Is this as big as it sounds? It sounds big.
18% of all working people in the US are under non-competes. This is a huge deal.
I honestly assumed the number/percentage was higher
Yeah, even hotel housekeepers sign papers saying they cannot quit and go to work for competitors these days.
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.
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.
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!
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.
Well holy shit, when did they grow teeth? ... and balls?
Don't worry. The supreme Court will find a reason that their existence is unconstitutional soon
that their existence is unconstitutional soon
The new rule, or teeth and balls?
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.
If you were as confused by this as I was:
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.
https://en.m.wikipedia.org/wiki/United_States_Chamber_of_Commerce
Incredibly based
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!
Vote went along party lines.
But MuH bOTh SiDeS, right guys?
I always thought non-competes were total bullshit anyways. Like a scare tactic or something. And unenforceable.
Didn't matter and sure doesn't now.
They probably were, but to find out you'd have to go to court, and your average person doesn't want to do that.
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!"
For those not familiar and missing context, California prohibited noncompetes prior to the federal prohibition.
Damn, Lina Khan has been killing it lately.
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.
Edited for clarity
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.
That's exactly what a non-compete is. Your job can no longer stop you from quitting and working for a competitor.
Is this what they make you sign that says
"You can't join any company that is in the same industry or has the same customers for 2 years after leaving the present company"
?
Yes.
Holy shit, I had to sign one for my current job
I've had one in previous contracts. I smirked since they aren't applicable in my country unless they are willing to pay me to vacation.
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.
But what do i know, i just like having rights.
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?
"nearly"? What the fuck, America, they ALL should be banned.
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.
Only exception seems to be preexisting agreements for top execs making more than ~150k yearly and having decisionmaking power.
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.
Fuck yes let's go! I am pumped.
*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".
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?
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.
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