FTC Proposes Banning Noncompete Clauses for Workers

WSJ ^ | 05-JAN-2023 | Dave Michaels

[SpeedyInTexas]

The Federal Trade Commission on Thursday issued a proposal to ban the use of noncompete clauses, a move that would allow workers to take jobs with rival companies or start competing businesses without the threat of being sued by their employers.

The FTC said noncompete clauses constitute an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition. Noncompete clauses, which typically bar employees from joining a competitor for a period after they quit, affect nearly one in five American workers, according to the agency. Long associated with higher-paid managers, the clauses have also been imposed on lower-wage workers who lack access to trade secrets, strategic plans and other reasons that could be cited for hampering job switchers, the agency says.

If the FTC eventually votes to adopt the proposal, companies would have to rescind noncompete requirements they impose on workers and let employees know about the change. FTC officials say noncompetes suppress wages, restrain new business formation and hurt the ability of companies to hire workers they need to grow.

[SpeedyInTexas]

Khan might do something useful? Useful idiot?

[SpeedyInTexas]

Archived version: https://archive.ph/hauIX

[Bayard]

I’m ok with this, but I think a time limit should be part of the roll out.

[Alberta's Child]

Noncompete agreements may or may not be a good idea, but I find it ludicrous that a Federal agency would have any say in the matter at all.

[spetznaz]

I can understand non-competes for high-placed/high-wage staff, but it is not right to apply the same to low-placed/low-wage employees.

I may reconsider if American companies decide to institute a non-compete clause on themselves if they fire an American employee for the purposes of replacing that employee with a cheaper offshore hire …

…and if that is untenable for the company then it may just be wrong for a low wage employee to accept a non compete

[RatRipper]

Careful. Former employees have knowledge of proprietary information. There needs to be balance in this provision or companies can be severely damaged by unscrupulous former employees.

[nathanbedford]

Application of noncompete clauses, by virtue of the common law, have for years been struck down if they are not reasonable as to time, geography and scope.

We don't need the Feds adding another layer to the deep state.

[MeganC]

A non compete clause is a violation of your civil rights. That makes it a federal issue.

[Manuel OKelley]

It’s just more control over private business and a bad idea.

I’ve been under these several times and always negotiated various “outs” for reasonable circumstances

Without non-competes nothing stops people from using resources of their employer and goign to a competitor to take business away

Let the market work and if you don’t want to be under one don’t sign the thing and get a different job.

[Yo-Yo]

If the FTC eventually votes to adopt the proposal, companies would have to rescind noncompete requirements they impose on workers and let employees know about the change.

So the FTC can reverse a hundred years of case law just because they feel like it?

[FlipWilson]

So then, what happens to the Intellectual Property they have and since when does the FTC get to do this? What is the enabling statute?

[Obadiah]

Under what law? Do we or do we not have a free market? More government socialism.

[Boogieman]

“The FTC said noncompete clauses constitute an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition.”

Well, yeah, it’s right there in the name.

[Reno89519]

Mixed feelings about this. By itself, there has to be some limitation on this. And what about non-disclosure which is typically paired with this? And who should this apply to? Company officers, senior management, mid-management, leads and managers, or workers? Skilled vs. non-skilled?

I think overall the rule is well-intended but I think it needs some details to balance protection of the worker AND protection of the business owner.

[Boogieman]

“Former employees have knowledge of proprietary information.”

The whole concept of “proprietary information” is obsolete and has been for a couple decades now. Eventually the law is going to have to catch up to that reality, along with dozens of other laws that are completely unenforceable in the information age.

[TermLimits4All]

As a worker who was affected legally by a non compete I’m all for reminding them. I was just a salesman and ended up being sued for starting a competing business in my area. Essentially the Court nullified my ability to earn a living in the field I’m an expert at and had been doing for over a couple of decades, 6 years with the company that sued me. I didn’t even attempt to go after the former employers customers.

[READINABLUESTATE]

Certain employees in management and sales have information that the competition would love to have, Worker bees, not so much.

[EEGator]

We have never been a free market nor were we ever intended to.
No country has a free market. The US isn’t even Top 15 in economic freedom.

[Bernard]

If the FTC can outlaw non-competes in the private sector, what happens to the various laws about federal employees going to work as lobbyists right after they leave office?

If the federal government wants to outlaw non-compete clauses in private sector contracts, let's use the American form of government; pass a bill in both houses of Congress and have the President sign the bill into law. The FTC has as much business making law as the courts do.

[Mouton]

I guess babe Ruth should not have been allowed to go to the yanks?