Re:White House urges ban on non-compete agreements for many ...
by tristor on Thursday October 27, 2016 @01:25AM
(#12803099)
This need is best addressed by termed employment contracts. E.g., in consideration of us paying $10k for you to pursue training in blah we mutually agree that you will work for us in your existing position a minimum of 6 months after the training concludes.
As an employer, after investing in training an employee you only need to ensure that you get an acceptable return on investment before the employee leaves. You want to prevent the employee leaving, so your agreement should specifically target that.
Non-competes are overly broad here and this has the consequence of making them coercive and punitive, both completely unnecessary. The non-compete doesn't guarantee your ROI except as a knock-on effect of its coercive nature. It only prevents your (former) employee from working at all. A net negative for society and arguable for you as an employer.
A non-compete allows a company to make an investment in you (in the form of training) with some assurance that you will not immediately turn around post-training and go work for a direct competitor. NDAs/IP assignment agreements do not address this need. If it weren't for non-competes, that investment would be infeasible and we would all be paying our employers for the training we get – either directly, in the form of course fees, or indirectly, in the form of depressed wages during the course of the training.
Edit: For a deeper dive on this, see Paul H. Rubin and Peter Shedd, "Human Capital and Covenants Not to Compete," available at https://www.jstor.org/stable/724227?seq=1#page_scan_tab_cont....