FTC votes to ban non-compete agreements

76 points by timf 1 year ago | 16 comments
  • ApolloFortyNine 1 year ago
    From what I can tell this is a full ban (except for senior leadership), is that correct?

    This is definitely an overall good thing for workers, but I do think a non compete that you are paid your salary during is fair for some industries. The ridiculousness always stemmed from companies being able to control who you worked for while you had ceased to benefit from the company.

    • hnburnsy 1 year ago
      >With respect to existing non-competes, i.e., non-competes entered into before the final rule’s effective date, the Commission adopts a different approach for senior executives than for other workers. Existing non-competes with senior executives can remain in force; the final rule does not cover such agreements.

      >The final rule allows existing non-competes with senior executives to remain in force because this subset of workers is less likely to be subject to the kind of acute, ongoing harms currently being suffered by other workers subject to existing non-competes and because commenters raised credible concerns about the practical impacts of extinguishing existing non-competes for senior executives. For workers who are not senior executives, existing non-competes are no longer enforceable after the final rule’s effective date Employers must provide such workers with existing non-competes notice that they are no longer enforceable.

      https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...

      • tomp 1 year ago
        Yes this is what top hedge funds do.

        Non-competes are enforceable while working for the company (obviously lol), so they just ... keep you working for the company, paying you salary+bonus! (E.g. 1 year+ for Citadel, 3 years for RenTech... old info though...)

        It's called "gardening leave".

      • ilove_banh_mi 1 year ago
        It will take 4 months to be effective, and there will be lots of lawsuits and obstacles. We'll see what happens.

        On a personal note I had the most insane experience moving from California to Colorado and being offered a most extreme non-compete clause by a local engineering company that had just hired a new CEO ... from California; I had to give them information about every project I had worked on in the past, would have to report whatever I did outside of work hours, and give them a blank card to patent either if they felt like it. The director who wanted to hire me said they never had that kind of non-compete, the new CEO --fresh from California-- had introduced it. I declined.

        • ChrisArchitect 1 year ago
          • hnburnsy 1 year ago
            Another news site that refuses to link to the source material...

            https://www.ftc.gov/news-events/news/press-releases/2024/04/...

            • bawolff 1 year ago
              Good they are actually banning them.

              IANAL, but i am in canada and from what i understand, most non-competes are unenforcible here (to be enforcible it must meet a bunch of standards which most tech non competes dont) but yet tech companies still insist on them to scare workers who dont know better into compliance. Its better to just ban them outright.

            • andthenzen 1 year ago
              Any employment law enthusiasts here who can comment on whether garden leave is still allowed under this? I would assume so, given the employment is active and the employee is still being paid, it is effectively an extended notice period where the employee doesn't do any work.
              • hnburnsy 1 year ago
                570 pages of rule making, which addresses garden leave agreements...

                https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...

                >With 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. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.

              • ch33zer 1 year ago
                This is huge, but I'm very concerned that it will get struck down.
                • atombender 1 year ago
                  Dupe: https://news.ycombinator.com/item?id=40135755 (1045 points, 429 comments)
                • xyst 1 year ago
                  Good.

                  Now let’s see if the FTC has the balls to stand up to the army of lawyers and lobbyists that the private industry will send to fight this.

                  Only time will tell. EPA regulators couldn’t do anything about the rampant amount of pollution that O&G produces. SCOTUS made sure of that [1]. I hope for different outcome for FTC

                  [1] https://www.hsph.harvard.edu/news/features/the-supreme-court...

                  • drivingmenuts 1 year ago
                    It’s not the FTC you have to worry about. It’s Congress - if business interests can bribe enough Congresscritters, then that rule is effectively dead.
                  • 1 year ago