FTC bans most noncompete agreements between employers and workers
FTC bans most noncompete agreements between employers and workers
The FTC estimates about 30 million people, or one in five American workers, from minimum wage earners to CEOs, are bound by noncompetes. It says the policy change could lead to increased wages totaling nearly $300 billion per year by encouraging people to swap jobs freely.
They’ve been around forever, which is where my pessimism comes from. I’ve personally suffered and even had to pass up a job due to a non-compete. I’m not going to court to prove a point, which means employers have much more power than workers.
While they have been around forever, courts tend to take kindly to the argument that you need to be able to earn a living doing what you are an expert in, and so unless very narrow they tend to be struck down. You need a good lawyer though to get far in court which often makes the fight not worth it.
Differs from state to state. CA for instance has been shooting them down in court left and right--it's such a guaranteed win for you that no company would actually sue you over it.
You need a good lawyer though to get far in court which often makes the fight not worth it.
And that's the point. It keeps lower-wage workers at bay, because a waged worker typically doesn't have the time or resources for a long, drawn out court battle.
Isn't there a pretty universal argument that you cannot prevent a person from earning an income? I've always thought that was the argument that gets these tossed in court. Then again i have zero experience with these and i didn't know anyone who does so shrug
Hopefully it sticks.
The dissenting commissioners, Melissa Holyoak and Andrew Ferguson, argued that the FTC was overstepping the boundaries of its power. Holyoak predicted the ban would be challenged in court and eventually struck down.
This might get voted down, but y'all should hear the counterpoint. My friend requires new hires to sign a NC that expires after 2 years. It basically says the employee may not work for another company using the same equipment unless they pay him the $3000 it costs him to get them certified. Before he did that, some employees would jump to a competitor shortly after completing the training. Now he's wondering if he can make the $3000 an employee loan that will be forgiven after 2 years of employment.
And no, he doesn't do the NC if the new employee was already certified. He just wants to protect his investment in their training.
This change in the law will have consequences in businesses where employees require special certifications or training for a high demand specialty. Will an auto repair shop be willing to train an employee to service EVs if they can't guarantee the employee will remain with the shop?
If your friend paid a competitive wage with the other company using the same equipment, while also providing an equal or better working environment, he would be able to retain the employees, and find an equilibrium for those moving to and from his competitor.
The only reason he would need a contractual limitation is if he was offering worse wages or a worse working environment.
While I sympathize with the potential to get intentionally ripped off for the training class, there’s got to be a better way. I don’t see how you define it well enough to not open it wide for employer scams. Your friend may be honest but what about the fast food place that mandates $3,000 “training” on flipping a burger? You have someone who can’t afford to pay it off so is trapped, but by training that is either unnecessary or currently “free”.
Given the employer has the power and the financial/legal advantage, you have to give this to the employee
I understand there's a lot of abuse, but for some specialties there just aren't enough trained workers. This change is going to make employers think hard about things like diesel mechanic certifications and IT certifications. And like my friend, they'll turn to making workplace loans for the cost.
In the above example, it seems like it would make sense to handle like a sign on bonus. I don't have a noncompete, but there was like a two timeout that was pro-rated on my sign on bonus. Basically if I jumped ship before the two years was up I would owe something to my previous employer but less the closer I got to the two years. Tuition reimbursement worked in a similar way.
2 years is too long IMHO. 1 year, forgiven in a prorated fashion seems far more palatable.
I work in government and an agreement to work for 2 years after the city pays tuition, license renewals, etc or reimburse the city is pretty standard.
This was at least 10 days ago…. Hardly “new”s
No worries. I hadn't heard about it until today, and i thought some other people might be in the same boat.
Here is arstechicnicas writeup, but please spread the word. Oh, and the bastards at the Chamber of Commerce are going to sue. They will lose, but it will cost all of us money.