FTC announces rule banning noncompetes
1169 points by null0ranje 1 year ago | 500 comments- LeifCarrotson 1 year agoFull text of the ruling here:
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.
- akira2501 1 year 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.
- crote 1 year 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.
- kiba 1 year agoPatents are no longer about protecting R&D investments.
Patents are always the tool of the moneyed and the lawyered, which is not the same thing as protecting R&D investment. There are exception, such as the guy who spent 12 years suing car companies over the windshield wiper, but that actually proves the rule because of time spent. It even apparently cause his marriage to break down. [1]
- infotainment 1 year agoDefinitely agree — software patents should be abolished, full stop. They serve no purpose but to impede innovation and progress.
I’d argue the same applies to all patents; the world would be better off without them in general.
- ClumsyPilot 1 year ago> overworked USPTO granting clearly invalid patents
Well no system can work that way - if judges in court were overworked and making invalid judgements, then the legal system would fail no matter what kind of laws you have and no matter what police does
- BurningFrog 1 year agoI think different patent lengths for different industries would do much to improve the current insanity.
- kiba 1 year ago
- wongarsu 1 year ago"short lifetime" is relative. Had Apple been granted a patent on the idea of a smartphone the same year they released the iPhone, that patent would only expire in three years.
There are some industries where due to slow-moving markets the 20 year patent period is still sensible, but for most sectors we would be better off with a 5 or 10 year patent period to account for the increased speed of innovation.
- bluGill 1 year agoApple did not invent the smart phone. The invented several features that make them useful (even their version one lacked apps), but others made smart phones before them. What Apple really did was make them useful by eliminating several of the things that made them annoying not not useful before.
- bluGill 1 year ago
- _aavaa_ 1 year agoIn theory maybe, but in practice it seems like the opposite. The current growth of the 3D printer market is in part directly tied to the lapsing of several key patents in the area.
Further, most patents may contain key details, but they also intentionally contain as much broad information as to create a massive exclusionary zone, not to mention burying any legitimately useful information.
- cryptonector 1 year ago> The short lifetime of patents
20 years is not short! 20 years might be appropriate for capital-intensive innovations (e.g., in pharma), but definitely not for industries where innovations are not typically capital-intensive. E.g., 20 years for cryptography and software patents is a disaster.
- chii 1 year ago> significantly mitigates this.
not if patents become a weapon against actual innovation - which it has devolved into being today.
Far from being made to progress science and the arts, patents have become a method for which large corporations can add moats to competition. Things like codecs for video/audio, which are purely mathematical expressions, have been patented. Genes and molecules, even tho they might occur naturally, can be patented (a very tenuous form of invention - it's discovered, even if not naturally occurring!).
And not to mention design patents.
I say the entire patent system needs to be abolished, or at least, made such that only applicable to physical mechanisms, and not software, nor biological systems.
- EasyMark 1 year agoHow is the lifetime of patents short? I mean they last for 20 years, that's an entire generation of time to make a profit?
- patmcc 1 year agoThey're short relative to other IP (like copyright), and short relative to inventions that have long R&D and cost recovery timelines. If $NEW_DRUG takes 5 years to develop, 5 years to trial, 5 years to market, and 5 years to profit...20 years isn't all that long.
If the invention takes 3 weeks and $0, yeah, 20 years is a long time.
- patmcc 1 year ago
- sanity 1 year agoDepends on the industry, 20 years is a lifetime in software.
- TaylorAlexander 1 year agoRespectfully, how do you define the current patent terms as “short”? Sure copyright is much worse, but innovation regularly happens on the scale of months! The current term of 20 years seems incredibly long to me, and it’s not clear that even at 5 years patents would provide more benefit than harm.
Most of the purported benefits of patents seem based on theories that most people don’t understand. We all take some received knowledge about their supposed operation, and usually proponents of patents know nothing about how powerful innovation in open source and other patent-free spaces can be.
- fsckboy 1 year agofor software patents they should have to disclose the sourcecode
- mlhpdx 1 year agoAny patent that fails to “teach” the innovation can be challenged and will likely prevail if it’s an egregious gap. That’s the public benefit part, in writing.
- mlhpdx 1 year ago
- crote 1 year ago
- ajb 1 year agoBoth things - that the number of patents measures innovation, and that they serve to stifle it, can be true at the same time. Under a fixed patent regime, the more innovation there is, the more individual patents are necessary to stifle it. Of course, if we allow the patent regime to vary, then if it changes to make patents easier to acquire then that means less innovation.
However, it's true that this property - of being a valid measure, but interventions to change it having the opposite effect on the inferred variable - is a very unfortunate one in a metric.
- bmicraft 1 year agoIt'd put it like this: the more patents there are, the (exponentially) more "innovative power" you need to achieve the next one.
- bmicraft 1 year ago
- nerpderp82 1 year 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.
- pictureofabear 1 year agoFRED has a good blog post on measuring innovation.
https://www.stlouisfed.org/open-vault/2021/june/how-to-measu....
- crakenzak 1 year ago> leading to an estimated average increase of 17,000 to 29,000 more patents each year
Insane to me that they use this as a measure of innovation, when almost by definition it is the antithesis of innovation.
- adastra22 1 year agoWhat definition is that? Because the legal definition of patent I’m familiar with requires each patent to be a unique innovation.
- colinsane 1 year agoa patent is a legal restriction affecting what others are allowed to produce. a person/group hit by such a restriction may elect to not produce the (innovative) thing they otherwise would have.
so that's the viewpoint in which patents may be "the antithesis to innovation". i won't argue which one's correct, just providing it here since you requested.
- naasking 1 year agoThat fewer patents are filed is not evidence that fewer innovations are taking place. Absence of evidence is not evidence of absence.
- colinsane 1 year ago
- vkou 1 year agoWhat objective metric would you recommend they use, instead?
- ClumsyPilot 1 year agoProductivity improvement in a physical application - it now takes fewer people less time to build a house
It takes less resources to remedy a failed over bridge. You’d have to have a basket of measurement like how we measure CPI - current approach is lazy.
- NominalNews 1 year agoWithout opining on the validity of the overall patent count as a measure of creativity, here's a cool paper I saw describing how to determine 'creative patents' - https://raw.githubusercontent.com/aakashkalyani/WebsiteUploa...
- ClumsyPilot 1 year ago
- adastra22 1 year ago
- l33t7332273 1 year agoI feel like, much like BMI, patent volume can be used to measure a population.
Sure, for any individual‘s fitness or a company’s “innovativeness” they are useless, but in aggregate they can be revealing.
- cratermoon 1 year agoThey do stifle innovation when one company locks up a huge portfolio of them. Forcing the employees who came up with the patentable ideas to sign non-compete agreements prevents them from working on anything related to those inventions elsewhere.
- no_wizard 1 year agoWonder ultimately how this will be handled once the Chevron Deference case is ruled on by the Supreme Court. The interpretations I've seen from other sources is that this will be overturned if the courts decide against the principle
- mrandish 1 year ago> I've always thought of that as representing a stifling of innovation.
Sadly, over my long career as a tech startup entrepreneur, my experience has been that your assumption is correct the vast majority of the time. Now when I teach or mentor young tech entrepreneurs I'm often explaining why they probably don't want to prioritize filing patents as part of their startup strategy. While there are certain exceptions, especially in pharma, biotech, materials science or medical fields, the years it takes for a patent to become enforceable and then the upfront cost + further years required to actually get a judgement, make patents largely ineffective in most startup contexts. There's also substantial uncertainty as to whether a startup can get the patent granted at all. After that, there's the challenge of getting it granted in a form which remains defensible and can't be easily worked around. Many people don't realize patent examiners can refuse to grant a patent unless the applicant narrows the claims.
Conversely, as a tech startup these days you do need to worry about patents potentially being used against you. The majority of tech patent cases are giant vs giant fighting over turf, a large incumbent trying to kneecap an emerging startup competitor (usually filing suit to make the startup unattractive to investors for a year and never intending to actually go to court) or patent troll vs everyone. Personally, I had both a giant trying to stop my startup's Series A funding and several patent trolls. Despite having no actual merit, the giant's suit did freeze our Series A and we nearly died. After seven months we'd demonstrated we could survive without a Series A so they dropped the suit (of course) but by then they'd cost us more than half our cash in just defending an obviously sham claim. As one investor told me, "Yes, it's clearly a bullshit claim but it will still cost serious money and a lot of founder attention over the next 18 months to get it thrown out and that, unfortunately, tips this deal over our risk threshold." And responding to the constant patent trolls just burns up startup founder attention and scarce cash in nuisance legal fees.
Despite the old-school trope of "garage inventor patents invention, makes fortune", frankly, from the perspective of fostering typical tech startups, you'd probably prefer a world where there were no patents outside of pharma, medical, bio, etc.
- mncharity 1 year agoI wonder how frequent that is, the "We've pointless patents. And legal budget larger than your last round. Thank for playing, goodbye." It seems a reoccurring theme.
But as for the usefulness of patents to startups, at least with material-science-y hardware, I've heard possession of a defensive patent portfolio described as "table stakes" for existence, with enforceability et al being secondary.
It was interesting watching patents and unicorn dreams shape VR. Instead of years of commercial ferment exploring low-hanging niches, we wait for monoliths to eventually create maximally-hard mass-market consumer tech, and will then backfill easier niches, eventually. An industrial policy optimized for pharma, yielding pharma-shaped industries.
- oceanplexian 1 year agoPardon my language but the patent thing has turned into a **** measuring contest, and serves no useful purpose.
When I worked at FAANG you had a whole class of PE engineer who literally couldn’t build anything to save their lives. But they would constantly file patents with a frenzy like IT guys rack up certifications. Of course when the patent office gets an application from $FAANG they approve it.
And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something, unfortunately.
- Terr_ 1 year ago> And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something
Wouldn't that mean they are accurately identifying ego-driven candidates that aren't actually engineers? :P
- Terr_ 1 year ago
- mncharity 1 year ago
- reaperman 1 year agoText of the rule itself starts on page 561, "XIII. Other Matters"
- akira2501 1 year ago
- k1rd 1 year 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...
- TuringNYC 1 year 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
- k1rd 1 year agoContinue reading:
> 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
I think TC is not included, will still get a base, but benefits seems to be included
- noitpmeder 1 year 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 1 year agoMust be nice to have a bonus. Never worked in a place that had one!
- adastra22 1 year ago
- ng12 1 year agoUsually the new firm picks up the tab for the lost bonus.
- TuringNYC 1 year agoIsnt the whole issue that the non-compete prevents a new firm from entering the picture? I did have a friend who got hired by a new firm, which then waited out her garden leave for 18mo...but I wonder how many firms would do that in, say, technology
- TuringNYC 1 year ago
- k1rd 1 year ago
- 1 year ago
- TuringNYC 1 year ago
- cjen 1 year 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.
- andthenzen 1 year agoPage 83-84 provides some guidance on garden leave and suggests that it will still be allowed under the new 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, 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.
- zippothrowaway 1 year agoDoesn't this mean the end of 'at-will' for anyone that a company wants to cover with a non-compete? At present a company can have their cake and eat it, giving you one day notice of end of employment but then enforcing a non-compete for x months.
If this survives the Supreme Court, wouldn't a company would have to put in your employment contract that you/they must give x months notice to end employment if they wanted to restrict you? Otherwise you could give one days notice and they wouldn't be able to put you on gardening leave.
- viraptor 1 year agoThe gardening leave still works as long as it's beneficial to both parties. The employee gets an effective long, paid holiday and the company gets a non-complete equivalent. Now they have to really ensure that pay is worth more than changing the employer though.
It's less "end of at-will" and more "if you want effective non-competes, it's going to cost you".
- viraptor 1 year ago
- zippothrowaway 1 year ago
- bagels 1 year agoI was denied a job I was well qualified for because, (paraphrased, besides the quoted part): Our CEO and your CEO have a "gentleman's agreement" not to hire people that work at eachother's company.
I have no idea why the recruiter was willing to put this in writing, and thankfully, I was able to find other work instead.
I know it's not a non-compete, but there are other ways that companies can illegally form cartels to suppress labor.
- adastra22 1 year ago> I have no idea why the recruiter was willing to put this in writing
You passed on a juicy class action lawsuit.
- bagels 1 year agoI'm not a lawyer, so I wouldn't make any money. I know it's a common refrain, but look at what happened with the Google & Apple class action. Those folks got less than $6,000 each for what must have been hundreds of thousands in damages each.
It's also career limiting to be the person that sued their employer. I didn't have any monetary damages, as I was able to find alternatives.
- bagels 1 year ago
- scheme271 1 year agoThat got Google, Apple, Adobe and a few other companies in a lot of trouble because they all agreed not to recruit each other's employees.
- bugglebeetle 1 year agoIt got them a slap on the wrist and a nothing fine for years of depressing wages. No one went to jail and the head of HR at Google during this period also got a book deal.
- bugglebeetle 1 year ago
- whaleofatw2022 1 year agoI saw this happen to a colleague in the fiber industry, it is very back room dealy.
- adastra22 1 year ago
- kevstev 1 year 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 1 year 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.
- lifeisstillgood 1 year agoBut at a certain point that deferred comp is “enough” that if you just go to work each day and hide in the loos it’s worth waiting around and collecting the cash. And the company won’t benefit from a mostly checked out workforce
- 0xbadcafebee 1 year 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.
- lifeisstillgood 1 year ago
- jbullock35 1 year agoI'm not sure that I understand. What does it mean for a noncompete to apply only to base compensation? Is the idea that if you join a competing company within X months of leaving your old company, you need to repay your base salary to the old company?
- bee_rider 1 year agoI think they are saying that the compensation they their previous employer paid them to not work for the competition for a year was based on their salary, not their salary plus bonuses, so it was not as good a deal as it sounds.
- cryptonector 1 year agoIt means that GP was paid their salary for the non-compete time. In finance it is common for total compensation to be the salary plus a "bonus" of 100% of salary in normal years + any performance bonus. This means that if you had a non-compete in the finance industry and you left your employer for a competitor, then your previous employer could pay you your salary (meaning 50% of your usual compensation) to not work for that competitor for a year.
(These numbers are typical of finance industry compensation and non-compete terms.)
- o_nate 1 year agoNo, it just means that during the period after you stop working at the old job but before you can start working at the new job, you are paid only your base. This can be a significant reduction in total comp in industries such as finance.
- bee_rider 1 year ago
- lokar 1 year ago
- MiddleEndian 1 year ago>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.
If a company wants to pay someone not to work for a year, they're free to do that whenever they want. Maybe without noncompetes, they'll have to pay more to make it worth it for the guy being paid to sit around!
- cryptonector 1 year agoWe'll have to see what the finance industry does. My guess is that they will only make sizeable counter-offers to key employees, and the employees will not be forced to accept them and typically won't. In the long run there might not even be sizeable counter-offers to key employees.
EDIT: Er, the FTC explicitly does not comment on garden leave:
> 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.
My guess is that garden leave will be offered, but in right-to-work states there will be no way to enforce that the employee remains employed.
- cryptonector 1 year ago
- yyhhsj0521 1 year agoI am currently on one of those deals by working for an HFT, then taking a competitor's offer. It is really very nice. From a wealth-accumulation POV, I am losing out a lot of earning each month I'm not working, but I am still paid a very cushy six-figure salary that covers a comfortable lifestyle for my family plus decent savings. I value my time at prime working age much more than the net worth I potentially lost. I have been able to travel, hone hobbies, start and finish personal projects, just help out my wife, and much more. Honestly I don't want it to end.
- michtzik 1 year agoHow does health insurance coverage work during the garden leave period?
- plyp 1 year agoSince you are still employed by your previous firm during garden leave you are still covered by your employer’s health insurance policy. I’m also on garden leave at the moment and that’s how it works in my case.
- yyhhsj0521 1 year agoThere is the option to COBRA. I just switched to be on my wife's insurance.
- plyp 1 year ago
- michtzik 1 year ago
- AlotOfReading 1 year agoIt's worth noting that the so-called "garden leave" you're describing usually doesn't come with things like bonuses. That may even be a majority of your compensation depending on the role.
- coldpie 1 year ago> I know non-compete rules personally held me back at a previous tech job.
Yeah. Remember this when you go to vote in November. Elections matter.
- cryptonector 1 year agoIs this rule a partisan issue?
- coldpie 1 year agoYes.
> The vote on the final rule, which fell along party lines, with three Democratic commissioners voting in favor and the agency’s two Republicans voting against
https://www.forbes.com/sites/mariagraciasantillanalinares/20...
- lotsofpulp 1 year agoI have yet to see a Republican led government advance banning of non competes (or really anything that benefits W-2 workers as a whole) in the last 25 years.
Washington (Democrat led), I think, most recently passed a non compete ban for those under a certain salary, but I cannot think of any Republican led states that have advanced such legislation, or espoused views that they want to.
It falls in line with similar worker friendly legislation passed by Democrat led states such as longer family leave, paid sick and family leave, higher unemployment benefits, higher minimum wages and minimum salaries for exempt workers, eliminating non tipped minimum wages, and publishing of salary ranges on job listings.
Edit to respond to below:
Is it partisan in California? If anything, I would have thought the California non compete ban is the most un-partisan issue since it has been in place since 1872, so neither of today's parties would be credited with it.
- CharlieDigital 1 year agoTends to be because it's ostensibly pro-labor and one party tends to favor pro-labor policies and the other tends to favor pro-business policies.
- coldpie 1 year ago
- lumb63 1 year agoAnother interpretation is that the ruling party is bribing people now that election season is ramping up by passing rules it knows has no standing in court, but won’t get shot down until post-election. Imagine all the people who voted for Biden thinking he would absolve them of the contract they willfully entered to pay their student loans. This is not much different. It is another group of people who have contracts they wish they didn’t have relying on government overreach to save them rather than not having put themselves in the position to begin with.
- electrondood 1 year agoI've heard this talking point before, and it's really silly to frame it as shenanigans somehow because of the timing, rather than elected officials enacting popular policies that the voters want.
That's literally their job.
- sunshowers 1 year agoContracts are only as enforceable as the legal system thinks they are. They get voided if they're against public policy. This is public policy.
- electrondood 1 year ago
- cryptonector 1 year ago
- wnmurphy 1 year agoYes, this is a huge win for labor from a very pro-labor administration.
- aidenn0 1 year agoI personally believe that lack of non-competes was one ingredient for Silicon Valley becoming what it is.
- gpderetta 1 year ago
- gpderetta 1 year ago
- anal_reactor 1 year agoI'm wondering whether EU will decide to adopt similar laws
- andthenzen 1 year ago
- datadrivenangel 1 year 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 1 year agoHow is Senior Executive defined? C-Level only? Named Executive Officers on the 10-K?
- tired_star_nrg 1 year agoMaking over ~$160k and making policy decisions
- zippothrowaway 1 year 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.
- zippothrowaway 1 year ago
- tired_star_nrg 1 year ago
- DebtDeflation 1 year ago
- bretthoerner 1 year 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?
- JumpCrisscross 1 year ago> FTC doesn't really have the ability to do this, since contract law is part of state law
The federal government can absolutely regulate both employment and contract law. (Merger agreements are contracts. The FTC was established to block bad mergers.)
Whether the FTC can do this is untested. But that’s more a Chevron issue than a federal powers one.
- bdw5204 1 year agoRelying on a Chevron argument is not particularly wise given the pending Supreme Court cases Relentless Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo where the Court is expected to overturn Chevron:
https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...
- faeriechangling 1 year agoYup, and the motivation is explicitly to go after unelected “administrative state” technocrats legislating by decree… such as through exactly what they’re doing here.
Unelected technocrats legislating by decree is the purview of the Supreme Court not the FTC, so sayeth the majority of current Supreme Court justices. I imagine a bunch of stuff is about to break since elected officials cannot pass jack shit in this hyper-partisan era.
- faeriechangling 1 year ago
- slotrans 1 year ago> The federal government can absolutely regulate both employment and contract law
Where in Article I Section 8 does the Constitution grant that power?
- dctoedt 1 year ago> Where in Article I Section 8 does the Constitution grant that power?
The Commerce Clause, when interpreted expansively — as federal courts have largely done. (We'll see what happens with the 6-3 conservative majority of this SCOTUS incarnation.)
- bombcar 1 year agoThe snarky answer would be the 13th amendment.
- dctoedt 1 year ago
- timeflex 1 year agoGenerally federal law will preempt state law. See the Court's decisions regarding California's attempt to ban arbitration agreements in employment contracts.
Now, that doesn't mean the Supreme Court won't come up with their own hot take, but at some point appeals and district courts are just going to say no when they send a case back.
What is the Supreme Court going to do? Federal judges can only be removed by impeachment of the House and conviction of the Senate. The Supreme Court has no power to enforce its decisions.
- HaZeust 1 year agoAs Jackson quipped; "John Marshall has made his decision; now let him enforce it." We'll see where this goes, and if it's honored.
- banish-m4 1 year agoThe odds of the conservative activism SCOTUS siding with employees and COTUS (bought off by corporate lobbyists) passing a worker-friendly prohibition on noncompetes are both zero. OTOH, it's not outside the realm of possibility that COTUS might pass a federal law superseding laws in California, Colorado, Illinois, Oregon, Nevada, Washington state, and Washington DC to roll back states rights favoring workers. Similar state bills in NY and NJ died in committee in 2022.
- HaZeust 1 year ago
- oceanplexian 1 year agoChances are extremely high that the current Supreme Court nullifies or greatly restricts Chevron. These kind of announcements are fuel for the fire and are likely to accelerate its demise.
They will kill this faster than they killed the COVID vaccine mandate. Govt. agencies can’t make laws, even if we may agree with them (I actually do in this case). However this isn’t the role of an unelected government agency.
- xpe 1 year ago> Govt. agencies can’t make laws
This is an unfortunately common response that often misses the point: U.S. government agencies do indeed have the power to make decisions with the force of law. Rule-making is a valid authority (subject to legal review of course)
- xpe 1 year agoIt is wise to look at an argument with extra caution when you see the phrase “unelected government agency”.
There are (of course) valid powers available to agencies. The question is what powers are valid.
Beware the dark arts of rhetoric. I’m familiar with spotting this one because my constitutional law professor used it often. He helped us to see right through it.
Logic and argumentation should win, not words designed to scare or muddle.
Intellectually honest comments reveal their fundamental guiding moral and political philosophies, rather than painting a one sided picture.
Edits done as of 6:30 pm eastern time.
- 1 year ago
- xpe 1 year ago
- bdw5204 1 year ago
- Buttons840 1 year agoAsk your attorney friends if a farmer growing food on their own land to feed to their own animals is "interstate commerce", and ask them to explain that to you.
What I'm referring to here is Wickard v Filburn in which the Supreme Court ruled that a farmer growing food on his own land to feed to his own animals was participating in "interstate commerce" and could thus be regulated by the federal government.
This is a big part of why the federal government can control things like which plants you are allowed to grow in your home.
But when the FTC tries to regulate something like non-competes and protect average workers the corporate attorneys come out of the woodwork, "oh no, the federal government can't do that!"
- mike_hearn 1 year agoIs it the same people? It seems like the current Supreme Court is very much against decisions like the weird farmer one and likely to roll such things back.
- cryptonector 1 year agoDuring the Federalist Revolution period of the the 90s, before Scalia got spooked by drug legalization, the court was definitely heading in the direction of reversing Wickard. Perhaps now that the court is willing to reverse big cases like Roe and Chevron (so it seems) it will also be willing to reverse Wickard.
- cryptonector 1 year ago
- modeless 1 year agoThe difference here is that Congress isn't banning noncompetes. The FTC is doing it. Different branch of government.
- nojito 1 year agoCongress established the FTC.
- nojito 1 year ago
- mike_hearn 1 year ago
- unyttigfjelltol 1 year agoYour friend may recall that the FTC occasionally acts against "deceptive" conduct in the marketplace. If you read the relevant law, it also can act against "unfair" conduct.[1] Sometimes people forget there are two words there separated by "or".
This would be an example of an "unfair" practice, which mostly are about predation in the context of unequal bargaining position when litigated under "Little FTC Acts"[2]. I don't know offhand whether these similar laws have been used to achieve the same thing state-by-state, but the FTC rule meets the straight face test for sure. So, regardless of what happens next at the Federal level, this is about to become a white-hot area of litigation under state "Little FTC Acts".
[1] https://www.law.cornell.edu/uscode/text/15/57a
[2] https://litigationcommentary.org/2021/06/15/a-fresh-look-at-...
- aidenn0 1 year agoIt is both true that the FTC's mandate is broad enough to include this and that this might get successfully challenged in the courts.
- relaxing 1 year agoInterstate commerce is broadly recognized to include just about anything.
- mbreese 1 year agoWhere I am, I know people who are under noncompetes that have a geographical clause. You can’t leave to join a competitor within X miles. In my part of the country, that would include at least three states (maybe more), but other locations would include many more.
So, yeah, seems like at least those non-competes impacts interstate commerce.
- kube-system 1 year agoYou're conflating two different things.
The reason those geographical clauses are in those contracts is because many states have ruled that non-competes are illegal unless they are limited in some ways to be "reasonable", and one common way states courts measure this is by ensuring that they are limited to something that might be a reasonable 'business area' that the company competes in. Corporate lawyers typically write in the exact radius that state courts have historically enforced into their non-competes to avoid them being disqualified for being too broad.
"Interstate commerce" on the other hand, just means any sort of business activity that crosses state lines. Basically every business engages in interstate commerce, just because commerce requires many interstate activities, like using the internet, or accepting electronic payments, or ordering supplies made in a different state.
- 1 year ago
- kube-system 1 year ago
- mbreese 1 year ago
- jameshart 1 year agoIf a noncompete agreement between a former employer, and a person who resides in a particular state, purports to prevent that person from taking up an employment contract with another employer - including by one who is located in a different state… well that seems like that could be an unfair restraint on interstate commerce.
- SkyBelow 1 year agoIf growing food for your own use is interstate commerce, contract law is interstate commerce.
- yieldcrv 1 year agoThe federal government has the constitutional right to regulate interstate commerce, and 100 years ago it discovered that all commerce is now interstate commerce, followed by the supremacy clause which is selectively applied (ie. not for scheduled drugs, but for everything else)
This Supreme Court could be friendly to invalidating that expansive interpretation though
so, big mismatch from the executive branch / agencies with the judicial branch which could completely warp our relationship with the Federal Government and what we find familiar in our way of life
But I dont think its as simple as saying “contract law is part of state law”
- timeflex 1 year agoThe Supreme Court doesn't have any power to enforce its decisions. District and Appeals Courts could just say no to their decisions and there isn't much they can do.
- cryptonector 1 year agoWhen district and appeals courts do what they like, the SCOTUS can reverse every one of their decisions. The inferior courts can then go on a spree of incorrectly deciding every relevant case and delay the final judgement by years, but then the SCOTUS could just speed up its process of reversing every such decision by the inferior courts. The SCOTUS also has options for removing judges from certain types of cases, IIRC. It's a game that the SCOTUS invariably wins in the end -- unless it gets packed.
- Animats 1 year ago> The Supreme Court doesn't have any power to enforce its decisions.
Sure it does. US Marshals are the muscle of the court system. They enforce federal court orders when necessary.
- cryptonector 1 year ago
- timeflex 1 year ago
- xpe 1 year agoI’m not a constitutional scholar, but I’ll say this —- there’s a reason this one is debated. It seems to me (with around 70% probability) that there are many possible constructions that could emerge which would more or less conform to the (rather contingent) bar for Supreme Court decisions.
I say contingent because the history of the Supreme Court is far from a deductive process of pure interpretation.
I recognize the utility of the Supreme Court while dismissing any grandiose claims of objective morality or obvious legality. It is a body of people after all.
- BWStearns 1 year agoOptions are also contracts and the FTC seems to have succeeded in regulating those.
- fallingknife 1 year agoThat's the CFTC
- BWStearns 1 year agoOops you are correct! Broader point still there that federal regulators can regulate contracts though.
- BWStearns 1 year ago
- yieldcrv 1 year agothe FTC regulates options?
it seems like thats a mixture of the SEC and IRS
- JumpCrisscross 1 year agoCFTC regulates commodities-based options, the SEC securities-based ones. The FTC and IRS are not proximately relevant.
- 1 year ago
- JumpCrisscross 1 year ago
- fallingknife 1 year ago
- robertlagrant 1 year agoIt may have the ability to, but it's not really anything to do with trade.
- xbar 1 year agoIt is a good question. I am glad that the FTC is testing it.
- hnburnsy 1 year agoNot agreeing, but just posting the other side of the argument from the US Chamber of Commerce. Not a fan of legislation by fiat, maybe this will prompt Congress to do something. USCoC said they will sue...
https://www.uschamber.com/finance/antitrust/chamber-comments...
>The Chamber and its membership are strongly opposed to the Proposed Rule. It would categorically ban nearly all noncompete agreements—regardless of individual circumstances, such as a worker’s skill, job responsibilities, access to competitively sensitive and proprietary information, bargaining power, or compensation—and require that organizations rescind all existing agreements and provide notice to affected workers of such rescission. Such a proposal fails to recognize that noncompete agreements can serve vital procompetitive business and individual interests—such as protecting investments in research and development, promoting workforce training, and reducing free-riding—that cannot be adequately protected through other mechanisms such as trade-secret suits or nondisclosure agreements. For centuries, courts have recognized the procompetitive benefits of noncompete agreements and balanced those benefits against any negative costs imposed by particular noncompete agreements. As perhaps acknowledged by the Commission’s request for comments on narrower alternatives, the Commission’s categorical ban would sweep in millions of noncompete agreements that pose no harm to competition, and in fact benefit the U.S. business community, economy, workers, and consumers.
https://www.uschamber.com/finance/antitrust/u-s-chamber-to-s...
>The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked.
- JumpCrisscross 1 year ago
- timf 1 year agoThe U.S. Chamber of Commerce is likely to file suit: https://www.uschamber.com/finance/antitrust/chamber-comments...
- fabianhjr 1 year agoI thought that non-governmental business association was pro-competition; guess not.
Edit: it was a dig to the pro-competition façade some pro-business people put forward.
- DamnableNook 1 year agoWhy would you think that? Lobbying organizations exist to advance the interests of their members. Their members in this case are businesses. This will restrict the control businesses have over their former employees. Therefore, they don’t like it.
- NominalNews 1 year agoIronically, it hurts their business overall (unless control of employees is something they intrinsically value).
- NominalNews 1 year ago
- sailfast 1 year agoThey are pro-business (and maintaining the rights of businesses to control their labor force), not pro-competition.
- supercheetah 1 year agoNeeds a /s.
- DamnableNook 1 year ago
- macintux 1 year agoI suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.
- cryptonector 1 year agoIf the SCOTUS overturns the Chevron doctrine, then this rule and probably all of the FTC's authority is on thin ice until Congress passes an act that says something more substantial and significantly less vague that "unfair business practices".
- seanw444 1 year agoWhich would be great. These agencies and bureaus have grown to an enormous scope, completely without the consent of the governed. Doesn't sound like a republic to me.
- seanw444 1 year ago
- JumpCrisscross 1 year ago> suspect this won’t survive a challenge in front of the current Supreme Court
It may be aimed at prodding the Congress into action.
- arcticbull 1 year 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.
- jfengel 1 year agoFrom a purely meta point of view:
This was something passed by a Democratic administration. Therefore Republicans hate it, and since 2/3 of the Supreme Court is Republican, it's likely to be struck down.
The actual reasoning comes later. Something-something-Federalist-Papers-something. I'm sure they'll have no trouble digging up some Founding Father who said something that sounds like banning this, if you squint right.
I know a great many lawyers, of both parties, who have more respect for the Supreme Court than I do. They are more informed and better educated than I am, so you should take my cynicism with a grain of salt. But in my experience, treating the Supreme Court as a partisanship machine yields extremely accurate predictions.
- cogman10 1 year agoInterstate commerce would allow congress to make such a law. However, the real question will be if congress gave or intended to give the FTC the authority to perform this action.
This supreme court has been very down on federal powers, so it really would not be surprising if they pulled "the major questions doctrine" to ultimately kill this off.
- Uvix 1 year agoThat this is coming from the executive branch, not the legislative branch.
- jfengel 1 year ago
- zer00eyz 1 year agoI am not entirely sure.
Without anti compete stealing your competitors staff becomes a valid business strategy. Buy up the competitions best people and cripple them.
This favors those with the most capital not the least.
- dwaltrip 1 year agoInteresting how you call it “stealing” to hire someone who worked at a competitor. They aren’t property, companies don’t own people.
If you don’t want to them to leave, then entice them to stay.
Getting rid of noncompetes puts workers and companies on more even footing, reducing the large power difference.
- cogman10 1 year agoI believe it will die more because of the originalist/textualism of the supreme court rather than considerations to which big businesses benefit (or are harmed by) this the most.
The question will ultimately arise "by what authority can the FTC make such a sweeping judgement" and it would not surprise me to hear the SC rule that this is an overstep of the authority they were given by the laws creating and maintaining the FTC.
Previously, the FTC could have argued that the chevron doctrine gives them this right. However, that is almost certainly about to be completely abolished this term.
The right of contract is almost certainly going to be more important to most members of the supreme court than any other considerations. That's my 2 cents.
- no_wizard 1 year agoGiven that these rules are very similar to those in California, and California has a big enough economy to be a good representative sample, I don't see this being a real issue.
Otherwise, why aren't well capitalized competitors in California hiring up the best people at their competitors and crippling competition, as it were? We just don't see this happen on a large scale like this suggestions.
Now, that's my take on it at charitably. My honest opinion about it is simply: who cares. If you want people to stay, give them reasons to stay that aren't the legal equivalent of holding a gun to their head
- akira2501 1 year agoIt also favors workers. By increasing salaries. And forcing companies to compete for them.
Labor is a market. It is too often ignored in favor of private equity concerns.
- triceratops 1 year agoI'd love for my company's competitor to buy me up. Shit let them all go to war for the privilege of employing my ass.
- tech_ken 1 year ago> This favors those with the most capital not the least.
So does the US Supreme Court lol
More seriously I think the issue is going to be whether it's executive overreach, not whether it's good or bad for a competitive marketplace.
- cryptonector 1 year ago> Without anti compete stealing your competitors staff becomes a valid business strategy.
And how would that not be an "unfair business practice"? Vague legal terms are problematic.
- WrongAssumption 1 year agoSo employers end up competing with higher wages putting more money in the hands of employees, and talent goes to where it produces the most value, yeah that’s the point.
- dwaltrip 1 year ago
- 1 year ago
- cryptonector 1 year ago
- nerpderp82 1 year agoTotal aside, but I think it is ridiculous that CoC larps as a quasi governmental organization. When in actuality it is a Union of Capitalists.
- CalChris 1 year agoYes, it was started by Taft as a business 'union' that the government could deal with. Now they're funded primarily by multinationals and so they place the concerns of those large corporations first and well before upstart startups.
- lotsofpulp 1 year agoI don’t get that appearance. Their website does not end in .gov and their about page does not indicate they are an official agency:
- bogwog 1 year agoI have heard the name "US Chamber of Commerce" before, and as someone who isn't a politics/government nerd, I always assumed that was some kind of government organization responsible for something...commerce related.
Clicking through to the website and seeing the kind of articles on there makes it pretty obvious that's not the case though, even ignoring the .com domain.
- ZeWaka 1 year agoI think people get that idea due to most cities also having chambers of commerce with lots of influence, sponsoring and hosting events and such.
- bogwog 1 year ago
- CalChris 1 year ago
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- fabianhjr 1 year ago
- FredPret 1 year 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 1 year agoI wonder if she applies this maxim selectively, or if she would also oppose other impositions on economic liberty, such as minimum wage laws.
- ajkjk 1 year 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.
- gnicholas 1 year agoThe point is that some people will be priced out of the labor market because they are only allowed to exchange their labor at/above a set rate. If your labor is worth $10/hr because you have very little job experience, you will be unemployed in a jurisdiction where the minimum wage is $15/hr.
It is not "best for people's freedom" to have that restriction; it benefits some people (those who remain employed) and worse for others (those who are laid off or cannot get a job). And it's good for companies that make tools to automate jobs away (we've seen more fast food kiosks recently).
But the big picture point I was making is that it's silly to wave the flag of economic freedom if you don't actually embrace that concept wholeheartedly (which I am assuming she does not).
- gnicholas 1 year ago
- FredPret 1 year agoThat’s why we need two parties
- mcmcmc 1 year agoThe two-party system is a blight on democracy. You ever read George Washington's farewell address?
- mcmcmc 1 year ago
- ajkjk 1 year ago
- edefefefee2 1 year 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. """
Given in tech industry / FANG, most people earn above the $151,164 I wonder how they define "policy-making positions" ?
As I read the above sentence I understand that this is a binary and and not an either you earn that much or are in policy making positions?
- gnicholas 1 year ago
- bufordtwain 1 year agoThis is nice but I think it's small potatoes compared to what could be achieved economically by decoupling healthcare from employment.
- wnc3141 1 year agoIt's one less tool for abuse from employers in an otherwise imperfect system
- dudul 1 year agoThis would be such a game changer for worker mobility and entrepreneurship.
- boppo1 1 year agoYeah, this is a big one. How'd that happen in the first place?
- Duwensatzaj 1 year 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 1 year agoI never knew that. Thanks.
A good example of disastrous 2nd order effects.
- breck 1 year ago
- cryptonector 1 year agoYou're looking for ERISA. And the ACA.
- ajkjk 1 year agoThe whole system remains a disaster, just slightly less of a disaster than it was.
- ajkjk 1 year ago
- Duwensatzaj 1 year ago
- wnc3141 1 year ago
- cryptonector 1 year 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 1 year 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 1 year agoAh man, go outdoors... fly a kite or something.
- jcadam 1 year ago
- banish-m4 1 year ago
- faeriechangling 1 year 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.
- benced 1 year agoI suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while.
(how bad? I don't know.)
- _akhe 1 year 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.
- benced 1 year agoIt is bad for a state - at least in relative terms - if it has a good thing and suddenly every state has that good thing. It means that people that might have once moved to California for its laws will no longer do so.
- _akhe 1 year agoThat mentality is like saying "I'm only rich if others are poor" - you can of course still be well off, even when others occasionally catch up, and maybe better off if the tide lifts all boats. Also what you say doesn't go against the point about signaling. There's something to being on the cutting edge vs not.
> people that might have once moved to California for its laws will no longer do so
Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right?
- _akhe 1 year ago
- benced 1 year ago
- banish-m4 1 year agoIt's not. California isn't the only municipality to have banned NCAs.
https://natlawreview.com/article/state-law-restrictive-coven...
- ballenf 1 year agoI'd guess it will have the opposite effect as companies have one less big reason to avoid CA.
- benced 1 year 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 1 year 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.
- Gibbon1 1 year ago
- benced 1 year ago
- dbcurtis 1 year 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.
- _akhe 1 year ago
- londons_explore 1 year 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 1 year 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."
- grubbypaw 1 year ago
- akulbe 1 year 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?
- dbcurtis 1 year 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.
- tryptophan 1 year 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 1 year ago
- banish-m4 1 year 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.
- option 1 year agoThis is fantastic news. This will make USA even more innovative.
- Shorel 1 year agoCan they also ban tipping culture?
- paxys 1 year agoYou can ban tipping culture for yourself if you want. The government doesn't need to get involved.
- 0xbadcafebee 1 year 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.
- eatsyourtacos 1 year 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 1 year 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.
- 0xbadcafebee 1 year ago
- TeaBrain 1 year agoCompared to outside the US, the US tipping culture is really bizarre. It's gotten to the point where baristas ask for a tip with their self checkout machines, before they having even made a drink. Tips were never meant to make up a difference as you allege, especially not when "tipping" before service, which is not a tip, but a donation or bribe.
- 93po 1 year agomost of the rest of the world where tipping isn't the norm isn't revolting at real prices
- eatsyourtacos 1 year ago
- paxys 1 year ago
- NominalNews 1 year 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
- nerdright 1 year agoThis is pretty big given the current stagnant job market. I expect a lot of startups to come from this change.
- dschofie 1 year agobig news for amazon employees
- pylua 1 year agoIf I have an existing non compete — what does this mean for me ? Is it invalid?
- bullfightonmars 1 year 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 1 year 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.
- j-cheong 1 year agoI was under the impression that workers earning less than $151,164 annually usually don't have noncompetes anyway? Sounds like a lot of people will get bucketed into "senior executives" group. At least new noncompetes can't be created.
- no_wizard 1 year agoNon competes are everywhere. Famous case with Prudential Security[0] where they had everyone sign non competes, that includes minimum wage workers, and they enforced them, which put an outsized strain on the minimum wage workers in particular.
Its a harmful practice across the board.
[0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...
- kube-system 1 year agoI've know places that pay 1/3 of that and have noncompetes.
Although, someone in this type of a role can often get away with ignoring noncompetes as long as they're smart about how they exit.
- no_wizard 1 year ago
- lokar 1 year agoSr execs can’t start new noncompetes
- 0cf8612b2e1e 1 year agoHow does a challenge work? Is the law valid until a ruling decides or is it put on pause?
- ixwt 1 year agoA stay on the ruling could happen, but that would be up to the courts. Not a lawyer, but considering that there could be damages from the removal of non competes and someone leaving to get another job, there could be a stay on the order rather than letting it go into effect. While it works its way up the court system.
- ixwt 1 year ago
- j-cheong 1 year ago
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- bullfightonmars 1 year ago
- smj-edison 1 year 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.
- evantbyrne 1 year 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.
- tchock23 1 year 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 1 year agoMany companies already try this approach
- ewhanley 1 year ago
- throw_m239339 1 year agoThank you the FTC. The very idea of non-competes clauses in a contract is absurd and anti right to quit or to work.
- trashface 1 year agoThis is going to get challenged and the conservative majority supreme court will overrule them. 100%
- wilsonnb3 1 year agoWould you mind linking to some of examples of their prior decisions that makes you think that? I am curious.
- wilsonnb3 1 year ago
- animex 1 year agoAnd this is just the start of why Apple cancelled Jon Stewart over a purported Lina Khan interview.
- banish-m4 1 year 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.)
- banish-m4 1 year ago
- m463 1 year 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?
- jmward01 1 year 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.
- octopoc 1 year 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.
- _akhe 1 year agoOne last economic stimulus for startup lawyers before getting replaced by Mistral + RAG + your jurisdiction's .txt files and PDFs :D
- dragonwriter 1 year 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 1 year 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/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.
- _akhe 1 year ago
- dragonwriter 1 year ago
- daft_pink 1 year 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.
- paxys 1 year 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.
- blackeyeblitzar 1 year 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?
- jrs235 1 year 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.
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- endisneigh 1 year agoI’m curious if it’s actually legal for them to ban noncompetes.
- robotnikman 1 year agoIt's about time! Nice to hear some good news for a change!
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- EasyMark 1 year 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
- gerash 1 year 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
- _xerces_ 1 year agoCA already makes non-competes unenforceable and aren't most FAANG employees in CA?
- EasyMark 1 year 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
- OkayPhysicist 1 year 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 1 year agoBut the headquarters are mostly CA
- OkayPhysicist 1 year ago
- EasyMark 1 year ago
- gerash 1 year ago
- dev1ycan 1 year agoGood, thank god, I have a non compete...
- chaostheory 1 year 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.
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- mxwsn 1 year agoWhy now?
- chowells 1 year 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.
- Sohcahtoa82 1 year ago> Remember, chain restaurants have started using non-competes to ban servers and cooks from moving to another employer.
It's so dystopian that this was ever a thing.
Non-competes were supposed to exist to prevent employees from bringing trade secrets to competitors. Instead, they were used to trap people in poorly paying jobs.
- banish-m4 1 year agoNever forget: college degree requirements, high housing costs, union busting, salary secrecy, return to office, sub-inflationary raises, 1099 contractors and "temporary" permanent workers, outsourcing, H-1B visas, NCAs, and lack of universal healthcare are just some of the ways corporations lord power over employees to reduce wages and worsen income inequality. (Oh and illegal things like wage theft.)
- SoftTalker 1 year agoThat's just absurd. Non-competes should never apply to commodity-skill jobs. I wonder how often they were ever enforced?
- 0cf8612b2e1e 1 year 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?
- no_wizard 1 year agoThey absolutely were, such in the case of Prudential Security[0]
[0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...
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- 0cf8612b2e1e 1 year ago
- jprete 1 year agoI had not heard about the chain restaurants; that is one of the scummiest things I've ever heard and it angers me that it takes place.
- Sohcahtoa82 1 year ago
- axus 1 year agoLina has been pretty busy, but she's been making progress on a large backlog of bad corporate behavior.
What were these guys up to? https://www.ftc.gov/about-ftc/commissioners-staff/former-com...
- jdminhbg 1 year ago> What were these guys up to?
Not losing in court every other month.
- jdminhbg 1 year ago
- dpe82 1 year agoBecause we have a Democratic administration that is taking this stuff seriously.
- robertlagrant 1 year agoSeriously, though. Why now?
- dpe82 1 year agoNew rules take time. Depending on the complexity of the regulation it can take a year or two to write (lots of internal reviews) and then there's a long statutorily-required public comment period during which an agency is required to read and address every comment. For this regulation, the public comment period appeared to start Jan 8, 2023.
You can see the public history here: https://www.regulations.gov/docket/FTC-2023-0007/document
- tech_ken 1 year agoBecause that administration needs red meat to activate their base ahead of an election cycle
- Overtonwindow 1 year agoSame as student loans. It’s election season.
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- dpe82 1 year ago
- robertlagrant 1 year ago
- toomuchtodo 1 year agoPolitical will.
- fckgw 1 year agoWhy not now?
- paxys 1 year agoLina Khan
- j-bos 1 year agoElection year
- bee_rider 1 year agoWhich is good, right? Politicians serving the interest of their constituents in the hopes of being re-elected is, like, the intended operation of democracy.
If only we could have an election year, every year, without all the annoying ads and stress.
- bee_rider 1 year ago
- chowells 1 year ago
- fidotron 1 year 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.
- andrewstuart2 1 year 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."
- BeefySwain 1 year agoNew policy: no more non-competes
- lamontcg 1 year agoI suspect that "policy-making positions" is a term of art that is more narrowly defined than it looks and that it'll actually be difficult or impossible to abuse it enough to made it apply to SWEs. Most likely big 4 accounting firms have a definition of what that means and it is part of accounting and auditing standards. At any rate they'd need to first abuse it to apply to managers who are below VP levels.
- cryptonector 1 year agoIt's defined in the rule...
- lamontcg 1 year agoYeah, so its based on the SEC Rule 3b-7 definition of a company officer, only with some changes to make it even more restrictive to senior executives.
They're not going to be able to claim that a SWE is now the VP in charge of changing lightbulbs and is now a policy-making position. There is a whole lot of text in the rule about what a "policy making position" is, and I'm certain that there is a considerable amount of legal and accounting history behind that SEC Rule which will act as precedent.
- lamontcg 1 year ago
- cryptonector 1 year ago
- buildbot 1 year agoYep, this would impact basically any dev at Microsoft, Apple, Facebook, etc. From my own point of view (at MS), policy making decision do basically happen at my/our level too, unless policy is on the tier of "buyout Infection.AI talent". Any kind of planning research/work could be considered policy. Decisions like what kind of framework or listing to use? Policy!
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- azinman2 1 year agoUnlikely they are in a policy making position.
- ascendantlogic 1 year 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 1 year 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".
- fidotron 1 year ago
- ascendantlogic 1 year ago
- andrewstuart2 1 year ago
- BeefySwain 1 year 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 1 year agoHogwash! I demand a free market for my business, but a closed market for my assets.
- paxys 1 year agoPrivatized gains, public losses. It is the capitalist way.
- paxys 1 year ago
- QuiDortDine 1 year agoI didn't know the FTC was this savage lol
- kevstev 1 year 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.
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- aidenn0 1 year 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.
- mattmaroon 1 year agoWhile your points are good, on the other hand, Congress at this point is totally broken, it’s hard to imagine it becoming unbroken (since it would require an amendment which is usually passed by Congress and they have no desire to make things harder for themselves), and it’s beholden to special interests in a way that the executive branch often isn’t.
So at least this way, things can get done.
- cryptonector 1 year ago> Congress at this point is totally broken
If Congress can delegate authority at will and with tremendous vagueness vagueness (as in the case of the FTC) then that allows Congress to be more disfunctional. If the Court reverses Chevron and later guts the FTC then Congress will have to get its act together -- they might not, but if they do then the Court will have helped us enormously.
- mattmaroon 1 year agoI don’t agree with that mental model because it assumes Congress has to make sure the job gets done. They don’t. They can be as dysfunctional as they want.
Polls show that the vast majority of people are unhappy with Congress, and yet they get re-elected at very high rates. There’s no real reason to suspect that their job performance had anything to do with getting elected anymore.
They could very easily just fail to regulate everything that actually needs it. The alternative to the FTC isn’t Congress doing the regulation, it’s no regulation at all.
Perhaps I’m overly pessimistic but I think we’ve gotten to a point where gerrymandering has just broken Congress irreparably by divorcing their job security from their effectiveness. I hope I’m wrong and you’re right.
- mattmaroon 1 year ago
- cryptonector 1 year ago
- snapetom 1 year agoThis has been a problem for decades. Congress' focus is more on self-preservation than good policy. For example, granting abortion rights through case law was always incredibly tenuous and now that's been proven.
I predict this will be kicked around the executive branch and bounced in courts. Even if it stands, like you point out, future administrations can just revoke it. All the while, Congress should be taking action and codifying this.
- jjtheblunt 1 year 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 ]
- aidenn0 1 year 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.
- cryptonector 1 year agoThe major questions doctrine announced in W. Virginia vs. EPA, and the upcoming, likely reversal of Chevron together will greatly limit the Congress' ability delegate power broadly to the Executive. You might call that a "fringe legal theory", but it seems poised to be the legal theory of the land.
- no_wizard 1 year agoThe same fringe legal theory that is likely to win in the Chevron Deference case[0] before the Supreme court, which will gut agencies (including the FTCs) ability to regulate things in this manner?
[0]: https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...
- cryptonector 1 year ago
- cryptonector 1 year agoLive by regulation, die by regulation. GP's point is that since this rule is made by this Administration, the next Administration could undo it. GP is right. As long as one Administration has the power delegated to it by Congress, and so does the next one, then the next one can change and even reverse the previous one(s)' regulations.
The court recently found (in W. Virginia vs. EPA) that Congress cannot delegate power in "major questions". This rule might not be a "major question", but given the vagueness of the statutory foundation of the FTC, it's possible that all of the FTC's work is on thin ice. The Court would likely not rule the whole FTC and its past regulations unconstitutional, but it might start looking askance at regulations that seem remotely like major questions.
Is this rule a "major question"? I don't know, but I'm inclined to think "no".
- mattmaroon 1 year 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 1 year ago
- brigadier132 1 year ago> completely abandoned its duty to pass laws
That's the duty of the legislature? To make more rules?
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- aidenn0 1 year agoPass, repeal, and revise laws, yes. That's literally what the word "legislator" means.
- brigadier132 1 year agoLegislator is a person that can write laws, it does not mean it's their duty to write laws. In the United States their duty is to uphold the constitution and represent their constituents. Not to create more rules.
- brigadier132 1 year ago
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- bagels 1 year agoNoncompetes for fast food workers are totally unconscionable.
- smallmancontrov 1 year 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!
- a_wild_dandan 1 year 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!
- 1 year ago
- ein0p 1 year agoAnyone can have a “strong economy” if they can print $2T a year. The question is for how long.
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- tuckerpo 1 year agoGood! If you don't want your SMEs taking your secret sauce to a better employer, then be the better employer.
- SoftTalker 1 year agoTrade secrets and NDAs can still be enforced.
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- jejeyyy77 1 year agoeveryone who had a noncompete should be compensated.
- ummonk 1 year 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.
- lr4444lr 1 year agoJust out of curiosity, were any non-competes ever actually enforced by the courts for a reason other than stealing clients or trade secrets?
- no_wizard 1 year 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...
- Overtonwindow 1 year agohttps://appleinsider.com/articles/23/09/25/rivos-countersues...
Phillip Shoemaker. https://www.theverge.com/2019/5/29/18643868/apple-app-store-...
- no_wizard 1 year ago
- throwaway74432 1 year 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?
- whitej125 1 year 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).
- saagarjha 1 year 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.
- lotsofpulp 1 year agoRemoving the risk of legal consequence simply for changing who you sell your labor to is a big change for many people.
- SoftTalker 1 year 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 1 year 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.
- MOARDONGZPLZ 1 year ago
- TheCleric 1 year agoYes, as this eliminates the threat of lawsuit I've had made against me for just changing jobs (multiple times).
- kube-system 1 year agoNoncompete clauses have often been used by employers to scare their employees into thinking they'll be sued just for simply finding a new job at a different company.
- saagarjha 1 year ago
- Bostonian 1 year 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 1 year 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.
- CharlieDigital 1 year ago
Eliminating non-compete doesn't mean you can steal intellectual property; it just means that they can't prevent you from working at a competitor. The IP is still protected under existing laws.> 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.
- vehemenz 1 year 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 1 year 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.
- wildzzz 1 year ago