The development of a thriving high-technology sector in Hawaii has been long on promise, short on results. Those who want to increase technology’s tiny share of Hawaii’s economy bemoan the difficulty in hiring and keeping qualified employees. So does the state Department of Education, which is struggling to fill positions in its Office of Information Technology Services.
State lawmakers are considering two bills that take a modest step in the right direction. House Bill 1090 and Senate Bill 1279 would restrict the ability of technology companies to insert "noncompete" clauses into employment contracts. The House bill would prohibit them, while the Senate bill would restrict them to one year. They deserve support as they move through the Legislature.
Noncompete clauses are fairly common in the technology sector. Employers keen on protecting trade secrets and their competitive advantage often require their highly trained workers to sign contracts forbidding them from taking another job in the same geographic area or with another company in the similar line of business for a period of time. In the highly competitive tech industry, employers legitimately fear their substantial investments in talent and research can be lost to competitors poaching their best employees.
Even so, noncompete covenants can unreasonably restrict the ability of skilled tech professionals to practice their trade and advance their careers. Employers don’t have to worry so much about their workers leaving for greener pastures, so work conditions and pay need not be truly competitive. Those who do change jobs may find themselves unable to work in their field of expertise for a year or more, even if other businesses are eager to hire them. And in the fast-changing world of technology, sitting out a year or so can be crippling to a tech professional’s career.
Furthermore, there’s evidence that noncompete covenants can be bad for business. A 2010 study by researchers at Yale University and Brock University concluded that "enforcement of non-compete clauses significantly impedes entrepreneurship and employment growth." They found that states that impose restrictions on noncompete covenants fare better in regards to the number of patents, number of business starts and employment than those states that enforce noncompetes. California, for example, does not recognize noncompete clauses except in rare cases. Still, Silicon Valley thrives.
And HB 1090 and SB 1279 would not strip employers of their ability to defend their trade secrets, which remain protected by state statute and the federal Uniform Trade Secrets Act.
The goal of a low-impact, high-paying industry that will lessen Hawaii’s economic dependence on tourism and the military remains mostly aspirational. In 2011, the state’s technology sector accounted for only about 3 percent of all civilian jobs in Hawaii. A new study by the Brookings Institution ranked Hawaii dead last, behind all other states and Washington, D.C., for its overall advanced tech industry presence.
Raising those numbers has been difficult, and it’s not for lack of trying. The state offered technology tax credits. It created the High Technology Development Corp. to help private companies get established and thrive. Schools aggressively promote robotics and STEM (science, technology, engineering and mathematics) education.
HB 1090 and SB 1279 won’t create a Silicon Valley in Hawaii. But they could help agencies like the public DOE, which supports HB1090, find and hire skilled tech workers. And the bills would allow the state’s small, entrepreneurial technology sector to be more nimble and give innovative start-ups and those who want to work for them a better chance to grow — and compete.
Inga Gibson, left, is Hawaii senior director for The Humane Society of the United States; Marjorie Ziegler is executive director of the Conservation Council for Hawaii; John F. Calvelli is executive vice president/public affairs for the Wildlife Conservation Society.