Wage stagnation in the USA has many causes: both the destruction of trade unions and the erosion of labor protections in the law (these two things are connected) are obvious culprits, and do much to explain how real wages could be falling even as unemployment has gone down.
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California says that non-compete agreements are unenforceable, and that's been a huge factor in the state's growth -- in particular, it's the most likely reason that California's tech economy zoomed past the Route 128 tech economy of Massachusetts -- the land where talent goes to die. Read the rest
When Stephanie Russell-Kraft signed up to work for Law360, she naively entered into a probably unenforceable noncompete "agreement" that asserted that by looking at court filings for interesting news stories, she'd be privy to "critical and sensitive proprietary information" -- but she didn't really think about it until Law360 used her signature on the agreement to get her fired from her second industry job, with Reuters, costing her a generous compensation package that included overtime and health insurance. Read the rest
Noncompete agreements have historically been the provision of highly-placed execs and critical "knowledge workers" (and even then, fast-growing economies like California have banned them in the interests of encouraging competition and growth) but now employers are routinely making the "agreements" a condition of unskilled waged labor, from making sandwiches to digging holes for $10/hour. Read the rest
Massachusetts is one of the few places in high-tech America where non-compete agreements are enforceable, a factor that scholars have pointed to in explaining why the state's tech industry has stayed so small relative to California, where the best workers can always move to the best companies. Read the rest
The California State Supreme Court has ruled that non-compete clauses in employment contracts are not enforceable in California. I'm reminded of the study from the Duke Center for the Public Domain that concluded that the reason that the tech corridor on Route 128 near Boston had grown so much more slowly than Silicon Valley was that Massachusetts has enforceable non-competes, while California does not. The researcher concluded that in California, the best talent moved to the best companies, while on Route 128, crummy companies could lock up great people for years at a time through non-compete agreements.
Note that none of this invalidates confidentiality agreements -- you're still not allowed to disclose secrets -- but you're allowed to work for whomever will hire you, without the cold dead hand of your last boss tugging on your belt.
Californians have the right to move from one company to another or start their own business and can't be prohibited by their employer from working for a competitor in their next job, the state Supreme Court ruled Thursday.
In a unanimous decision, the justices said state law since 1872 has forbidden what are called noncompete clauses that restrict management employees' options after they leave a company.
State Supreme Court rejects noncompete clauses
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