17 ms·
FTC announces rule banning noncompetes
- a_wild_dandan 2y agoThis is a stunning change. We already have a uniquely strong economy. If the US keeps trending toward tackling anti-competitive behavior, we may avoid a downturn for quite awhile!
- ein0p 2y agoAnyone can have a “strong economy” if they can print $2T a year. The question is for how long.
- deleted 2y ago[deleted]
- deleted 2y ago[deleted]
- dschofie 2y agobig news for amazon employees
- ummonk 2y agoHow does this not have any discussion? Banning noncompetes was one of the biggest drivers of innovation in California that allowed Silicon Valley to outperform other tech hubs.
- smallmancontrov 2y agoThe best time to do this was 50 years ago, but the second best time is now. Congrats and thanks to anyone involved in the effort!
- deleted 2y ago[deleted]
- mxwsn 2y agoWhy now?
- toomuchtodo 2y agoPolitical will.
- chowells 2y agoBecause excesses finally became so ridiculously over the top that it was finally politically viable to address it. Remember, chain restaurants have started using non-competes to ban servers and cooks from moving to another employer. The situation is finally in the eyes of the general public.
- SoftTalker 2y agoThat's just absurd. Non-competes should never apply to commodity-skill jobs. I wonder how often they were ever enforced?
- 0cf8612b2e1e 2y agoEnforcement does not matter. It is the chilling threat an employer can use against someone without options. If you are flipping burgers for minimum wage and your boss says they can sue you if you leave for a competitor, are you willing to chance it?
- SoftTalker 2y agoIf I had no real net worth, yeah probably. What are they going to take? I'd like to see a judge's reaction to a non-compete on a burger-flipping job. Non-competes already get voided if they are too restrictive; you can't prevent someone from earning a living. But yeah, I can see a young kid might be intimidated.
- deleted 2y ago[deleted]
- 2y ago
- deleted 2y ago[deleted]
- pylua 2y agoIf I have an existing non compete — what does this mean for me ? Is it invalid?
- deleted 2y ago[deleted]
- deleted 2y ago[deleted]
- deleted 2y ago[deleted]
- bullfightonmars 2y ago> Instead, under the final rule, employers will simply have to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future. To aid employers’ compliance with this requirement, the Commission has included model language in the final rule that employers can use to communicate to workers. > Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions. > The final rule will become effective 120 days after publication in the Federal Register.
- MattSteelblade 2y agoGoing off of the press release, it doesn't go into effect until 120 days after publication and doesn't apply to current senior executives which are defined as "workers earning more than $151,164 annually and who are in policy-making positions." I would also imagine that it will immediately be challenged in court.
- lokar 2y agoSr execs can’t start new noncompetes
- 0cf8612b2e1e 2y ago
- bretthoerner 2y agoMy attorney friends tell me that the FTC doesn't really have the ability to do this, since contract law is part of state law. (My poor paraphrasing, not theirs.) I've been surprised I haven't seen this mentioned on social media or in the news. Are my friends wrong, or are people celebrating because this is just a step in the right direction even if it may not do anything yet?
- BWStearns 2y agoOptions are also contracts and the FTC seems to have succeeded in regulating those.
- yieldcrv 2y agothe FTC regulates options? it seems like thats a mixture of the SEC and IRS
- JumpCrisscross 2y agoCFTC regulates commodities-based options, the SEC securities-based ones. The FTC and IRS are not proximately relevant.
- yieldcrv 2y agoI was charitably hoping they were referring to employee stock options where their existence is primarily due to tax regulations of granting RSUs of illiquid company shares, hence IRS but yes, not at all relevant its hard for me to understand why people get the agency acronyms mixed up and interchanged. I can sort of see it, but I’ve just never seen people be so confidently wrong outside of perhaps the eastern medicine crowd.
- deleted 2y ago[deleted]
- fallingknife 2y agoThat's the CFTC
- fidotron 2y ago> Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions. Lot's of devs will be surprised to discover they are in policy making positions.
- BeefySwain 2y agoNew policy: no more non-competes
- azinman2 2y agoUnlikely they are in a policy making position.
- ascendantlogic 2y agoYou're missing the subtle sarcasm here. OP is implying that companies will deem engineers making $150k+ as making policy decisions in order to continue enforcing the existing non-competes they have most likely signed.
- fidotron 2y agoI wish I was being sarcastic! IME the sort of people putting non-competes in contracts will claim things like "programming is simply the act of defining company policy in machine form".
- anticensor 2y agoThat type of wording reduces programming to a mere policy-translation job, not a policy-making job.
- andrewstuart2 2y agoI'd imagine that would be considered a role change and a new non-compete, and thus forbidden. That's definitely how I'd approach it if someone told me I was suddenly an exec. "Sweet, sounds good. Send over the new employment contract, then! With a 10% raise, of course."
- jejeyyy77 2y agoeveryone who had a noncompete should be compensated.
- datadrivenangel 2y agoThe rule goes into effect 120 days after it gets published in the federal register, and at which point all previous non-competes are unenforceable EXCEPT for senior executives. Senior executives cannot enter into new non-competes though.
- DebtDeflation 2y agoHow is Senior Executive defined? C-Level only? Named Executive Officers on the 10-K?
- tired_star_nrg 2y agoMaking over ~$160k and making policy decisions
- zippothrowaway 2y ago'A “policy-making position,” according to the final rule, is a business’ president, CEO or equivalent, or any other person with “policy-making authority” for the business similar to a corporate officer with policy-making authority. The term “policy-making authority” in turn means the authority to make policy decisions controlling “significant aspects of a business entity or common enterprise.” Expressly carved out, are positions that only have the ability to “advis[e] or exert influence over such policy decisions” or positions only having “final authority to make policy decisions for . . . a subsidiary of or affiliate of a common enterprise.”' This seems written to stop even VPs being covered.
- BeefySwain 2y ago> The Commission also finds that instead of using noncompetes to lock in workers, employers that wish to retain employees can compete on the merits for the worker’s labor services by improving wages and working conditions. I absolutely love this.
- gffrd 2y agoHogwash! I demand a free market for my business, but a closed market for my assets.
- paxys 2y agoPrivatized gains, public losses. It is the capitalist way.
- deleted 2y ago[deleted]
- QuiDortDine 2y agoI didn't know the FTC was this savage lol
- kevstev 2y agoI do too and it feels to some extent that its about sending a message. I worked at Citadel, and they had these posters about Integrity, Winning and being a meritocracy and all that but their ever more constraining non-competes completely flew in the face of it and it was upon them putting one of those agreements on me that I started to become disillusioned with the firm (around the same time that I found that Ken Griffin was donating to Trump's campaign). I tried to negotiate to get them to at least agree making the non-compete periods pay out my full comp and not just base, but they absolutely refused to budge an inch. Some people I knew there had non-competes locked in at their base salary when they started, which in some cases was 10+ years ago, meaning that it was a relatively paltry amount. They also had a clause in them that stipulated that it was 100% at the discretion of the firm as to whether they would enforce it or not- meaning that it wasn't even a guaranteed paycheck if you left... they would decide- and only after you left or were fired- if they were going to enforce it, leaving you in limbo until they made their decision. F non-competes. Mine worked out okay, my wife got burned hard on them and it took her career at least 2 years to recover from hers.
- nerdright 2y agoThis is pretty big given the current stagnant job market. I expect a lot of startups to come from this change.
- cjen 2y agoThis seems incredibly important. I know non-compete rules personally held me back at a previous tech job. I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.
- kevstev 2y agoI was subject to one as well, but it was just on my base, not total comp, which was not the majority of my compensation. And while my base was fine, it was more or less explicitly stated that this was meant to make it painful for employees to leave and had almost zero to do with any special information the employee had.
- lokar 2y agoThey have other tricks. My comp was about 80% bonus, most of which went into deferred comp for a few years. If I was to go to a competitor without permission (independent of the non compete) I would forfeit the deferred comp.
- 0xbadcafebee 2y agoReject the handcuffs. Once enough people do, they will stop making it deferred. They know that if you're willing to reject the money, you're willing to leave (the handcuffs aren't keeping you there), and that scares them.
- anon84873628 2y agoThat's called a multi-agent coordination problem and game theory tells us it is not so simple to solve.
- 0xbadcafebee 2y agoI don't know about game theory, but a few of us did it at one company and they changed their policy.
- timf 2y agoThe U.S. Chamber of Commerce is likely to file suit: https://www.uschamber.com/finance/antitrust/chamber-comments-on-ftc-proposed-rule-to-ban-noncompetes https://www.uschamber.com/finance/antitrust/chamber-comments...
- deleted 2y ago[deleted]
- macintux 2y agoI suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.
- arcticbull 2y agoIt'll be interesting to see what happens. It does sound like this clearly falls under interstate commerce, so within the scope of Fed action. Is there something that makes you think otherwise? Beyond court composition, that is.
- Uvix 2y agoThat this is coming from the executive branch, not the legislative branch.
- arcticbull 2y agoSure, but FTC was authorized by congress (FTC Act 1914) to "prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce" which seems pretty cut and dried? I may be missing something, this just feels pretty reasonable.
- ixwt 2y agoYou're missing the fact that the current Supreme Court has been doing everything they can to kill Chevron Deference.
- robotnikman 2y agoIt's about time! Nice to hear some good news for a change!
- benced 2y agoI suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while. (how bad? I don't know.)
- dbcurtis 2y agoEh.... any impact will play out over a long period of time. Everything interesting happens on the margin, so I do agree with you that CA's laws around non-competes has had a beneficial impact on new business formation, and contributed to CA's economic growth. If this gets fully implemented, it will level the playing field with other states, but it will take some time (a decade would be my bet) for the impact to be fully felt.
- ballenf 2y agoI'd guess it will have the opposite effect as companies have one less big reason to avoid CA.
- benced 2y agoThe reason no non-competes has helped CA is increasing startup formation. California has shown over the last 30-50 years that startup formation > attracting legacy businesses for growth. Unless that changes, California becoming less differentiated for startup formation but getting more legacy businesses is a bad trade for California.
- Gibbon1 2y agoOne of the biggest issues I have with economists theory of comparative advantage is it ignores the self sustaining ecosystem aspects of economics. Some places if you need someone to do specialized thing X you can just walk down the street. Most places you'll need to find someone willing to move and and take a big hit on his career options. So that deep bench of skilled labor and business resources is a big deal.
- _akhe 2y agoIt's not bad when people are copying you, it signals that California is ahead of the curve on the issue and - upon further examination - others too like decriminalization of cannabis including removing it from background checks and drug testing for most employment, as well as certain tenant and landlord rights other states don't have. Some of those non-competes were ridiculous with their "in perpetuity throughout the ends of the Universe" type wordplay, I'm surprised governments haven't been more vigilant on things like the stifling of entrepreneurial mobility, since it only helps their economies in the long run to do so. Make it possible to disrupt, design economies for entrepreneurs as much as for corporations, and reap the benefits IMO. Let those big evil uglies get disrupted if they can't stay relevant or retain top talent.
- bagels 2y agoNoncompetes for fast food workers are totally unconscionable.
- kylestlb 2y agowhoa, that existed? sheesh
- deleted 2y ago[deleted]
- throwaway74432 2y agoDoes anyone know the history of noncompetes? It seems like a case of Tacit Collusion[1]. But if there is no competitive advantage to the noncompete, how did it catch on? 1. https://en.wikipedia.org/wiki/Tacit_collusion https://en.wikipedia.org/wiki/Tacit_collusion
- whitej125 2y agoDoes this change a lot for many people? This doesn't mean you can scurry off a just build a competing product/service to your existing employer. You probably also have NDA and/or IP agreements too. > The Commission found that employers have several alternatives to noncompetes that still enable firms to protect their investments without having to enforce a noncompete. > Trade secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Researchers estimate that over 95% of workers with a noncompete already have an NDA. Trade secrets would generally include anything from code, approaches to problems, product roadmaps, customer lists, etc (so spans not only engineering... but also product, sales, etc).
- SoftTalker 2y agoI've often wondered how often noncompetes get enforced/litigated. I had to sign a noncompete once, in order to get a severance package when the company was going out of business. I asked a lawyer about it, who said don't worry about it, there isn't going to be anyone who will ever enforce it.
- MOARDONGZPLZ 2y agoA buddy of mine worked in a niche industry and their noncompete didn’t allow them to go to competitors, even to do something different and in an arm of the competitor that was not directly competitive with the company. The company spent a lot of time and resources suing people and threatening litigation. Enough so that employees desire to leave and still work in the industry was chilled and the competitors in the industry started becoming very reluctant to hire from my buddy’s company. It was pretty messed up and this rule fixes that awful situation.
- saagarjha 2y agoYou already cannot use trade secrets from your last job at a new role. That's in pretty much every single employment agreement, spelled out clearly. That does not mean you cannot go work for a competitor and do something new there.
- 2y ago
- deleted 2y ago[deleted]
- LeifCarrotson 2y agoFull text of the ruling here: https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule... It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued. > In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule. I've always thought of that as representing a stifling of innovation.
- nerpderp82 2y agoI'd say the number of patents filed and granted by practicing entities of small to mid-size would be a pretty good measure of innovation. I think patent fees and complexity should be progressive, esp if you have working hardware and don't just flip the patent to a troll.
- akira2501 2y ago> I've always thought of that as representing a stifling of innovation. The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.
- sanity 2y agoDepends on the industry, 20 years is a lifetime in software.
- crote 2y agoIn theory? Yes. In practice? No. For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good. Patents are no longer about protecting R&D investments. They have become more about patenting the vaguest concepts possible, in the hope of making a profit when someone else does an actual invention which somehow stumbles into your patents' wording.
- deleted 2y ago[deleted]
- aidenn0 2y agoI am 100% for this, but it makes me sad that the legislative branch has nearly completely abandoned its duty to pass laws in favor of granting the executive branch the authority to regulate just about everything. This is a problem for two main reasons: 1. The executive branch can unilaterally revoke these regulations, making them more volatile. Maybe my non-compete is invalid today, but will it be in 4 years when I actually want to change jobs? Changing a law takes approval of either majority of both chambers plus the president, or a supermajority of both chambers. 2. It lowers the stakes in congress, which I believe causes more misbehavior. When the stakes are actually high enough, congress tends to get things done. When the stakes are low, congress grandstands for reelection.
- deleted 2y ago[deleted]
- jjtheblunt 2y ago> The executive branch can unilaterally revoke these regulations The US Constitution + amendments delineates the powers of the branches. Is the situation you describe possibly a window in time when executive branch constitutional overreach has not been yet challenged? [ edit : great explanations below -> sincere thanks ]
- mattmaroon 2y agoIt’s not overreach, it’s delegation by Congress to the executive parent is discussing. Congress often gives the executive the right to regulate things instead of regulating it themselves, and it’s a controversial topic.
- aidenn0 2y agoCongress created the FTC, congress could eliminate or curtail the FTC's power. Some have argued that it's unconstitutional for congress to give away its power (even conditionally) in this way, but AFAIK that's a rather fringe legal theory. Certainly the FTC has existed for over 100 years at this point, so there's been plenty of time to challenge it.
- tuckerpo 2y agoGood! If you don't want your SMEs taking your secret sauce to a better employer, then be the better employer.
- SoftTalker 2y agoTrade secrets and NDAs can still be enforced.
- deleted 2y ago[deleted]
- endisneigh 2y agoI’m curious if it’s actually legal for them to ban noncompetes.
- paxys 2y agoMy prediction – this will be litigated in courts for the next few years until eventually being struck down by the supreme court in a 6-3 decision. And if Trump becomes president we won't even need to wait that long.
- animex 2y agoAnd this is just the start of why Apple cancelled Jon Stewart over a purported Lina Khan interview.
- banish-m4 2y agoLina Khan, AI, and China. Apple+ is like MSNBC: they only want incrementalist pseudo-agitators rather than those who speak truth to power. (MSNBC has a history of firing hosts who Washington king makers or Comcast executives disapprove of.)
- jmward01 2y ago-best- -reason- -ever-: The Commission also finds that instead of using noncompetes to lock in workers, employers that wish to retain employees can compete on the merits for the worker’s labor services by improving wages and working conditions.
- deleted 2y ago[deleted]
- Shorel 2y agoCan they also ban tipping culture?
- 0xbadcafebee 2y agoTipping culture stays because consumers don't want to pay what the product is worth. You reduce salaries and suddenly the food looks cheaper, and the "tip" is what they took out of the salaries. When restaurants end tipping, consumers revolt at the real prices.
- 93po 2y agomost of the rest of the world where tipping isn't the norm isn't revolting at real prices
- eatsyourtacos 2y agoThat's a bunch of bullshit. The tips advantage the EMPLOYER because there is zero transparency to the consumer. I have no idea how much every server I go to is making. How do I know if it's good or bad? How do I know if they have any benefits? Especially now that everyone wants a fucking tip. I buy some ice cream with my kids and I'm supposed to tip 20% to someone for scooping my ice cream? I have no idea if the server is making $15/hour or $4/hour to determine if the tip is part of their pay or pure bonus etc. It's baffling you blame the consumer. Employers are the ones that don't want to pay what their employee is worth. Honestly the entire country is broken because of simple issues of non-guaranteed healthcare and non-guaranteed time off etc. If basic human rights were guaranteed we wouldn't have to play this constant game of figuring out what to pay people at a minimum.
- 0xbadcafebee 2y agoCountless American restaurants have experimented with removing tipping over the years. Nearly every single one of them goes back to tips, and the reason cited is the customers balk at the prices.
- TeaBrain 2y ago
- faeriechangling 2y agoI’m sure all the politicians in the United States, who champion the “right to work”, will of course support banning legal contracts which have the sole purpose of restricting your right to work.
- Bostonian 2y agoBanning noncompetes discourages companies from training workers, since they can leave immediately after their training is over. It also impinges on worker freedom. Currently I can apply for jobs with and without noncompetes, and if the job with the noncompete pays substantially more or is more attractive in some other way, I can take it. The FTC rule would deprive me of that choice. I have been hired to write software to implement investment strategies. My noncompete prevents me from leaving and immediately taking a job at company that invests in the same markets. That is a reasonable way for the company to protect its intellectual property.
- wildzzz 2y agoUsing investment strategies developed at Company A to make money for Company B would likely be a violation of your NDA. Even if you didn't use anything you learned at Company B, you might still expect a trade secrets lawsuit if they really suspect you did (printing out docs, storing docs off network, etc.) There already is plenty that companies can do to protect trade secrets from leaving with employees that don't require you to find a new career field. Like maybe Company A can better separate the work so that every software engineer doesn't need to have access to the secret sauce or simply making the job more attractive so that the ones with the secret sauce don't feel the need to leave at all. Why would a company bother to work hard to retain you if they know that leaving would involve taking a pay cut, relocating, or having to restart your career elsewhere? Employers may offer more initially when hiring non-compete workers but there's little incentive to grow their wages. As for training costs, many companies already require extra years of service for educational assistance. Simply make the employee pay back any training costs if they voluntarily leave for a new job within 6 months after initial training is concluded.
- vehemenz 2y agoI see the point, but wouldn't this new rule also force employers to pay more to prevent workers from leaving in the first place? Employees won't leave if they are well compensated.
- jaysinn_420 2y agoYou can have training repayment and non-disclosure clauses in contracts, leaving cost recovery and legal remedies for employers. Takee your investment industry example - a non-compete could prevent you from taking a lucrative position in a competitor of your current employer, doing completely unrelated work like writing software for their settlement system. I would rather have the freedom to choose where I work.
- lr4444lr 2y agoJust out of curiosity, were any non-competes ever actually enforced by the courts for a reason other than stealing clients or trade secrets?
- Overtonwindow 2y agohttps://appleinsider.com/articles/23/09/25/rivos-countersues-apple-over-employee-intimidation-with-restrictive-agreements https://appleinsider.com/articles/23/09/25/rivos-countersues... Phillip Shoemaker. https://www.theverge.com/2019/5/29/18643868/apple-app-store-approval-process-antitrust-phillip-shoemaker-interview https://www.theverge.com/2019/5/29/18643868/apple-app-store-...
- no_wizard 2y agoA case that isn't even a tech company: Prudential Security enforced non competes against minimum wage security guards[0] [0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3-companies-that-prevented-employees-from-leaving-for-competitors/ https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...
- deleted 2y ago[deleted]
- cryptonector 2y agoRegardless of whether this is a good or bad outcome, I'm still totally non-plussed that the best we can do in the law is to ban "unfair" business practices. What exactly is "unfair"? We all know it when we see it, I suppose, but we don't all see things the same way. More importantly, and especially if the Chevron doctrine falls, I don't see how the Congress can delegate so much power, so ambiguously, to the FTC. It seems like a "major questions" issue, especially if the FTC then uses this to regulate practices in a way that amounts to usurping Congress's power. For example, imagine that the FTC declared walled gardens an unfair practice. Or suppose the FTC set a maximum transaction fee (think of Apple here). Such examples would have such tremendous impact as to arguably require legislation rather than bureaucratic fiat. There has to be a better way. Perhaps the best way would be for Congress to every term consider banning recent innovations in business practices that are "unfair" -- to do it before the businesses using those new practices can use them to gain so much power that Congress might have a hard time banning those practices later.
- banish-m4 2y agoUnfortunately, what you, I, or any non-billionaire voter thinks is reasonable or not is impertinent to the "free speech" of super PAC corporate lobbyists and $5 ideological fringe zealots near total monopolization of legislative output. No amount of grassroots action, voting, or dumb insurrections can break through entrenched corruption that is in the tank for billionaires, Russia, QAnon, and militant evangelical Christian white suprematists.
- jcadam 2y agoAh man, go outdoors... fly a kite or something.
- throw_m239339 2y agoThank you the FTC. The very idea of non-competes clauses in a contract is absurd and anti right to quit or to work.
- londons_explore 2y agoIt seems this also allows you to accept another job for a competitor "after hours". I wonder how many companies will start offering "consulting" over brunch on a saturday to their competitors employees? Sure, NDA's still apply, but have fun proving that if it's all verbal over brunch...
- grubbypaw 2y agoNo. It explicitly does not do that. "The Commission declines to extend the reach of the final rule to restraints on concurrent employment. Although several commenters raised this issue, the evidentiary record before the Commission at this time principally relates to post-employment restraints, not concurrent employment restraints. The fact that the Commission is not covering concurrent-employment restraints in this final rule does not represent a finding or determination as to whether these terms are beneficial or harmful to competition. The Commission relatedly clarifies that fixed-duration employment contracts, i.e., contracts between employers and workers whereby a worker agrees to remain employed with an employer for a fixed term and the employer agrees to employ the worker for that period, are not non-compete clauses under the final rule because they do not restrain post-employment conduct."
- evantbyrne 2y agoIs this just clarifying existing case law? When working on contracts with my attorney he mentioned on multiple occasions that noncompetes were unenforceable. I'm in Michigan for whatever that is worth.
- blackeyeblitzar 2y agoAlthough I agree with noncompetes going away or being limited, I don’t feel good about agencies making broad changes that feel like they should be the outcome of a legislative process. I wonder if this will be challenged. Also - what happens in situation where someone is leaving one company to work for a direct competitor? How do noncompetes function there to prevent sharing of confidential information or trade secrets that will help the competitor?
- banish-m4 2y agoCurrently: 0. Get hired by any MAANG or tech company of sufficient size outside of California. 1. Watch as the employment agreement is marked on the edges or in the metadata as being specifically tailored to that state with different protections and obligations than employment agreements signed by other workers doing the same job in different states. 2. Negotiate on onerous terms that are harmful to your interests. I don't know if this is more of an "executive order" wish because if the FTC had the power, it probably would've done so already.
- bufordtwain 2y agoThis is nice but I think it's small potatoes compared to what could be achieved economically by decoupling healthcare from employment.
- boppo1 2y agoYeah, this is a big one. How'd that happen in the first place?
- cryptonector 2y agoYou're looking for ERISA. And the ACA.
- ajkjk 2y agoThe whole system remains a disaster, just slightly less of a disaster than it was.
- Duwensatzaj 2y agoFDR froze wages during WWII while excluding insurance benefits. That plus tax subsidies for third-party insurance and we ended up in the current mess.
- breck 2y agoI never knew that. Thanks. A good example of disastrous 2nd order effects.
- wnc3141 2y agoIt's one less tool for abuse from employers in an otherwise imperfect system
- dudul 2y agoThis would be such a game changer for worker mobility and entrepreneurship.
- k1rd 2y agoWith respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...
- deleted 2y ago[deleted]
- TuringNYC 2y ago> "same total annual compensation and benefits" This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected
- noitpmeder 2y agoSure, but to some degree bonuses are completely discretionary. A very bad year at some shops or on some desks could land you with a 0 bonus, although when that happens expect everyone to start looking for other jobs.
- adastra22 2y agoMust be nice to have a bonus. Never worked in a place that had one!
- dev1ycan 2y agoGood, thank god, I have a non compete...
- EasyMark 2y agoI think the FAANGs are gonna come out on this one and take it all the way to the supreme court. I don't see this sticking at all, especially with the current SCOTUS
- _xerces_ 2y agoCA already makes non-competes unenforceable and aren't most FAANG employees in CA?
- EasyMark 2y agoCA isn't federal law and this involves the FTC. Sure they could have taken them before but I think a nation wide limit might stir up the hornet's nest. FAANG have offices and data centers all over the country
- gerash 2y agoBut the headquarters are mostly CA
- OkayPhysicist 2y agoTo my knowledge, none of the FAANGs utilize noncompetes, because they are pretty much completely illegal in California, including ones that were signed out of state. It's too much of a headache for something that can be invalidated simply by moving to California.
- gerash 2y agoQuite the opposite, I suspect one of the reasons FAANGs are successful is the lack of non-compete in CA. Folks can easily hop around, ask for higher wages and take their skills to a new company that directly competes with the old. There's a heavy competition among the tech companies both for talent and for their businesses
- NominalNews 2y agoOne of the best decisions made. Non-competes are harmful and the problem they claim to solve can be resolved in other ways. Why economists are so critical of non-competes - https://www.nominalnews.com/p/to-compete-or-non-compete https://www.nominalnews.com/p/to-compete-or-non-compete
- trashface 2y agoThis is going to get challenged and the conservative majority supreme court will overrule them. 100%
- wilsonnb3 2y agoWould you mind linking to some of examples of their prior decisions that makes you think that? I am curious.
- FredPret 2y ago> "‘Robbing people of their economic liberty also robs them of all sorts of other freedoms,’ said FTC Chair Lina Khan, who appeared at a House hearing in 2023." Should be the motto of every government in the world.
- gnicholas 2y agoI wonder if she applies this maxim selectively, or if she would also oppose other impositions on economic liberty, such as minimum wage laws.
- FredPret 2y agoThat’s why we need two parties
- mcmcmc 2y agoThe two-party system is a blight on democracy. You ever read George Washington's farewell address?
- FredPret 2y ago> George Washington I'm a huge fan but nobody's perfect. Two parties were not only inevitable but work unbelievably well. I'm not American, and I really don't want to inflame the political passions of either side, but take the US 2020 election, for example. I remember reading an article comparing various polling results on policy points and candidate popularity to the election outcome. The polling results suggested that people didn't want Trump again, but liked many of his policies, and didn't want a far-left candidate either. Through votes for president, governors, senators, etc, they got exactly what the polls said they wanted. Using the two-party system, over a hundred million US voters were able to send a very clear and nuanced message to the political system. How's that for a solution to a distributed co-ordination problem?
- ajkjk 2y agoWell if your goal is "freedom" all-around then it would make perfect sense that sometimes that would lead to regulations that prevent things and other times it would lead to regulations that allow things. In each case the regulation does whatever is best for people's freedom? I seriously can't understand how anyone could be opposed to this. Laws that help people and protect them from people who have power of them are... good. That's what laws are for.
- option 2y agoThis is fantastic news. This will make USA even more innovative.
- m463 2y agoI'm not a senior executive, but I'm curious about: "existing noncompetes for senior executives can remain in force." So what happens to these people, are they stuck with the noncompete forever? so if they leave, they can still be sued? or is it that they can't start a competing business at the same time?
- octopoc 2y agoThis would definitely affect me, but I guess I should wait until it goes into effect and then someone else tests the law? I can't afford to get sued by my former employer.
- daft_pink 2y agoIs this really legal? Do they have the authority to do this? I’m not against it. I’m just shocked they are able to do it.
- jrs235 2y agoI see a lot of discussion about interstate vs intrastate commerce/non-competes. I would bet the farm that all these businesses have an EIN, an employer identification number, which is issued by the federal government and thus would be enough to show nexus and jurisdiction for federal regulation and allowing the FTC to take action here.
- tchock23 2y agoWill this lead to companies getting creative with other types of agreements? For example, I could see this leading to overreaching non-solicitation agreements, where you can't approach "any person/company ever added to our CRM" (for a period of time), thereby effectively ending any chance of you have of building or working for a competitor.
- ewhanley 2y agoMany companies already try this approach
- akulbe 2y agoDo you folks think this is going to just sail right through? Isn’t it premature to get excited before the proverbial ink is dry? I’m very much in favor of a total ban of noncompete agreements. That said, it seems like all the parties that stand to benefit from them will fight tooth and nail to see this doesn’t come to pass. Thoughts?
- tryptophan 2y agoI think its pretty clearly a ploy by the biden regime. It follows the same playbook as the student debt cancelation plot. Use gray areas in the law to do things that it was obviously not intended for, then advertise how you did the thing, and then when it inevitably gets shut down because its not legal you blame the other side for killing it. He is just playing with voters.
- dbcurtis 2y agoThis is past the NPRM stage, if I am reading correctly, so final rule is getting published in the federal register. That is as baked as regulations get.
- _akhe 2y agoOne last economic stimulus for startup lawyers before getting replaced by Mistral + RAG + your jurisdiction's .txt files and PDFs :D
- dragonwriter 2y agoMistral (or even Mixtral) + RAG + txt/pdf files of law is nowhere close to usable to replace lawyers, and probably wouldn’t even provide reliable legal tooling. (A decent LLM + RAG + LexisNexis or Westlaw’s proprietary extremely extensively human annotated datasets of constutitons, statutes, case law, precedent, and scholarship, OTOH, would likely be ingredients from which a powerful professional tool could be built.)
- _akhe 2y agoIt was said in jest, but you went a little overboard with: > wouldn’t even provide reliable legal tooling. There are already funded companies and even hobbyists in Discords I'm in doing this with RAG, also patient medical docs, etc. it's really great for that use case of specific document data like laws or a patient's medical history. Here are some AI assistants that I created that can interpret law, examine medical docs, help you buy shampoo, or even give you price and parts comparisons at your local auto parts store: https://github.com/bennyschmidt/ragdoll-studio/tree/master/examples/instant-assistant https://github.com/bennyschmidt/ragdoll-studio/tree/master/e... I say said in jest because (and this is counter to your second point) it very likely will not replace lawyers, but become tooling for lawyers.
- smj-edison 2y agoJust a thought: I think patents do tend to favor the little guys. Coco cola has never had to patent their recipe, as it's a trade secret. I believe ASML and TSMC don't patent some of their technology, since it's a trade secret. They don't want to patent it, as that would reveal details. Also, iirc, if you can patent something that is shown to significantly improve on a previous patent, you can get a patent for that. That's not to say that patents can't be abused—they certainly can—but it can give a smaller person leverage.
- chaostheory 2y agoThe ban of non-competes is Silicon Valley’s not so secret advantage. Its literally part of its origin story with the Fair Children companies like Intel. The next few years will be interesting. We’ll see if any other metro outside of California will offer it real competition now that the ban on non-competes is national.