US Bans Noncompete Agreements For Nearly All Jobs
- Reference: 0173623214
- News link: https://news.slashdot.org/story/24/04/24/0436227/us-bans-noncompete-agreements-for-nearly-all-jobs
- Source link:
> The FTC received more than 26,000 public comments in the months leading up to the vote. Chair Lina Khan referenced on Tuesday some of the stories she had heard from workers. "We heard from employees who, because of noncompetes, were stuck in abusive workplaces," she said. "One person noted when an employer merged with an organization whose religious principles conflicted with their own, a noncompete kept the worker locked in place and unable to freely switch to a job that didn't conflict with their religious practices." These accounts, she said, "pointed to the basic reality of how robbing people of their economic liberty also robs them of all sorts of other freedoms."
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> The FTC estimates about 30 million people, or one in five American workers, from minimum wage earners to CEOs, are bound by noncompetes. It says the policy change could lead to increased wages totaling nearly $300 billion per year by encouraging people to swap jobs freely. The ban, which will take effect later this year, carves out an exception for existing noncompetes that companies have given their senior executives, on the grounds that these agreements are more likely to have been negotiated. The FTC says employers should not enforce other existing noncompete agreements.
[1] https://www.npr.org/2024/04/23/1246655366/ftc-bans-noncompete-agreements-lina-khan
20%? (Score:2)
"The FTC estimates about 30 million people, or one in five American workers, from minimum wage earners to CEOs, are bound by noncompetes"
Somehow that seems like a vast overestimation
Re:20%? (Score:5, Insightful)
You underestimate how common abusive clauses are in employment contracts. From blanket intellectual property assignments (even stuff done on personal time) to unpaid noncompete periods after termination, these are distressingly common.
This. (Score:3)
Seriously fast food workers have non-compete clauses now and they have been used to bully workers into not changing jobs.
It doesn't have to be legally enforceable it just has to be a threat to someone who's in a weak position.
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That's not going to change then.
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Not quite: Unenforcable and illegal are two very distinct states.
One requires the victim to have some knowledge of the law and in that case, the perp just shrugs. Worth a try.
An outright illegal clause will have HR and legal teams sweat bullets (which is the state you as a decent human being always want legal and HR to be in) because if that EVER comes out, the lawsuit will be glorious.
Anyhow, this is a good step and one I never thought the US was capable of. I am part of a facebook group about a chronic di
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Distinction without meaning for the purpose of this discussion. There are rights that aren't being enforced right now. Adding a little bit more right in the same vein will not change the status quo.
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> Somehow that seems like a vast overestimation
Absolutely not. Every single employer I've had anything to do with since the early 2000's has required some kind of non-compete, including very small shops. I suspect it's the same for every "knowledge" worker.
I predict this will die a violent death in US courts. Every AG in every red state will be in one or more big zoom meetings by the end of the week preparing to kill this with fire. Don't expect this to be real for years, if ever. They're lining up the judges and injunctions right now. This is f
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It is funny how you think that it is the red states that will kill this. Noncompetes are already not enforceable in many right-to-work states. It's the blue states where noncompete clauses had weight.
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See California, largest state in the union, setting the precedent. Colorado followed. Blue states.
And again, these were legislative acts.
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Yes, it took specific legislation to ban them in blue states. However, "right to work" laws, as present in red states, already banned them, just not explicitly, more "your employment contract cannot bind you after you cease working for that employer".
IE, what I've seen a couple times, they have to keep the employee "employed' for the non-compete period, including paying them.
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IANAL. However, I suspect that conflating right-to-work and non-compete is naïve. Union law is from an entirely different legal foundation, and even age, than IP based non-compete contracts. A trivial attempt to find legal views on this corroborates my suspicion:
[1]Non-Competes: Myths, Misconceptions & Lies [clousebrown.com]
> 1) Non-competes are unenforceable in “right-to-work” states like Texas. FALSE
> Right-to-work laws govern whether employment may be conditioned on an employee’s union membership, or lack thereof. Although a “right-to-work” may sound like it implies that all employees have a guaranteed privilege to freely seek work and be employed, this phrase is actually unrelated to non-competition laws (which allow reasonable limitations on an employee’s traditionally unrestrained mobility in our free market). Completely distinct from the enforceability of non-competes, right-to-work laws protect employees from being denied employment because they are members in a union (or because they choose not to be members or make payments to a union). Thus, the notion of employees having a “right-to-work” is strictly limited to protecting an employee’s right to participate, or choose not to participate, in a labor union or organization by prohibiting such choice from affecting the employee’s “right” to employment. Because the notion of right-to-work is completely unrelated to non-compete limitations, non-competes are still enforceable in right-to-work states like Texas.
So, unless you are a lawyer, take a breath and accept that perhaps you aren't qualified for this guesswork.
[1] https://clousebrown.com/non-compete-myths/
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California banned non-competes in 1874 when they were a solidly Republican state.
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At that time, the Republican party had not yet become completely corrupted, unlike today.
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I would believe that around 20% have a non-compete, the part that is ignorant is that they are "bound" by the noncompetes.
For the majority of people if the company ever tried to exercise them would be laughed out of court because they break state law.
To many company put the non-competes in standard hiring paperwork and have never had it check against the local laws.
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Still, the clauses pose a serious financial risk to the employee. If their former employer sues them, even on base of non-enforceable non-compete clauses, they still have to lawyer-up.
Non-compete clauses create a bind, be them enforceable or not.
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Nearly every employer I've had since the late 90s has required me to sign a non-compete. First time was in 1996 after a wrote a tiny software program to help banks calculate credit insurance, for like $100, something only tangentially related to my job at the time and not our usual customers. My employer came to me a week later in a panic, as if I was stealing money from him, demanding I sign a non-compete or quit.
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You think?
Tell me one good reason why I would not put such a clause in a burger flipper job contract to ensure my burger flipper will think twice before bailing from the horrible boss I am, knowing he will never flip a burger again if he does, and he already has a non-compete from his time at Target.
There are only so many no-skill jobs in a town, and once you're barred from all of them by ridiculous non-compete clauses, you have to stay with that last one that gang-pressed you into indentured service, becau
About time (Score:3)
This is excellent news. There was a small space where non-compete agreements made sense. Predictably, people with money and power abused the living crap out of legislation intended to protect those few instances, and they've been getting away with it for years.
There will be a few cases that need to be hashed out in court, and those can be dealt with. Mostly, vampires who suck the life blood out of innovators will be forced to stick with whatever they got before their victims got fed up and left.
Don't get too excited (Score:2)
The thing is, at least with non-competes it was clear what your obligation was. The new front in the war on employee rights is around 'trade secrets'. It used to be that the line for this was anything you could not memorise - so you can't take copies of code, or lists of customers, but anything you can remember (e.g. a way you solved a coding problem, or names of customers you could remember) was fair game. But there has been an erosion of this and a move towards companies 'owning' knowledge in your head.
Th
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I agree here. I've never had to sign a non-compete, but I have had to sign many NDAs, and when I left GE they made me sign this document stating that I may have worked on materials covered under NDA without either me (or them!) knowing it was covered under an NDA and the same for their trade secrets. They wanted to do all kinds of asinie things like patent the way piping is laid out on a process skid and stuff like that. I laughed at HR, signed the stuff and was happy to leave the place.
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Do not get too excited just yet. Any future R led Congress or presidency will roll back this regulation. It is merely a regulation and not backed by any law that I can see.
wow (Score:3)
This is really good, both for personal freedom and the economy, as it makes it a lot easier for startups to attract competent, experienced employees.
starbucks and amazon will take this to USSC just l (Score:2)
starbucks and amazon will take this to USSC just like they are with the NLRA
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True but the more popular rules and legislation that the Supreme Court strikes down the sooner the Democrats are in a position to balance the courts. Thomas and Alito are both at retirement age and both very likely going to face criminal investigations for their obvious bribery scandals as soon as the election is over. If the Democrats are still in charge of the Senate and the White House then those two are likely to retire so that they can cash out and the Democrats will have a 5-4 majority on the Supreme
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Neither Alito nor Thomas will retire. You'll have to hope they both have convenient heart attacks on vacation just like Scalia.
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[1]Chamber of Commerce has already got the ball rolling on that. [bsky.app]
[1] https://bsky.app/profile/phillewis.bsky.social/post/3kqt4visioc27
The first court will kill this off. (Score:1)
This will be killed by the first court that looks into it, there is no way they are affecting banning state level contracts without making a properly law. Yea the biden administration like to be a dictator and has tried this multiple times but they have all been quickly killed.
The only thing that could possibly be stupider and worse is if they went and made the existing contracts void.
that said states do need to implement laws preventing them from being allowed except on people making 4-5x average salar
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Probably so. It would (and probably should) require an act of Congress to invalidate so many contracts all at once.
How it should work (Score:3)
This puts a tiny little bit of power back in the hands of employees. If you disagree with how your employer operates or treats employees, you should not be afraid to quit because you can't go to work in a related field, exactly the places that are likely to hire you next.
1980s Under Reagan (Score:1)
I know this practice started well before the US was founded (https://faircompetitionlaw.com/2021/10/11/a-brief-history-of-noncompete-regulation/). I had to sign a non-compete in 1984, when I was a junior engineer at a defense electronics firm in Metro-Boston. I had to go back to grad school and change fields to get out from under it.
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Good. Competition is good.
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Indeed. Both employees and companies do better in jurisdictions that ban non-competes.
Employees do better for obvious reasons since they can hop to better jobs.
It is not as obvious for companies, but they benefit from more freedom to hire, ideas and innovation spreading faster, and more satisfied employees.
Non-competes are a [1]prisoner's dilemma [wikipedia.org]. An individual company benefits from a non-compete but is harmed even more when other companies do the same. They are collectively better off if none of them do it. B
[1] https://en.wikipedia.org/wiki/Prisoner's_dilemma
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> Non-competes are a [1]prisoner's dilemma [wikipedia.org]. An individual company benefits from a non-compete but is harmed even more when other companies do the same. They are collectively better off if none of them do it. But the only way to enforce that, is a legal ban.
Tragedy of the commons. People are short-sighted, greedy and stupid and CEOs are decidedly not an exception.
[1] https://en.wikipedia.org/wiki/Prisoner's_dilemma