Neither does her boss. So we need to go to Legal. But who do I reach out to there? The company's general counsel doesn't have time to deal with this. So I guess I start emailing around? Who do I go to who actually has the authority to change this? It becomes too much of a hassle and I turn candidate #2 away. Oh, and by the way, had candidate #2 signed the contract, they would have been banned from working for any other company whose business is primarily selling Fancy Widgets to people named Bridgette who have 11 fingers. It probably wouldn't have been an issue anyway.
My point is that people sometimes overthink this. Yes, non-competes are bad. I'd argue that they are immoral and certainly bad policy. But not every non-compete is created equally and sometimes maybe you'd be better off negotiating for other things that might be easier to negotiate on and would be more useful anyway. If you are a software engineer, it's often unlikely that you'd find yourself working for a direct competitor anyway.
The problem is that there is an asymmetric bargaining power between companies and potential employees. I had a family friend who is a lawyer I could talk to, most people don't have that luxury and don't have the time to educate themselves about non-competes. Talking to people reveals most (wrongly, for most states in the US) think non-competes are unenforceable. Companies use non-competes to avoid paying a fair market wage. The fact that companies resist paying severance in accordance with non-competes reveals the true motive companies have for non-competes - to keep workers at their company while paying below market rates. In situations where companies don't have unequal bargaining power, but still want non-competes (top level executives), these contracts almost always include a large severance package.
If a company is preventing me from working, and doing so is actually important to the company above and beyond a tool to keep me working for them, they can afford to pay a salary for the duration of the non-compete. The fact that companies aren't willing to do so reveals that the companies want non-competes so they don't have to pay market wages and to restrict freedom of movement of employees. It is a terrible standard to have non-competes for at-will employees.
I have actually refused a job offer because the terms of the non-compete were so one-sided for the employer. The contract had things like one-way attorney fees, applied everywhere in the US for a year, wasn't limited to what the company actually worked on, and other employer favored terms. This was for at-will employment, and apparently I was the first person to refuse the job offer due to the contract. I wish more people would refuse to sign such biased contracts, as it stands companies can get away with the practice because too many workers allow them to do so.
Why would it select for no non-competes when people are willing to sign them and a culture of legal "take anything you can get"-ism among employers pays off in other areas?
That may (or may not) be true. But in my experience, at least some percentage of people bound by non-competes elect to just be on the beach rather than going the legal route. Some companies have a reputation for consistently litigating these.
In addition, even if the employee/ex-employee is willing to risk it, lots of potential new employers aren't. I worked for a small firm for a number of years and we wouldn't even entertain having discussions with someone if they were bound by any remotely relevant non-compete.
Non-competes ask employees to give up something extremely significant: freedom to work there they choose. Which I have no problem with if they get something significant in exchange.
Let's an employer wants some insurance that I won't go work elsewhere because there is going to be a long training period or what not. I expect significant compensation for that, ideally in the form of a large signing bonus, maybe 50k per year of non compete.
Don't want to pay 50k in cash up front per year of non compete? Take out the non compete. Simple negotiation.
I guess the problem in practice is that employees just sign their employment contract no matter what it says, which is unfortunate.
Any half decent employer that isn't willing to negotiate is just going to say that. They risk losing a hire if they say that though, so some will be willing to negotiate. If you try to bluff them, it almost certainly won't work because nobody wants a troublesome employee with a big ego, so if your going to walk because of the non-compete, you better mean it.
Non-competes are incredibly unfair on workers. Companies already have a way of stopping their trade secrets from walking out the door - make the employee's life better than what they would have working for the competitor.
Instead of that, what do we see? Employers that grudgingly give tiny pay rises to loyal employees that are essential cogs to their operations. I can't feel terribly sorry for the company when the employee decides that their career would be better served working for the competitor.
The very existence of a non-compete will also scare off some employers. I worked for a very small company for a number of years and we basically wouldn't even talk to anyone who had a non-compete even if it seemed low risk. Just wasn't worth it--especially if they were from a client.
About time. IMHO non-competes are inappropriate for anyone outside of C-level executives (who are well compensated for accepting such terms). For low-wage workers non-competes are just pointlessly cruel.
reply