New York may ban noncompete employment agreements and Wall Street is not happy

Original Article ↗ Hacker News Discussion ↗

New York’s proposed ban on noncompete agreements is prompting sharp debate over how far employers should be allowed to restrict workers’ ability to change jobs. Many argue that noncompetes—especially for low- and mid-wage workers—suppress wages, entrench corporate power, and are often unenforceable but still used as a threat, while others contend they are justified in narrow, high‑pay, IP‑heavy fields if paired with substantial paid “garden leave.” The exchange also contrasts U.S. practice with European models where noncompetes require mandatory compensation, and raises broader questions about worker bargaining power, trade secrets, and what genuinely counts as fair competition.

General reaction to NY noncompete ban

  • Many commenters strongly support the ban, framing noncompetes as anti-worker, anti-competition, and akin to “modern indenture.”
  • Others argue a blanket ban is too crude; they prefer targeted limits and better-designed contracts.
  • Several say this should be national policy, not state-by-state.

Fairness, coercion, and “voluntary” contracts

  • One side: if you sign an employment contract, that’s voluntary; you’re responsible for reading and accepting terms.
  • Other side: choice is not meaningful when the alternative is unemployment, losing housing/healthcare; severe power imbalance makes such “agreements” effectively coerced.
  • Disagreement over how low US unemployment changes this: some cite it to claim workers have options, others say macro stats don’t reflect individual precarity.

Scope: which workers should ever face noncompetes?

  • Broad consensus that noncompetes for low-wage/fast-food/retail workers are abusive and should be banned.
  • Some suggest allowing them only above salary thresholds or top percentiles.
  • Others argue all workers should be treated equally in law; no carve-outs by pay level.

Noncompetes vs NDAs, trade secrets, and IP

  • Repeated distinction: NDAs and trade-secret laws already cover stealing source code, manufacturing processes, or confidential customer databases.
  • Many argue noncompetes mainly suppress wages and mobility, not protect genuine IP.
  • Some legal nuance: “inevitable disclosure” under NDAs can function like a de facto noncompete in IP-heavy roles.

Compensated noncompetes and gardening leave

  • Widely endorsed principle: noncompetes are acceptable only if the employer pays during the restricted period.
  • Examples from Sweden, Germany, France, Washington State, and Wall Street: partial to full salary, often time-limited (6–24 months).
  • Disputes over what “fair” pay means when bonuses vastly exceed base salary; some want full recent total comp or more.

Quant finance and Wall Street-specific debate

  • Some call quant trading uniquely IP-sensitive; argue noncompetes prevent teams from cheaply porting profitable strategies.
  • Critics counter: if strategies are that valuable, retain staff with compensation, not legal shackles; society gains from freer competition.
  • Several note finance already relies on long notice periods and garden leave, but point out the economic inefficiency and public cost of sidelining highly paid talent.

Non-solicitation, clients, and teams

  • Contention over whether ex-employees should be barred from recruiting former coworkers or clients.
  • One camp: poaching clients/teams is legitimate market competition; relationships are personal, not corporate property.
  • Other camp: lifting full client lists or leveraging inside account data is theft of confidential business assets; some nuance between memory-based relationships and exported CRMs.

Enforcement and deterrence

  • Legally, many noncompetes are hard to enforce and often narrowed or struck down by courts.
  • Practically, they work via fear: threat of lawsuits, blacklisting, and legal costs keeps workers compliant even where clauses might fail in court.
  • Some advocate stronger penalties for abusive clauses to deter employers from using unenforceable but intimidating terms.

Broader capitalism and power themes

  • Thread repeatedly returns to how “free markets” are selectively applied: capital wants competition for laborers and customers, but not for itself.
  • Debate over whether current arrangements are “capitalism” versus “crony capitalism,” and whether strong labor protections are needed to counter structural imbalances.