FTC To Vote On Noncompete Ban (axios.com) 96
The Federal Trade Commission is set to vote Tuesday afternoon on a proposal to ban noncompete agreements, which prevent workers from taking positions at competitors for a period of time after they leave a job. From a report: The ban could be a win for workers -- particularly at the low end of the income scale. Critics of these agreements say they stifle innovation and wage growth by restricting workers' ability to take new jobs that pay higher wages or offer some other opportunity. They also make it tougher for employers to hire strong talent, lessening competition.
Some states have laws limiting noncompetes to higher-income folks or banning them altogether -- but most don't. Experts told Axios that the final rule will likely look similar to the draft proposal, which was a broad prohibition on all noncompetes, even for executives. Any final rule is unlikely to take effect for many years -- if ever, as it will surely get tied up in court. The Chamber of Commerce, which opposes the ban, has already said it's ready and willing to file a lawsuit.
Some states have laws limiting noncompetes to higher-income folks or banning them altogether -- but most don't. Experts told Axios that the final rule will likely look similar to the draft proposal, which was a broad prohibition on all noncompetes, even for executives. Any final rule is unlikely to take effect for many years -- if ever, as it will surely get tied up in court. The Chamber of Commerce, which opposes the ban, has already said it's ready and willing to file a lawsuit.
A good idea (Score:5, Insightful)
Re:A good idea (Score:5, Informative)
California restricted non-compete agreements in 1872 and banned them in the 1940s.
The ban is one reason the Silicon Valley phenomenon happened in California. Startups can hire with fewer restrictions, ideas spread faster, and employees are more productive because they can easily move to a better-fitting job.
California does a lot of stupid stuff, but got this right.
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Employees having a greater set of potential employers is more beneficial to them than any kind of laws or regulations that a government could hope to enact.
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While they're at it they should eliminate professional licensing requirements in any but the most safety critical jobs.
More than 1,200 professions are licensed in at least one state, but only 60 are licensed in all states. Eliminating 95% of the licensing requirements would have little negative consequence.
In California, you need a license from the state to make yogurt.
The excessive licensing requirements are often caused by regulatory capture [wikipedia.org]: Incumbents like the requirements because fewer competitors can afford to enter the business.
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My wife would like to become a hairstylist, but the training/education requirement in both states we've lived in is 1-2 years. You can become a paramedic in 1-2 years, why does it take that long to learn how to safely cut and dye hair?
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Take the course and find out ;)
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Wait until you see how little training is required to become a cop.
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For the very reasion you stated. Safety. Do you really want someone hacking away at your hair with a sharp pair of scissors? You have ears, don't you? And that doesn't get into the issue of HOW to cut hair so it looks decent. How do you properly cut a bob? Layering? What do you do with different types of hair (straight, curly, African American, thick, thin, etc)? How do you cut a man's hair
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My wife would like to become a hairstylist, but the training/education requirement in both states we've lived in is 1-2 years. You can become a paramedic in 1-2 years, why does it take that long to learn how to safely cut and dye hair?
You just became acquainted with the concept of "protectionism."
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ANY dairy product made for sale to the public requires licensing, and yearly inspection of the production facilities for safety compliance. Which makes sense, given the number of foodborne illnesses and poisoning concerns that can come from improper processing and sanitation when dairy is involved. This isn't "excessive licensing requirements" in any way, shape or form, no matter how much dishonest lying-ass conservatives try to misframe it.
The yearly license cost is absurdly low, too. Licensure if you're
Re: A good idea (Score:2)
You mean the Founding Fathers didn't think to enshrine in the Constitution my right to make bathtub yogurt? Those communist!
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Who the hell would sign one of them?
Yeh actually I really dont need an answer. People do, for some MYSTIFYING reason.
Folks, if your entitled to a payout as part of leaving a place, dont sign shit, they cant deny you that payout. ESPECIALLY if your retrenched.
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Can't believe how many anti-worker bootlickers there are in this thread!
Non-competes need to be banned 100%, no exceptions, because of how companies use them: even **illegal** non-competes scare other companies from hiring workers covered by them, because they don't want the hassle of fighting it.
It has to be universal.
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Can't believe how many anti-worker bootlickers there are in this thread!
Not a boot licker, just someone who understands a bit about economics.
Non-competes need to be banned 100%, no exceptions, because of how companies use them: even **illegal** non-competes scare other companies from hiring workers covered by them, because they don't want the hassle of fighting it.
Let me ask you this: from Econ 101, what do you expect to be the outcome of this ban? If you say "nothing, other than a lack of non-competes", please try again.
What we should expect is salaries will be lower than otherwise. Think about it: given a choice between two jobs, one with a non-compete and one without, which one would you prefer? Would you demand a higher salary for the job with the non-compete? I sure would. Suppose you're the e
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Let me ask you this: from Econ 101, what do you expect to be the outcome of this ban? If you say "nothing, other than a lack of non-competes", please try again.
What we should expect is salaries will be lower than otherwise
Perhaps if companies are allowed the freedom to offer both competes and non-competes at the same time, there might be a salary difference. However, we're talking about a blanket prohibition across the entire country. I'd expect supply and demand to quickly eliminate all effects from the transition to outlaw non-competes.
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Perhaps if companies are allowed the freedom to offer both competes and non-competes at the same time, there might be a salary difference. However, we're talking about a blanket prohibition across the entire country. I'd expect supply and demand to quickly eliminate all effects from the transition to outlaw non-competes.
Yes, we could reasonably expect salaries to settle on a single market-clearing price. The insight is that this price will be lower than the market clearing price should non-competes be allowed. We might have trouble measuring the delta but it's likely to be there somewhere.
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What we should expect is salaries will be lower than otherwise
Wrong. They can do that already, and I'd bet the ones with the non-competes in their employment contracts also have "I'm altering the deal" as standard boiler plate in there as well.
We should also expect higher job turnover
Yep, that's the point. Refuse to pay your employees and guess what? They'll move to greener pastures. They shouldn't be held under wage arrest or threat of lawsuit just to keep the employer's profits up. The whole point of a business is to make a profit despite the challenges of doing so. It was never supposed to be a free lun
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What we should expect is salaries will be lower than otherwise
Wrong. They can do that already, and I'd bet the ones with the non-competes in their employment contracts also have "I'm altering the deal" as standard boiler plate in there as well.
Wait, you're saying you expect contracts to have a clause of the form "when you quit, you can work anywhere you want, unless we decide we don't like it in which case you can't."? As an employee, that's within epsilon of a flat out non-compete clause. You'd have to assume the company will invoke that clause.
Yep, that's the point. Refuse to pay your employees and guess what? They'll move to greener pastures.
We agree that's the point, to enable greater employee mobility. You realize that comes with a cost to the employer, right? Hiring and training workers is expensive, as is the disruption of not having the
Better solutions exist (Score:2, Interesting)
Instead of banning non-compete, just make sure it can't be abused. Something as simple as requiring companies to continue paying the employee their full compensation for the entire non-compete duration (with a 5% increase each year) would prevent abuse. Companies could still use them when it's important enough to protect the company, but no employees get screwed.
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Your solution would effectively ban non competes, since basically no company would consider the price worth it. So why bother with the extra rules? Simplicity is our friend. Corporations are masters of abusing complex rules.
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I'd be happy with a 75% salary after being laid off. If the company feels that non competes are so important that they can hire a large team of lawyers and be willing to pay court costs to retaliate against past workers, they can afford to pay something to the workers directly as a carrot rather than a stick.
Re: Better solutions exist (Score:2)
Most workers would not be happy with that. Low wage workers who have been subject of non compete certainly wouldn't. And in addition, they may need to pay extra for the health benefits they may have lost.
I don't think this us viable at all.
Let workers work.
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In some special circumstances, such a non-compete would be entirely viable.
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Your solution would effectively ban non competes, since basically no company would consider the price worth it.
Is this bad? Non-competes truly make sense only for high-value positions, like CTOs and VPs. And in this case you absolutely can afford to pay them during the non-compete period.
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Yes, it's far from good. If I'm a high-value employee, I want to work, I don't want to just sit around being paid for doing nothing.
Re: Better solutions exist (Score:2)
Indeed. They could demote you with a huge paycut, then terminate you. Took me seconds to think of this loophole.
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Instead of banning non-compete, just make sure it can't be abused.
That is what they are doing. Banning non-competes to ensure they can't be abused.
Something as simple as requiring companies to continue paying the employee their full compensation for the entire non-compete duration (with a 5% increase each year) would prevent abuse
Something as simple as [what you said] isn't as simple as what you just said.
Case in point, your full compensation is now $1/month. One minute later you're fired.
To which you reply "well add to that some rule to not allow that" - or put shorter - "It's not that simple"
No, Ban them. So long as there is some options left to use them legally, they WILL be abused. Period.
A ban will force companies to take into account employee
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Something as simple as [what you said] isn't as simple as what you just said.
Case in point, your full compensation is now $1/month. One minute later you're fired. To which you reply "well add to that some rule to not allow that" - or put shorter - "It's not that simple"
I don't know how this works in America but where I'm from, there already is a rule against changing someone's salary like that: Every salary change requires a contract amendment signed by both the employer and the employee.
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Something as simple as [what you said] isn't as simple as what you just said.
Case in point, your full compensation is now $1/month. One minute later you're fired. To which you reply "well add to that some rule to not allow that" - or put shorter - "It's not that simple"
I don't know how this works in America but where I'm from, there already is a rule against changing someone's salary like that: Every salary change requires a contract amendment signed by both the employer and the employee.
The vast majority of workers in the US have no contract. For most employees companies can make you an offer, then rescind it nine days into your 10 day notice with your current employer. You can be fired for wearing argyle socks, so long as you can't prove that the firing of people who wear argyle socks doesn't disproportionately impact people of a protected class. Companies can absolutely cut your pay without you signing anything, it just can't be retroactive.
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Care to point to a sensible use of them? I can't think of any that isn't about creating an indentured service situation for your employee.
Aka "you work for me or you won't work for anyone".
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Care to point to a sensible use of them?
The California ban on non-competes has an exception, which is probably the only valid reason: If you are a business owner and you sell your business to another company, the contract for that sale can have an enforceable non-compete for you (but not your employees).
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What exactly is sensible about that? You're punishing someone for creating a successful business by disallowing him to compete with the company that was stupid enough to buy it from him.
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No, you misunderstand completely. It's not disallowing anything.
It simply allows someone who is buying a business to negotiate a valid non-compete with the seller. This negotiation would take place at the time of the sale. The seller can refuse to accept the non-compete. They buyer can also refuse to buy without the non-compete.
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I'll sign it without hesitation. Non-competes are illegal in my jurisdiction, and illegal clauses in contracts are void.
Startups around here get hoovered up including the former owners as "consultants". Basically that means you get money for doing nothing, at least as long as you don't try to start a competitor because guess what "consultation" is no longer needed should you try that...
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What if you are quitting because your pay is shit?
let the free market rule (Score:4, Informative)
Re:let the free market rule (Score:5, Interesting)
The HR goon didn't know what to do. He thought they'd just refuse and I'd walk, which I was ready to do. Instead my hiring manager exempted me from that agreement. Years later I found some severe security problems with some IBM software. IBM denied the problem. I responded by showing them a proof of concept exploit. IBM responded by saying that since I was an IBM employee, they owned the code and I could not release it or talk about it. I responded by quitting and releasing it publicly with a lot of data showing the tender bits they were trying to hide. They responded by threatening me with a lawsuit. I responded by aggressively Lawyering up and suing them, instead. They responded by backing WAAAAY off and apologizing (including with a fat check and paying my legal fees) after they found out they didn't have that magic NDA signed (they thought they did because almost everyone signs them).
The moral of the story is to stand your ground, hold your middle finger in the air, and refuse. It'll pay off, even if you miss an opportunity because of your values.
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Once again, corporations want a "free market" for themselves but not a "free market" whereby skills and labour can be mobile.
I'm kind of curious. In places where non-competes are legal, how widely are they used? I've only ever worked in California and have never run into any company which used them, even for employees hired out of state. I do know every company I've worked for has been adamant that bringing confidential information from your previous employer was generally a firing offense.
It does show up as a plot device in Suits but I don't think that's a great guide for understanding the real world.
What I'm wondering is whethe
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It's used almost everywhere in red states even for something as stupid as burger flipper and toilet scrubber. Standard boiler plate in almost any employment contract, and yes it's whole purpose is to effectively chain employees to a specific employer under threat of destitution if they choose otherwise. The reason you don't see it in California is because they banned it within the
Ban them except for executives. (Score:5, Interesting)
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I can see an exception for some sales position as well. It would have to be short term and limited in scope, but I can see barring someone who is in a sales position from going to a direct competitor in a small market where they would be able to take their clients with them. It would be maybe 3-6 months, limited by location (say 100 mile radius), and have to be a direct competitor in the same markey, but I wouldn't have an issue with something like that.
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I expect taking a client list from one company to another is illegal even without a noncompete.
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I can see barring someone who is in a sales position from going to a direct competitor in a small market where they would be able to take their clients with them
They don't exactly need a no-compete for that; they really need a broad no-solicit listing everyone who would be in the sales' peoples contact list.
As for future business prospects in the area; the company has not yet paid the Sales person to sell to them, especially not in companies where the Sales folk are paid on mostly commission, eg 25% p
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Maybe, but then you need to define an "executive", otherwise they will make everyone an executive.
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Now, how about forced binding arbitration (Score:3)
Just about every company requires you to sign, as a condition of employment, an agreement that if you have a dispute with the company, you will submit to binding arbitration, with an arbitrator of the company's choosing. This effectively makes it impossible to sue an employer for misconduct. Binding arbitration needs to go.
REQUIRE PAPER!! (Score:1)
Digital contracts and click to sign must be banned from employment contracts!
You can't amend them by pen before signing them and you can't sneak in amendments either and the process can be so bad that you can't even find a way to continue the process and the HR drone doesn't know how to do anything flexible making it a take it or leave it situation right upfront before negotiation could even happen!
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you can't sneak in amendments either
If you "sneak" amendments into an agreement, arguably said agreement would be invalid because you were duplicitous which prevented a meeting of the minds.
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The way they sneak in is that they send an email to everyone employed saying hand book has been updated.
Please read and click accept by EoW or you will be fired.
Re: REQUIRE PAPER!! (Score:2)
In that case no agreement longer than a couple pages should be enforceable since it's arduous to comprehend the full import if you are not a lawyer.
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YOU TOTALLY CAN "SNEAK" IN AMENDMENTS! LEGALLY!
It is their responsibility to review the documents you sign to see if you amended them and reject them if your changes are not acceptable. It's not dishonest as it is openly done and documented; better than what they do to you having lawyers craft up sentences of almost foreign language legal tactics you unwittingly agree to. If you had a lawyer review the things the contract negotiation process would result in you rarely ever being hired.
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Also illegal in Europe.
Can you see why I laugh in the face of the US embassy employers whenever I renew my visitation visa when they tell me I can't work in the US? Who in his sane mind would want to work there when you have a cushy job in the EU?
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I know you Europeans look down your noses at us US workers. Yes, we have our issues, but so do you. They are just different issues.
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So what may be my issues?
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Oh really, you're going to play the ignorance card? You're going to tell me there are no employment issues in Europe? Maybe you haven't been paying attention.
It wasn't hard to find reports of EU worker discontent.
https://www.euronews.com/busin... [euronews.com]
https://www.aa.com.tr/en/europ... [aa.com.tr]
https://www.euronews.com/trave... [euronews.com]
https://apnews.com/article/eur... [apnews.com]
https://www.reuters.com/world/... [reuters.com]
https://www.nbcnews.com/now/vi... [nbcnews.com]
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Yeah, there's a lot of lamenting, but face it, it's tantamount to complaining that the Beef Wellington isn't exactly medium on point where everyone around you is starving to death.
Compared to the problems you face, we're actually, I hate to say it, pretty well off.
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Just as you don't see your EU problems as serious, I don't see our US problems as serious. There are plenty of opportunities and plenty of good jobs. Most of us never encounter situations where we have the need to resolve a serious dispute that is subject to the binding arbitration agreement. Most of us like our coworkers and get along reasonably well. Most of us don't work unreasonable hours and aren't subject to abuse.
So it's perspective.
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You don't consider it serious that you're essentially indentured servants of corporations and that they can easily circumvent due process and force you into settling on their terms?
O... kay...
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Your statement is not true. There is this little thing called competition. In a tight labor market, companies have to be very careful what conditions they can mandate, or risk losing people. So while the government doesn't tie their hands in this regard, the free market does.
For example, there's a move right now towards hybrid work. I personally want fully remote work. This is not a problem, there are still plenty of companies that embrace fully remote work, I have no problem finding work that meets the con
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C'mon. Please. When has the free market ever tied the hands of corporations? If that ever happens (and yes, there is indeed that nonzero chance that we're heading into an employer market, at least in some fields), rest assured that the game will be rigged some more in your disadvantage.
The only reason that corporations were fine with government letting "the market" sort it out was that until now, they had you by the balls. Let's wait what's gonna happen should this change.
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How about you consider that you're not in the US workforce, so you haven't experienced it first hand. In this country at least, if you have a good boss, you have a good job, if you have a bad boss, you have a bad job, regardless of your employer. There's a saying, "People join a company, but leave their boss." One's boss is far greater a factor in how someone views their job, than the company.
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I have experienced it first hand. Never again.
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This effectively makes it impossible to sue an employer for misconduct. Binding arbitration needs to go.
Erm.. This arbitration crap is not some long-standing standard. It's a new exploitive trend that is currently affecting about half of US employees.
They can require arbitration of contractual issues, but in case the employer breaks the law -- having a binding arbitration clause puts them in the DOL crosshairs [dol.gov].. Or so they say
We vigorously prosecute violations at workplaces where workers are bound by
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It's a new exploitive trend that is currently affecting about half of US employees.*
*And an even higher percentage of consumers.
How does the FTC have this authority? (Score:3)
I wonder how this will be enforceable in individual states against entities that aren't engaged in interstate commerce.
Who cares? (Score:2)
I would gladly let them do it. It's time that indentured service clause practice stops.
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I wonder how this will be enforceable in individual states against entities that aren't engaged in interstate commerce.
The courts have ruled that effectively ALL commerce is interstate commerce. Which is another problem, while we're at it...
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The reach of interstate commerce is much broader than many think.
Famous case Katzenbach v McClung (1964)
https://www.oyez.org/cases/196... [oyez.org]
Restaurant required to abide by federal regulations because they were part of interstate commerce (think the food that they received to prepare for clients, where the equipment they cooked and served the food on, where the employees and clients came from and where they went, it is a long list of ways that one can become part of interstate commerce)
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Or how about the earlier Wickard v. Filburn?
https://www.oyez.org/cases/194... [oyez.org]
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note that the pendulum has swung back.
Note, for example, the 2000 Morrison case, in which the USSC choked on the notion that a violent act a woman was inherently intra-state act.
While the overreach of the Commerce Clause still needs to be reined in, it doesn't (over) extend nearly as far as it used to.
hawk, esq.
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Given the current makeup of SCOTUS, I am not sure selling interstate roadsigns on a bus that is currently on an interstate in the process of crossing a state line would be considered interstate commerce. But I suspect that in the future we will look back at pretty much everything this current group decides and respond with a collective WTF!?!
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If an activity affects interstate commerce, then that activity is potentially subject to regulation by congress.
Unfair Business Competition, Antitrust, etc, are federal issues. It doesn't matter if the company does not engage in any interstate commerce directly - it would still be subject to these laws.
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They don't - something like this needs an Act or Congress.
SCOTUS made up some BS "Chevron Deference" in the 80's which has been abused like this since.
The current /Maine Fisheries/ case should dissolve Chevron deference.
We may like the FTC proposal on this one but with that kind of power and no representation it's only counting the days until they do something we absolutely detest. And then there's no effective recourse.
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The only thing that could possibly be stupider and worse is they went and made the existing contracts void so they are now creating law that apply retroactively.
that said states do need to implement laws preventing them from being allowed except on people making 4-5x average salary.
F1 & Gardening Leave (Score:3)
In Formula One whenever a significant individual leaves for another team, they have to take a 'gardening leave' where their original team will continue to pay them during this gap period to ensure that the team's design secrets will be outdated by the time they join the new team. I'm not sure if this is strictly a written policy or just and understanding between all teams.
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I think you have misunderstood "gardening leave". Most Formula One employees are in the UK, so it's UK law. In general non-competes haven't traditionally been used in the UK, but this seems to have changed in recent years.
However, a one-month or longer notice period has been common in the UK. It was quite typical for employees to give a one-month notice and their employer telling them to to stay home for that month. That's gardening leave.
Gardening leave was usually only required when moving to a competitor
About time (Score:3)
They have been illegal in most of Europe for a long time now. The worst a company can try here is to get you to pay back training costs (if training was within the last 3 years) and some try to squeeze a "pay us big bucks if you dare to quit and work somewhere else" clause in, so far nobody dared to try to take this to court (to my knowledge at least).
The adhesive contracts that are possible in the US are a joke.
Idea: Selective noncompete clause (Score:2)
Were I to have influence over a company's policy on that topic, I'd propose a selective noncompete clause: the noncompete clause limits employees from migrating to relevant companies, but only if the companies have noncompete clauses that would prevent the reverse direction. Tit for tat.
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I'd propose a selective noncompete clause: the noncompete clause limits employees from migrating to relevant companies, but only if the companies have noncompete clauses that would prevent the reverse direction. Tit for tat.
We know what would happen in that case: non-competes all around. A few years ago, a bunch of companies in the SF Bay Area (such as Apple, Google, Adobe, etc.) were sued because they had agreements to not hire from each other.
sue city (Score:2)
With the non-compete clauses, it is not only the individual who gets sued, but also their new employer. The clause is a poison pill.
jimmy john's tryed this for low wage fast food and (Score:2)
jimmy john's tryed this for low wage fast food and they smacked in the jimmy by the state!
Reality Check (Score:2)
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Unfortunately, it will play out on the courts for years
Non-competes (Score:2)
If a company isn't paying you well into or higher than six-figures they have no business giving you a non-compete. That should be strongly outlawed.
non-competes (Score:1)
It's a safe bet... (Score:2)
...that if the US Chamber dislikes something then it's a good thing for individuals and small businesses.
Finally (Score:2)