Most companies do not pay for the period of time that a non-compete is in effect. What you're describing is somewhat different. Typically that's known as garden leave, and essentially you're treated as a current employee for the period of time, but you're not allowed to work. Which means that you'll likely have the 6 months of free pay. I'd definitely review your contract and the terms.
Well if you want to be technically correct, EU regulations are binding and must be implemented to the letter by all member countries without excuse or deviation. EU directives are the ones that have some leeway with local laws. Both are legislation though so might as well call them laws.
That is not correct, the way mandatory gardening leave typically works is that you are no longer an employee but you still get paid. Depending on local laws you can force someone to not compete but you cannot force someone to be an employee, that is slavery and not allowed under the law.
New York courts had basically already mooted unpaid noncompetes before this (except for executives). The ones in finance are paid, and often paid pretty well.
Garden leave is a different beast and seems fair, you and the employer each get something, non competes on the other hand do not usually offer anything to the employee.
Many garden leaves as a condition of having a non-compete aren't a great deal though. I think the fairly recent Massachusetts law is 50% pay--and that may be of just base pay. It might be a good deal if you want to travel in your twenties. It may not be such a great deal if you have a mortgage to pay and family to support and you're basically pressing pause on your career.
It does make the company put skin in the game but if they decide to enforce anyway, it's better than nothing but hardly a panacea.
You still lose as you won't get raises, bonuses or promotions. You may lose extra-legals like company cars, insurance (?), long term savings-matching. Even then your cost of living will probably increase due to not working.
Yea, the bonus point is interesting, especially in finance where bonuses can be > 100% of base. You can't insist on firms paying last years bonus, or else people would just quit and get a non compete if they had an insane year. But paying only base also seems a bit unfair.
A thought I had was you'd have to pay whatever their new offer is paying. The argument is that if you want to prevent someone from working, you should have to pay them their worth - which, in the case of someone resigning with a competing offer - has just been priced by the hiring market!
Paying the wage of the new offer leads to bad incentives w.r.t. nepotism. It also discourages starting your own small business where you tend to pay yourself a small wage.
It is at many HFT firms, including mine. You will be paid your base salary for some number of months to not work at a competitor, even if you don't have a signed offer for a competitor and just want to sit around
> It is at many HFT firms, including mine. You will be paid your base salary for some number of months to not work at a competitor, even if you don't have a signed offer for a competitor and just want to sit around
That's called "garden leave" and it's completely different from non-compete agreements as discussed by this bill.
A garden leave is a form of compensated non-compete. The entire point is that you’re paying a former employee to not compete (in this case to literally not work).
Garden leave is just a (usually?) legal (or at least contractual) requirement associated with non-compete agreements in some jurisdictions. Unsurprisingly, it was originally a British term, although it meant something different.
> "Garden leave" wasn't a common term when I was in HFT in NYC. It was just called a "non-compete" (possibly confusingly).
The terms are used somewhat interchangeably in colloquial use, because (at least as of now) the distinction isn't meaningful for most people. The point is that garden leave isn't targeted by this bill.
The first bill outlaws all non-competes and garden leave would fall under it. The most they could do is offer it as a form of severance where you get to sit on your butt for 6 months conditionally.
The second bill would allow for garden leave aka compensated non-competes. It just codifies the "don't try any non-compensated/good faith aspect".
I don't think that is true, or at least I have not seen that anywhere. My understanding is this bill removes any kind of non-competes. It was already basically unenforcible to have an unpaid non-compete in New York (through common law)
If companies actually paid employees not to compete they would be able to keep them. Correct me if I'm wrong, but--at least where I live--non-competes lack legal authority (even before they were outlawed) because most companies don't provide compensation for limiting an ex-employee's ability to make a living in their field in the future.
So, it's conceivable that an ex-employee could receive 6 months severance in trade for a non-compete of that length, but I doubt it's very popular.
> If companies actually paid employees not to compete they would be able to keep them
Why is this true? If someone is making $200k and leaving to make $350k, an employer may well be able to afford the $100k for 6 months to prevent them from immediately handing over IP, but not be able to match the $350k their new employer is offering.
> So, it's conceivable that an ex-employee could receive 6 months severance in trade for a non-compete of that length, but I doubt it's very popular.
It's quite popular in finance. Also, it's not a one time severance, its paid as a standard paycheck. A firm might "release" someone from their non compete while it is still active (basically saying it's no longer active and we are no longer paying you).
> Why is this true? If someone is making $200k and leaving to make $350k, an employer may well be able to afford the $100k for 6 months to prevent them from immediately handing over IP, but not be able to match the $350k their new employer is offering.
Sorry, I worded that poorly. I meant companies could keep the ability to impose non-competes if they originally compensated employees who were let go.
I know it gets muddled when it comes to employees moving around for increased pay, but non-competes aren't supposed to be a mechanism for holding down salaries. They're only intended to protect vital corporate secrets that, if they were released, would be so costly to the company that they'd risk bankruptcy. The value of those secrets would likely be enough that many competitors would be hesitant to hire those employees because they might fear opening themselves up to future litigation for patent infringement or IP or whatnot.
The fact that many HR
departments apply them to every single rank and file employee and don't explicitly define what constitutes a direct competitor or what explicit activities/information are protected by the NC is why they're a pretty useless legal tool in most circumstances.
And there are a ton of other reasons people change companies as well.
>an employer may well be able to afford the $100k for 6 months to prevent them from immediately handing over IP
Presumably there are other restrictions to just handing over IP but at least some of the reasoning for non-competes is that you can't really restrict the transfer of a lot of know-how even if they don't share corporate strategy decks.
