1) to prevent you from working somewhere else at the same time, which can create all sorts of conflicts of interest, or 2) because it'll keep you from looking for a new job, and they think you're too naive to argue.
Actually there is a third reason: An employee leaves and takes proprietary tech to a competitor.
The standard answer is: Well that's what an NDA/Confidentiality clause is for so you don't need to worry about that.
Unfortunately it doesn't really work like that. You can't just purge your brain of something you've been working on for months or years. On top of that it's nearly impossible to prove that a confidentiality infringement was made unless code or hardware was straight up exported/copied and implemented.
Especially in the case where a megacorp hires away someone from a startup, the startup can't reasonably sue megacorp for this type of thing because it would cost too much and be basically a total loss.
Effectively it happens like this:
Employee 1 was implementing a novel computer vision algo for Startup X.
Megacorp approaches Employee 1 with 3x salary offer and stock.
Employee 1 leaves startup to work on a similar project for megacorp.
Startup can't ask what Employee 1 is working on because Employee 1 and Megacorp have an NDA.
Megacorp comes out with a new product that implements the algo, except it was implemented by the team Employee 1 was on which had been working on the same problem for a while and not just Employee 1 themselves.
I've seen this happen first hand, so it's not like it doesn't go on.
There are a million "reasons" why people are ok with this situation and just blame it on the startup not being competitive with salary, but increasingly that's basically impossible.
I sympathize with what you're saying. But if this were truly such a problem, wouldn't you expect jurisdictions that enforce non-competes to have a more robust startup ecosystem than jurisdictions that don't?
The point I am trying to make is that there are valid reasons to have non-competes that aren't just trying to handcuff employees as that is the standard way of thinking in this thread. Whether or not they could practically be used for them is a different question.
I do agree there are situations in which a non-compete could have value not only to a particular employer, but to the overall economy.
The problems are:
1) Even in those situations, does the societal value outweigh the harm to the employees who suffer under the weight of the non-compete?
2) Even if the answer to #1 is yes, is there a way to narrowly craft law that allows non-competes in that very narrow situation without the collateral damage of other employers foisting non-competes on employees in non-analogous situations?
On #2, my guess is the answer is no. We have bright-line rules for good reason - because without them, it is easy for an employer to get around them. They are a blunt instrument, but they work. A lot of labor laws are like this.
And remember, the situation you were concerned about - the small startup vs. big company situation where the startup cannot enforce its trade secret rights because of costs of enforcement - would end up being turned into an analogous situation in the employee vs. big employer context if we allowed more non-competes to be enforceable. Maybe the employee's legal position would be correct, but try going up against a big employer in a legal battle to fend off enforcement of such rights.
Maybe instead of playing around with rules around non-competes, we should be focusing on providing a greater ability for small companies to enforce IP laws? For example, better attorney-fee shifting provisions?
Actually there is a third reason: An employee leaves and takes proprietary tech to a competitor.
The standard answer is: Well that's what an NDA/Confidentiality clause is for so you don't need to worry about that.
Unfortunately it doesn't really work like that. You can't just purge your brain of something you've been working on for months or years. On top of that it's nearly impossible to prove that a confidentiality infringement was made unless code or hardware was straight up exported/copied and implemented.
Especially in the case where a megacorp hires away someone from a startup, the startup can't reasonably sue megacorp for this type of thing because it would cost too much and be basically a total loss.
Effectively it happens like this:
Employee 1 was implementing a novel computer vision algo for Startup X.
Megacorp approaches Employee 1 with 3x salary offer and stock.
Employee 1 leaves startup to work on a similar project for megacorp.
Startup can't ask what Employee 1 is working on because Employee 1 and Megacorp have an NDA.
Megacorp comes out with a new product that implements the algo, except it was implemented by the team Employee 1 was on which had been working on the same problem for a while and not just Employee 1 themselves.
I've seen this happen first hand, so it's not like it doesn't go on.
There are a million "reasons" why people are ok with this situation and just blame it on the startup not being competitive with salary, but increasingly that's basically impossible.