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.
As workers become more desperate and as corporate interests come to dominate more and more state legislatures, noncompetes are being used to lock up the working lives of sandwich makers and people who dig holes for $10/hour. This situation has alarmed many policymakers, who were reassured that the laws they voted in would only be used to stop senior execs from stealing trade secrets and going to the competition.
As states across the country move to moderate, reform or eliminate their noncompete rules, Idaho is bucking the trend, thanks to the aggressive lobbying of incumbent businesses, who paid to get the state to enact one of the most overreaching, unfair, one-sided noncompete regimes in the USA.
Ironically, this is billed as part of the state’s bid to become a tech hub. Noncompetes are particularly bad for the tech industry because so many startups flame out, meaning that the smartest people who go to the earliest startups in a new field are effectively locked out of working in that field for three years from the day they realize that their bosses don’t know what they’re doing.
Tech is one of the few sectors without a labor surplus, and tech workers can take their pick of jobs: more specifically, they can choose to seek employment outside of Idaho. The argument that investors will give more money to entrepreneurs who can indenture their talent is cute, but the reality is that investment capital is much more dependent on having a proven team than it is on being able to abuse that team with the assistance of feckless lawmakers in your state-house.
Ilana Rubel, one of the few Democrats in Idaho’s House of Representatives, became the bill’s fiercest critic. Ms. Rubel, a Harvard-trained lawyer who does intellectual property litigation for the Silicon Valley-based law firm Fenwick & West, described the proposal as “toxic to a good business ecosystem.”
“This bill was a giant thumb on the scale in favor of old established business at the expense of start-ups,” Ms. Rubel said.
Despite the bill’s passage, Ms. Rubel is undeterred. She has drafted legislation to repeal the law and is enlisting tech executives to help.
As Jeff Reynolds, a local entrepreneur who advises young companies at a co-working space called Trailhead, noted: “If you’re in Boise, Idaho, and you’re trying to build a start-up culture, it’s not like we have a head start in doing that. We shouldn’t try to put new impediments in our way.”
At a hearing last year to debate the proposed law, one of those who showed up was Mr. Sedrick, the Zenware chief executive who lost two engineers to TSheets. He didn’t mention his competitor by name, but complained about a local software company “hand-poaching” engineers.
Quit Your Job for a Better One? Not if You Live in Idaho
[Conor Dougherty/New York Times]