[bachmeier]

> Quant firms at least are one of the few places where noncompetes can make sense. It's an extremely IP sensitive industry with stupendously high pay where the employee is going to someone probably competing very directly with you, for the same/similar opportunities.

So the solution is that employees should only be able to work for one employer in their career? I wouldn't disagree with this argument if the noncompete came with a payout in the tens of millions of dollars.

[dan-robertson]

It’s reasonably normal to be more like garden-leave where the employee is paid some high percentage of their base salary for some amount of time when they may not compete. This can still be very expensive for employees who will often have bonuses that are a large multiple of their base and so going down to base for the duration of the garden-leave.

Some places won’t compensate for the noncompete at all, others won’t compensate if the person works at a non-competitor. Some have a mix, eg up to a year of (paid) garden leave followed by up to a year of (unpaid) noncompete. If someone does leave one firm for another, there is often some negotiation, eg maybe the hiring firm agrees not to have the person work on certain things for some amount of time (potentially longer than the noncompete) and in return they can get them sooner.

So one solution is to allow noncompetes so long as employees are fairly compensated. It seems hard to discuss improving the rules around fairness there if you’re a politician because quant firm employees are not very sympathetic – it looks bad to say they are mistreated when they make many times more than lots of other professionals, even though by allowing that mistreatment you’re effectively giving the money to their even-better-off bosses instead.

[amelius]

> It’s reasonably normal to be more like garden-leave where the employee is paid some high percentage of their base salary for some amount of time when they may not compete.

Some would use that money and time to start a competing company :)

[dan-robertson]

If you’ve been successful enough at a quant firm that you want to try to set up your own firm, it’s not one year of base pay from garden leave that’s going to be providing your start-up capital.

But also, setting up a competitor is definitely violating noncompete. If you look at how actual firms started (basically all of them start from people leaving other firms) the founders waited out noncompetes. It would be a waste of money and potentially scare off investors by risking getting massively sued.

The things people normally do are like:

- go travelling, especially to places less well suited to short trips. Hard for people with partners who don’t want to stop working for a year or two.

- learn/train for something. Eg maybe requires a bunch of courses or maybe just a lot of time and effort.

- some combination of the above, eg mountaineering requires a certain amount of training/fitness as well as long trips

- some kind of civic/vocational thing where you’re applying professional skills from work but not IP, eg taking a more active role as a charity trustee

- spending more time with kids/other family

- working for some non-competitor like Google for a year.

[auntienomen]

Lawyers will advise you not to do this. It exposes you to accusations of IP theft and barred competition.

[iancmceachern]

It worked out for the traitorous 8

[infairverona]

I feel like the solution is to force the company to pay full TC (average of previous years + inflation or something?) for the duration of the noncompete.

[arrrg]

In Germany non-competes have a max duration of two years and compensation has to be at least 50%.

[caskstrength]

Living two years on half the salary sucks though.

[ghaff]

Realistically though, you're never going to have a system where it's generally more attractive financially to spend a couple years on the beach than to keep working. That's a perverse incentive.

But, yes, that's the thing with gardening leave. There are certainly some people who would be fine with taking a year off at significantly reduced pay--but not the majority.

[F-W-M]

It's a great start into freelancing though. They have to pay you 60% of your former salary upto 110% of it.

[caskstrength]

You know what would be even better? Them paying you 100% of your salary while you are freelancing ;)

[vgatherps]

> I feel like the solution is to force the company to pay full TC (average of previous years + inflation or something?) for the duration of the noncompete.

It absolutely has to be something like this at a bare minimum. The whole "We pay full base" argument is nonsense when the TC is multiples of base.

[michaelmrose]

Even this doesn't work because its often the case that an employee leaves for a higher salary elsewhere. Instead of trying to add epicycles to a stupid system it makes more sense to shit can it. There are about 338 million people who would benefit whereas the people who truly have anything to gain from such a system could all attend an event together.

[lordnacho]

But bonus depends on how the team did plus individual perf... politics.

How do you establish what the person would have gotten paid?

[snovv_crash]

Take the average over the last years? If the employer doesn't want to pay that then the employee can always go work for a competitor, right?

[eszed]

That's why he suggested "average of preceding years". Maybe you allow companies to appeal to reduce the amount based on a decline in profits leading to reduced bonuses for employees on identical schemes, but... Meh. If they want to use non-compete clauses I think they should bear that risk. It will make companies think hard about on whom they should impose them, which in my opinion is the point of creating restrictions.

[stephencanon]

Right. They can always release them from the noncompete if they find it onerous.

[vgatherps]

> So the solution is that employees should only be able to work for one employer in their career?

Yes, I very definitely made this anything remotely resembling this argument in my post.

Regardless, it would be a beyond-amazing deal for most employees if they got lifetime yearly TC from a quant firm only on the condition that they didn't work for a competitor. Mindblowingly, shockingly, amazing.

[hackerlight]

Non-competes should be regulated so the person is paid a full salary (or paid the equivalent of the last year's total comp) if the employer wants to enforce it, and have a max duration say 1 or 2 years. I don't see a problem if it's done like that.

[dragonwriter]

> Non-competes should be regulated so the person is paid a full salary if the employer wants to enforce it, and have a max duration say 1 or 2 years. I don't see a problem if it's done like that.

That's just employment, so its effectively the status quo in places with a ban on noncompetes. You can absolutely hire someone as an employee, when their only job duty is not to compete with you. You can even contract such employment for a set term. The problem, of course, is that employers want noncompensated noncompetes and at-will, no-set-term employment.

[hackerlight]

It's not just employment because employment can't exclude you from quitting and finding another job, but a non-compete can. Otherwise I agree.

[ffgjgf1]

> So the solution is that employees should only be able to work for one employer in their career?

What makes you suggest that? If I understand correctly after you leave one of the quant firms you end up having to spend X months not working in the industry getting base pay. Which seems like a very reasonable deal.

[lokar]

I’ve seen “hostage exchanges” where two firms wave the noncompete (for people already on garden leave) so they can start right away. Seems to undermine the idea that sensitive IP is at risk.