The Federal Trade Commission narrowly voted Tuesday to ban nearly all noncompetes, employment agreements that typically prevent workers from joining competing businesses or launching ones of their own.
I've had places try to make me sign a non-compete agreement as a chef. I straight up told them that their agreement wasn't even useful as toilet paper. Signed anyway, and worked for them for a few months, then moved on to a better paying job.
100%. These non-competes essentially lock employees in to their existing employer, unless they want to find a job in a completely unrelated sector (and likely take a massive payout, which, especially these days, is near financial suicide). This will have enormous ramifications for companies with toxic culture, as now people don't have to put up with their crap. This allows for freedom of economic mobility, and more control of one's own life.
I disagree. If you're in a place in life to take a position requiring a non-compete, you probably already knew it was unenforceable. We're not talking teens with their first jobs here.
OTOH, I strongly agree that this is a great thing for workers. Really can't believe it happened!
When places talk about how they’ll be “the next Silicon Valley” this is one of the reasons none of them have actually managed it. In CA people in many cases can take a good idea that their employer doesn’t want and do something with it themselves. In most other places it will get so tied up in non competes that it’s not worth the effort to even try.
And it’s not just tech, here in Colorado we recently had a restaurant try and shut down another restaurant simply because the newer place’s chef had worked at the older place. They settled but it’s so entirely ridiculous that it could have even started court proceedings in the first place.
Forget ideas, just normal worker mobility. A couple of years ago I switched jobs.
The old company had gotten bought by a conglomerate and they were milking the product line by stopping development, stopping raises, and letting attrition do its thing. Time to leave. One of my peers found a great company still investing in their products and jumped ship. Me too. However we both had noncompetes specifically prohibiting “poaching”, so could we even talk to co-workers? Everyone lost because of this noncompete. New company missed out on potential new hires, co-workers missed a potential opportunity, and even old company attrited slower than otherwise so less profit
This is a classic case of noncompetes blocking worker mobility, hurting everyone
I’m going to go against the crowd and say that while I think it’s a good move to make it official non competes were effectively already declared unenforceable via the court system. It’s rarely used for the average worker unless something truly fucky was going on and the courts would usually side with the employee no matter what unless something truly fucky was going on.
Even if unenforceable, they likely had a huge chilling effect. Most people understandably prefer not risking going to court, even if they're in the right.
The threat of lawsuit is usually enough to get an employment offer rescinded. It's rare for a company to want to take on a legal defense just to hire someone new. Even though they weren't actually legally binding, non-competes still limited options for a lot of people.
Overall I agree with you that this isn't as big of a deal as people make it sound, but it's easy underestimate their influence if only looking at the result of cases that go to trial. In many situations, the damage is done well before a case can go to trial.
Is this a big deal in terms of allowing people to more easily quit their jobs and take new ones? Yes.
Is this a big deal in terms of boosting innovation and economic productivity by allowing ideas to move more freely between businesses? Maybe.
Is this a big deal in terms of harming businesses or causing radical shakeups at businesses? No. States like California already ban non competes as do most western countries, companies just keep on going, truly proprietary innovations are already going to be covered by NDAs.
What gets me is how controversial things like this are in the US. Non-competes are antisocial, because they blunt one of the few mechanisms capitalism has to keep employers in check -- labor market mobility. One of the things that's supposed to make capitalism kind of okay is the fact that "if you don't like it, you can go elsewhere." Well, if you're not allowed to start a business or get another job in your line of work for like years after you leave, how the hell are you supposed to actually do that? How does the labor market route around bad employers when workers are literally trapped?
Way I see it, a non-compete is just an employer's way of telling you they'd keep you trapped in a box in your off-hours if they could.
My country has non-competes in the most sensible way: if you don't want the employee to go to a competitor, you must pay him what he could earn at the competitor during the duration of the non-compete. Employee quits? He can either join the competitor or you can pay him as long as you want him away from the competitor.
Will employers still put non-applicable non-competes? They sure do and I smile when I see those baseless clauses. Have they tried enforcing them at the "work tribunals" (free for the employee), yes they have and they've been laughed off by the judges.
Is it controversial? The only support I’ve heard for them comes from corps, sleazy executives looking to control their employees. Everyone else is like”meh, clearly unfair and should be illegal but I can’t do anything about it and still have a job”
Unfortunately, there is a strong implication in American culture that your worth as a human being scales directly with your productivity + net worth. Rich people are intelligent and to be admired
Now take all that stuff that you pointed out as bad, and add on the fact that your healthcare typically comes from your employer too!
You probably don’t even need me to tell you that the right wing media in this country would immediately kick into gear and start programming their base to hate the idea of labor market mobility and the market routing around bad employers. Those people ARE the bad employers!
Before long they're going to start floating some modern version of an indenture contract for service workers and arguing for the reinstatement of serfdom.
I remember my last job had a Non compete. I was a handy man. Non competes for NBA players and wealthy CEOs, fine. But non compete for just regular people doing regular jobs is crazy. Once I leave my current job, my ex employer should have no say in where I work afterwards.
That's just so they can treat you like crap and under pay you, so that you can't just go be a handy many somewhere else. If you lived in California it would have already been unenforceable anyway though.
Why is good for athletes and ceos? And is that the specific line that you would draw? NC seems like it benefits corporations and organizations but almost never individuals. Seems better to eliminate all together to me.
It's fine for them because they're being paid tens and hundreds of millions. And they can easily reject the contract and not sign. Don't act like a cleaning lady and an NBA player are in the same boat
Executives make some sense because they made deciding the direction of companies, and can take “unfair advantage”.
Athletes, no. They bring mostly their own talent and effort, and that’s also what they bring to a new team. They are only employable by doing the same thing for someone else, and likely in the same league: literally competing . Non-competes don’t make any more sense for athletes than they do for baristas
This sounds awesome, but I will say that I'm a bit concerned about whether or not the Supreme Court will let this stand. I'm speculating that the Supreme Court may strike it down and say that the FTC doesn't have jurisdiction and that non-compete clauses should be handled by the Department of Labor or something like that. Imo it could fall under either department because the FTC is meant to tackle anti-trust measures, and non-compete clauses could be seen as a form of monopolistic behavior (restricting competition).
At the same time, however, non-competes have to do with labor practices, which is why I could see the Supreme Court saying that it's something the DoL should enforce, and because (afaik at least) the DoL only has the power to enforce legislative regulation, we'd end up back where we started: waiting for Congress to get their shit together and actually do something instead of sitting around and picking fights or virtue signalling.
I hope I'm wrong though. I'd like it if our Supreme Court would let us have nice things every now and then.
What you are talking about is colloquially called Chevron Deference. And yes, it is on the kill list after Roe, Obergefell, and I can only assume Brown v Board ffs.
Not after, before (well maybe after Roe since that's already gone).
Chevron deference is already on the chopping block, and very well might be gone by the end of the current SCOTUS term. And nobody seems to know or care.
Or at least create SCOTUS terms, maybe. Does that do anything? Who could know such things. We need to do something though. The conservative justices aren't legal activists, they are legal evangelicals.
It would come down to exactly what authority has been granted to the FTC by Congress and whether or not this falls under that. And not a broad strokes description, but just what power Congress actually delegated to them and no further. The recent EPA cases are examples of that in action.
Shortly after the vote, the U.S. Chamber of Commerce said it would sue the FTC to block the rule
The US Chamber of Commerce is a right-wing lobbying group for businesses, unrelated to the US Department of Commerce which is an actual government agency.
In some countries this has long been handled by requiring that non-competes are only enforceable if the employer employee keeps on getting paid during the non-compete period.
Want to restrict my freedom of trading my work, pay up!
It's doesn't matter if you want to go to court. Your future employer doesn't want to go to court on behalf of a new hire, so they won't hire you in the first place.
I had a non-compete handed to me when I lived in California. I laughed my ass off and signed it. When I left the dumbass VP of HR threatened me with it.
My response was "Could you pretty please try to enforce it? My lawyer would absolutely love to represent me in court. FYI you know my lawyer. He was the paralegal that told you the non-compete contract wasn't legal. You then screwed him over and got him laid him off. Guess who passed the bar exam 6 months ago!"
I have been told (by my attorney) that arbitration is sometimes more expensive than filing suit. IIRC, the rationale is that arbitration can have very high fees and involve a large number of people. It was in the context of drawing up a boilerplate nda, but it has been awhile and I don't remember the details.
Lol what. That doesn't make any sense. Are you supposed to just sit for 2 years doing nothing unless you're trained on two completely different fields?
And by full wage, it's either the wage you had or the one you could get at the competitor. Otherwise, it's too easy to lock people in at non-competitive salaries.
No, that’s not enough to make it legal. I wouldn’t want to be out of work that long and potential employers would wonder how rusty I was
Yes, compensation needs to be a minimum requirement: isn’t that basic contract law? However contract law also requires that you be in a starting position to bargain or refuse and employees really aren’t: the imbalance of power is too great.
More importantly, things that block the functions of a free market like this really need to be weighed for societal good, fairness, and market efficiency. This fails all three. It also needs to be narrowly defined, because leaving it to legal action is the definition of failing market efficiency
Why not both? Full wages as damages + EU-style fine of maximum between some amount and some % of global turnover. Or fixed amount + % of global turnover.
Would this also apply to a contracting agency that has a noncompete document that had to be signed by their contractor employees?
The noncompete is so that the contracting employee can't end the contract early and then be hired directly by the company they were being contracted to. At least not for at least a year after ending the contract unless the length of the contract was completed in full.
I think so, yes. If you read the actual rule (https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf) it says a noncompete is something against "seeking or accepting work in the United States with a different person". Since you're working in the first part with a contracting agency, and then going to work with a different company, the rule seems applicable here.
I'm not sure why they use "person", but I'm assuming your W-2 or 1099 would have different companies, and the different companies would have different presidents/CEOs/chairmen, so it would objectively be different both in the general legal Romney-style "corporations are people" person and the literal dictionary person.
Not a competitor, but the company you were working at with the contracting agency. Basically trying to stop being a contractor and trying to be hired directly as a colleague.
I think he's asking about temp to hire, the employee being given an offer, but only if they quit and quit looking through the temp to hire agency, then get picked up by the company they were working for (before the 1 year that the temp to hire would be collecting commission on)
But I don't have the foggiest what the answer would be
Isn’t that scenario a dispute between the contracting company and its customer? How is the employee even involved? Contracting company should have a term in their contract with their company how to handle that situation
ive signed one for every job I've ever worked, I think. UK and USA, employment and contractor. And then hopped competitors and to my knowledge no one even so much as raised an eyebrow.
the fact that non competes and NDAs are a thing upon leaving a company is fucking insane to me, seems like blackmail at best and straight illegal at worst.
the fact that non competes and NDAs are a thing upon leaving a company is fucking insane
Non-competes are completely evil. Especially so in fields requiring very specialized skillsets. And even more so when the company insisting on the non-compete lays off people.
How the fuck is someone supposed to keep a roof over their head in a situation like that?
The ban, which will take effect later this year, carves out an exception for existing noncompetes that companies have given their senior executives, on the grounds that these agreements are more likely to have been negotiated. The FTC says employers should not enforce other existing noncompete agreements.
This is amazing! I’ve always had to be under a noncompete even though no one gives a shit about my work. So while no one would probably ever enforce it, I was always worried when switching jobs and now I don’t have to.
NDA is different than noncompete. Two companies sign an NDA so they can work together for example without fear the one or the other will disclose secrete information. Same between two regular folks. Like if I'm working on some plastic gizmo and I need to have a part made, I don't just send it out to any machine shop. I first ask them to sign my NDA so they don't just figure out my part and start selling it under a different name. 99% of the time there's no need, but that 1%, that's when you could be sitting on a goldmine and you end up giving it away for nothing.
Wow that's actually good. So who did this, where'd they put the original people, and how can we replicate the results with every other regulatory body?
*So what's the historical use of these? I can only assume in the past it was used sparingly, then went further and further until the current state of "fuck you employees".
It's not whether or not they've been around, it's how they've been used, how often they've been used, for what positions they've been used, how severely they've been used. Etc.