The FTC Just Banned Noncompete Agreements And It's A Huge Deal
The FTC Just Banned Noncompete Agreements And It's A Huge Deal
Commissioners approved the historic regulation on the grounds that noncompetes stifle competition for workers. A legal challenge is all but certain.
The FTC’s three Democratic members were in favor of adopting the regulation, while its two Republican members were against it.
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“The FTC estimated that the ban would boost wages by between $400 billion and $488 billion over 10 years.”
Employers are required to tell people that existing noncompetes are void:
The new rule makes it illegal for employers to include the agreements in employment contracts and requires companies with active noncompete agreements to inform workers that they are void. The agency received more than 26,000 comments about the rule after it was proposed some 16 months ago. The rule will take effect after 120 days, although business groups have promised to challenge it in court, which could delay implementation.
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From the article...
The FTC’s three Democratic members were in favor of adopting the regulation, while its two Republican members were against it.
... and ...
The FTC’s rule does not include a salary threshold, but it has an exception for noncompetes when a business is sold.
The final rule also allows existing non-competes to be enforced for senior executives. But all other such contracts would be rendered unenforceable when the rule is implemented
That exception is very much like the one in California, where the founders of a startup can be required to sign a noncompete when they sell it. Has essentially no material impact on anybody else.
Yeah it looks like they're trying to preserve somewhat of the non-complete clause viability for senior management especially when companies are bought and sold.
I mean, this makes sense and is what a non-compete is for in the first place.
I mean, this makes sense and is what a non-compete is for in the first place.
The issue has been that lately corporations have been using it on everyone, not just senior management, to control their movement, and not have to pay them as much, as there's less competition from movement.
Though personally I don't think it should be used for anyone, as we need to allow as much competition as possible, so that we all can earn greater income through better salaries.
It isn't just corporations. I work for a less-than-10 employee company, and I had to sign a non-compete. Couple friends that I used to work with now work for another company that's even smaller, and they had to sign one as well.
Yeah, I, a lowly button pusher, had to sign a noncompete at my first real gig close to a decade ago. It was at least limited to working on shared clients at another employer, but it was still really annoying considering nothing I knew about that customer's ops that would have been considered proprietary.
The FTC’s three Democratic members were in favor of adopting the regulation, while its two Republican members were against it.
Not surprising in the least. Of all the Republican hypocrisy their attitude towards workers using their value to increase their earnings is one of the worst. They claim that they support self reliance and building yourself up, but stuff like this shows that it's clearly a lie. They support businesses maximizing their earnings by charging what the market will bear, but as soon as a worker tries to do the exact same thing they lose their God damn minds.
The Republicans would reinstate child labor and child marriage in a heartbeat if they could get away with it. In fact, they do get away with it in some of their states.
Reinstate? Both are still allowed in many Republican states and Republicans have been blocking any attempt to stop it.
free market bro. oh wait. not like that!
“bOTh sIdeS ArE thE sAmE”
The FTC website says it has an exception for Senior Executives which it defines as people making over 151k and are involved in policy making decisions.
Oh shit that’s low. A lot of engineers in high cost of living areas are going to need to argue they don’t make policy decisions
Given that non-competes were already hard to enforce and engineers (or any staff role) can easily answer no to questions like "are you an executive?" I don't think it's going to be hard.
Or are all getting promoted to Senior Executive! But I think that's a good clause to greatly restrict who it applies to.
Rhetorical question: why do bills like this include specific wage amounts when those amounts are bound to become obsolete? Why not make them a variable, like the percentage of the cost of living?
jeez that is sorta low espcially for large metropolitan areas.
Its the "policy making decisions" clause that saves us.