FTC Proposes Banning Employee Non-Compete Agreements

[Zorba]

The FTC is proposing a new rule that will ban all employee non-compete agreements, invalidate existing ones, and make it illegal for a company to "represent to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause."

That clause is important, non-competes are already completely unenforceable in Oklahoma, but that doesn't stop companies from using them and making threats with them. Or like my company does, change then venue to a different state they don't even operate in.

I think this is long long long overdue and I'm very glad it's finally being done. A person should always have the right to take their labor elsewhere.

Non-Compete Clause Rulemaking

Overview About one in five American workers—approximately 30 million people—are bound by a non-compete clause and are thus restricted from pursuing better employment opportunities.

www.ftc.gov

 

[MomentsofSanity]

Good. Most are garbage and unenforceable anyway. Nothing like trying to deny someone the ability to work in the field they are trained and skilled in moving forward. Employers have far too much control, or try to.

 

[Perknose]

Excellent. Needed. Long overdue. For all these reasons, I fear it won't happen.

 

[MrSquished]

about. fucking. time.

 

[Pens1566]

Good

 

[K1052]

One of my more hated things right there with contractual binding arbitration requirements.

 

[senseamp]

Already unenforceable in California, hence the success of Silicon Valley.

 

[Zorba]

Already unenforceable in California, hence the success of Silicon Valley.

Except companies do the same thing there as in Oklahoma, change venue. Even if completely unenforceable they make people scared.

 

[compcons]

But what about the job creators!?!?! Who will take care of them? They are the real victims here.

 

[senseamp]

Except companies do the same thing there as in Oklahoma, change venue. Even if completely unenforceable they make people scared.

Not anymore.
S.B. 1241 :

(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:


(1) Require the employee to adjudicate outside of California a claim arising in California.


(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.


(b) Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.


(c) In addition to injunctive relief and any other remedies available, a court may award an employee who is enforcing his or her rights under this section reasonable attorney’s fees.


(d) For purposes of this section, adjudication includes litigation and arbitration.


(e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.


(f) This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

California is expensive, but you can make more money without non-compete BS.

 

[TheVrolok]

Excellent. Needed. Long overdue. For all these reasons, I fear it won't happen.

All of this.

Have my fingers crossed, though.

 

[Brainonska511]

This is definitely long overdue.

Saw a thread from doctors talking about these a few days ago, with some pointing out how ridiculously broad some agreements are written - like not being able to practice anywhere else in the state, or can't go to another practice within 50 miles (even though they were at a major hospital in the center of NYC). I think the latter one, the doctor was able to have a lawyer help him get it thrown out, and many are probably unenforceable because they're too broad. Organizations push for them to keep employees in their place and afraid to leave instead of trying to keep good employees through good benefits and pay.

 

[senseamp]

Guys, it's not a law, but regulation, and we have a SCOTUS bent on striking down Democrat regulations under dubious pretenses. If you want to get rid of non-competes, you'll need to elect Democrats at the state levels, like California has, and to Congress.

 

[Zorba]

Guys, it's not a law, but regulation, and we have a SCOTUS bent on striking down Democrat regulations under dubious pretenses. If you want to get rid of non-competes, you'll need to elect Democrats at the state levels, like California has, and to Congress.

Oklahoma and California are nearly in lockstep on this. While New York and Illinois still believe in restrictions on labor. Not sure "go full blue" is the real fix here. Campaign finance reform is.

But I'm sure the USSC will find some bullshit reason to crap on employees.

 

[senseamp]

Oklahoma and California are nearly in lockstep on this. While New York and Illinois still believe in restrictions on labor. Not sure "go full blue" is the real fix here. Campaign finance reform is.

But I'm sure the USSC will find some bullshit reason to crap on employees.

Primaries are important too. Most people don't follow state labor laws, even though they have far more impact on them than social issues. But you can bet employers lobby their interests.

 

[Shmee]

How would this be implemented or enforced? It sounds like it is not an act of congress, but rather an FTC regulation that comes into effect if approved, but how is that done? I am a bit curious on that. Anyway, this sounds like great news potentially.

 

[senseamp]

Step 1 is actually knowing what the current non-compete laws are in your state and any states that you may consider moving to:

https://beckreedriden.com/wp-content/uploads/2022/11/Noncompetes-50-State-Survey-Chart-20221121.pdf

There's really a risk in living in a non-compete state as a high tech employee, since job hopping or implicit threat thereof is your biggest lever to get more pay. Even if you save on taxes and housing, you might end up worse off overall. Unless you are so good that you can negotiate exemptions from non-competes or a fair one. I know a guy who left big tech in CA for hedge fund in NY. His non-compete states that they have to keep paying him salary and benefits (though not bonus) after he leaves until they release him from non-compete.

 

[Zorba]

How would this be implemented or enforced? It sounds like it is not an act of congress, but rather an FTC regulation that comes into effect if approved, but how is that done? I am a bit curious on that. Anyway, this sounds like great news potentially.

It's just like any other regulation, once enacted it becomes the law of the land and fully enforceable by the courts. The big thing here is any court in the country would immediately throughout any non-compete suits and maybe punish the company for attempting. There will also likely be penalties for attempting to make your employees sign an agreement.