For high demand folks (the kind we read about in executive emails between Apple and Google and so on) it seems very possible that a company would opt to pay 10% of the employee's comp to deny them from the competition.
eg, you get full benefits plus no less than 80% of all compensation of the previous 12mo. Non-cash compensation (eg equity) may be replaced with equivalent cash.
> "Non-cash compensation (eg equity) may be replaced with equivalent cash. "
What's the equivalent cash value of options? The variability here is huge. Seems better to just ban these schemes entirely, especially considering there's seemingly zero upside to allowing them.
Remember: California has never allowed noncompetes and we're doing just fine in the tech department. Better plan would be for the rest of the country to follow our lead.
But really the right move here is either no non-competes or employees getting to set their own prices for them. Being on the wrong side of a power asymmetry forces behavior changes.
In other words, the kind of person who is actually in a position to negotiate the terms of their contract. What bugs me most about the current situation is the ubiquity of non-competes for low salary employees, who have the least amount of leverage to negotiate contracts. I'm much less concerned about staff engineers at tech companies and portfolio managers at hedge funds, although I'd prefer to see non-competes banned altogether (except perhaps for non-competes for owners selling a company... I think it's fair that if I buy your ice cream shop, we can agree that you can't open one up across the street the next day).
If all employees rejected them, companies would have no option but to disband them.
The issue is that when one enters into a non-compete without equivalent compensation the government loses potential tax revenue. Income tax is maximized when workers are working most productively, so there is a strong incentive for the government to keep workers working productively. Similar reason for why we have minimum wage.
If non-competes provide sufficient "garden leave" then the tax revenue should not be impacted, so there is no reason for the government to care. The productivity is still captured. The government isn't in the business of spotting bad deals for individuals – you are quite free to make all kinds of boneheaded financial decisions – only bad deals for itself.
Granted, execution and enforcement can be a challenge. Say you enter into a non-compete with "garden leave" of $1. Is that sufficient compensation with respect to the intent of allowing "garden leave"? Now you need a tribunal to make the call and all the complexities to go along with it. And so, when drafting laws, it may be more practical to prohibit "garden leave" as well.
“Garden leave” is basically just being in paid employment with no duties.
Neither the FTC action nor state policies like those in California generally prohibit noncompetes while employed.
However, if the compensation for such a contracted “garden leave” was substantially less than normal full-time comp for the employee, and agreed prior to employment rather than as a separate independent agreement at the end of the employment-with-duties, I can imagine the FTC still seeing it as an unfair competition practice, and state courts, limiting recovery for breach to any “garden leave” compensation for the time in breach.
Where did you get that idea? In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
From the actual case law of application of the prohibition by state courts, etc.
> In California: non-competes are carte blanche unenforced and even considered abusive and illegal in many contexts (for non-executives), whether you're currently employed or not.
This both a misuse of the phrase “carte blanche” and inaccurate in its substantive message. Prohibition on competing work while employed is a well-documented exception to both California’s general policy against non-competes and its general policy against employer prohibitions against moonlighting; your employer can’t stop you from working for someone else who doesn’t compete with in your spare time while you are employed by them, and can't stop you from competing with them when you are no longer employed by them, but they can prohibit competing work while you are employed:
https://www.dwt.com/blogs/employment-labor-and-benefits/2020...
https://www.mossbollinger.com/blog/2020/december/my-employer...
Productive work is a major factor in psychological well-being. And a lot of people have spent their career being a highly specialized expert in one thing.
Expecting them to abandon that for a year or more in order to instead contribute "entry-level skills" at something else can be difficult. It's already known how retirement can lead to depression and a painful feeling of emptiness -- imagine how much worse that can be in the prime middle of your career.
It's not about the money or whether GDP measures something or not. It's about the ability to contribute what you're best at, where your excellence lies, or having that ability taken away. For many people, there isn't any kind of easy substitute for their primary area of expertise.
2 years of non-compete aka 2 years of compensation to not work sounds WONDERFUL. Like, it means you're so good at your job we're willing to pay you to not do jack shit. You musta been working on something so cool that it's worthwhile to have you sit at home then let someone get even a whiff of it. It's the best possible compliment.
There are PLENTY of ways to do productive work -- take a class, work on a certification, work on a side gig, or take a job in a different industry for a spell. Volunteer at the YMCA and do an AWS cert while sleeping in until 10am every morning.
"entry level skills" is also simply untrue -- plenty of non-entry level stuff you can crank away at. Start a Master's degree, or shoot for the high end Cisco certs, etc. etc.
You can contribute to where where you're best at in a ton of different ways. You need to ditch this hustle culture mentality, there are plenty of ways to generate excellence and they don't require full-time, ass-kissing jobs.
Have something to show for your time, like you took an online class or something, but it's not a huge surprise. You didn't pop on multiple DUIs and spend 2 years in the slammer.
Non-competes are stupid period and thankfully in California are not enforceable. It's similar to a prenuptial agreement in marriage except who the f is marrying their employer?? A good employer wants to keep you, will compensate you to do so, and if they can't, they are proud of you and wish you well, _even if that means a stronger competitor_ .
The trade secret argument the poster above you alluded to is very unlikely. Usually a competitor is hiring you because you are already somewhat trained and up to speed in their field... and perhaps the competitor can slow your company's operations by hiring you away.
In the end, many companies only pay you what they have to keep their operations stable and feel more than free to pay the very top of management more than what they deserve, and keep those executive compensations while laying off people in operations quite freely when times are bad. Noncompetes only for the company, not the worker, during good times.
Now there's an idea - a fair noncompete. Employee can't use their knowledge/skills for 2 years after they leave, but also the company can't hire anyone with any industry knowledge or related skills for 2 years after they leave either. Wonder how many companies would like that idea?
I too can see the reasons that non-competes exist, but I see more reasons why they shouldn't exist. And even if a company thinks it's worth it to pay someone's salary for a year or two to enforce a non-compete, is this really what's best for the economy overall? Motivated, highly skilled people excluded from the job market?