U.S. bans noncompete agreements for nearly all jobs
The Federal Trade Commission narrowly voted Tuesday to ban nearly all noncompetes, employment agreements that typically prevent workers from joining competing businesses or launching ones of their own.
Is this as big as it sounds? It sounds big.
18% of all working people in the US are under non-competes. This is a huge deal.
I honestly assumed the number/percentage was higher
Yeah, even hotel housekeepers sign papers saying they cannot quit and go to work for competitors these days.
In California none of this shit is enforceable anyway.
How recent is this? I'm asking because about 10 years ago, I worked for a local TV station owned by a massive media company and not only did I not sign a non-compete, I left them for a better paying job at the other local TV station owned by a different massive media company and they didn't make me sign one either.
Both jobs were utter shit, by the way. I'm not defending them or the shitty stations or the shitty companies. I'm just surprised.
Idk I was making a metaphorical analogy, I'm neither a housekeeper nor a housekeeping data analyst.
I've had places try to make me sign a non-compete agreement as a chef. I straight up told them that their agreement wasn't even useful as toilet paper. Signed anyway, and worked for them for a few months, then moved on to a better paying job.
Yes, this is a big fucking deal.
100%. These non-competes essentially lock employees in to their existing employer, unless they want to find a job in a completely unrelated sector (and likely take a massive payout, which, especially these days, is near financial suicide). This will have enormous ramifications for companies with toxic culture, as now people don't have to put up with their crap. This allows for freedom of economic mobility, and more control of one's own life.
I disagree. If you're in a place in life to take a position requiring a non-compete, you probably already knew it was unenforceable. We're not talking teens with their first jobs here.
OTOH, I strongly agree that this is a great thing for workers. Really can't believe it happened!
It was my understanding is that non-competes are a grey area and depended on the context. For an example, an indefinite non-compete clause isn't enforceable, but a 6 month clause might be. A non-compete clause for someone working in a highly-specialized position where they're working with trade secrets, confidential information or patented technology might be enforceable, but a non-compete clause for a normal web developer probably isn't. If you're in Texas then it's more likely to be enforceable, but if you're in California then it might not. If you're trying to work 2 jobs for competing companies then it would probably be enforceable, but if you get fired and immediately go work for another company then it's unlikely they could enforce it.
That was my understanding anyway.
A non compete clause should be justified, limited in time, limited geographically AND be compensated.
This is the regulation in France. A person who has a non compete clause should receive a financial compensation for the duration of the clause, usually between 25% and 50% of their salary.
This way to do seem fair to me
Eh, I don't know if everyone actually knows that they're unenforceable. I've never dealt with one of these, so I'll admit that I'm shooting from the hip, but I'd guess that usually a non-compete comes with what I'd imagine to be a pretty decent salary and benefit package, so I could see it being a tradeoff people will take despite not knowing what the company is like as they're pretty jazzed on the money aspect. Plus, if a former employer were to take you to court, you probably would still want legal representation even if a judge throws it out, which will still cost you a pretty penny. But again, I don't have any first-hand experience in this regard.
Read above. Hotels are currently making housekeeping staff sign noncompetes. That is not a “place in life you know it’s unenforceable”, especially considering the number of housekeeping staff that are immigrants.
You want to keep your employees? Make their job more attractive.
you probably already knew it was unenforceable
But that’s not true. They were potentially enforceable (outside California), and even finding out risked a high cost of legal assistance. It was too risky to simply ignore, even if they shouldn’t be enforceable. The corporation claiming it, making you sign it, and employing a legal team to back it up does mean sometimes people won’t risk it
When places talk about how they’ll be “the next Silicon Valley” this is one of the reasons none of them have actually managed it. In CA people in many cases can take a good idea that their employer doesn’t want and do something with it themselves. In most other places it will get so tied up in non competes that it’s not worth the effort to even try.
And it’s not just tech, here in Colorado we recently had a restaurant try and shut down another restaurant simply because the newer place’s chef had worked at the older place. They settled but it’s so entirely ridiculous that it could have even started court proceedings in the first place.
Forget ideas, just normal worker mobility. A couple of years ago I switched jobs.
The old company had gotten bought by a conglomerate and they were milking the product line by stopping development, stopping raises, and letting attrition do its thing. Time to leave. One of my peers found a great company still investing in their products and jumped ship. Me too. However we both had noncompetes specifically prohibiting “poaching”, so could we even talk to co-workers? Everyone lost because of this noncompete. New company missed out on potential new hires, co-workers missed a potential opportunity, and even old company attrited slower than otherwise so less profit
This is a classic case of noncompetes blocking worker mobility, hurting everyone
I’m going to go against the crowd and say that while I think it’s a good move to make it official non competes were effectively already declared unenforceable via the court system. It’s rarely used for the average worker unless something truly fucky was going on and the courts would usually side with the employee no matter what unless something truly fucky was going on.
Even if unenforceable, they likely had a huge chilling effect. Most people understandably prefer not risking going to court, even if they're in the right.
Right, I can’t afford to take a corp to court, even if I would win.
I can’t afford to have my new employer balk at hiring me if they don’t want to risk defending themselves, even if it doesn’t happen often
The threat of lawsuit is usually enough to get an employment offer rescinded. It's rare for a company to want to take on a legal defense just to hire someone new. Even though they weren't actually legally binding, non-competes still limited options for a lot of people.
Overall I agree with you that this isn't as big of a deal as people make it sound, but it's easy underestimate their influence if only looking at the result of cases that go to trial. In many situations, the damage is done well before a case can go to trial.
Is this a big deal in terms of allowing people to more easily quit their jobs and take new ones? Yes.
Is this a big deal in terms of boosting innovation and economic productivity by allowing ideas to move more freely between businesses? Maybe.
Is this a big deal in terms of harming businesses or causing radical shakeups at businesses? No. States like California already ban non competes as do most western countries, companies just keep on going, truly proprietary innovations are already going to be covered by NDAs.
Is this a big deal in terms of allowing people to more easily quit their jobs and take new ones?
Now do healthcare.
Yes big deal. However, I'm not sure if this will survive the supreme court.