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FTC announces rule banning noncompetes

ftc.gov

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Re: FTC announces rule banning noncompetes

#191

Post by cryptonector »

MiddleEndian wrote: post #144
cjen wrote: post #24

This seems incredibly important. I know non-compete rules personally held me back at a previous tech job. I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

>I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal. If a company wants to pay someone not to work for a year, they're free to do that whenever they want. Maybe without noncompetes, they'll have to pay more to make it worth it for the guy being paid to sit around!

We'll have to see what the finance industry does. My guess is that they will only make sizeable counter-offers to key employees, and the employees will not be forced to accept them and typically won't. In the long run there might not even be sizeable counter-offers to key employees.

EDIT: Er, the FTC explicitly does not comment on garden leave:

> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.

My guess is that garden leave will be offered, but in right-to-work states there will be no way to enforce that the employee remains employed.

Re: FTC announces rule banning noncompetes

#192

Post by iamthirsty »

cogman10 wrote: post #152
ixwt wrote: post #130

Earlier quoted context omitted.

You're missing the fact that the current Supreme Court has been doing everything they can to kill Chevron Deference.

Yup, this is very much the key to why I think this will be killed. This supreme court is very much on track to eliminate any authority federal agencies have that aren't explicitly written into law. Effectively destroying federal agencies ability to make rules.

> This supreme court is very much on track to eliminate any authority federal agencies have that aren't explicitly written into law. Effectively destroying federal agencies ability to make rules.

Very dramatic. Really, it's a reaction to Federal Agencies — unelected governmental representatives — unilaterally making their own rules out of the gray areas.

Re: FTC announces rule banning noncompetes

#193

Post by cryptonector »

coldpie wrote: post #69
cjen wrote: post #24

This seems incredibly important. I know non-compete rules personally held me back at a previous tech job. I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

> I know non-compete rules personally held me back at a previous tech job. Yeah. Remember this when you go to vote in November. Elections matter.

Is this rule a partisan issue?

Re: FTC announces rule banning noncompetes

#194

Post by kube-system »

mbreese wrote: post #121
relaxing wrote: post #54

Earlier quoted context omitted.

Interstate commerce is broadly recognized to include just about anything.

Where I am, I know people who are under noncompetes that have a geographical clause. You can’t leave to join a competitor within X miles. In my part of the country, that would include at least three states (maybe more), but other locations would include many more. So, yeah, seems like at least those non-competes impacts interstate commerce.

You're conflating two different things.

The reason those geographical clauses are in those contracts is because many states have ruled that non-competes are illegal unless they are limited in some ways to be "reasonable", and one common way states courts measure this is by ensuring that they are limited to something that might be a reasonable 'business area' that the company competes in. Corporate lawyers typically write in the exact radius that state courts have historically enforced into their non-competes to avoid them being disqualified for being too broad.

"Interstate commerce" on the other hand, just means any sort of business activity that crosses state lines. Basically every business engages in interstate commerce, just because commerce requires many interstate activities, like using the internet, or accepting electronic payments, or ordering supplies made in a different state.

Re: FTC announces rule banning noncompetes

#195

Post by jaysinn_420 »

Bostonian wrote: post #124

Banning noncompetes discourages companies from training workers, since they can leave immediately after their training is over. It also impinges on worker freedom. Currently I can apply for jobs with and without noncompetes, and if the job with the noncompete pays substantially more or is more attractive in some other way, I can take it. The FTC rule would deprive me of that choice. I have been hired to write softwar…

You can have training repayment and non-disclosure clauses in contracts, leaving cost recovery and legal remedies for employers.

Takee your investment industry example - a non-compete could prevent you from taking a lucrative position in a competitor of your current employer, doing completely unrelated work like writing software for their settlement system. I would rather have the freedom to choose where I work.

Re: FTC announces rule banning noncompetes

#196

Post by cryptonector »

macintux wrote: post #36
timf wrote: post #26

The U.S. Chamber of Commerce is likely to file suit: https://www.uschamber.com/finance/antitrust/chamber-comments...

I suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.

If the SCOTUS overturns the Chevron doctrine, then this rule and probably all of the FTC's authority is on thin ice until Congress passes an act that says something more substantial and significantly less vague that "unfair business practices".

Re: FTC announces rule banning noncompetes

#197

Post by cryptonector »

zer00eyz wrote: post #99
macintux wrote: post #36

Earlier quoted context omitted.

I suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.

I am not entirely sure. Without anti compete stealing your competitors staff becomes a valid business strategy. Buy up the competitions best people and cripple them. This favors those with the most capital not the least.

> Without anti compete stealing your competitors staff becomes a valid business strategy.

And how would that not be an "unfair business practice"? Vague legal terms are problematic.

Re: FTC announces rule banning noncompetes

#198

Post by lotsofpulp »

cryptonector wrote: post #193
coldpie wrote: post #69

Earlier quoted context omitted.

> I know non-compete rules personally held me back at a previous tech job. Yeah. Remember this when you go to vote in November. Elections matter.

Is this rule a partisan issue?

I have yet to see a Republican led government advance banning of non competes (or really anything that benefits W-2 workers as a whole) in the last 25 years.

Washington (Democrat led), I think, most recently passed a non compete ban for those under a certain salary, but I cannot think of any Republican led states that have advanced such legislation, or espoused views that they want to.

It falls in line with similar worker friendly legislation passed by Democrat led states such as longer family leave, paid sick and family leave, higher unemployment benefits, higher minimum wages and minimum salaries for exempt workers, eliminating non tipped minimum wages, and publishing of salary ranges on job listings.

Edit to respond to below:

Is it partisan in California? If anything, I would have thought the California non compete ban is the most un-partisan issue since it has been in place since 1872, so neither of today's parties would be credited with it.

Re: FTC announces rule banning noncompetes

#199

Post by cryptonector »

lotsofpulp wrote: post #198
cryptonector wrote: post #193

Earlier quoted context omitted.

Is this rule a partisan issue?

I have yet to see a Republican led government advance banning of non competes (or really anything that benefits W-2 workers as a whole) in the last 25 years. Washington (Democrat led), I think, most recently passed a non compete ban for those under a certain salary, but I cannot think of any Republican led states that have advanced such legislation, or espoused views that they want to. It falls in line with similar w…

I've yet to see this be a partisan issue anywhere.

Re: FTC announces rule banning noncompetes

#200

Post by banish-m4 »

Currently:

0. Get hired by any MAANG or tech company of sufficient size outside of California.

1. Watch as the employment agreement is marked on the edges or in the metadata as being specifically tailored to that state with different protections and obligations than employment agreements signed by other workers doing the same job in different states.

2. Negotiate on onerous terms that are harmful to your interests.

I don't know if this is more of an "executive order" wish because if the FTC had the power, it probably would've done so already.

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