Thursday, December 06, 2007

Indentured servitude in the modern world -- the noncompete

My employer can fire me at any time.

That's fine, I can also leave at any time.

Except, I theoretically can't work after I leave, but my employer can stay in business. I knowingly signed a non-compete ...
Techdirt: Noncompete Agreements Are The DRM Of Human Capital

... Much of this discussion kicked off with AnnaLee Saxenian's 1994 book Regional Advantage that tries to understand why Silicon Valley developed into the high tech hub it is today, while Boston's Route 128 failed to follow the same path -- even though both were considered at about the same level in the 1970s. Saxenian finds that the single biggest difference in the two regions was the ability of employees to move from firm to firm in Silicon Valley. That factor, ahead of many others, caused Silicon Valley to take off, while the lack of mobility in Boston caused its tech companies to stagnate and make them unable to compete against more nimble Silicon Valley firms....

Ronald Gilson found this to be interesting, and followed it up with his own research suggesting that that it had much less to do with cultural reasons and much more to do with the legal differences between the two places, specifically: California does not enforce noncompetes, while Massachusetts does. Gilson looks at a few of the other possible explanations for the difference and shows how they're all lacking, leaving the difference in noncompetes as being the key difference between the two regions in terms of the flow of information and ideas leading to new innovations. He also explains the history of non-enforcement in California, showing that it was mostly an accident of history more than anything done on purpose...
I think that the single biggest thing Minnesota could do for its economy would be to limit non-compete agreements.

PS. In fact non-competes are rarely enforced, they're mostly about intimidation. The way to break them, I'm told, is to get a job in a state where they are not enforceable and to bring suit there.

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