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FTC announces rule banning noncompetes

ftc.gov

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Re: FTC announces rule banning noncompetes

#361

Earlier quoted context omitted.

Pass, repeal, and revise laws, yes. That's literally what the word "legislator" means.

Legislator is a person that can write laws, it does not mean it's their duty to write laws. In the United States their duty is to uphold the constitution and represent their constituents. Not to create more rules.

Unless their constituents think the current laws of the land are 100% perfect, then representing their constituents would involve passing laws.

Re: FTC announces rule banning noncompetes

#362
post #253

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 b…

> "same total annual compensation and benefits" This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected

Usually the new firm picks up the tab for the lost bonus.

Re: FTC announces rule banning noncompetes

#363

Earlier quoted context omitted.

Indeed. Government agencies are overseen by officers of the United States, appointed by the president with the advice and consent of the senate, typically to terms greater than the length of either a presidential to senate term. Just like Judges. The idea that courts are the only delegates of the elected representatives of the people who are allowed to figure out the nuances of how to carry out the democratically leg…

It’s not really a brainworm, it’s the fact that people see the government in radically different ways. My view is that as long as there’s genuine consent, two parties agree to something, no one is coerced, both are of sound mind, two human beings should be able to enter into any contract you can imagine. It doesn’t matter if that’s Gay Marriage or a firearms transaction. The role of government should only be to ensur…

> no one is coerced

How do you square that up though with the power differential in employer / employee relations? The employee has to work or be destitute. That gives employers a tremendous amount of power in any contract negotiation.

Coercion doesn't have to be a gun to your head. Every person in the workforce is under a pretty coercive force which is that without gainful employment you are going to go without housing, medicine, transportation, etc. Without any collusion on the part of the employers, the market works to select those employers who can create the contract conditions most favorable to profit production. We shouldn't be surprised that "favorable to profit production" and "disadvantaging the worker" are often closely aligned, every company would like to pay as little as possible for their input and get as much profit as possible out of their outputs. Labor, or Human Resource, as corporations like to call it, is an input and so there's a tremendous systemic pressure to craft contracts in the way that will get the maximum profit out of every employee.

Sure the employee didn't have to sign that unfair employment contract, they could have elected to sign one of hundreds of unfair employment contracts. The fact that they have a large variety of unfair contracts to select from doesn't on its own increase the fairness of the contract. The "collective force" of "you need money to operate in society" means that all workers are coerced to sign "the best deal they can get" which doesn't mean it's going to be a good deal or a fair deal for the worker, just the best that the market has.

Re: FTC announces rule banning noncompetes

#364

Earlier quoted context omitted.

Page 83-84 provides some guidance on garden leave and suggests that it will still be allowed under the new rule: > 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…

Doesn't this mean the end of 'at-will' for anyone that a company wants to cover with a non-compete? At present a company can have their cake and eat it, giving you one day notice of end of employment but then enforcing a non-compete for x months. If this survives the Supreme Court, wouldn't a company would have to put in your employment contract that you/they must give x months notice to end employment if they wanted…

The gardening leave still works as long as it's beneficial to both parties. The employee gets an effective long, paid holiday and the company gets a non-complete equivalent. Now they have to really ensure that pay is worth more than changing the employer though.

It's less "end of at-will" and more "if you want effective non-competes, it's going to cost you".

Re: FTC announces rule banning noncompetes

#365

Earlier quoted context omitted.

Legislator is a person that can write laws, it does not mean it's their duty to write laws. In the United States their duty is to uphold the constitution and represent their constituents. Not to create more rules.

Unless their constituents think the current laws of the land are 100% perfect, then representing their constituents would involve passing laws.

And they would need to convince enough other representatives and the constituents those representatives represent, which they can't because the country is extremely divided.

Re: FTC announces rule banning noncompetes

#366

Earlier quoted context omitted.

> FTC doesn't really have the ability to do this, since contract law is part of state law The federal government can absolutely regulate both employment and contract law. (Merger agreements are contracts. The FTC was established to block bad mergers.) Whether the FTC can do this is untested. But that’s more a Chevron issue than a federal powers one.

> The federal government can absolutely regulate both employment and contract law Where in Article I Section 8 does the Constitution grant that power?

The snarky answer would be the 13th amendment.

Re: FTC announces rule banning noncompetes

#367

Earlier quoted context omitted.

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".

Which would be great. These agencies and bureaus have grown to an enormous scope, completely without the consent of the governed. Doesn't sound like a republic to me.

It would be catastrophic, because Congress as it stands is utterly incapable of legislating. This is why the little stuff gets delegated to unilateral decision-making withing the executive branch: If making new rules was left to congress, they could never keep up. The world moves fast, congress moves slow.

Instead, they delegate powers to agencies that can make rules within some tight purview and pursuant to some defined purpose, and if they step out of line Congress is completely within their power to legislate their preferred stance into law.

Re: FTC announces rule banning noncompetes

#368
post #362

Earlier quoted context omitted.

> "same total annual compensation and benefits" This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected

Usually the new firm picks up the tab for the lost bonus.

Isnt the whole issue that the non-compete prevents a new firm from entering the picture? I did have a friend who got hired by a new firm, which then waited out her garden leave for 18mo...but I wonder how many firms would do that in, say, technology

Re: FTC announces rule banning noncompetes

#369
post #131

Earlier quoted context omitted.

In theory? Yes. In practice? No. For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good. Patents are no…

Definitely agree — software patents should be abolished, full stop. They serve no purpose but to impede innovation and progress. I’d argue the same applies to all patents; the world would be better off without them in general.

Maybe software patents require releasing the source code and last for a shorter term related to the pace of technological change. Then the incentive to share the advance is preserved instead of everything being a trade secret.

Re: FTC announces rule banning noncompetes

#370
post #362

Earlier quoted context omitted.

Usually the new firm picks up the tab for the lost bonus.

Isnt the whole issue that the non-compete prevents a new firm from entering the picture? I did have a friend who got hired by a new firm, which then waited out her garden leave for 18mo...but I wonder how many firms would do that in, say, technology

The new firm makes you whole after the non-compete period ends.
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