We’re now less than a week away from what could be the most important election in recent memory – particularly for those working in innovation-driven industries like tech startups. The ebb and flow of Georgia politics has a momentum all its own, including a who-knows-who’s-funding-them run of negative ads that have made this election season extra-gross for me personally. But at least voters get a crack at changing leadership every four years. If Amendment One passes this November 2, it will never be rolled back – mark my words. Regardless of which side of the aisle you prefer (or even if ‘None of the Above’ seems like the best option), next Tuesday needs to begin with a NO vote on Amendment One. Your future earning potential is absolutely at stake.
An Enemy By Any Name
Yep, the dreaded Georgia Restrictive Covenant Act (HB173) has taken its slot as Amendment One on this year’s ballot. Just to review the pure evilness of this effort, let’s look at the verbiage that’s on the ballot:
"Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"
Damn, that just steams me every time I read it while knowing there’s absolutely no proof that reducing employees’ rights to change jobs leads to economic competiveness – especially using Michigan as a case study. And the argument it incents more companies to relocate to Georgia has been debunked by arguably one of our town’s most successful relo rainmakers, Nick Masino of the Gwinnett Chamber of Commerce. The good news is I’ve seen a fair amount of negative press around this outrageous language, so my hope is the general public has at least heard something critical about the amendment.
Bye, Bye Tech Startups
So if these Draconian rules come into effect, expect two primary types of startup entrepreneurs: 1) kids straight out of college and 2) those with a cash-laden exit event behind them. These will be the only two groups who won’t have the stain of one of these non-competes on them. The big problem is that creates some serious issues for an already-struggling startup ecosystem.
The first is I would contend the success percentage of first-time, under-25 entrepreneurs is a fraction of what a more seasoned executive could pull off. In fact, primary research from my Duke University professor buddy Vivek Wadhwa shows the average entrepreneur is just about 40, married and has kids. Not for long if Amendment One passes. Starting a company is massively hard work, and takes every experience gained over a lifetime of professional experience. It probably goes without saying, but kids like Mark Zuckerberg and Shawn Fanning who remake industries are the exception more than the rule.
And for those fortunate enough to engineer an exit under the old rules, navigating these new restrictions is likely more important than continuing their path of innovation. For their sakes, I hope they made enough money so that working for someone else never comes into play again in their career. That probably means 4-5 successful startups over a career without any necessity to stop-over in a corporate gig with a guaranteed paycheck and benefits. It’s good work if you can get it, but that’s a tall order.
Everyone else in between – especially those who are now employed in corporate with an eye toward starting their own company one day – is just flat screwed. The more innovation you’re creating for your employer, the more likely they are to show up with a new agreement for you to sign. In other words, I’d expect the best of the best to get screwed the fastest. Is it just me, or does this just seem un-American?
So there’s one simple question: with Amendment One as law, do you have the opportunity to be a startup CEO? I’d call it a travesty if you can’t control your own destiny and prosperity in this arena. If you’re ready to risk it all to create better technology, new jobs, more tax revenue, and a better life for your family, why should some pro-big business lobbyist decide you couldn’t by deceiving the electorate into voting in favor of Amendment One?
A Well-Informed Voice of Reason
I’m going to conclude my penultimate article on this topic by doing something relatively rare – reprinting an entire opinion piece from the Cordele Dispatch written by Ed Buckley and Tom Stubbs. Ed has consistently rallied against the passage of Amendment One, and makes a great series of arguments from the real-life position of a labor lawyer.
Georgians should vote 'no'
By Edward D. Buckley and Tom Stubbs
Cordele — (This editorial written by two Atlanta area attorneys is reprinted at the request of Cordele attorney James Hurt).
Georgia voters will soon be asked to vote on an amendment to the state constitution which is intentionally phrased to deceive them.
The language reads: "Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"
This language is a lie on its face. The amendment does not make Georgia more competitive; it makes us less competitive by restricting the free flow of labor upon which that capitalism depends.
The proposed constitutional amendment will shackle employees to businesses, and strangle the present rights of employees to go out and work for competitors or start new competing businesses.
Voters who are employees of any kind, be they doctors, news people, engineers, mechanics or salespeople should rise up and vote "No" to this radical change to our state constitution.
You'd never know it by reading the ballot question, but the proposed constitutional amendment relates to "non-compete agreements." Employers may already force non-compete agreements on employees -- as long as the agreements are reasonably limited in time, geography and job description.
Under the Georgia Constitution, if an employer imposes unreasonable restrictions, such as banning former employees from working in their field of choice forever or everywhere or in all kinds of jobs, then our courts are required to strike the entire agreement. That process obviously encourages employers to err on the side of keeping the restrictions contained in non-competes reasonable and limited.
This legal framework has worked well for decades. For every non-compete that you see challenged and overturned due to its being overly broad in time, geography or job definition, hundreds, if not thousands, of properly and reasonably limited non-compete agreements are entered and enforced without a hitch every year.
Indeed, business-oriented publications such as Entrepreneur, Forbes, Chief Executive Magazine, and others have consistently ranked Georgia as one of the top states in the country for business. So, current law has worked well for business.
Big Business wants more, however. They want to erode even this minimal protection for employees. How? The proposed constitutional amendment -- drafted by lawyers who work only for management -- permits judges to edit, not just strike, overly broad non-compete agreements.
This innocent-sounding change totally tilts the table on non-competes to favor employers. If this proposed amendment passes, employers will be able to write every non-compete agreement overly broadly, because there is no threat of the entire agreement being stricken anymore.
The worst that can happen is that, at some distant time in the future, a judge may make the employer use more reasonable restrictions in its non-compete agreement. In the meantime, employers can require an employee to sign these overly broad agreements or get fired, then fire them anyway.
The end result? Overly broad non-compete agreements dictate how and where many employees work. The economy loses because labor is prevented from flowing to the place where it is most productive. Consumers lose because entrepreneurs are prevented from leaving mediocre jobs to start their own businesses that offer better products and services.
Employees who don't leave lose because they are stuck at jobs making less than they could make elsewhere. Employees who dare to make a break for new employment are likely to lose, as well. They will have to live under the overly broad restrictions for months, if not years, on the thin hope that the attorney they have to hire -- at great expense -- will some day get those restrictions eased.
The gain? Our already clogged courts gain even more lawsuits, and our judges gain power to become activists who make up and insert completely new terms into contracts.
Georgians should not surrender their constitutional rights to make way for this one-sided, pro-employer and anti-employee new law. This proposed amendment makes no sense whatsoever, but, at a time when unemployment is at record levels, it is especially wrongheaded.
Vote "no" to deceit. Vote "no" to anti-employee legislation. Vote "no" to Amendment One.
It's a lie told to Georgia voters, and it's a lie told to employees at a time when jobs are scarce. Free competition is a sacred American right. Vote "no" to Amendment One to preserve this right.
Look for my final call-to-arms on this topic on Monday, and please do press this topic into conversation at your weekend Halloween festivities. I know I’ll be foregoing the standard neighborhood discussions like stray cats and homeowners associations in favor of educating a few more voters on the topic before Tuesday. You should absolutely do the same!
Previous Articles on the Topic:
KillHB173: T Minus 22 Days
KillHB173: So Long Professional Services
KillHB173: How Natural Selection Should Punish Crappy Employers
KillHB173: How To Guarantee Another Startup Cluster Never Happens
KillHB173: Are You In The Crosshairs?
Employees Chained And Restrained: Why We The People Must Defend GA's Constitution Against HB173