Posted on 04/23/2024 12:19:32 PM PDT by CFW
Federal regulators on Tuesday enacted a nationwide ban on new noncompete agreements, which keep millions of Americans — from minimum-wage earners to CEOs — from changing jobs within their industries.
The Federal Trade Commission on Tuesday afternoon voted 3-to-2 approve the new rule, which will ban noncompetes for all workers when the regulations take effect in 120 days. For senior executives, existing noncompetes can remain in force. For all other employees, existing noncompetes are not enforceable.
The FTC heard from thousands of people who said they had been harmed by noncompetes, illustrating how the agreements are "robbing people of their economic liberty," FTC Chair Lina Khan said.
The FTC commissioners voted along party lines, with its two Republicans arguing the agency lacked the jurisdiction to enact the rule and that such moves should be made in Congress.
(Excerpt) Read more at cbsnews.com ...
Not true. Enforceability is regional. In my area, for instance, non-compete clauses for physicians have been universally upheld. This is going to be a major disruptor.
Should have been doing NDAs for intellectual property anyways.
Wow, that’s crazy. I think it’s a good disruption. They’re dumb.
IF YOU DO NOT WISH TO SIGN A NON-COMPETE CLAUSE-—DO NOT TAKE THE JOB OR CONTRACT.
PERIOD
TOO MANY “WANNA-BE’S” Want to ride someone else’s coat tails.
1. At no time did I ever feel like a “slave.”
2. If I didn’t like the terms of a noncompete agreement, I wouldn’t sign it. Imagine that.
3. If I can no longer use this type of agreement to protect my business interests, then I’m simply going to change the way I do business accordingly — and to the substantial detriment of others.
Seems like yet another unconstitutional interference in contract law. But that’s why the bureaucrats do it.
But this is a set up for something. I’m not sure what, yet, but I have a feeling it is about hurting Trump and Trump businesses.
Something stinks about this.
Exactly.
Donald Trump probably doesn’t make anyone sign noncompete agreements … because he might be one of a dozen people in the history of human civilization who can honestly say he has no competitors.
Enforceability of non-compete agreements is a state law issue. In Texas they are generally enforceable, subject to a reasonableness test as to area and duration.
The FTC should have no jurisdiction or legal authority to abrogate private contracts that are otherwise enforceable. Unless there is a constitutional right implicated or some other federal question, the feds have no authority to regulate this. But that won’t stop them.
They make sense in some circumstances. Take a private medical practice, for instance. Two physician/owners are looking to expand so they recruit an associate. This new physician employee, often a new grad, is hired with a guaranteed salary for 2 years and often a considerable signing bonus. In turn the practice gets a new doc that is typically going to take a year or more to ramp up production since they are new to the area and unknown to the referral base. Additionally, the process of getting a new doc reimbursed by insurance plans is a nightmare of burocracy and delay/deny. So, the practice is taking on significant overhead with the hope that the associate will be a long term, productive employee or even a partner. If not for the non-compete clause, the new doc essentially could get his first 1-2 “lean years” subsidized by the practice, then quit and open up his own competing practice across the street, taking his patients with him. If this ruling sticks, I predict that employment contracts are going to shift away from salary to pay-for-production from day one. That’s going to be tough for new docs looking for stability early in their career.
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in (software) it’s pretty much doctrine, they never hold up, sign em, ignore em, take whatever job you want.
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Again it depends. There are standards of reasonableness and consideration that have to be met — those depend on the State. Also, even if there are unreasonable/unlawful terms, many States follow a “red-pencil” rule which lets the presiding court strike out the offending terms (if any) and leave the rest of the NC in place.
I personally have seen data center IT/dev ops get sued when changing jobs to different data center providers. And an engineer working in a niche consulting field. The devops guy and his new employer decided to wait out his NC. And the engineer and the consulting company settled because we very aggressive and filed first in a more favorable forum than recited in the NC — but it took lawyering which costs money.
The companies that I have seen go after their ex-employees are small companies with vengeful/spiteful owners. Bigger companies wont bother unless the departing employee is a real big deal. Medical clinics/providers are also big on suing MDs that try to break NCs. Though, I haven’t had personal experience with one of those just read a lot of case law.
Though some of the abuses of NCs this rule is directed to are when low wage employees at restaurants, hair salons, or the like, are bullied with NCs. Those employees cannot afford lawyers. In several states this type of NC abuse is unlawful but not all.
Great post. In my STEM field a NC agreement is rarely used outside an ownership contract. Senior managers agree to the NC terms as a condition of their ownership stake in the company. I can’t imagine the FTC ruling would ever cover this type of arrangement.
My current employer asked for a disclosure of any current work that I wanted excluded from their purview as well as an "at will" employment agreement. No problem. I had a few specialized embedded systems that were developed for local hospitals that were explicitly excluded. I'm approaching 33 years with the current employer. I'll probably die before I retire.
I’ve always ignored them. Not constitutional.
I don’t know, my thought is if you’re primary concern is what happens when they leave you’re setting up a situation where they SHOULD leave. If you want your new doctor to stick around and not hang his shingle elsewhere then be a place worth staying at. Instead of being punitive be supportive. Give them opportunities to grow with in. Partner paths. Expansion paths.
HUSH MONEY!
The first company I worked for was very petty like that. If the CEO even heard a rumor you were looking he’d fire you. He tried NCs and all kinds of crap. And went out of business because anybody worth a crap got out.
Will not affect the illegal aliens though... this only applies to tax payers and those subject the laws, the IRS, etc.
Maybe now they can start to seal the Souther Border;) Afterall, the employers have a new class of hostages. Just change a rule - SCOTUS should get right on this because something of this magnitude requires Congress to pass lesigation making a law - per the 2022 SCOTUS RULING on Agencies creating rule, laws, etc. SCOTUS stated that Congress has not been doing their jobs.
How do ordinary Americans get a class action law suit the prevents Federal Agencies from enacting rules with the force of law? SCOTUS has not shut down the Agencies so we have to constantly deal with the EPA, FTC, ATF, FBI, etc.
Time for Change. Time to make Congress do something besides give money to Ukraine.
“ arguing the agency lacked the jurisdiction to enact the rule and that such moves should be made in Congress.”
Sound constitutional reasoning.
Unfortunately, that ship has sailed.
Why? The rule does not apply to propriety matters such as intellectual property which are rightly protected from theft. It simply means for example if you worked as a bookkeeper at Dowee,Cheatham,& Howe they can’t make you agree that you will never start your own bookkeeping business or work for another firm in that capacity.
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