Tell HN: Beware confidentiality agreements that act as lifetime non competes

I think the Chinese law is effective in this regard: in order to maintain any non-competition agreement, the company must continue to pay you a monthly compensation amount equal to 30% of your total monthly income when you were at the company. Whenever the payment stops, the non-competition agreement is automatically void.

can you choose to refuse these payments to avoid the responsibility?

Would be very interested to read more about that. Do you have a link?

Or the Brazilian law, that requires 100% compensation, and puts the onus on the company to prove that the non-compete is necessary before it can be enforced.

If you ever see one of those contracts here, it's usually usually for a very reasonable situation and a well paid position.

I’ve seen this is France and UK but it lasts only a few months and no you can’t refuse the payment - but the company can refuse to pay and set you free.

Imagine if Tesla had been able to stop Andrej Karpathy working at Open AI just by spending 1/3 of what his salary was when he was on Autopilot. That sounds like a terrible idea.

That's a terrible law.

30% of your total monthly income as it was, when you are likely leaving for more money at a competitor or to start your own company...

In UK it's called gardening leave. A period when you are still employed but not at work and can't join another company without agreement.

Uk law generally is that non compete clause is ok, if the length of time is reasonable. But you can't stop a person with a trade from applying that trade unreasonably.

Most tend to be 3-6 months.

Normally it's to stop a person leaving from stealing clients.

In Portugal is generically the same - non-compete clauses require the payment of a monthly compensation for the duration of the non-compete clause; If non-compete clause exists, but no specific compensation is specified in the contract, the employee may demand the full salary during the specified period (I know at least one case).

So do it four times and retire.

Hmm… in four different industries, though… Yeah okay there might be some issues.

Oregon at least makes it 50% IIRC. Anything less than 100% seems useless though. Usually when taking a new job in the same industry you expect a pay bump, so even a 100% rate is likely leaving money on the table.

I generally ask for 150% - usually on the expectation that it’ll make the non-compete go away.

It’s not at all a ridiculous ask, either. I’ve made a career out of going after high-impact roles in whatever is the fastest growing area of technology at the time. The non-compete isn’t just asking me to sacrifice the income from my next role, it’s asking me to sacrifice the experience as well. It also limits my ability to renegotiate comp while on the job, because they know your BATNA isn’t to just go get a better offer from a competitor.

If a company wants me to give all of that up, I’m sure as shit not doing it just for the privilege of working for them.

Then the employee is only making 30% and presumably not working elsewhere or that would defeat the purpose. So how is this a good approach? I would get 80% or more but don’t see how this is effective.

US finance has the same thing, and also calls it gardening leave. In our case I think it's reasonably common for it to be as long as a year.

Downside for finance folks is that the usually make a decent chunk of their compensation through bonuses, not their base salary. So their gardening-leave pay ends up being quite a pay cut, and while they're "gardening", they're out of the game for a year and their skills/knowledge becomes a little out of date.

Well, yes, but you don't have to work.

This is the first I’ve heard of this so I’m just rolling it around… but I suppose this would make it cost-prohibitive for companies to insist on non-competes unnecessarily.

As the employee, it’s still clearly a bad position for me unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.

> unless I can find a non-competing job that pays me at least 70% plus whatever pay bump I’d expect for career advancement.

This clearly depends on your role and industry. I can write code in a bunch of industries I've actually never had 2 jobs in the same industry. If I were an oil pipeline engineer it would be different.

I mean under the current rules they could have stopped him for 0/3 of his salary.

I'd think it isn't about employee getting 30%. It is about the companies would be paying money really for nothing in most cases, and thus forcing the companies to avoid blanket enforcement (and unpredictable at that as it avoids the company having the free option of coming after you nilly-vanilla when they feel like it years later) - and such avoidment is great for innovation industry-wise. If your confidentiality agreement is really meaningful, then probably you can negotiate much better payment.

> Normally it's to stop a person leaving from stealing clients.

I have a lot more sympathy for "you may not take clients with you" clauses than for "you may not work in the same industry" clauses.

    > reasonably common for it to be as long as a year

Absolutely not. For ibanks, less than VP is one month. VP/ED/MD is three months. Sometimes it is six months for an MD, but that is extreme. The longest that I ever heard was someone who left Citadel as a portfolio manager had a TWO year gardening leave. How can that make any financial sense for Citadel? Before the HN crowd jumps in about that Citadel example being "reasonably common": There are probably less than 1,000 people globally who would fall under such an extreme contract.

For a lot of people, taking 50% of base salary (absent bonus/RSU/etc.) isn't very practical. Even if there's some alternative like Starbucks.

More like you are not allowed to work. Loss of work experience, loss network, not even accounting for inflation.

Doesn't mean you don't have to make the mortgage payment.

Wasn't he in California? If so, they couldn't have.

I would welcome an opportunity to walk away from the entire tech industry with a guaranteed-for-life income, allowing me to pursue dreams without them needing to be financially viable. Setting up as a high end timber boat builder without ever needing to turn a profit while still having the same income I do now is something I'd jump at immediately.

There is a difference between non-solicitation and non-compete. In the US, the former obligation might be acceptable while the later might not.

That actually sounds bad, since after the payments end you can basically speak about IP and its as if you're encouraged to do so after payments stop.

Bad if you leave for a competitor. I've never really done so. Fintech, social media, recipes, bidding, e-commerce, fashion, saas, mental health, games, and so on. There's just a wide range of fields you can go into that don't compete and still use the same skills.

Unless the previous employer is slow and incompetent, if you've done good work, they'd probably be ahead and better funded. I'd take the money.

And loss of negotiating power -- the company knows your BATNA is garden leave, and probably not a better offer.

Plus, nobody says you can't work in any other field you like, just not whatever you used to do.

Net present value of 50% of salary for the next 30 years is something like a million dollars for most HN commenters, I'd guess.

Except it's not "for life". It's until they feel free to lift the non-compete. My guess is that most information you take from a company is irrelevant in a couple years. Maybe 5 tops?

Plus it'd almost certainly end with zero notice. You'd get a email saying "you're free to go". Suddenly. After say 26 months.

So it's not like a "pension for life" - just a gap in your employment history.

I believe this is the interpretation that most closely reflects the intent of the legislation. This is not a form of income, but rather a means of discouraging companies from acting recklessly.

I'm betting AK was clued up and would negotiate that out. He was hot property from the get go.

for senior people whose alignment an employer needs to maintain after separation, it seems a lot more common to use some sort of advisory or consulting contractual relationship to keep them close as long as necessary…

Only if you're a generalist. What if you're an expert on some specific tech?

I mean I would probably take the money and temporarily switch fields too but I don't think it's quite that simple for a lot of people.

While I agree with the sentiment, you could lose that income at any time should they close to drop to non compete.

Oh no, ah jeez, slightly more than one year of income for zero effort, darn.

Any employment gap can be easily explained by saying "I was under a non-compete and being paid garden leave while working on personal projects to keep my skills fresh". It's very common in e.g. the finance world, I believe.

I know an example of a garden leave for 2 years for an engineer working on trading algorithms. Maybe he falls into that 1000 people category (PhD in math).

Exactly: That person falls into the 0.01% of the finance industry.

The "non-solicitation" agreements are so stupid. There is a cottage industry in headhunters where you tell your next employer who you want to recruit, then they ask a 3rd party recruiter to go track down that person after X months... and invite them to interview. I have seen it so many times in career.

I suspect most people with that sentiment don't have a mortgage/kids/etc. I have known youngish people who got a very nice severance package back in the day and essentially took a 6 month sabbatical. I don't really see a problem for getting future jobs so much. But it is a loss of significant income (assuming you were well-compensated even if you're still being paid something) and may not have great alternatives for income though, if you're in the position to do so, you can of course travel or whatever.

It's definitely fuzzy. I mean, someone like an account rep or a financial advisor (and their clients) can't unknow somebody. So even if someone isn't taking their client list and calling/emailing everyone, there's inevitably going to be an element of client "poaching" so long as they're still in the same business.

Speaking of China:

The free movement of workers is important to having an efficient economy. The US could do a lot better here; we have bad safety nets, non-competes, "trade-secrets".

When workers move freely and spread trade-secrets, this results in all companies performing better, on average. This is good for everyone except the lazy owners who would lose money to those who perform better.

While the US worries about limiting the free movement of workers, non-competes, and "trade-secrets", China is going to build approximately a billion homes and factories.

If we take the "free" out of "free market", then we're just a market, and far from the most efficient one.

I've no argument with the severance cash, I'm saying that you can't just revert to a hobby because you have an "income for life."

The uncertainty means you're still out on the job market looking for a real job.

If it's 100%, I'd rather the noncompete not go away. If I am able to live off the salary, why not take the free paid vacation if it's offered? I can spend the time doing and learning things for myself, rather than the company.

U.S doesn't have a hukou system.

I guess corporations don't write the laws in China?

There's perhaps significantly lower total compensation and potential uncertainty. A lot of people just aren't in the position to travel the world (or whatever) for a year. Or even work on an open source project that may or may not even be within the bounds of the non-compete depending in the company.

I think the lack of universal healthcare is a very significant limiter to freedom of job movement in the US, especially if your whole family depends on the health insurance you get from work.

In principle, if you are changing jobs, it's because you found one with something like a raise or better working conditions. Being unable to look for those has a cost.

fyi there are clauses in contracts that try to control the use of residuals in “unaided memory” , trying to refer to stuff you just happen to know by dint of having been exposed to them, even though they’re in no explicit notes.

it's not necessarily about fully compensating you. It's about making the non-competes actually cost the company something so they can't use them as free leverage to get you to accept shitty conditions today because quitting means not being able to work in your field at all for x years even if someone wants you around.

You mean a billion homes that no one lives in and ends up being a Ponzi scheme?

https://www.newsweek.com/what-happened-china-ghost-cities-20...