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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

#21

Post by sozin »

leoc wrote: post #11
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.

This is correct — very common practice in trading (I am currently sitting out one now!).

Generally they are 3-12 months in duration, although recently we are seeing much longer ones (24 months) from firms such as Citadel.

You generally draw full base salary, and healthcare comes from COBRA.

US-wide ban of non competes is good for hiring firms (they get the talent immediately), bad (allegedly) for firms from whom the talent is leaving, and mixed for the workers themselves (for whom the garden leave can be sometimes received as a paid sabbatical). It will be a really big change.

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

#23

Post by Longlius »

epicureanideal wrote: post #13

What changed to get the politicians on board with this?

Non-competes have positively flourished in the tight labor market. I know a guy who works in PR who moved across the country to work for a company serving a completely different industry who dealt with aggressive emails from his former employer's legal team about enforcing the non-compete he signed.

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

#24

Post by runarberg »

epicureanideal wrote: post #13

What changed to get the politicians on board with this?

Probably lobby money.

A new congress that hasn’t received as many gifts from the powers that want to keep this. And probably the proportion of upper management of the FTC that has gotten such gifts is getting lower (or the gifts are getting weaker).

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

#25

Post by Retric »

granzymes wrote: post #10

Banning (most) non-competes is likely good policy, particularly agreements that do not provide for payment during the period of enforcement. But you also have to ask whether the FTC is the right part of government to make this decision. The States have 50 different approaches written into their laws on how to deal with non-competes. Some ban them entirely, while others curtail their scope or shift the burden to emplo…

Non competes have a direct impact on interstate commerce so the Federal government has a clear mandate from the constitution.

Non competes are rarely enforceable as written, so the FTC has a clear mandate from both the unfair and deceptive standpoint.

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

#26

Post by ghaff »

sozin wrote: post #21
leoc wrote: post #11

Earlier quoted context omitted.

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.

This is correct — very common practice in trading (I am currently sitting out one now!). Generally they are 3-12 months in duration, although recently we are seeing much longer ones (24 months) from firms such as Citadel. You generally draw full base salary, and healthcare comes from COBRA. US-wide ban of non competes is good for hiring firms (they get the talent immediately), bad (allegedly) for firms from whom the…

And you highlight how allowing non-competes with garden leave is a mixed bag. If someone's fine with taking a year or two off while getting some fraction of the total compensation they were getting previously, I suppose it can look like a good deal. But that would be pretty unsatisfactory for a lot of people mid-career with kids in college.

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

#29

Post by blendergeek »

toomuchtodo wrote: post #5
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…

https://www.ftc.gov/news-events/news/press-releases/2023/01/... https://www.whitehouse.gov/briefing-room/presidential-action... https://mattstoller.substack.com/p/antitrust-enforcers-to-ba... https://www.nytimes.com/2023/01/09/opinion/linakhan-ftc-nonc... https://threadreaderapp.com/thread/1611025895388577792.html

I would prefer that those things would be mentioned _in the article_.

As it stands, I came away from the article not having been enlightened on any of the topics you just linked.

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

#30

Post by lotsofpulp »

candiddevmike wrote: post #20
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.

Requiring employers to allow employees to sell their labor to whoever they want is a good thing, in my opinion.
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