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Posted by toomuchtodo 2 hours ago

New Washington state law bans noncompete agreements(www.seattletimes.com)
207 points | 83 comments
Beestie 35 minutes ago|
A clause I frequently see (as one who performs a lot of contract work) is a restriction on accepting an offer of employment from the client of the consulting firm I'm contracting with. Whenever I see this clause, I redline it out and advise the consulting firm to fashion a buyout clause* with the client. I'm very firm that the consulting firm cannot restrict my employment opportunities.

* The buyout clause is between the client and consulting firm and roughly compensates the consulting firm for the lost profit of the rate diff over the remaining term of my contract with the consulting firm.

hx8 13 minutes ago|
I've had a buyout clause used while consulting before. The company was ending their relationship with the contracting company and wanted to keep a handful of individuals.
jeffreyrogers 1 hour ago||
The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.
bickfordb 2 minutes ago||
I also see these as reasonable since they are part of the negotiation of selling the business. Non-competes as it relates to most ordinary employees in the US is typically a contract of adhesion: a surprise take it or leave it clause while signing an employment agreement, well after a job offer and salary negotiation.
Beestie 41 minutes ago|||
Non-competes are restrictions on employees by their current employer. A non-compete agreement between a seller and buyer is perfectly fine.
mzi 54 minutes ago|||
Here in Sweden non-competes without a financial agreement is void. And those that offer some financial are probably OK, but haven't been tried extensively.

The non-competes I've signed have offered 60% of my base pay for six months (the length of the non-compete) if I cannot find a job because of the contract if the company exercise it.

They never have exercised it for me.

cortesoft 33 minutes ago|||
Those sorts of agreements are generally still allowed with these anti non-compete laws. If there is a specific non-compete contract that is signed, with money being paid for it directly, that is fine. That is a normal contract where both sides trade something of value.

The types that are banned are ones that set the restriction as a part of a normal employment contract, where there is no specific compensation given for accepting the non-compete and where the employee can't decide to abandon the non-compete in return for not getting the extra money.

mzi 28 minutes ago||
Yeah, those contracts are not valid here as the right to livelihood will trump that contract.

So even if you sign that clause you are not bound by it.

worik 24 minutes ago|||
In New Zealand it has been like that for ever, but no one knew, and employers used them and employees abide.

Partly it was naked power.

hodgesrm 55 minutes ago|||
That's how it works in California. I had a 3 year non-compete with VMware after we sold a business to them. It was restricted to the specific market and technology our business covered but didn't limit activities in other areas. It seemed completely fair to me.

Besides, competing would have meant doing exactly the same thing over again. What's the fun in that?

colechristensen 52 minutes ago||
>Besides, competing would have meant doing exactly the same thing over again. What's the fun in that?

All of the baggage and tech debt gone! THIS TIME WE'LL DO IT RIGHT

dylan604 34 minutes ago||
It is not unheard of that employees leave a company to start their own precisely because the company is not addressing something specific leaving a gap in services. The startup begins to gain traction to the point the company the employees left buys the startup. It's like this is the only way for the company to "do it right", yet it would have been cheaper if they'd just let the employees do the thing as employees in the first place
bluefirebrand 25 minutes ago||
> it would have been cheaper if they'd just let the employees do the thing as employees in the first place

Keep in mind the company is probably not refusing to do things because of cost. Often it is because of risk.

A lot of people running businesses have terrible judgement when it comes to risk

NewJazz 1 hour ago|||
Isn't that doable via stay on and holdback clauses?
dylan604 34 minutes ago||
I think every company with contracts like this should have a well furnished roof for these employees to hang out during the day
josephg 1 hour ago||
Why? They started one successful business. It seems good for society if they go on to start another.
cowsandmilk 52 minutes ago|||
Often an acquisition of a company is for the set of customers. If I sell my lawn care business and then turn around and email all my former clients offering them lawn care via my new company, I’ve just undercut what I just sold.

Noncompete shouldn’t be so broad that I couldn’t move to another city and start a lawn care business there, but I shouldn’t be able to compete directly with the business I just sold using my insider information of that business.

hedgehog 47 minutes ago|||
There's also a big difference between starting a competing business like your example, and being barred from say working on "cloud infrastructure" because your previous employer also worked on "cloud infrastructure". It can be blurry for executives, but in general noncompetes seem to be used to push pay down more than for any legitimate business purpose.
themafia 25 minutes ago|||
> Often an acquisition of a company is for the set of customers.

That's a merger. You can, not having any business currently, buy yourself into one. In which case the acquisition is purely for the profits.

> I’ve just undercut what I just sold.

No you've just competed with them. If your prices are lower then you've undercut them. If their prices are artificially high then the market, a.k.a. those customers, are the ones to benefit.

> but I shouldn’t be able to compete directly with the business I just sold

Competition is _competition_. You didn't buy a market you bought an opportunity. You still have to compete against everyone else.

> I just sold using my insider information of that business.

Insider information? On a lawn care business that has no issued securities?

bs7280 56 minutes ago||||
Why would I buy a business if the person im buying it from is just going to create a new one to compete with me?
Klonoar 52 minutes ago|||
That is not even remotely the point OP is arguing.
tzs 45 minutes ago||
The article covers this, but probably worth having it mentioned here too: Washington already had partially banned noncompete agreements.

They were banned for employees who made less the $127k/year or contractors who made less than $317k. Those numbers were adjusted annually for inflation.

Edit: less/more mixup fixed

curuinor 29 minutes ago|
Less than, not more than
charcircuit 12 minutes ago||
I think it's reasonable to prevent your employee from working for your competitor at the same time they are working for you. Or even an employee creating a startup themselves with AI and then mailing all of your clients.
softwaredoug 1 hour ago||
It’s not the noncompetes that’s the problem, it’s confidentiality agreements with extremely broad language.

Learn about the legal principle of “inevitable disclosure”. It’s the idea you can’t work for a competitor because you can’t help yourself but violate an NDA

WarmWash 14 minutes ago||
I haven't heard much about it, but I am incredibly curious about how this is currently shaking out in the AI craze.

It seems these labs are revolving doors, and any kind of breakthrough knowledge would immediately make you incredibly valuable to other labs or incredibly valuable as a spinoff start-up. Never mind these researchers all knowing each other and certainly having more than a few common spaces (digital or IRL). And the excitement of working in a fresh field still littered with low hanging fruit.

I can't help but feel that a large part of the reason why the labs are neck and neck is because everyone is talking to everyone else.

I can't substantiate any of this though, it seems to have largely dodged anything besides internal conversation.

wbl 59 minutes ago|||
Have fun trying that in CA.
cyanydeez 1 hour ago||
Inevitably, it's just the need for lawyers to intervene in "common sense" negotiations. It's never legal to do X, Y, Z, but if the business has all the lawyers and the employee has non, then it doesn't really matter whats legal; it's whose willing to exhaust the cash to fight the issue.

Which of course, is why unions are what's needed to properly negotiate employee-employer relationships, the same way a strong government is needed to negotiate corporate-civil relationships.

Americans, however, have decided that "individual freedom" is _soooooo_ valuable, that it only exists for people with enough cash to defend it.

otterley 1 hour ago||
Why wait until 2027, instead of making it effective immediately?
dragonwriter 33 minutes ago||
Because Washington has a Constitutional provision requiring that no law shall take effect sooner than 90 days after the end of the session in which it is adopted [0] unless it is an emergency law passed with a 2/3 vote, and the common convention for most normal laws is to set the first January 1 certain to come after the 90-day period of the current session as the effective date so that "new law day" for non-emergency laws is consistent.

[0] Each state is different here, but a "90 days after end of session", or "90 days after passage" rule for the soonest a passed bill can go into effect, with exceptions for emergency bills with special rules including a supermajority requirement, are pretty common, as are conventions of setting a January 1 effective date in the legislation itself when the minimum is X days from end of session or passage.

SilverElfin 45 minutes ago||
Especially when WA’s ruling party regularly uses false ‘emergency’ declarations to make new laws become effective immediately and because this lets them make new legislation immune to voter referendums (yes they abuse this loophole all the time). They could do the same here. If they don’t, it’s a choice made on purpose.
dragonwriter 27 minutes ago||
Washington has a 2/3 threshold in both houses of the legislature to pass emergency legislation, and the majority party is short of a 2/3 supermajority in both houses, so it is actually impossible for them to unilaterally pass emergency bills. Also, emergency laws in Washington are not immune to initiative (repeal or amendment by subsequent laws passed by the voters), but are immune to referendum (popular veto by the voters before going into effect).
SilverElfin 7 minutes ago||
The ruling party has pretty close to a supermajority - over 60% in each house. And also keep in mind, some of the members of the other party are opposition in name only due to the districts where they compete. The share doesn’t really matter - the main issue is that it is overused. There shouldn’t be a hundred emergency clauses in each legislative session.

As for the voters’ constitutional right to repeal - I’ve updated the terminology. From https://www.washingtonpolicy.org/publications/detail/time-to...

> Despite the name, the real reason for these supposed emergencies is not that the state faces some immediate threat. Legislation that includes an emergency clause can only be repealed using an initiative, which requires twice as many signatures as a referendum to put on the ballot for the voters to keep or reject. Referenda also face fewer legal challenges because they consist of a simple up or down vote on a piece of legislation.

It doesn’t change the fact that the abuse of these emergency clauses is anti democratic and an abuse of power

ChuckMcM 33 minutes ago||
If you had asked me in 1995 what was the one thing[1] that Boston could change in order to compete with Silicon Valley I would have told you "Make non-compete agreements legal" Companies in the Bay Area whined about it all the time but it kept the ecosystem vibrant and a lot of technology exists because of that. In the late 90's early '00s a big reason for a lot of 'high profile' people quitting their cushy job and setting out in a startup was because 'management' wouldn't allow them to move forward on an idea that they felt would "disrupt our own business." Those same people could quit, create a start up, and make that idea real anyway. So this is excellent progress for Washington State. I wonder how many ex-Microsoft employees this effects.

[1] I vacillated between this and California law giving ownership of what you worked on in your own time on your own equipment yours, except the latter was pretty effectively neutered by big corps defining their businesses more vaguely.

gautamcgoel 17 minutes ago|
Wait, I'm confused. Do you mean Boston should have made non-compete agreements illegal?
ChuckMcM 3 minutes ago||
Yes. At the time, non-compete agreements were legal (and commonplace) in Massachusetts. I haven't followed the Boston tech news for a decade so they may have changed that. But I had this exact conversation with Senator Ed Markey who was a congressman at the time. He was in the Bay Area and I was one of the people who were invited to a dinner he held on "Technology and Innovation."
mitchbob 1 hour ago||
https://archive.ph/2026.03.27-223204/https://www.seattletime...
sheikhnbake 1 hour ago||
Big ups for pro-working class legislation
dismalaf 52 minutes ago|
This feels a tad heavy-handed and will make it tougher to sell a business without hard assets.

It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

hedgehog 33 minutes ago||
Why would it affect selling a business?
dismalaf 30 minutes ago||
Previous owner can start the same business immediately and poach all the clients, reducing the value of the sold business to zero. Buyers obviously anticipate this and won't buy the business without the non-compete.
hedgehog 29 minutes ago||
That would violate a non-compete attached to the sale.
dismalaf 26 minutes ago||
The posted article is literally about banning non-competes.
hedgehog 21 minutes ago||
...for employees. For business owners there are different rules (IIRC > 1% ownership threshold).
colechristensen 45 minutes ago||
As the years go buy I'm gradually more and more in favor of restrictions to sell businesses. They tend to benefit two groups: the people running a successful business and the people running the even more successful businesses buying them.

They tend not to benefit the employees, the customers, the competitors and really anyone else besides a small number of people who are already very successful.

logicchains 18 minutes ago|||
Then nobody creates businesses in your state and everyone there loses. What person in their right mind would invest their time and money into a business they wouldn't be able to sell?
BurningFrog 35 minutes ago||||
All voluntary transactions benefits both buyer and seller.

This is as it should be!

dismalaf 42 minutes ago|||
Not all businesses are wildly successful. Some are just successful enough to provide a single family with a middle class income. For some people, selling that is their only hope of retirement.

It's not like the seller never has an option to say no to the non-compete.

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