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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

#61

Post by Spivak »

mattkrause wrote: post #55
Spivak wrote: post #36

Earlier quoted context omitted.

Which is why I think companies should have to “buy you out” in the event you get another job. If you get an offer and they want to exercise the non-compete they have to pay you total comp for that offer otherwise you can work there. I’m sure in a forum of devs you’ll will think of plenty obvious “hacks” which are just fraud and our courts are perfectly capable of sussing that out.

This seems unwieldy because people change jobs for reasons beyond their own immediate salary. Maybe I want to make a lateral move because I'm unhappy with my boss or my commute. What if I'm moving because my partner found a new/better job elsewhere, or I want to be closer to my extended family? You can try to put a monetary value on some of these (pay my commute?) but I don't think you could "buy me out" of moving fo…

Huh? Why doesn’t this work? If you want to change jobs for any reason you can and if the employer wants to exercise the non-compete they have to pay you your best offer to not work, not to keep working for them.

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

#62

Post by leoc »

mattkrause wrote: post #58
AlotOfReading wrote: post #33

Earlier quoted context omitted.

Long-term garden leave is still unequal as you forfeit things like bonus (which can be a significant percentage of TC) and you can't practice the skills of your employment for months or years. Imagine going on leave from the financial sector in 2007 and coming back in 24 months later, for example.

New CV item: "Zero losses during the global financial crisis" :-)

Are you really a financial-industry veteran if you didn't tank at least one merchant bank when you had the opportunity? ;)

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

#63

Post by ghaff »

neilv wrote: post #57
iancmceachern wrote: post #35

Earlier quoted context omitted.

The tech industry in Mass us there because of the universities. It doesn't have to do with non competition agreements. Also, the tech industry in California is an order of magnitude larger than that in Mass.

I don't know whether it's true, but I've often heard the theory that California's no-noncompetes is what made it so startup-friendly originally. Once the dotcom boom started, people were saying go to the SF Bay Area for startups, because that's where the investors are. MIT graduates with computer-y degrees seemed to be fleeing Cambridge/Boston as soon as they could.

As someone who was there at the time, the reasons were complicated. The Route 128 computer industry was in pretty significant decline and nothing had really come in to replace them. And the metro itself saw an outflow of population until the late nineties. When Teradyne moved out of Boston that was probably the last significant tech company in the city proper at the time. And the whole biotech and pharma boom in Kendall Square didn't happen until later. (As well as the establishment of major offices for firms HQd on the west coast.)

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

#64

Post by granzymes »

wpietri wrote: post #45
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…

Sure, anything that inconveniences people with money gets challenged in court. I also think "they never did it before" is not a very good reason to not do it now. Especially as this is a growing problem. In 2018 research found, "noncompetes cover 18 percent of all U.S. workers and have covered 38 percent at some point in time." Had the FTC banned them earlier, like in 1914 when the FTC Act was written, surely somebod…

The problem is not that the FTC has been silent on non-competes in the past. The problem is that the FTC has never used Section 5 this way before in any context. Courts are skeptical of agencies "discovering" new powers based on vague sections of their enabling statutes.

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

#65

Post by granzymes »

EMIRELADERO wrote: post #44
granzymes wrote: post #31

Earlier quoted context omitted.

Obviously the Federal government is constitutionally authorized to regulate non-competes. That's not my argument at all. And the FTC is not banning unenforceable non-competes, the proposed rule bans all non-competes. Regardless of which non-competes they choose to ban, however, the fact remains that this is the first time that the FTC is attempting to use Section 5 in this manner. It is very unclear that they have th…

Can you explain why they don't have that authority? Do you think Congress can't delegate its power through a statute? Or do you think that it hasn't done so in this speciifc (Section 5) instance?

The latter. Courts are skeptical of agencies "discovering" new powers decades later that are based on vague sections of their enabling statutes. Congress could of course directly ban non-competes or amend the FTC Act to give the agency this power.

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

#66

Post by MAGZine »

ghaff wrote: post #59
iancmceachern wrote: post #35

Earlier quoted context omitted.

The tech industry in Mass us there because of the universities. It doesn't have to do with non competition agreements. Also, the tech industry in California is an order of magnitude larger than that in Mass.

>The tech industry in Mass us there because of the universities. It doesn't have to do with non competition agreements. That's pretty much my point. The presence of non-competes did not prevent the development of a tech industry in MA. And, while VC funding is about 20% of CA's, MA+NY+CA have far more VC than any other states--and NY and MA together have more than half of CAs funding. Those two states collectively al…

i think the point GP is making is that Mass's tech sector might be actively hindered because of non-competes, and that without the universities, who knows if it would exist at all.

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

#67

Post by Pulcinella »

baron816 wrote: post #32

When I first tried to transition into tech, I had a really hard time getting someone to hire me. I had a lot of potential, but no one wanted to take a risk on someone without experience. I still needed some training, and no one wanted to train me, just to see me leave in a few years. That seems to be an argument for keeping non-compete clauses--allow firms to hire people on the condition that they'll stay a few years…

What you want is literally just contract employment (not the same thing as being a "contractor"). It's common in the world of teaching (though these days it's generally just for the school year. In the past 3 year contracts were more normal). It's not very common in the world of business and instead employment is generally at-will (which is another reason why non-competes are BS. At-Will employment lets the company fire you whenever they want, but the non-compete makes it difficult for you to leave whenever you want).

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

#68

Post by mattkrause »

Spivak wrote: post #61
mattkrause wrote: post #55

Earlier quoted context omitted.

This seems unwieldy because people change jobs for reasons beyond their own immediate salary. Maybe I want to make a lateral move because I'm unhappy with my boss or my commute. What if I'm moving because my partner found a new/better job elsewhere, or I want to be closer to my extended family? You can try to put a monetary value on some of these (pay my commute?) but I don't think you could "buy me out" of moving fo…

Huh? Why doesn’t this work? If you want to change jobs for any reason you can and if the employer wants to exercise the non-compete they have to pay you your best offer to not work , not to keep working for them.

My bad! I thought the buy-out would keep your working at your original job.

I still think there's something off about the power asymmetry though.

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

#69

Post by MAGZine »

baron816 wrote: post #32

When I first tried to transition into tech, I had a really hard time getting someone to hire me. I had a lot of potential, but no one wanted to take a risk on someone without experience. I still needed some training, and no one wanted to train me, just to see me leave in a few years. That seems to be an argument for keeping non-compete clauses--allow firms to hire people on the condition that they'll stay a few years…

or, maybe if a company is scared of losing an employee, they should pay them market value.

holding a grudge over them because you trained them and are trying to recoup your costs is idiotic and doesn't work.

asking the government to subsidize corporate training is a non-starter. it is a corporation's job to both DEVELOP and RETAIN talent. Both. Companies would like very much to do neither--but putting in the effort is required for good results.

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

#70

Post by wpietri »

granzymes wrote: post #64
wpietri wrote: post #45

Earlier quoted context omitted.

Sure, anything that inconveniences people with money gets challenged in court. I also think "they never did it before" is not a very good reason to not do it now. Especially as this is a growing problem. In 2018 research found, "noncompetes cover 18 percent of all U.S. workers and have covered 38 percent at some point in time." Had the FTC banned them earlier, like in 1914 when the FTC Act was written, surely somebod…

The problem is not that the FTC has been silent on non-competes in the past. The problem is that the FTC has never used Section 5 this way before in any context. Courts are skeptical of agencies "discovering" new powers based on vague sections of their enabling statutes.

Courts are increasingly skeptical of regulatory powers at all. Which, gosh golly, might have something to do with the increasing funding by the super-rich of groups that push for judges that think that way.
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