Georgia Voters Agree To Allow Human DRM: Non-Competes Made Enforceable

from the anti-innovation dept

Tue, Nov 16th 2010 2:48pm — Mike Masnick

A few years back, we explained how non-compete agreements are like human DRM. We detailed a whole series of research which actually showed the single biggest reason why Silicon Valley became "Silicon Valley," (according to multiple studies) was that unenforceability of non-compete agreements (yes, there were other factors too, but it was those factors combined with greater job mobility that created the innovation boom). You can read the details to understand why (and understand the various studies), but the short version is basically that by letting people move around from company to company, you get greater idea sharing among companies, which actually helps them all advance. While some want non-competes to avoid losing good employees, they ignore the fact that it also blocks them from getting good employees back, and from allowing an incredibly important form of information sharing to occur. One of the more recent studies in this space showed how the collapse of the Detroit auto market followed quite quickly on Michigan making non-compete agreements enforceable (yes, correlation, not causation, but combined with other studies, there's a strong relationship).

There's actually been a big effort in a few other states to make such agreements unenforceable, but apparently some states are going backwards. Benny6Toes points us to the unfortunate news that Georgia has passed a Constitutional Amendment to make non-compete's more enforceable. Before this, some non-competes were enforceable, but in a limited way.

What's really ridiculous is that those pushing for this Amendment presented it in terms that were quite clearly the opposite of what the Amendment would do:

"Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"

Even though plenty of people who actually understood this issue knew that it was a ridiculously bad idea, for those who don't actually understand this issue, who's going to vote against making their state "more economically competitive"? Of course, it's rather scary that Georgia politicians would make such a claim when all of the evidence shows that such non-competes actually make states significantly less competitive. Really a tragic move for the state of Georgia.

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Filed Under: georgia, innovation, non-competes

43 Comments

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out_of_the_blue, 16 Nov 2010 @ 3:16pm

Advance only occurs when advance is possible.
The semiconductor industry got up to speed by prior decades slowly laying the groundwork for it, *not* because of any ferment specific to the 80's, job changes or not. -- Everyone likes to think the years of their youth is *the* most crucial time *ever* in history, but it's simply bias. -- Similarly, social trends of the 80's were a logical extension of changes since WW2, at least. A full context completely vaporizes your narrow thesis.

AND NOW that industry in the US is winding down, this Georgia thing isn't going to affect beans. Stop worrying.
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Anonymous Coward, 16 Nov 2010 @ 3:19pm

Sometimes the more cynical side of me wants RIAA, Disney, the Corporations, stupid people in general and all evil entities to have their way and see society burn to the ground. That way we can restart this messed up problem.
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Anonymous Coward, 16 Nov 2010 @ 3:26pm

I never met a non-compete I wouldn't sign and ignore.
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MrWilson, 16 Nov 2010 @ 3:41pm

Unless the non-compete agreement stipulates that you get severance pay equal to the wages you would have earned during the length of the agreement had you stayed at the same job, why would anyone possibly agree to such an agreement?

It doesn't seem very agreeable to me.
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Designerfx (profile), 16 Nov 2010 @ 3:43pm

Re:
most people are desperate for employment and don't even read the noncompetes.
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Concerned Citizen, 16 Nov 2010 @ 3:55pm

Non-competes have only one purpose...
To keep salaries low. Most people these days live from check to check, making it impossible to be out of work for any period of time, such as, waiting for a non-compete to expire. Many companies do not pay severance during this period. Some companies fire employees and still hold those employees to the non-compete. Many companies will not hire people with non-competes. Companies love them because of the power they give over employees.

Down with non-competes! They are no good for any employee, anywhere, anytime.
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Wolfy, 16 Nov 2010 @ 3:56pm

This has rethuglican scent all over it. Remember the "clear skies' bill that allowed MORE air pollution, and the "no child left behind" bill that gutted public K-12 education funding? And it's illegal to shoot lying politicians. Shame.
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Anonymous Coward, 16 Nov 2010 @ 4:00pm

Move out of Georgia when you quit your job and want a new one in the same field. Wait...what if you sign a non-compete with company A in Georgia, and then move to a job somewhere else for company A. With that change of employment terms do they have to update the terms with a different non-compete? (I had to resign some paperwork when I moved states for my job) Does that nullify the old one?

Also, I hate be a nag, but can we get a "related studies" box? Either have commenters submit them (and vote on them), or if you could start building a list and add them to the end of the article (maybe build a little database that autoadds them based upon article attributes, hell I have no idea what your site infrastructure is like). I realize we can do this in the comments, but it seems it'd be a good idea to draw more attention to the studies for those who are looking for them. (usually you do a good job of linking all the studies you refer to, but as of late I've been seeing less blue text per article it seems).
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ChurchHatesTucker (profile), 16 Nov 2010 @ 4:14pm

New Ballot Initiative
"Shall you protect widows and orphans by giving Church one million dollars?"

TIA, GA
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harbingerofdoom (profile), 16 Nov 2010 @ 4:31pm

i think ive signed 4 or 5 of those things and violated the terms of every single one of them

(really, you expect me to turn down a job because a non-compete had the vague statement that i cant work in a "related field" for 3 years after separation of employment? pfft...)
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harbingerofdoom (profile), 16 Nov 2010 @ 4:32pm

Re:
this does not have rethuglican all over it. it has stupidity all over it. i have heard this kind of blather from both sides of that isle over the past few years.
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James Carmichael (profile), 16 Nov 2010 @ 4:36pm

Re:
There's a list of 'Related Stories at the bottom of the right column. At least I see four of them for this article, but they're right below the ads so they're hard to see. It might not be there for everyone... though I agree that the "Related Articles" feature could be revamped... I'll bet it'd increase pageviews!
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TechDan (profile), 16 Nov 2010 @ 4:55pm

America: Meet Georgia
Your semi-retarded cousin that I can't wait to leave in my goddamn dust.
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Anonymous Coward, 16 Nov 2010 @ 5:04pm

Re: Advance only occurs when advance is possible.
The semiconductor industry blah blah blah ...

Nobody said anything about the semiconductor industry in general. Mike was talking about "Silicon Valley". Please try to read the articles before commenting on them.
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abc gum, 16 Nov 2010 @ 5:56pm

Does the non compete require that one disclose who your new employer is? Make them spend money on investigators and then sue them for stalking.
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Noel Coward, 16 Nov 2010 @ 6:03pm

Re: Advance only occurs when advance is possible
Oh stop your nit picking!

If you read what he was trying to convey, you'd realize it was applicable in the general sense too.

Personally, I think he is correct and less biased than you.
Though understandably, you have resorted to defending Mikes position. Perhaps because it sounded a little harsh and personal.

My feelings are that these are the words of some one frustrated with the lack of total balance in reporting.

My advice, don't read too much importance in this info-tainment world of so called journalism. It's mean't to provoke response, not necessarily truth.
Besides, these gentlemen haven't been around long enough. ;)

However, I do agree with Mike's assessment that this is akin to Human DRM [ tad dramatic ], but anti-competitive.
Not sold on your thin analysis of Silicon Valley though.

Close but no cigar!
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Anonymous Coward, 16 Nov 2010 @ 7:02pm

Of course, it's rather scary that Georgia politicians would make such a claim when all of the evidence shows that such non-competes actually make states significantly less competitive. Really a tragic move for the state of Georgia.

Good grief, Mike's stupid conclusory statements never end. "ALL of the evidence" shows that, does it? Yeah, right. Like there isn't one shred of evidence that suggests otherwise. Bullshit.

That's just standard techdirt stupid logic: Anything that backs up Mike's position is "evidence," while anything that contradicts it is "faith-based." What a fucking tool.
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Concerned about corporations, 16 Nov 2010 @ 7:06pm

Re: Non-competes have only one purpose...
Of course! You would sure think twice before leaving or doing something that might cross the line.

It is a power trip for sure. Big business up and workers down.

If we do not stand up now and say our what is on our minds now this century is going to be all about the corporation. They have the money and they want the power.

I shudder at the thought of a privatized world where you have essentially no rights because they have all been contracted out. A world where the kings are both impossibly ruthless and faceless at the same time. Oh and BTW it's not alarmist if it is already happening.
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Bruce Ediger (profile), 16 Nov 2010 @ 7:17pm

Re:
Like the folks say, "Pics or it didn't happen".

In this case, got any citations that non-compete agreements make states more competitive?

Or maybe I should put it this way:

That's just standard Anti-Mike stupid logic: any claim that contradicts Mike's position is "evidence", and The Anti-Mike doesn't have to cite references at all, just shill some big company position.
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Anonymous Coward, 16 Nov 2010 @ 7:18pm

Re:
Where you asking Mike to backup his supposed sources of his evidence?

I think you could have done it in a non-rude way.

I found this online and it really goes into depth about the issue in California.

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202473700488&src=EMC-Email&e t=editorial&bu=National%20Law%20Journal&pt=NLJ.com-%20Daily%20Headlines&cn=20101027NLJ&a mp;kw=Hurd%20on%20the%20street%3F&slreturn=1&hbxlogin=1
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coach george (profile), 16 Nov 2010 @ 7:23pm

Re:
I have never met a non compete I signed. If you insist on a non compete, you don't want me badly enough.
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bob, 16 Nov 2010 @ 7:30pm

Re: Re: Advance only occurs when advance is possible.
What exactly is Silicon Valley?

Oh that's right silicon is a semiconductor.
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Christopher (profile), 16 Nov 2010 @ 7:37pm

I would be pressing for a lawsuit to nullify the voting because the Constitutional Amendment as passed was unconstitutionally vague and a normal person could not understand what was being done.
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Christopher (profile), 16 Nov 2010 @ 7:38pm

Re:
Agreed. If someone took this case to the Supreme Court, state Constitutional Amendment or no, the non-competes would be thrown out and banned.
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Anonymous Coward, 16 Nov 2010 @ 8:22pm

Re: Re:
I see the related *stories* box, I'm talking more about a method of linking all the relevant *studies* that are mentioned. The emphasis isn't to imply you missed the point, just to point out that there is a difference. While I do like reading the other techdirt stories, it can be frustrating to have to follow old link after old link to find all the related studies that show x, y, or z. Plus having related studies in one place for each article would stop the

"exactly what studies? ah, you cant point to a single one, your argument is invalid!" kind of posts/naysayers.
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Anonymous Coward, 16 Nov 2010 @ 8:51pm

Re: Re: Re: Advance only occurs when advance is possible.
Oh that's right silicon is a semiconductor.

And you think that somehow makes Silicon
Valley the whole semiconductor industry? With kind of logic is that? Oh, wait ... that's Anti-Mike logic. Sorry, I forgot.
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furball, 16 Nov 2010 @ 11:30pm

Re: Re:
No, Wolfy's correct. Georgia is in the pocket of the right.
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Evil Auntie, 16 Nov 2010 @ 11:38pm

Remember...
Remember these three initials after your signature.... S.U.D.... Signed Under Duress....

I can't imagine signing a non-compete clause... it's basically a company's way of saying you rule... and they suck.
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Mike Masnick (profile), 17 Nov 2010 @ 12:13am

Re:
Good grief, Mike's stupid conclusory statements never end. "ALL of the evidence" shows that, does it? Yeah, right. Like there isn't one shred of evidence that suggests otherwise. Bullshit.

No, actually in this case I will stand behind that claim 100%. This is an area that has been studied repeatedly by multiple parties and yes *every single study* that I have seen in this area has shown problems with non-competes. I went through much of the literature on this subject in a previous post which cites numerous research confirming this finding:

http://www.techdirt.com/articles/20071204/005038.shtml

You are falsely claiming (as you have done multiple times) that I have not backed up my claims with evidence.

I have. Yet, you have not provided any evidence to the contrary.

That's just standard techdirt stupid logic: Anything that backs up Mike's position is "evidence," while anything that contradicts it is "faith-based." What a fucking tool.

Hmm. No, actually, that's not true. Evidence is evidence, and I'm open to evidence on all sides. Claiming something must be true when there is no evidence to back that up is actually a "faith-based" assertion. I didn't realize it was so complex to understand the difference.

My complaint is when people make claims -- as you have here -- without any evidence to back it up. I provided actual evidence.

I had no idea that providing evidence made me a "fucking tool." For someone who promised to stop insulting me, but today alone called me a "fucking tool" and a dillweed or something along those lines, it would appear that you have no interest in actually looking at evidence or learning, but that anyone who disagrees with your pre-conceived notions must be insulted.

I would suggest, should you eventually graduate from law school, that you not try that tactic in court.
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Jose_X, 17 Nov 2010 @ 4:52am

Wow, get an amendment to seize first borns by saying the amendment will help the economy
>> Of course, it's rather scary that Georgia politicians would make such a claim when all of the evidence shows that such non-competes actually make states significantly less competitive.

What is scary to me is that the amendment would stand. Aren't their truth-in-advertising-state-amendment laws?
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Anonymous Coward, 17 Nov 2010 @ 5:26am

This is where unionization would be preferable. But wait! The corporations succeeded in making unions look like anti-Christian boogeymen.

There goes that avenue of self defense.
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Anonymous Coward, 17 Nov 2010 @ 5:46am

I discussed this issue with my brother who owns a business in Geogia. He voted for this ammendment. According to him, no one could ever sell their business if non-competes were not enforceable. He could sell his business and start a new business doing the same thing with his old customers down the street from his old business, without a non-compete. No one would buy his bussiness if he could do this.

So what's the answer?
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Anonymous Coward, 17 Nov 2010 @ 6:51am

Re:
I imagine this specific, narrow case could have easily been handled in the contract of the sale rather than a broad sweeping constitutional amendment.
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Anonymous Coward, 17 Nov 2010 @ 7:35am

Don't sign the stupid thing. If the only job you can get makes you sign one you need a new career. Ohhhhh Georgia I remember you used to have business in technology!!
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Anonymous Coward, 17 Nov 2010 @ 7:36am

Once you leave the cities in the southern United States the IQ level tends to spiral downward. What do you expect from swamp rats.
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greenbird (profile), 17 Nov 2010 @ 8:50am

Make all politicians sign non-competes
Make all the politicians sign non-competes as a condition of serving in the government. They cannot work in any industry or job directly or indirectly related to government operations or any job or industry related to any work they were involved in while in government service (including legislation) for a minimum of 5 years after they leave government service.
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Mark, 17 Nov 2010 @ 2:00pm

Re:
The first sponsor of the bill was a Democrat.
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Josh in CharlotteNC (profile), 17 Nov 2010 @ 2:11pm

Specific wording
The wording of what was asked to the voters seems to me that it would make actually amending their state constitution difficult.

Evidence that shows non-competes make the state less economically viable means that the constitution cannot be amended.

Or am I trying to apply too much logic to politics?
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Clueby4, 17 Nov 2010 @ 4:52pm

Non-complete voiding At-Will
Wouldn't a non-compete agreement void At-Will nonsense.
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Jose_X, 17 Nov 2010 @ 5:32pm

Re:
You are suggesting that without trade secrets a business is worth nothing (it can't be sold). At a minimum, you should always be able to sell it at near tangible asset value minus liabilities.

The best interest of society is to reward those that give away trade secrets. Otherwise, society allows the business skill to end up able to dominate all other professions/skills in terms of mopping up money (because of lack of competition and general tendency for money to have a feed forward effect (until some saturation point) in that the more of it you have, the easier it is to make more relative to your peers -- so those with the greatest ability to earn it end up much further ahead -- and not necessarily in honest fashion since a theme seems to be that many times lying and deception gets rewarded).
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Josh Taylor, 17 Nov 2010 @ 7:53pm

Human DRM for what? To prevent us from singing a copyrighted lyric in the shower without paying and quoting from a movie, TV Show, cartoon, etc.? The voters in this state are puppets for copyright. Human DRM implanted in our brain will mute our voice box.

Those who are from the state of Georgia and are against Human DRM can move to Florida with me.

So that means I can't shop at another store that's competitive, or go to another church, or work at another job that is competitive?
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Lance Weatherby, 17 Nov 2010 @ 8:42pm

The Answer
When you sell a business you enter into a formal agreement. That agreement says that as part of the deal you agree to not operate within the same industry or within the same geographic market for a specified period of time. It is common practice.
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Mike Masnick (profile), 17 Nov 2010 @ 11:49pm

Re:
According to him, no one could ever sell their business if non-competes were not enforceable.

Non-competes haven't been enforceable in California in over a century.

California has one of the most active M&A businesses around. Not having non-competes does nothing to stop people from selling businesses.
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