In France, and I believe in many other places as well, you can't have a noncompete without proper compensation. Compensation is relative to how it will affect the former employee career, it is usually less than a full wage, but it can be that if it makes finding a new job particularly difficult.
There have been a trend at one time of bullshit noncompete clauses that were too broad and didn't come with compensation, these are not enforceable. If they tried to sue the employee (they don't), they would be laughed off by the judge.
The norm there is paid time off between jobs (“gardening leave”). Everyone knows it is part of the system and that a mid level or senior hire can’t start right away. They also buy out still vesting bonuses and the like.
It’s quite a civilized system and I think the law ought to leave it alone, while addressing abusive ones like we have in tech.
Still useful for taking advantage of employees not in the know.
Timing was poor - during the budget season when the entire legislature was in town. The notion that a sandwich stop should be allowed to restrict the future employment is absurd on its face.
Yet there are fields where it makes sense. When I was an employee of the government, ethics laws limited my ability to leave and sell my services to the government in various ways. There are similar scenarios in other industries.
That said garden leave is not all sunshine and roses like OP describes. It’s common on Wall Street but a huge part of your normal compensation is performance bonuses - and typically garden leaves only cover base salary.
A typical garden leave doesn’t come close to full income replacement for the period. But it’s better than nothing - which is the status quo in tech.
FWIW American courts also tend to frown on non competes that do not compensate for forced unemployment and have generally sided with the worker. This is (yet another) way that employers deprive employees of their rights by using the expense of litigation against them. This is also why we need regulation around this - you should not have to fight this in court to have your basic rights asserted.
I think this is more about corruption control than non-compete.
Or codify it. Imho the better alternative. One should never assume that companies won't try to change the system to the detriment of the employee if they see a chance.
If we assume that the financial sector is good for society, then a productive element of it is idling causing inefficiencies leading to higher fees.
If the assumption is incorrect, then the financial sector is not a productive part of the economy. In this case the worker's vacation is irrelevant since it's just a manifestation of the parasitical nature of it.
Either way normal people are paying for this civilized system's largesse.
The truth is somewhere in between. The role of the financial sector is to match capital with projects needing capital needs. Since the 80s (?) this is an insignificantly small portion of modern finance - most of it is parasitical sloshing of funds around to either gather fees or launder money.
At other companies CEOs secure themselves giant equity packages to “retain the best talent and align shareholder interests” and then think they can motivate rank and file employees with t-shirts, “the mission,” and shoutouts during all hands.
In finance, CEOs acknowledge that everyone is there for the same reason—executives and regular employees alike. The numbers are definitely smaller but bonuses are bonuses and not employee of the month mugs.
Maybe if more companies and their executives were so open with what they want (and maybe I'm cynical, but imho it is the only thing at least 99% of them want) things would be better.
It _can_ imply that if garden leave isn’t valued by workers in the negotiation stage of a position, but that also means it could be the bottom right corner of the prisoner’s dilemma.
Luckily one of the major reasons for the government to exist is to create regulation like this to make everyone pick the top left square of the prisoner’s dilemma so we all get a better outcome
If the answer is no, then you should reconsider thinking that garden leave is bad. It’s essentially a buffer that covers the switching cost for agents needing to decide which principal they work for.
If you removed garden leave you’d have a higher up front cost for rational actors who needed to account for the fact that they could lose their income stream at any moment if they were fired
The rule of thumb should be that the majority of employees under noncompete should be happy about it (because of the advantageous compensation). It is only a problem when it is not the case.
Not you can argue about the value of secrecy vs openness to society as a whole, but that's another debate.
Even severance is usually not much. Typical is one week for year of service, minimum two weeks.
Given turnover in the industry, very few people are going to get 20 weeks severance.
Every time there is a discussion of non-competes on HN there is always a bunch of confused people who can't grasp the difference between NCA, NDA and NSA. You don't need NCA to "protect company secrets" or ensure that people don't just steal company's clients or something. Non-competes are only needed to depress the wages by making it very hard for employees to change jobs, end of story.
What's the point of a law requiring it? Unless it's an addition to a minimum wage law and only in effect for those being paid the minimum wage...
Remove non-competes, then there's no need for garden leave.
If an industry insists it needs non-competes, the dept. of labor could issue exceptions with strong penalties (x3 wages (incld. expected bonuses) for the duration of the non/ -compete, etc)
[1] an argument could be made that the more workers are put on garden leave the better it is for the economy, vis a vis less folks doing damage. Overall, I think the whole fintech industry is a waste of STEM talent. Those physics PhDs could be something beneficial instead, like being a magician at three year old birthday parties.
Sounds like a great incentive to quit the job and hang out for the duration of the non-compete. If I can make more money by working than not working, I know what I'm doing.
This justification can be extended a bit to people in executive management roles at corporations, but for regular employees? You either got their salary value out of them when they worked for you or you overpaid them. I don't see additional societal value to a non-compete except in edge cases where an employee quits within a short period after hiring - staying just long enough to gain skills without generating a corresponding amount of value for the company.
Moreover even in MSF if the CEO is being paid based on a compensation consultant’s report of the market rate “in order to attract and retain the best talent to advance our mission” well then everyone else should be paid on the same principle.
People in this thread are saying you "only" get your base. If they really do get full base pay of 200k, that puts them in the 94th percentile to take a forced vacation.
Yeah, for direct/important enough competitors, I can see it. Senior enough management can't help but have knowledge of a lot of things that neither the public nor most rank-and-file employees don't--and act on it at a new place even if they're not sending confidential board meeting presentations around. On the other hand, execution ability and culture matter for a lot too.
So the starting point for the system is that we need a way for these highly paid and skilled people to take a year or two off between jobs.
Also the employer may have the option of not activating the noncompete clause when the employee leaves the company, meaning the employee is free and no compensation is due.
It’s a form of corruption.