Friday, January 6, 2023

Feds Want to Ban Non-Compete Clauses

Will rule free Mike Land's barbers? 

The Federal Trade Commission is interested in banning non-compete clauses - all of them.  The FTC posted on its website yesterday: 

About one in five American workers—approximately 30 million people—are bound by a non-compete clause and are thus restricted from pursuing better employment opportunities. A non-compete clause is a contractual term between an employer and a worker that blocks the worker from working for a competing employer, or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends. Because non-compete clauses prevent workers from leaving jobs and decrease competition for workers, they lower wages for both workers who are subject to them as well as workers who are not. Non-compete clauses also prevent new businesses from forming, stifling entrepreneurship, and prevent novel innovation which would otherwise occur when workers are able to broadly share their ideas.  The Federal Trade Commission proposes preventing employers from entering into non-compete clauses with workers and requiring employers to rescind existing non-compete clauses. The Commission estimates that the proposed rule would increase American workers’ earnings between $250 billion and $296 billion per year. The Commission is asking for the public’s opinion on its proposal to declare that non-compete clauses are an unfair method of competition, and on the possible alternatives to this rule that the Commission has proposed.   

The proposed rule is posted here.  

Some highlights of the proposed rule are: 

* It is unfair method of competition for an employer to require a worker to enter into a non-compete clause. 

* All such clauses must be rescinded by the compliance date. 

* Notice of the recession must be provided to the worker as well as past workers still covered by the non-compete clause. 

* The proposed rule does NOT apply to sales of businesses. (910.3)

* The proposed rule supersedes any conflicting state laws. 

* Compliance date is 180 days after publication of the final rule

* The public has 60 days to submit a comment on the proposed rule



48 comments:

Anonymous said...

Woke Progressives will ruin this country from within.

Anonymous said...

Maybe football should have this clause...

Anonymous said...

Amen 9:25

Anonymous said...

9:25 AM
Want to explain how a non compete is "progressive"? If anything this is anti-competitive.

Anonymous said...

I'm conservative. Getting rid of a non-compete clause has nothing to do with being woke. Shamefully, a lot of so-called "free market" conservatives still support non-competes because their wealthy "conservative" donors want to limit salaries of their employees so they can line their pockets with another million or two each year. Most of these business owners like to hide under some "proprietary" knowledge pretending like a competitor doesn't already have the same knowledge in this day in time. There is nothing that Bank A is doing that Bank B isn't already doing, but the banks just want you stay their and put up with their measly 2-3% annual raises when you can jump around and get 10% or more raises. Businesses want to force "loyalty" by garbage non-compete clauses but don't practice "loyalty" by firing you for no reason at all.

Kingfish said...

Any man who has to say I am a conservative is no conservative.

Anonymous said...

@9:25 and @9:43, getting rid of non-competes is Capitalism at its peak. Aren't we in favor of letting the market handle it?

Anonymous said...

This really isn't a conservative v. liberal issue. There are valid reasons for non-competes, but they are badly abused to the point we're probably better off with out them. Non-solicitation agreements and non-disclosure agreements can cover employers' legitimate needs. ThHey are just harder to effectively enforce.

Anonymous said...

This is a nuanced issue, not black and white. freedom of contract is a cornerstone of our society. And courts do a pretty good job of deciding when they're not enforceable. If you don't like it, don't sign it

That said, as an employee I would never sign one or want it enforced against me. And as an employer, I'd need a good reason for needing one. And if I have a good reason, I want it enforced.

This is a slippery slope. We seem to have more and more of those these days.

Anonymous said...

Getting rid of non-competes is the antithesis of fairness. In most cases, they are to protect intellectual property, which includes inventions, patents, processes, and customers. A company invests and develops a competitive advantage, and an employee takes this knowledge to another firm or sets-up shop. It's capitalism based on socialism (see: People's Republic of China).

Anonymous said...

Amen 10:29.

Anonymous said...

I once worked under a non-compete due to the fact that my few hours of training "constituted a valuable trade secret."

Is Mike Land claiming he has a valuable trade secret that the millions of others hair snippers in the world haven't figured out?

I don't know Mike Land other than to watch him coach ten year old recreation league baseball years ago. Anyone who cheats in ten year old rec ball is not to be trusted.

Anonymous said...

"Any man who has to say I am a conservative is no conservative."

Ah, are you one of those crappy employers who likes to limit competition while pretending to be a free market capitalist?

Anonymous said...

"I once worked under a non-compete due to the fact that my few hours of training "constituted a valuable trade secret.""

Exactly, it's abused and it is why it needs to go. Sure, if you invent a new drug that cures cancer, you don't want your employee to run off to your competitor with the secret but there are other legal recourses to remedy that situation than a non-compete.

Anonymous said...

10:40, you still have patents and copyrights to protect intellectual property. Non-competes are anti-competition and 95% of them are abusive. I can see maybe binding a CEO or other executives. But not rank and file. There are far too many rank and file employees being bullied or tricked into signing non-competes.

Anonymous said...

My wife got laid off by a big pharma company in 2015 and they tried to enforce a 6-month non-compete after laying her off. It was ludicrous.

Anonymous said...

Non-competes are fundamentally unenforceable unless damage can be shown (no harm, no foul) to show standing. Despite this it is an intimidation tactic and needs to go.

Anonymous said...

I’m the mind of a simpleton, anything they think they’re not supposed to like is labeled “woke progressive.” That’s the extent of the “thought.”

Anonymous said...

11:28 - 10:40 here.

In my experience, they've been used for two primary reasons: 1) Employees that have the potential to leave the business and take a large client or client based with them, and 2) employees that have been heavily engaged in technology development and have the ability to replicate this somewhere else by designing around the constraints of the patent. This is of particular concern in the chemicals and pharmaceutical industries, where the patent will give ranges of chemical contents to conceal the details, but the chemists know the specifics to the secret sauce.

Anonymous said...

@10:40 you don't have a clue what you are talking about

Anonymous said...

I am so sick and tired of hearing from morons about conservative v liberal. This so overplayed and truthfully makes everyone that uses those monikers look dumb as hell. Discuss issues don't just call names. That is stupidity of where our political system finds itself! Come on morons, let's change.

Anonymous said...

After a takeover, Gulf and Western enforced the non-compete clauses of everyone they "laid off" or fired. It's the rank and file employees hurt the most and even executives knew they didn't have the legal resources to fight Gulf and Western.
Just because this came during a Democratic administration doesn't mean it's bad. It may just mean there are now enough examples of abuse to prove the change is overdue.

Anonymous said...

Non-compete clauses are standard parts of contracts now for most nurse practitioners. TrustCare requires NP's that are either fired or leave on their own to not practice in any facility within 10 miles of another Trustcare location. That to me is too restrictive when general nurse practitioners hold no trade secrets or intellectual property relating to the business.

Anonymous said...

My problem with this isn't the policy - plenty can debate the merits on both sides. It is that this is being decided by the FTC. Policy decisions like this should be decided by the legislative branch which has unfortunately delegated too much power to the executive.

Anonymous said...

10:40 AM
A Non-Disclosure Agreement would cover intellectual property concerns. Not handcuffing someone to a job. You would know that if you mere marginally aware.

Anonymous said...

Has anyone ever met an semi-intelligent person who claimed everything was woke, Marxist, or socialist. Me neither.

Anonymous said...

Along with 1:55 pm, I find this a ridiculous policy to be implemented by a Commission.

Apart from 1:55, I'm not sure this is a federally appropriate issue - why should the government intervene in private business decisions between employers and employees such as this?

You don't want to have a non-commpete clause - don't go to work for that employer. Fairly simple. If the employer needs your services enough, they can do away with their non-compete policy.

Not the role of government to intervene - but because we have a government now that has ignored that basic constitutional provision, it certainly should be relegated to the legislative branch to pass a statute establishing the role, not a bunch of appointed commissioners.

Anonymous said...

Millions of American fast food and chain restaurant workers have non-competes?

That's your freedum to contract on steroids!!!

Anonymous said...

"Trade Secrets':

The fries have to be served hot!

Clean the grease hood like the operating manual says and how to do it!!

Our special sauce is so special it's a secret!

Anonymous said...

"Policy decisions like this should be decided by the legislative branch which has unfortunately delegated too much power to the executive."

Here here!

Anonymous said...

Non competes are for companies who have very little to offer employees and realize that they will lose employees quickly to their competitors. If a company pay and treats their employees well then they have little to worry about. If any barber challenged Mike
In their non compete they would win in Mississippi. Unfortunately not enough people have money to challenge these. I had one and was threatened with enforcement but in the end they went away.

Anonymous said...

So now you can build up a good business, sell it and make your fortune, and go open another one across the street exactly like the one you just sold, and put the guy you sold your first business to out of business. That seems fair. Liberals think about 2 seconds into the future, and that's it.

Anonymous said...

The legislative branch has been bought by those with the deepest pockets. Expecting them to do what’s best for the
American worker is a pipe dream.

Anonymous said...

@ 2:02 PM

Bullshit. NDAs are toothless, and at best helpful for due diligence and discovery purposes. Spend some time at a real company in the private sector.

Anonymous said...

This is a business vs employee issue. It's absurd wokism. How many contracts are out there with non-competes in them because the owners of the business invested time, money and resources to train people. The libs don't see that as a protectable right of the business to keep those people it trained at its expense from stepping out and competing. Want to compete? Fine, just move to another market.

Anonymous said...

Like or dislike them, noncompete clauses should be a matter of state law. The FTC is overreaching here. Not all noncompete clauses are bad. There are legitimate Interests, especially when an employee has access to proprietary information or the employer has made substantial investment in training a specialized employee. But boiler plate noncompete clauses are an overreach by employers, and should be against public policy. A one size fits all rule is a bad idea. And it really should be a matter of state law, not by fiat by Washington bureaucrats.

Kingfish said...

5:45: Try reading the whole post.

Anonymous said...

I have not been keeping up. What does Mike Land have to do with this ?

Anonymous said...

Non compete clauses used to be outrageous. Lawyers have learned to temper the scope and many today are reasonable. But, I generally dislike them and suspect the marketplace will be fine without them. We will still have non disclosure agreements which will generate more fun for lawyers once non competes are gone.
RMQ

Anonymous said...

I know a barber shop on Hoy Road in Madison who has his barbers sign non-competes.

He claims he is called by God to do so.

Anonymous said...

The Supreme Court ruled against the EPA for overstepping its statutory authority. Not sure if this falls into that category with the FTC or not, but it should. As others mentioned, this should be a legislative responsibility. Whether or not they would/could act on this is moot.

Anonymous said...

6:52 PM
By that logic so are non competes. I work in private sector.

Anonymous said...

6:52 PM
By that logic so are non competes. I work in private sector.

5:45 PM
That's exactly what the creator of McAllister and Newks did.

Anonymous said...

Non compete agreements are are designed by businesses to limit competition. They enable companies to exercise undue control over their employees. They are anti free market. I almost always vehemently disagree with Democrats, but this idea has merit that is good for our economy.

Federal government has this authority under the commerce clause.

Anonymous said...

Non-Complete agreements are necessary for specific circumstances, and should not be banned because some businesses (and their legal council) abuse their application.

The FTC needs to leave it alone and let the states handle it.

Anonymous said...

States rights! (Except when the states don’t do what we want)

This is for the legislators! (As long as we own most of them)

Employees are free to contact! (As long as they can’t bargain collectively with equal bargaining power)

Anonymous said...

So, a branch of the Federal Government decides it's best to disband a long-time legal practice. And it thinks it has that authority.

Notwithstanding the fact that this is over-reach and not with the authority-scope of the agency to do so....reckon it would apply to federal employees who leave jobs and decide to become lobbyists and certain other currently illegal practices?

Next up: If you leave the military with an Air Force retirement, you cannot become a FedEx pilot making north of 300k per year. Even though this example is the converse of the proposal.

Fuck-it with government control of peoples' lives and decisions.

Anonymous said...

Again...Heavy on the censorship-radar today. Kingfish knows nothing about this subject but has the authority to censor those who do. He's never held a real job, never worked on a contract basis and has zero knowledge of the realities or pitfalls of such.

However...carry on anyway.



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