> 60%? Forget that. Why should anyone give up their right to work for a little over half of their market value?
Well, you could take the American option where you're not allowed to work in that field, so you get 0% of your salary... (California excluded, if I understand correctly)
You are kind of making my point: comparing working in 2 countries has a lot of factors. Non compete might be a minor thing to a lot of people. Disclosure I neither live or work in the US or Germany.
Ah, thanks for the clarification. thank god most employers go above the bare legal minimum, I never had anything less than 28 days. Once I even had the luck of being under a "naked" payment contract: 35 hour work week, unlimited overtime to be taken of whenever it was possible, 30 days of vacation and 12 weeks of continued pay in case of sickness (6 more weeks than mandatory). Ah, I miss these days...
The tax rate in the US gets pretty close to 50% when all the municipalities take their cut. If you're in Silicon Valley, most devs are going to be paying a 41%-44% tax rate just from federal and California income tax. Then you've got any local taxes, land taxes, etc that add onto that
Self employed consultants are pushed into private healthcare, which will ruin you when you retire (you have to keep paying >>$1000 per month until you die).
60% is a nice balance that leaves both sides unhappy. Which means that non-competes will be used sparingly; only in cases where it really means something.
If a wolf and a sheep are having a discussion over what to eat, is letting the wolf eat only 1 or 2 legs a nice balance because both sides are unhappy?
Should one side be made happy when they have an unreasonable ask?
If companies do not want you to work for competitors, they should be paying your salary for that time. Employees still lose out on things like keeping their skills sharp through work, or career growth, but they are at least getting compensated for the job
When poliicians pass laws though, there are often unintended consequences. Good politicians will intentionally create loopholes out of humility, realizing that they don't understand the entire issue and how it will affect everyone.
If the loopholes are too big, then thr policy will be ineffective and they will either need to tighten the loophole later, or scrap the whole policy as unworkable.
Do you think the ban is ineffective? Are there hordes of unhappy German citizens drawing 60% of their salary because they are unable to find better work without violating the non-compete? And tons of greedy companies making zillions of euros by paying people to not work?
I am making a practical argument and you are making an ethical/moral argument of it.
But for your argument to be complete I think you need at least some example of someone doing something unethical or wrong because of the policy. The policy exists today so hypothetical arguments fall a bit flat.
To illistrate my point, consider that it is legal (as far as I can tell -- not a lawyer) to walk around in California with a sword as long as it's neither concealed nor being brandished. But it doesn't make sense to argue that the lack of a law against carrying a sword is unethical because of what people might do. Theoretically people might do horrible things while carrying a sword; but empirically they do not, because few people even have swords, fewer still walk around with them, and approximately zero deaths result from it.
There are people on non competes that are not being compensated with the full salary they would have been getting. To me that is unethical.
It is not a hypothetical situation, unless you are trying to claim that no company anywhere is using a non compete, in which case I just need to pull up the associated paperwork for pretty much every offer letter I've gotten. Alternatively I can go and poll just my social circle and compile the list of non competes.
Anything less than the full salary is unethical to me, and I'm partial to arguments that it should be more as the employee under the non compete is losing out on career growth and raises
They are not making money while doing nothing. They are making money by not using their knowledge, so that their previous employer can prevent other entrants into their market from benefiting from said employees skills.
Well, it practically serves the prupose of limiting the actual use of non-competes. So it does serve the purpose pretty well IMHO. Enforcing those in Germany is really difficult by the way.
> 60%? Forget that. Why should anyone give up their right to work for a little over half of their market value?
They don't. They very specifically can not ask an employee to "give up their right to work", only in the US does that shit happen.
German law (and most european law around NCC in various fashion) requires that the NCC ne limited in time and not have "unreasonable clauses" e.g. can't prevent working in the field throughout the country.
As a result enforceable NCCs are extremely rare and only happen for actual business interest reasons, it's not a sword over the employee's head as it is in the US.
Also it's at least 50% of gross, so closer to 65~70% of net.
To add to that, it's very rare that companies deny employees to work on side projects (or rather claim all work an employee did in their free time for themselves). That's typically done by American companies.
It's not like the specific job is the only thing you can do - there are other jobs that don't break the NC. 100% is too high, and 50% is too low. But the amount should be negotiable for each person.
You are most valuable in a position that leverages your existing skills and expertise. Those positions are the most likely to be covered by NCAs.
Not only is 100% not too much, but it’s the minimum that should be required. The cost of requiring a NCA should be high; that ensures they are only used when they are really worth it to the employer.
> You are most valuable in a position that leverages your existing skills and expertise.
Exactly. So per the non-compete, you'd have to take a position where you are only 40% as valuable as you could be—and the 60% noncompete makes up the difference.
That sounds like a bad idea, but you could also take it as an opportunity to develop in a new direction and build some experience there.
It's probably a bad deal for people who are extremely specialised and want to stay that way, but it'd be a pretty good deal for people like me, who love an excuse to learn something new.
So what, I’m only expected to bring 40% of my abilities to my next job? That makes mathematical sense, but it’s impossible in practice. It would be like trying to use 40% of your arms.
If an honest engineer sees a problem which is exactly the same as one she solved at a previous company, and it is still the best solution, she will solve it in the same way. This has nothing to do with company secrets, it’s basic tradecraft. But it’s covered in many of these agreements. They’ve got to go, plain and simple.
You're expected to do your best at your next job—but because it's not the most appropriate job for you, you're actual performance is probably some percentage less than what it could be elsewhere. This can in turn be an opportunity to diversify your overall skillset.
(I was of course being a bit facetious with the 40% metric—real life isn't quite so simple—but saying the noncompete should have 100% compensation is silly. That would only make sense if your ability to work was being completely taken away)
How is 100% compensation silly? Non-compete agreements restrict your ability to freely practice your craft. They are prone to being improperly applied or outright abused (see Jimmy John's audacious non-compete clause). This has happened so often that California practically outlawed them. The root of the problem is that a boiler plate non-compete clause in every employee contract costs nothing. The company can pick and choose when to enforce it, so why not include it? Requiring 100% compensation forces companies to justify the non-compete with their pocket book. This is a powerful feedback mechanism that balances restricting a person's basic rights with legitimate business needs.
Why exactly would I choose a company which will professionally handicap me for the rest of my career, locking 60% of my income potential at what it is now and leaving me to sort through how to have a career without getting sued? Ain’t gonna happen. Not going to sign the agreement. Like I said, it may sound mathematically right, but it’s absolutely absurd.
> You are most valuable in a position that leverages your existing skills and expertise.
For me the key word here is "most". I interpreted the previous comment as implying that previous employers should pay for the opportunity cost of you not maximizing your value.
Unless you are prevented from getting job that leverages _any_ of your previous experience...such as requiring a new career shift. In that case 100% compensation could be merited. Otherwise 100% is not likely to equal the opportunity cost to the employee.
Not being able to work a job on your career path freezes it in place, while your physical body continues to age at the same rate. Thus, there is even a case to be made for > 100% compensation.
If you don't choose to retire a year later, the year you sit out is costing you what you would have been making in the last year of your career.
To explain in more detail, starting with the year you return to a career job, your pay may be reduced by a differential representing one year less experience, for every year until the end of your career. You miss out on the pay for the year you didn't work, plus all the raises between years, and the one raise you never got, because your career was one year shorter. All that adds up to the pay you would have otherwise received in the last year of your career.
It should probably be more than 100%. You don’t just miss out on salary. You miss out on raises and promotions, which might put you behind. You miss out on opportunities that may be gone with the NC period is over. Depending on the work, keeping your skills honed might be impossible from home.
The problem is that 60% is not about making you whole. It’s about discouraging NCs in general.
That doesn't stop companies from asserting that their non-compete is more broad than it is. Once they do, no other company is going to risk having you work for them while that illegally-broad non-compete is in effect.
You can sue but it's so expensive you probably won't and the company knows it.
that's disingenuous, it's very hard to find a job that doesn't look exactly like the 5 last jobs you had. If you want to fix that you gotta fix the labor market and hiring practices first, which is wishful thinking. 60% is low.
> it's very hard to find a job that doesn't look exactly like the 5 last jobs you had
That's funny, I've never had a job that was exactly like any of the other jobs I've had. Depending on how picky you are, I've never had a job that was even particularly similar to any of my previous ones.
I was thinking the same because I am a programmer and it’s quite easy to find programming job in another area. But then I thought about other industries, dor example if I’m researcher about LED lights for 20 years, then my other options for another non-LED related job is very limited. So I’m confident that there are many example as this which can prove your logic (and my initial thinking too) wrong.
Most non-competes are usually imposed on very specialized professions like market analysts and accountants at global firms for example. If you're barred from working for another financial firm for 2 years, what are you going to do?
I'm surprised to see such a narrow view about this issue on this forum.
One area of non-competes I'm somewhat familiar with is consultants/analysts for a particular market. If they leave, sure, they can go work for a vendor or other participant in a different side of the market. Which is a very different job. But they basically can't do their role with another firm or independently. And my understanding is that these non-competes are regularly enforced.
A company I worked for had something like this, basically along the lines of, "you can't poach customers or other employees for a year." You likely could still work on your own as a consultant in the same field, but what it appeared to disallow was trying to take your clients with you.
The company was acquired, (and that in turn), when the new parent tried rolling out new contracts per employee, with a short turnaround to sign. Among other things, the new version basically would have prevented me from working in my field for a year.
I told them I needed time to have it reviewed by my lawyer, and I did too. Sure, the backlash had them rolling back the demand forthwith, but it convinced me that the ideal time to leave was immediately, under my old contract.
I'm surprised to see such a narrow view about this issue on this forum.
This forum oddly has some anti-labor sentiment. It is seen in this thread and also in threads related to unions, where the tone is quite obviously anti-union.
What's odd about being anti-union? Depending, I guess, on how exactly you define "anti-union".
Me, I'm very anti-union in that I never want to be part of one, but OTOH, I fully support their right to exist as simply the collective extension to the individual members' right to bargain.
I love non-competes that pay me compensation and will happily (more than happily) sign one. But, yeah, 100% or it's no deal. If they want to pay 60% then they can easily cut the time be the same factor ;-)
Personally, I won't negotiate for bonuses, or equity equivalent, though... just salary. I'm happy to use that time to invest in myself. It gets too complicated otherwise. I tend to negotiate for max salary anyway, as I don't trust bonuses or equity. YMMV.
I think I've only ever had one company actually pay me NC compensation, though. Usually they realise that they are paying for nothing and strike it from the contract.
If it’s not based on total compensation, employers will just use that as a loophole. Compensation will shift even more heavily away from salaries to “additional” income.
Well, practically the best is to do a yearly around the world traveling sabbatical sponsored by your previous employer. No hurt for CV, cash is fine. win-win
There is no excuse for allowing less than 100% compensation, and that should include not just salary, but projected bonuses.