startups stifled by noncompetes

[Dan Croak]

Hey all,

Please take 5 minutes to read http://is.gd/1b26k.

I'm interested in this group's opinion on this issue.

I'm also interested in creating a special section of http://bostonrb.org to address this issue. The page would allow you to digitally sign your support for House bill 1794, which should come to a vote in the Massachusetts State Senate this summer, potentially as early as July.

http://prohibitrestrictiveemploymentcovenants.net

Basically, you'd sign your name & put your zip code into a form. On submit, you'll see the contact information for your representative and means to alert them of the petition.

I don't like that legislation like this will likely be determined by the lobbying efforts of large companies like EMC & Akamai when it affects just as many people operating in small businesses & web startups.

I like the idea of our existing group of hundreds lending our names in a unified effort to counter-act those forces.

What do you think?

--
Dan Croak
@Croaky

[David Berube]

Dan Croak wrote:
> Hey all,
> Please take 5 minutes to read http://is.gd/1b26k.
>
> I'm interested in this group's opinion on this issue.
>
> I'm also interested in creating a special section of http://bostonrb.org to
> address this issue. The page would allow you to digitally sign your support
> for House bill 1794, which should come to a vote in the Massachusetts State
> Senate this summer, potentially as early as July.
>

..snip...

> I like the idea of our existing group of hundreds lending our names in a
> unified effort to counter-act those forces.
>
> What do you think?
>

FYI, at least one member (me) of this group is politically neutral. What
individual members of the group choose to do is their business, but be
very careful that you don't claim the support of Boston.RB as a whole.

Take it easy,

--
David Berube
Berube Consulting
http://berubeconsulting.com
(603)-485-9622

[Brian Cardarella]

So I recall when this bill (or a similar one) was brought up a few months ago. I contacted my local rep and asked him to support the bill. I was told that he would not be supporting the bill because while it does hurt startups big companies love the non-compete. It protects them from any potential competition.

In today's world I think this is kind of a bullshit reason. How often are large companies competing with *only* other companies in MA? In a world where one can get a job working remotely or live in MA and work in NH, ME, VT, CT or RI the only result is throwing a roadblock in the way of good ideas getting off the ground. And MA loses out on bringing more business in and more jobs.

Unfortunately, startups don't have very many lobbyists working for them.

- Brian

[Dan Croak]

I'll take that as a vote of support.

Dan Croak

@Croaky

[Dan Croak]

David,

On Jun 23, 2009, at 6:26 PM, David Berube

<djbe...@berubeconsulting.com> wrote:
>>
>
> FYI, at least one member (me) of this group is politically neutral.
> What
> individual members of the group choose to do is their business, but be
> very careful that you don't claim the support of Boston.RB as a whole.

Excellent point. Exactly why I would make this an opt-in thing,
restricted by zip code so that only supporters who live in
Massachusetts would be counted.

Would people prefer if this was a separate site?

[Brandon Casci]

The spirit of a non-compete is to protect innovation and ensure credit stays where credit is due, not to keep people out of work. This ads a certain mount of security to employers and therefor jobs. Pharmaceutical companies for example. There are fair amount of in MA, and they employ a lot of people. It normally takes them 20 or 30 years to bring a product to market and a lot of money. That's a world apart from a service that took months, maybe weeks to launch, and craps out messages with a 140 character maximum. Think twice before asking them to be taken away. With that being said, some non-competes are overboard and sometimes the enforcement is manipulative and abusive. Reform is due.

--
=========================================
I have a spinal injury. Please don't mis-interpret
short communications as curt communications.
This is simply a way to minimize time using a
keyboard and mouse, which will slow and possibly
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=========================================

[Brian Cardarella]

Didn't realize the subject was closed for discussion. My apologies.

- Brian

[Dan Croak]

Brandon,

On Tue, Jun 23, 2009 at 9:01 PM, Brandon Casci <brando...@gmail.com> wrote:

The spirit of a non-compete is to protect innovation and ensure credit stays where credit is due, not to keep people out of work. This ads a certain mount of security to employers and therefor jobs. Pharmaceutical companies for example. There are fair amount of in MA, and they employ a lot of people. It normally takes them 20 or 30 years to bring a product to market and a lot of money. That's a world apart from a service that took months, maybe weeks to launch, and craps out messages with a 140 character maximum. Think twice before asking them to be taken away. With that being said, some non-competes are overboard and sometimes the enforcement is manipulative and abusive. Reform is due.

I hear what you're saying about the nature of their business requiring some different protections than other industries. Would you prefer the law to allow exceptions for the pharmaceutical industry? How about a law specific to our industry, the web industry? Should we as web developers be supporting a prohibition specific to our version of high-tech?

In general, what doesn't make sense to me about non-competes for a state is that we all compete globally now. The incentives in Massachusetts are only to create aggravated employees and push the best talent elsewhere once they've gotten an education here or held one job where they signed a non-compete.

--
Dan Croak
@Croaky

[Dan Croak]

Brian,

On Tue, Jun 23, 2009 at 9:10 PM, Brian Cardarella <bcard...@gmail.com> wrote:

Didn't realize the subject was closed for discussion. My apologies.

- Brian

Didn't mean to abrupt; I was replying on my phone and read your response as not directly addressing any of my original questions.

Re-reading it, your one question for further discussion is:

"How often are large companies competing with *only* other companies in MA?"

I have no statistics to back up my answer, but I read that question as almost rhetorical: I would think the answer is "close to never".

--
Dan Croak
@Croaky

[Brandon Casci]

I don't have any specific ideas at the moment. I think non-competes are understandable for certain people in certain places. I think more relevant for physical goods than companies that write software or provide virtual services. Though in-depth and specific knowledge of a particular business's operations is probably a global concern. Now saying anyone here has to share that concern, it's just a concern that others will have.

Devil's advocate...

So you're saying it's OK for people to take inside knowledge and bounce around from company to company exploiting everyone in their path, and putting all jobs at the previous employer at risk?

I'd expect if you were lobbying to get rid of non-competes  you'd get counter arguments like the above.

This is just my opinion/observation having been to DC four times, and working with my local Congress person on the still standing webcaster royalties issues. Don't expect to win anything with logical and sound arguments. Do everything you can to show how the issue you care about is hurting constituents, not just Conduit Labs, and prepare to be involved for years. The issue causing the most damage to constituents, and consequently votes,  can win in the end...but the issue proving the most money has an excellent chance of holding you at bay for a lifetime.

[Randy Cole]

Very interesting! There is such a huge power imbalance between employer
& employee, and between MA & CA laws, that I have to agree we should
eliminate noncompetes, except for "key employees", and people who are in
the marketing or sales dept, or spend >50% of their time doing that type
of work (and it is in the job description).

Note that lawyers are already exempt from non-competes!!

And definitely, people who are laid off should be exempt.

Another problem is "anti-poaching" agreements between companies not to
hire each others employees. These often secret agreements are really
anti competitive. I know one person this has happened to, and another
that required negotiation.

I'm not sure we should take an official position on this - let's take a
survey first, how many of us have been affected in the past by
non-competes? If lots of people in our group have been impacted, maybe
we should take an official position.

--Randy

[Ryan Angilly]

This is a complicated issue.  I'm not a big fan of reactionary legislation, and therefore I don't think legislation should be used to make non-competes illegal.  If you dont like non-competes, dont work for a company who makes you sign one.  If talent wont work for companies that force non-competes, companies will stop forcing non-competes.

[Rob Sterner]

When is legislation not reactionary? I agree, legislation that comes
out of a passionate debate/situation is usually a bad idea (FISA,for
example), but if every citizen/corporation/entity were content with
the status quo it would follow that not much would change.

I think most people agree that the net effect of non-competes varies
across industries. The pharmaceutical example is compelling, I think
there's a justification for having some form of legally binding
agreement between an employer and an employee. I don't think, though,
that said agreement should essentially force the employee to be unable
to take a job in his or her career field in Massachusetts if they
decide to part ways with the employer.

IMO, in the software world, a company that hides behind a non-compete
is destined to fail. I understand the inclination to protect a
company's IP, but, I don't think a sweeping non-compete is the way to
go. I've personally declined a job offer due to egregiously broad
terms laid out in the non-compete. The wording could be interpreted
as "any idea that I have or have ever had is the IP of The Company"
and "I may not work for 2 years at any company that has a public web
site". That's just absurd.

I'm not suggesting that non-competes be made illegal altogether, but
I'm definitely in favor of removing some of their teeth.

[Dan Croak]

Rob,

On Wed, Jun 24, 2009 at 9:50 AM, Rob Sterner <rob.s...@gmail.com> wrote:

IMO, in the software world, a company that hides behind a non-compete
is destined to fail.

This is what concerns me the most. I want Massachusetts software companies to be thriving. I also don't want great people at other companies thinking they need to move to Silicon Valley (where they have ruled that noncompetes are invalid under California law) instead of considering a position at thoughtbot.

http://www.massachusettsnoncompetelaw.com/tags/economic-impact

I should also say I don't know of anyone directly affected by this but I do think any roadblocks that put us at a competitive disadvantage to Silicon Valley should be removed. 

--
Dan Croak
@Croaky

[Chris Maxwell]

One thing to consider is that any agreement can be negotiated just
like salary and benefits can. If a company really wants you they would
be foolish not to reconsider modifying an unfair non-compete
agreement. I also don't think there's anything wrong with providing
your own agreement to a potential employer that you believe makes
sense, or separating out the protection of intellectual
property/non-disclosure from the non-compete - which are oftentimes
bundled together, and declining to sign the non-compete while still
providing protection to the company.

... but that can sour a relationship, and the question is, or rather
the problem is, not everyone will have the ability to negotiate or
even understand these contracts. Even though Massachusetts judges can
and will blue line unreasonable non-compete agreements, not everyone
can afford to take this route, or has the time or support from the
hiring company. The employee generally has the burden of proof and the
lesser hand.

On the employer side, I do think it is important to have some kind of
protections in place, and I understand this. For example, sometimes
when people are let go they can become very vindictive, and if former
employees are hired by a direct competitor, in general, it's good to
have everything spelled out in terms of returning work product and
what is considered confidential. Another thing to consider is the need
for employers to protect their most important resource, their
workforce, from poaching as well as protecting business partners who
have entrusted them with intellectual property and have contractual
obligations to protect - again these protections can be separated from
a non-compete.

Anyway, I have seen some pretty ridiculous agreements and I just don't
sign them and that's that.

Chris

On Wed, Jun 24, 2009 at 9:50 AM, Rob Sterner<rob.s...@gmail.com> wrote:
>

[Mike Champion]

I wrote to my state rep back in April to support the banning of
non-competes in the HR 1794 (and blogged a few links to things mostly
seen in these threads:
http://graysky.org/2009/04/non-compete-clauses-massachusetts/).

Personally, I think they tend to be overly-used and cover more than
just key personnel. As it stands, I think they have something of a
chilling effect because of fear of lawsuits & adding friction to
innovation as evidenced by some data from that HBS researcher, among
others.

-mike

[William Morgan]

Reformatted excerpts from Dan Croak's message of 2009-06-23:

> I'm also interested in creating a special section of
> http://bostonrb.org to address this issue.

Sounds good to me. Since many of us are interested in startups, and the
lack of noncompetes is one of the quintessential differences brought up
when comparing the Bay and Boston area startup scenes, I think this is
relevant to the group at large.
--
William <wmo...@masanjin.net>

[William Morgan]

Reformatted excerpts from Rob Sterner's message of 2009-06-24:

> I think most people agree that the net effect of non-competes varies
> across industries. The pharmaceutical example is compelling, I think
> there's a justification for having some form of legally binding
> agreement between an employer and an employee.

Keep in mind that companies have legal tools like NDAs and trade secrets
that also address these issues.
--
William <wmo...@masanjin.net>

[Dan Croak]

I'm going to be doing some more information-gathering next week at this event:

https://www.bostonbar.org/ebusiness/Meetings/EventDetail.aspx?ID=3752

A Symposium on Bills Affecting Employee Non-Compete Agreements
Wednesday, July 22, 2009
4:00 PM

It's free to attend and you don't have to be a lawyer.

If anyone wants to go together, @ reply me on Twitter.

--
Dan Croak
@Croaky