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The FTC plans to curtail the use of non-compete clauses

economist.com

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Re: The FTC plans to curtail the use of non-compete clauses

#11

Post by leoc »

munk-a wrote: post #6

In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests. There is an extreme burden on the employer to prove that there are appropriate jobs available to the former employee that wouldn't violate the non-compete or (and this is much more common for "serious" non-competes in the modern world) provide partial compensation to the employee for the term of…

I'm not an expert, but IIUC the financial industry tends to pay full "garden leave" for employees serving out their noncompete terms https://en.wikipedia.org/wiki/Garden_leave , presumably partly for this reason.

Re: The FTC plans to curtail the use of non-compete clauses

#12

Post by andrewjf »

munk-a wrote: post #6

In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests. There is an extreme burden on the employer to prove that there are appropriate jobs available to the former employee that wouldn't violate the non-compete or (and this is much more common for "serious" non-competes in the modern world) provide partial compensation to the employee for the term of…

> be on the hook for continued compensation at some proportion of the employee's former wage to actually exercise the privilege to deny the employee work in a specific field

Yes. The proportion should be 100%, plus all benefits (401k, health, continued vesting of equity, etc). If you're being denied future employment then the employer can pay for it if it's that important to them. Possibly even more than 100% if they're preventing me from going to a company with a substantial increase in pay.

Re: The FTC plans to curtail the use of non-compete clauses

#14

Post by cma »

andrewjf wrote: post #12
munk-a wrote: post #6

In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests. There is an extreme burden on the employer to prove that there are appropriate jobs available to the former employee that wouldn't violate the non-compete or (and this is much more common for "serious" non-competes in the modern world) provide partial compensation to the employee for the term of…

> be on the hook for continued compensation at some proportion of the employee's former wage to actually exercise the privilege to deny the employee work in a specific field Yes. The proportion should be 100%, plus all benefits (401k, health, continued vesting of equity, etc). If you're being denied future employment then the employer can pay for it if it's that important to them. Possibly even more than 100% if they…

Ultimately that is still very anticompetitive, it just asks for more compensation to the worker but is still paying them to do nothing and hurting competition, a sure sign of a broken system (paying people to do nothing is usually a charged leveled at very broken bureaucracies).

Re: The FTC plans to curtail the use of non-compete clauses

#15

Post by ghaff »

bushbaba wrote: post #2

This would be a big blow to California. One of the reasons I didn’t move to Washington was that my employer was known to sue for breaking the non compete if you headed to a competitor. Being employed in California protected me from said lawsuit.

While I'm all for making non-competes for employees unenforceable in general, I think their role is overplayed notwithstanding your anecdote. Otherwise you'd have a tech industry in Oklahoma and wouldn't have one in Massachusetts, which until fairly recently fully allowed for non-competes. (EMC in particular fought against legislative change but there's now a somewhat weak garden leave requirement--but it at least makes companies put skin in the game.)

Re: The FTC plans to curtail the use of non-compete clauses

#16

Post by andrewjf »

cma wrote: post #14
andrewjf wrote: post #12

Earlier quoted context omitted.

> be on the hook for continued compensation at some proportion of the employee's former wage to actually exercise the privilege to deny the employee work in a specific field Yes. The proportion should be 100%, plus all benefits (401k, health, continued vesting of equity, etc). If you're being denied future employment then the employer can pay for it if it's that important to them. Possibly even more than 100% if they…

Ultimately that is still very anticompetitive, it just asks for more compensation to the worker but is still paying them to do nothing and hurting competition, a sure sign of a broken system (paying people to do nothing is usually a charged leveled at very broken bureaucracies).

For sure - I would like to see non-competes banned outright, of course.

I was just replying to OP for implying that a worker should get a reduced (i.e. proportional) payout for being denied employment at a competitor. The "losing" employer should pay substantially for such a egregious act and the employee should benefit.

Re: The FTC plans to curtail the use of non-compete clauses

#17

Post by 3pt14159 »

neilwilson wrote: post #9

Non-competes should fail under restraint of trade. Always.

No they shouldn't.

For non-classified contexts, they should be properly regulated. For example, there should be a term limit that is something reasonable, like 18 months, and there should be a provision that the duration of their enforcement is paired with ongoing compensation at the same terms as during employment. So if you made $200k cash plus $100k Stock options per year, on the moment your employment contract ends if they want to make you unhirable from their competitors it should cost them ongoing money.

For classified contexts, it should be a longer term for some fields based on national security concerns and ongoing renumeration should not be provided, given it is literally national security. This nonsense where British pilots were training non-allies on UK flight tactics right after leaving the RAF is bananas.

Re: The FTC plans to curtail the use of non-compete clauses

#18

Post by akomtu »

munk-a wrote: post #6

In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests. There is an extreme burden on the employer to prove that there are appropriate jobs available to the former employee that wouldn't violate the non-compete or (and this is much more common for "serious" non-competes in the modern world) provide partial compensation to the employee for the term of…

What courtroom? Such contracts always come with binding arbitration.

Re: The FTC plans to curtail the use of non-compete clauses

#19

Post by _zzaw »

dragonwriter wrote: post #7
blendergeek wrote: post #3

The headline here is deceptive. Nothing in the article mentions any plans by "America's trustbusters to curtail the use of non-compete clauses". Rather, this is a short essay about non-competes, explaining why they are a bad idea. The article ends with a call-to-action: > California, the global hq of disruptive innovation, goes a step further and bans non-competes altogether. The FTC should do the same, on the ground…

> The headline here is deceptive. Nothing in the article mentions any plans by "America's trustbusters to curtail the use of non-compete clauses". Can't even read the whole article because of the paywall, but the part before the “pay for the full article” does mention the FTC has them in their sights. This is an opinion article about the news, not a news article, though, so it focuses on the why its good, not the det…

here ya go https://archive.ph/oOJeb

Re: The FTC plans to curtail the use of non-compete clauses

#20

Post by candiddevmike »

munk-a wrote: post #6

In the instance this change doesn't go through it is important to be aware that non-competes don't survive hardship tests. There is an extreme burden on the employer to prove that there are appropriate jobs available to the former employee that wouldn't violate the non-compete or (and this is much more common for "serious" non-competes in the modern world) provide partial compensation to the employee for the term of…

I'm trying to think of why the powers that be want this too, and the only thing I can think of is to expand their hiring pool/make poaching legal. Maybe I'm too cynical.
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