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.

Non-competes (including stealth non-competes like the OP mentioned) are being abused by US employers seeking leverage over their employees.

In fact, 12% of hourly workers earning $20 or less had to sign non-competes. These workers do not have access to corporate secrets. It simply reduces their power to negotiate with their employer.

https://www.minneapolisfed.org/article/2021/non-compete-cont...

It's funny how states like Washington are notorious for enforceable non-competes, to be "business friendly".

Meanwhile California bans non-competes, and its GDP is 4th largest in the world if it were a country!

"incumbent friendly" vs "startup friendly"

OTOH, beware letting yourself be intimidated by scary looking but unenforcable clauses that are all over contracts. In doubt, spend a bit of money on a lawyer to figure out what your real situation is.

I know of several cases where lawyers said "don't bother arguing with them about clause X, just sign it and ignore it".

So happy my union managed to ban broad non-competes in my country ~8 years ago. Now it needs to be very specific if they want to enforce it (not just "development work in the same industry" which most contracts had back when I graduated), only applicable for maximum a year, and they have to pay your salary for the time they stop you working somewhere else.

A few years ago an American company that approached me (UK based) about a job opportunity insisted I sign an NDA before I could interview with them. I refused and they couldn't understand why so they even put me in contact with one of their lawyers. I still refused, and they eventually relented, but I could never understand why I'd need to sign an NDA to attend a job interview. There's literally no benefit to me in doing so.

At the time I was working for a competitor and I figured they could use the fact that I interviewed with them to argue that I - either intentionally or unintentionally - gained proprietary knowledge of their product and my current employer gained from it.

In some countries that's illegal. So when presented with a contract that contains such claims, I have 2 options:

1) ask them to remove it... and so I risk not getting the job

2) don't say anything, and sign it

If I'm really interested in the job, I'll go for option 2 because I know they cannot enforce such claims, so I'll be fine.

I once declined a job offer because the non-compete made no sense. (It was many pages, claimed that I would be paid during the non-compete period, and impossible to read.) I basically concluded that they (the company) had a lawyer that was basically wanking off.

> They argue it would be impossible for you to work elsewhere in this industry during your entire career without violating confidentiality with the technical and business instincts you bring to that domain

In that case you need to ask for a lifetime worth of salary, including growth from being in position to be put in escrow before you sign the dotted line. Otherwise they can hire you and fire you immediately and you'd never be able to work in your field that you spent years/decades training for.

sounds crazy. in my country, adding anything that prevents you from finding work in the future to a contract is kind of invalid.

you do get non competes etc., but it never holds up in court as you can easily prove it prevents you from finding jobs.

i wish for you in your legislation there might be a similar law, otherwise these things are really evil. i mean, its like prison in some fields niche enough, and those are exactly the fields prone to such overly protective clauses

New definition for the word Irony:

AI companies protecting their IP.

In common law jurisdictions, there's a term of art in law -- "unconscionable". It's when a contract is so egregiously one-sided that no reasonable person would agree to it, and it could be ruled unenforceable.

It's not reasonable to expect an employee to build up a body of expertise in a field, and then agree to be bound never to work in that field again after leaving your current job. IANAL, but confidentiality agreements that act like lifetime noncompetes are good candidates for being found unconscionable, even absent an explicit anti-noncompete statute in your jurisdiction. (Other clauses you may rightly consider unfair, I don't know about.)

Making things worse for the companies implementing such contracts is the fact that things change so fast now that they are unable to substantially benefit from such a contract. The contract is purely a CYA move.

If you have agreed to lifetime noncompete terms, you may wish to speak to an employment attorney about how enforceable the contract actually is in your area.

This is a state level thing. As is whether IP produced outside of your job, on your own equipment, is yours.

I moved from New York to California a bit over 20 years ago in large part because I personally encountered this (the IP ownership bit), and preferred to live under California's rules.

It is worthwhile to read https://www.paulgraham.com/america.html. Point 7 talks about how easy it is for regulations to accidentally squash startups. I believe that the fact that California makes neither mistake causes us squash fewer startups. It is not sufficient to have made Silicon Valley a startup hub, but it was likely necessary.

Is there any precedent for this yet? This sounds like some overeager lawyers talking out of their ass hoping you don’t call them out for it? It sounds like it’s for a very specific situation that really doesn’t apply to most people.

If I understand it right, those NDAs work as non-competes if “confidential” is defined as restricted just on the basis of some relationship to the business, which is pretty weird attack of legalese on common sense. Let’s say I used some relatively simple chain of thought to derive X about my job at Z. The fact that Z uses or does X is probably confidential, and that’s ok. This would be how I understood a broad definition. But what kind of reasoning would conclude that X is confidential per se, preventing me to use or do X elsewhere, effectively making doing my job impossible? It just doesn’t make sense.

IANAL but as I was told by some who are:

They can say that all they want, but that isn't what the statutes or case law about trade secrets says. in California state courts take a very dim view of this sort of overreach.

"Unconscionability is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract."

https://en.wikipedia.org/wiki/Unconscionability

I wish "inevitable disclosure" were totally turned on its head. If I were in charge, proving inevitable disclosure would happen would result in nullifying the NDA instead.

Hot take: Sign these agreements without worry. When you change employers in the future, make no public announcements about it -- don't post anything on social media, including LinkedIn. Do your best not to transfer any IP between employers. You will be fine.

Finally: Yes, I think these agreements should be illegal. I recently signed a new employment contract that requires me not to disparage my new employer... forever. Literally: There is no end date. I could be an old man in a squeaky rocking chair that says something bad about my (then) former employer, and they have the right to sue me for breaking a non-disparagement agreement. I laughed to myself when I signed that contract.

What exactly should one be on the lookout for? Practically every company has an IP confidentiality agreement.

That's the terrible Wikipedia article. It says nothing at all about juridictions in which it's considered a valid legal principle. I notice that someone seems to have just flagged it "unclear".

Not just employment contracts, some companies require NDA just for interviews.

To chime in on how English law approaches this (and perhaps amplify some of the good points already made): the common law position is that any restraint of trade is contrary to public policy and so should not be enforced unless some exception can be shown.

Post employment restrictions fall under the doctrine of restraint of trade - which explains why we use "gardening leave". While you are employed you and your employer have a relationship which includes a duty of loyalty by you to your employer. They have duties such as a duty to pay you for your work. By default they should also be offering you work, so a specific "gardening leave" clause is required to keep you at home, bound by restrictive covenants but without work and being paid.

After employment, it is much harder to make restrictions that will bite. Typically an employer must show there is some legitimate interest they are protecting and that it is reasonable to do so.

Hence: non-solicitation of clients tends to be easier to justify, though only if an employee actually had some kind of relationship with or knowledge of those clients. Whereas a non-compete is much harder to justify. It is also harder to make reasonable, hence time/space/sectoral limitations.

Looking at confidentiality: the default established in the amusingly named Faccenda Chicken v Fowler (Mr Fowler was a frozen chicken sales lead). It is that you are bound by the usual duties of confidentiality that arise when anyone has confidential information but that you cannot be prevented from using information gained while working that is part of your normal skill acquired as part of the job unless that is so secret as to amount to a "trade secret".

In this case, Mr Fowler knew where to sell chicken (from having done so). While this was confidential, he was able to use that information (not being a trade secret) in setting up a competing frozen chicken sale network.

The core idea is that you can't stop someone plying their normal trade.

That's the default. Obviously if you sign an agreement that imposes post-contract confidentiality obligations it can go further than Faccenda Chicken, but if it went too far, it would also be vulnerable to the rule against restraint of trade.

In short:this sort of "you cannot work in the industry" idea is very unlikely to work in England and Wales (and I suspect the rest of the UK - though I am strictly only an English lawyer).

That said: there is still value in reading your contract of employment carefully and making sure that you are happy with it.

So tired of this garbage. I think non-competes (and the legal concept of inevitable disclosure) should just be banned completely. Sure, some things (like taking customer lists when you leave a company) are messed up and should be barred, but companies should just be required to accept the fact that their employees will take some "proprietary" knowledge/information with them to their next job.

I don't even think that non-competes should be allowed for higher level employees/executives. Everyone deserves the right to change jobs whenever they want to.

Non-competes should be illegal. If someone is so valuable that them leaving for a competitor would severely damage the business, then pay them more. Do their laundry. Hire someone to drive them around. Give them a personal chef. Etc.

Of course this depends on the country. This is a non-issue in France for instance where this topic is strictly regulated and heavily leaning towards the employee.

I thought a few states maybe California or New York effectively made non compete not enforceable

Has anyone been caught by this? As in sued or prevented from working?

What happend to you?

most country's employment law would hold up against NDA/non-competes if they do try to sue

For what it's worth, a noncompete that makes it effectively impossible for you to apply your profession anywhere for your entire career is unlikely to be enforceable in any state in the country.

Companies that are serious about noncompetes for professionals (rather than hourly shift workers) generally do garden leave. I'd take a noncompete for a garden leave company seriously, and would maybe roll my eyes at a broad noncompete from a random tech firm.

(Don't sign anything you're not comfortable with.)

once you're - in you're in. we found we were bound like rats.

Too bad. I routinely reapply the exact same business logic across competitors. I even have proprietary source code collections I use for reference. If you don't like it, write your own software. Business methods are literally unpatentable.

If you're not copying internal wikis, and poaching customers what are you even doing?

Like.. has anyone been sued for the violation of the non compete?

...but are they enforceable?

Have an employment attorney always look over said agreements before signing. A local acquaintance who did work for an MSP had said MSP try such a ploy, only for the employment attorney to sue and get it thrown out as unreasonable and unenforceable.

Never, EVER sign a contract without reading it first, and having your lawyer review it.

isn't this illegal?

I mean even patent has 20-year limit

So if you are against this, you are okay with Coca Cola’s secret to be divulged by any employee to any competitor? If you cannot let companies maintain trade secrets, you may as well close them down.