I’ve been concerned about the wording of the ballot initiative known as Amendment One since the first time I read it. Political candidates aren’t allowed to campaign within hundreds of feet of polling places, but this wording campaigns for itself right there on the ballot. Who wouldn’t want to “make Georgia more economically competitive”. The situation smells fishy, and I want to highlight some of the fishiness through some of my recent experience.
I recently finished spending over 2 years as CTO of Elf Island (and then Xeko after a merger). We hired several key artists from a Rezilio, another local gaming company. The company couldn’t pay its employees, but they hoped to turn the company around. If they had enforceable non-compete agreements with these employees, they probably would have enforced them against us. That’s not a judgement against Rezilio, just a logical move. It’s much easier to turn a company around if the key employees haven’t been hired by someone else. We would have spent much more time looking for excellent artists familiar with building flash games, and those employees would have waited for courts to sort out the non-competes or abandoned their game skills to start from scratch in another industry.
More recently, Xeko itself closed, leaving myself and several key employees without job or salary. The company hopes to take on more funding and reopen the game. While I also hope that happens, I have a family, a mortgage, and many other financial obligations. Waiting around for funding was not an option. Fortunately, we knew some people at Menue Americas, who were looking to add a development team to make a new Facebook game. 7 days after Xeko let us go, 6 of us had new jobs with competitive pay, great benefits, and exciting work. We moved as a functioning team, which has allowed us to produce MUCH faster than a newly formed team could possibly have produced.
While I trust that Xeko’s founders would have treated us fairly, we had taken on several rounds of funding that could have left the decision of how to handle our employment agreements in the hands of investors. The best interest of these investors is to ensure that key employees would be available to resume company operations in the event that new funding was secured. I am fairly certain that folks like our team – CTOs, creative directors, art directors, lead developers, etc, are exactly the sort of people that Amendment 1 would seek to constrain under non-compete agreements. If amendment 1 were in place, I have serious doubts that such a peaceful and quick transition could have been made. Menue might have hesitated to hire us, fearing that Xeko’s investors would invoke their non-compete rights. If they did hire us, they could have been tied up in legal disputes for months for the crime of hiring people who had lost their jobs.
Simply put, if you are an employee, or ever expect to be an employee, Amendment 1 is very bad for you in that it WILL limit your ability to use the expertise used in one job to find another job. Critics suggest that employees should merely read and negotiate their employment agreements as they enter a job. In the past decade, every single job I have taken has required a non-compete agreement which I have been told is non-negotiable. This is with small companies – imagine trying to tell AT&T, UPS, Turner, etc. that you, as a staff employee, wish to negotiate your non-compete agreement. They’ll tell you to go find another job, and the issue is that under Amendment 1, every company’s lawyers will tell them to construct the most restrictive employment agreements possible and let the courts sort it out. Especially in a time of 10% unemployment (but really any time), people need jobs FAR more than the hiring firms need specific people for specific jobs. There is an imbalance of negotiating power that current Georgia law addresses, while the proposed law leaves employees with very little power.
Consider the 6 of us who needed a job post-Xeko. Imagine that we showed up for work on day 1 and had non-compete agreements thrust at us precluding us from working on games for 2 years after our employment with Menue (they did not, but note that the 1st day of work is typically when this sort of agreement is dumped on an employee). We’re then faced with a choice – extend our period of zero income, or put a major constraint on our future job prospects – most would choose the former, and this does NOT “make Georgia more economically competitive”. Are we to go home and tell our family that we quit the job on the first day because they threw a document at us that we didn’t like, that the next employer is equally likely to throw at us? The lack of enforceable non-competes allowed 6 employees and 1 company to reach a mutually beneficial agreement quickly.
There are cases where the government needs to step in to address power imbalances in the free market. Lawyers and their paranoid advice to companies create a power imbalance in employment that Georgia’s government has, to this point, addressed. This misleading amendment throws employees to the wolves, where employees will not be able to accept most interesting jobs without compromising their future employability. This amendment asks voters to vote themselves into handcuffs. There is no evidence suggesting that Georgia’s economic competitiveness has been harmed. Newell-Rubbermaid and NCR moved here quite recently, and there’s little evidence that our existing Fortune 500 companies are looking for an escape route because non-competes are harming their business. There is plenty of research and obvious logical evidence that this will harm early-stage technology firms in Georgia.
Please strongly consider voting “No” on Georgia’s amendment 1.
Rob's Blog - Technology, Atlanta, Startups and Stuff 