Comment by tianqi
6 days ago
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.
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 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.
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.
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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.
U.S doesn't have a hukou system.
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.
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...
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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.
Well, yes, but you don't have to work.
More like you are not allowed to work. Loss of work experience, loss network, not even accounting for inflation.
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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.
Doesn't mean you don't have to make the mortgage payment.
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.
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).
I guess corporations don't write the laws in China?
can you choose to refuse these payments to avoid the responsibility?
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.
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.
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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.
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.
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.
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...
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.
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.
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.
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.
So do it four times and retire.
Hmm… in four different industries, though… Yeah okay there might be some issues.
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.
I'm betting AK was clued up and would negotiate that out. He was hot property from the get go.
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I mean under the current rules they could have stopped him for 0/3 of his salary.
Wasn't he in California? If so, they couldn't have.
Would be very interested to read more about that. Do you have a link?