Massachusetts Bill to Ban Non-Competes backed by Spark Capital

[sachinag]

I would love to see what the folks at Harmonix think about this. If it passed, they'd probably be decimated by publishers grabbing teams of three to work on various rhythm games.

That said, I'm fully in support. :)

[dmillar]

I agree. If you feel your employee is a value to you and potentially a competitor, you ought to compensate them accordingly. Personally, I would never sign a non-compete unless there were not only adequate considerations for compensation, but also equity.

[electromagnetic]

I agree with a ban on putting it into an employment contract, however I don't agree with them being banned completely.

I don't think my getting a job should hinge on if I agree not to use my knowledge for my own best interest. If a company wants to offer me something that (from my perception) is of better interest to me than competing with them, then I'd possibly sign it.

If it's that important to a company that I don't compete with them, they should be willing to pay me enough that I have an interest not to compete.

[jacoblyles]

From an employer's perspective, employees at a competing company are more valuable workers than employees of equivalent skill at companies in other product markets, due to their inside knowledge of competitors' operations. I can understand why some people might think this is unfair and be willing to enforce contracts that make an employee wait a certain time period before working for a competing firm.

[josefresco]

Exactly. If you want your employees to be loyal to your 'cause', give them equity. Don't expect them to be a team player without some sort of reward beyond simply keeping their job.

As an employee I 'clock out' when my day is over and are free to pursue whatever I want in my own time. As an owner, I do everything I can to make sure my company survives and thrives around the clock both at work and at home. There's a definite line there that shouldn't be crossed (or you'll get burned)

[ivankirigin]

I didn't get a job at a startup in MA because they feared my last company's non-compete.

[tptacek]

I've been involved in legal posturing between companies over noncompetes before, too. I wonder if, even if courts refuse to enforce noncompetes against individuals, the agreements will still have teeth between companies; just the cost of taking an ultimately doomed lawsuit to court might be deterrent enough.

[alexbeaudet]

To what degree banning non-competes will fuel the tech scene in Massachusetts is tough to say - obviously there are a lot of other variables separating it from Silicon Valley - but it's nice to see that Spark is practicing what it preaches, having stopped requiring non-competes in 2007.

[tjic]

I dislike the government asserting that I am not a fully competent adult, capable of making my own decisions about what agreements I enter into and which I do not.

If I'm not competent to read a non-compete and agree, or not agree, to it, then why do they think that I'm competent to drive a car, or vote, or sign a lease?

[biohacker42]

I agree with the core of your argument, however in this instance we have private market manipulation.

In most situations the employers have more leverage then the employee. The very best hires will not accept sub par offers. But a lot of others, including some very good ones, will.

The result being that private companies influence the labor market for their own benefit and everyone else's detriment. That includes other employers and employees.

Think of non competes for utilities, as in only one cable co. can serve your area. Does that make the private market manipulation more obvious? Private market distortion is no better then public market distortion.

Cartels, non-competes, etc, are legitimate targets for government busting from my libertarian perspective.

[frig]

It has nothing to do with your imputed (in)competence.

All a decision like this would mean is: the state of MA has decided it's not in the interests of the state of MA to enforce noncompete clauses, so from here on out it will not enforce them.

You can still sign whatever you want.

[toby]

There are already plenty of things that can't be enforced by contract. You can't sell yourself into slavery, for instance, because the state isn't allowed to make sure you submit to your agreement.

As another commenter said, sign whatever you like. Some companies make you sign non-competes in California, we just all know they don't mean anything.

[mellis]

Non-competes could be seen (from a company's point of view) as a form of the prisoner's dilemma: everyone is better off if no one requires non-competes, but if everyone else requires them than I need to. Therefore, a law of this sort could potentially improve conditions for all companies in a way that individual companies could not accomplish themselves. That is, the government is not trying to tell you what to do, it's trying to create a better business and employment environment.

[donaldc]

In theory, the ability to sign a non-compete increases an employee's options. In practice, if they're enforced, many employees no longer have much option for employment without signing them.

But don't worry, even if this bill passes, you'll still have the option of signing enforceable non-competes in almost every other state in the U.S.

[dsil]

Driving a car, voting, and signing a lease are all much much simpler to do than understanding a non-compete agreement. And actually I think the line of "most" people falls somewhere in the middle.

[jfarmer]

I read this as [Massachusetts Bill to Ban] [Non-Competes backed by Spark Capital], rather than [Massachusetts Bill to Ban Non-Competes] [backed by Spark Capital], so it's good to see that Spark is backing the ban.

In general I think the state should take a utilitarian perspective in matters like this. If non-competes hurt the economy more than they help it would be self-defeating for the state to enforce them.

I'll leave the rest for politicians and pundits.

[sfg]

How do we measure the utility?

[bdr]

I'd guess that people often agree to non-competes because they don't know how bad a deal they are. This could be solved if (1) people checked their contracts with lawyers more often, or (2) contract terms were standardized in such a rigid way that people could quickly learn about all the potential clauses.

Why don't people check their contracts with lawyers? If it's because of a high estimated cost, is that estimation right?

Part of the problem (and therefore part of the solution) is that the choosing of contract terms asymmetrically benefits the employer, since they only have to do the lawyer work once.

[jhancock]

I've had lawyers in Georgia tell me a non-compete has no teeth under GA law. You still might get sued, but apparently, the law leans heavily towards the employee.

Intellectual property and trade secrets are however well protected for the employer.

[tptacek]

That's the case in most jurisdictions; judges will tend not to interpret contracts in ways that preclude individuals from earning a living. In a lot of states, judges also have the authority to modify noncompetes on the fly, so that they aren't confronted with the choice of screwing a former employee and throwing out an entire contract term wholesale.

[sscheper]

Excellent movement on Spark's part. I've personally been handed a non-compete by a venture capital fund that would make a producer blush. It's preposterous what some firms try to con entrepreneurs into.

[tptacek]

I'm really not sure why I'm expected to muster sympathy for entrepreneurs facing noncompetes from VC's. Isn't this an eminently reasonable use for noncompetes? You're epsilon from corporate-to-corporate contracts in this scenario.