NON-COMPETES IN TECHNOLOGY JOBS
I am currently reading a fascinating study on the use on non-competition agreements in technology jobs. I wrote about the study last week and the author (Dr. Matt Marx of MIT) was kind enough to share a complete copy of the study. Sadly, because of copyright laws, I am not allowed to re-post it.
Notwithstanding, I wanted to share my appreciation for his work.
For years I have watched non-compete contracts derail careers, harm individuals personally and professionally, and cause families pain and financial suffering. This is not an exaggeration. Although the law states these agreements are not favorable, and will be reviewed strictly by the courts, the practical effects of having a non-compete agreement, and changing jobs, goes far beyond the Court house steps.
Dr. Marx writes in his article, that “one mechanism by which firms assert power over highly skilled workers is a post-employment non compete agreement.” He argues that while it may be impossible to separate workers from their skills, “by exercising post-employment restraints on ex-employees, it may none the less be possible to separate works from the use of their skills. NON-COMPETE AGREEMENTS ENABLE COMPANIES TO CONVERT GENERAL TRAINING INTO FIRM SPECIFIC HUMAN CAPITAL BY DENYING WORKERS THE OPPORTUNITY TO APPLY THOSE SKILLS OUTSIDE THE FIRM.” The Firm Strikes Back: Non-compete Agreements and the Mobility of Technical Professionals, American Sociological Review, 76(5) 695-712, Dr. Matthew Marx, 2011.
He also found in his research, the methods used by employers to have the contracts signed by employees were calculated: “Firms carefully manage the process of obtaining signatures for non-competes, usually not mentioning the non-compete until after the worker has accepted the job offer (and presumably has turned down other job offers).” Id.
This ambush approach, either on day 1 of employment, on a Friday at 9am with an email from HR that says “sign and return by 5pm” and or attached to a severance agreement that expires quickly, is typical.
And the effect?
Hundreds of employees who feel bullied, helpless and without control over their own jobs. Is that really how you want to build a company?
Thank you again Dr. Marx for your work. I am excited to see this very real issue being addressed outside of the practice of law.