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FTC intends to ban noncompete clauses that bind 30M US workers

arstechnica.com

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Re: FTC intends to ban noncompete clauses that bind 30M US workers

#11

Post by theRealMe »

tssva wrote: post #9
MrFoof wrote: post #2

Apparently the case that really ticked off the FTC was a security company threatening to try to hit security guards for $100K if they left for a competitor. https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3... Not highly compensated employees. People who were likely making less than $20/hour (possibly under $15/hour) , being threatened to be smacked for $100,000 which would be absolutely life ruining for s…

Jimmy John's used to make the teens that made your sandwiches sign non-competes. It stopped after this became public causing horrible publicity and lawsuits from the New York and Illinois attorney generals.

That is just unjustifiably gross. I get wanting to have noncompetes for people with nonpublic information that could be used to harm the company (note: I said “get” and not “agree”), but to slap a non compete on a close-to-minimum-wage worker whose most secret information is how many pickles to put on a sandwich? Makes my skin crawl.

Re: FTC intends to ban noncompete clauses that bind 30M US workers

#14

Post by pxmpxm »

theRealMe wrote: post #11
tssva wrote: post #9

Earlier quoted context omitted.

Jimmy John's used to make the teens that made your sandwiches sign non-competes. It stopped after this became public causing horrible publicity and lawsuits from the New York and Illinois attorney generals.

That is just unjustifiably gross. I get wanting to have noncompetes for people with nonpublic information that could be used to harm the company (note: I said “get” and not “agree”), but to slap a non compete on a close-to-minimum-wage worker whose most secret information is how many pickles to put on a sandwich? Makes my skin crawl.

Agreed completely - these are clearly anticompetitive in nature, rather than anything to do with protecting company IP.

FTC is probably overdoing this though; I sat out a full year on a compensated noncompete couple years back for a very good reason and the use case is still very much there for industries with sensitive information.

Proscribing noncompetes will make hiring very difficult going forward - one bad hire and your alpha walks out of the door...

Re: FTC intends to ban noncompete clauses that bind 30M US workers

#16

Post by vsskanth »

mxz3000 wrote: post #3
MrFoof wrote: post #2

Apparently the case that really ticked off the FTC was a security company threatening to try to hit security guards for $100K if they left for a competitor. https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3... Not highly compensated employees. People who were likely making less than $20/hour (possibly under $15/hour) , being threatened to be smacked for $100,000 which would be absolutely life ruining for s…

Surely these were never enforceable, but I guess people don't know better. Reducing the asymmetry of knowledge is also key here. To be fair, pay is irrelevant in this context. Abusive non-competes should be banned, whether in the state's or elsewhere.

There's no penalty for drawing up a non-enforceable non-compete to create a chilling effect on the job market.

If a company goes after an individual, they have to pay for lawyer fees to fight it on top of being unable to take up the competing offer. It's a huge burden.

If individuals were awarded massive payouts for companies trying to enforce non-competes that arent enforceable under state law, you'll see this behavior change quick.

Re: FTC intends to ban noncompete clauses that bind 30M US workers

#17

Post by MiddleEndian »

mxz3000 wrote: post #3
MrFoof wrote: post #2

Apparently the case that really ticked off the FTC was a security company threatening to try to hit security guards for $100K if they left for a competitor. https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3... Not highly compensated employees. People who were likely making less than $20/hour (possibly under $15/hour) , being threatened to be smacked for $100,000 which would be absolutely life ruining for s…

Surely these were never enforceable, but I guess people don't know better. Reducing the asymmetry of knowledge is also key here. To be fair, pay is irrelevant in this context. Abusive non-competes should be banned, whether in the state's or elsewhere.

>Surely these were never enforceable, but I guess people don't know better.

Even if the worker knows it's unenforceable, it's still a threat and the worker would have to fight it in court if challenged.

If I walk up to someone half my size in the middle of the day and threaten to beat them up if they don't give me their lunch money, it's still a threat even if that person knows it's illegal and suspects I'm unlikely to actually beat someone up in public.

Re: FTC intends to ban noncompete clauses that bind 30M US workers

#18

Post by subharmonicon »

skywal_l wrote: post #12
subharmonicon wrote: post #4

Hopefully non-solicitation agreements are next.

Aren't they already illegal? (ref to the infamous Jobs/Google email chain).

Within the US, I believe enforcement of non-solicitation agreements is going to be dependent on the state.

A non-solicitation agreement is not strictly the same as collusion between companies to agree to not hire away each other’s employees.

If I sign a non-solicitation agreement, I as an employee cannot move anywhere else and try to hire former coworkers for some period of time.

The scandal that happened among multiple tech firms (not just the ones you mention) was that several companies agreed at the top level not to recruit and/or hire one another’s employees.

Re: FTC intends to ban noncompete clauses that bind 30M US workers

#19

Post by tpankaj »

pxmpxm wrote: post #14
theRealMe wrote: post #11

Earlier quoted context omitted.

That is just unjustifiably gross. I get wanting to have noncompetes for people with nonpublic information that could be used to harm the company (note: I said “get” and not “agree”), but to slap a non compete on a close-to-minimum-wage worker whose most secret information is how many pickles to put on a sandwich? Makes my skin crawl.

Agreed completely - these are clearly anticompetitive in nature, rather than anything to do with protecting company IP. FTC is probably overdoing this though; I sat out a full year on a compensated noncompete couple years back for a very good reason and the use case is still very much there for industries with sensitive information. Proscribing noncompetes will make hiring very difficult going forward - one bad hire…

I think the fear is a bit overblown. California already doesn't allow non-competes as far as I know.
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