FTC bans all new (and most existing) non-compete clauses

[TheTexan]

I've never in my life even seen an NDA that didn't sunset automatically after a stated period of time.

Are the ones that don't more or less common than the chupacabra?

Having an expiry at a specified time does not qualify as an exit clause, because at that point the contract is already fulfilled.

 

[acptulsa]

Having an expiry at a specified time does not qualify as an exit clause, because at that point the contract is already fulfilled.

So?

I can't talk about NDAs in a thread about NDAs while you're talking about clauses?

 

[TheTexan]

So?

I can't talk about NDAs in a thread about NDAs while you're talking about clauses?

So, if a contract is unenforceable if its permanent, its also unenforceable if it expires after 90 or 60 or 30 years or even 3 days.

The duration of a contract is not relevant to its enforceability.

 

[fisharmor]

I'm not sure what this will do to employment in the US. I'm subject to a non-compete agreement and so are my peers. We may see tons of people leaving their jobs and poaching by competitors. I suppose that's a good thing?? Maybe companies will be incentivized to pay more to keep their good employees??

But, I'm sure the consequences will be ugly. It's going to be harder for businesses to retain talent. Plus, the onboarding and training expenses are going to rise dramatically. This could impact the already pressured economy even more.

Ironically, it's also going to be much harder to get a job because the new employer has to make a significant investment in you without a safeguard against you leaving for a competitor. And once you get the job, it's going to be harder to get access to key information in the company that can help you succeed. This is going to get weird.

Five months ago I started my first new job since 2001.
After 23 years I finally got a clue and realized despite what they had said in the past, they absolutely did not give a fuck about me or anyone else working for them.
The place where I am now is marginally better, but if there's one hard-learned lesson I'm taking into this new job, it's that it's a job, not a career. I'm working diligently on updating certs and getting to the point where I can go anywhere.

Because I know corporatism makes it impossible to keep up with inflation. At least this company is giving out 'bonuses' (which I found out were commonplace 7-8 years ago, then stopped, and now they're bringing them back) to help combat rising costs. But my last employer started doing this too: never giving raises, and using windfall money to keep everyone quiet about it.

But you know what is guaranteed to get me a raise? A different job. Employers have to offer competitive wages to get new people in. I got nearly $10k extra base pay just moving jobs. If that's the way I can provide for my family, well, the fact that I'll be spending 1/4 to 1/2 of my time at that new job training only to move on is someone else's problem.

Eventually the people whose problem that is will get to the point of realizing they're not giving out pay raises fast enough to accommodate inflation and that yearly bonuses do not suffice. And some INTJ in the company will send a message to management that sounds a little too much like "how come you ivy league assholes haven't figured this out yet and could you please stop giving us platitudes about market forces we really don't give a shit about and just figure out how to pay us", and get fired.

But the third or fourth time it happens someone in upper management will finally pull his thumb out of his ass and say "huh, maybe there's something making all these people say they can't live on what we pay them" and one of them will write a book that makes it to the NYT best seller list and he'll get all the credit and a few extra million dollars for "figuring out" the thing several people's lives were ruined over trying to talk about.

Then there will be a sea change in American business, where people will get paid what they need to be paid to stick around.

Or, more likely, most of them will just be replaced with Indian robots with master's degrees who never sleep and work for $5 an hour. They'll never figure out how much of that work time they spend working on stuff that doesn't advance any company goals, but that won't be part of the value calculation.

 

[oyarde]

I dont think these will matter much in my old fields of manufacturing because they never did , no idea about govt tech jobs etc

 

[CaptUSA]

Eventually the people whose problem that is will get to the point of realizing they're not giving out pay raises fast enough to accommodate inflation and that yearly bonuses do not suffice. And some INTJ in the company will send a message to management that sounds a little too much like "how come you ivy league assholes haven't figured this out yet and could you please stop giving us platitudes about market forces we really don't give a shit about and just figure out how to pay us", and get fired.

That was me at my last job, except for the "get fired" part. I quit. And then the CEO and VP's started calling me trying to get me to reconsider. Sorry - you had your chance to listen. (My problems ran deeper than the compensation - it was the woke board, the bureaucratic incentives, their covid response, and of course, the pay)

But I do recognize the value of NCA's... This decision is likely unconstitutional. I know an insurance salesman that is sweating this. That's an industry that requires relatively low skills or knowledge to start, but requires good geographic networking. He's got NCA's in place that prohibits his employees from opening a business within 5 miles of his location after a year of them leaving. 5 miles isn't much, but if they leave, they may take some of his clients with them. This new dictate will dramatically change how he hires new people.

The fallout is going to be huge if this is allowed to stand. I get the other side, too. NCA's are often abused by employers. But this is throwing the baby out with the bath water.

 

[fisharmor]

I know an insurance salesman that is sweating this. That's an industry that requires relatively low skills or knowledge to start, but requires good geographic networking. He's got NCA's in place that prohibits his employees from opening a business within 5 miles of his location after a year of them leaving. 5 miles isn't much, but if they leave, they may take some of his clients with them. This new dictate will dramatically change how he hires new people.

There's an interesting case study. Interesting because while I'm sure your acquaintance is a decent guy, I have also spent a couple decades periodically being the guy to help clean up the technological shipwreck created by an IT salesman. So I'm a bit biased about them getting paid the amount they do (plus the perks) for the job they do.

What about mortgage sales? The people who call up and get you to refinance? We haven't been getting those calls recently because their entire industry suffered an apocalypse a few years ago. But some of them were really decent people who did what they did very well. I actually refinanced twice with the same guy because he did such a great job of it. And he's probably out of work, or doing something else now, and that entire company is probably gone. I feel for him, but things are different, and things had to change.

The market is merciless. If people aren't getting the maximum value for their dollar, they're not going to part with it easily. Lots of people want to change that calculus and bring the state to bear on the situation that brings them an advantage and "creates mercy" in the market. And in this case study, we have three sides: one, the business owner, who wants to bring the power of the state to bear on his employees and make the market less merciless to him. The second is the employee, who likewise wants the state to side with him, and make the market less merciless to his interest. And the third is the other sales situations where there has never been a state action on either side, allowing the market to act with zero mercy.

Lots of contracts are unenforceable and there are arguments to be made to that effect here. If I was making the argument, I'd say that an employment arrangement requires pay to count as employment. If the pay isn't happening, it's not employment. If someone owes some action or inaction to someone else and isn't paid for it, then that's slavery. There has to be a way to put NCA's in place that compensate the employee for it.

I agree with you that there will be lots of fallout from this. But I'm looking beyond the individuals who will be harmed in the short term and toward the bright future where there are a lot less salesmen in the world. Getting locked into a business model is the worst thing for all of us. Businesses either pivot and do something that works once the old ways are dead, and we all benefit from it collectively, or they get to force everyone to keep doing things in a way that allows them not to change. I know which way the market would have us go.

 

[acptulsa]

I'm sure it'll be a boon to sales of AI programs. Gotta help corporations prepare for the coming massive workforce shortages as the depopulation continues.

 

[ClaytonB]

I've never in my life even seen an NDA that didn't sunset automatically after a stated period of time.

Are the ones that don't more or less common than the chupacabra?

Every NDA I've signed has been a lifetime NDA regarding all IP and trade secret information. No sunset.

 

[acptulsa]

Every NDA I've signed has been a lifetime NDA regarding all IP and trade secret information. No sunset.

Interesting. I wouldn't have expected that of your field. As fast as the product becomes obsolete, that seems silly.

 

[ClaytonB]

Interesting. I wouldn't have expected that of your field. As fast as the product becomes obsolete, that seems silly.

Obsolescence is more of a marketing thing. Under the hood, it changes much less than you might think.

 

[Occam's Banana]

https://twitter.com/JOEY94742474/status/1783930631598067841

Massie is correct (as usual): "Butt out, feds!"

https://twitter.com/RepMattGaetz/status/1783148707287826488
to: https://twitter.com/RepThomasMassie/status/1783179639050944515

 

[ClaytonB]

Massie is correct (as usual): "Butt out, feds!"

Even though I hate non-compete clauses and I do not believe they would exist in a free-market, Massie is right on legal/procedural grounds here (and it matters): the bureaucratic pen-stroke has been made into the equivalent of Politburo diktat, especially in post-911 America. We need to halt this tyranny in its tracks and restore power to the people, and trust that the people will do the right thing when they are given back the power to do so...

 

[Occam's Banana]

FTC Outlaws Most Noncompete Agreements
https://www.youtube.com/watch?v=_YLQqg5WcWQ
{Steve Lehto | 26 April 2024}

It'll end up in court - and be resolved in a few years.

 

[Matt4Liberty]

More ruling by royal decree. I don't even necessarily hate the concept but this is one of the most impactful legislations I've seen in a very long time, and it completely bypassed Congress. I don't see how this could possibly hold up in court. Of course they don't care. They'll just do many things by royal proclamation from emperor poopy pants and let the courts overturn it later.

 

[devil21]

I admit to not being very knowledgeable on this topic, but how on earth can the FTC "strike down" existing legal agreements between businesses? The FTC isn't a judicial body with power to strike down anything done between consenting parties during the course of business, especially retroactively. Declaring existing contract agreements null and void??

It seems the feds are now fully in "Constitution be damned, we'll do (say) whatever we want and hope it sticks" mode lately. Time must be getting short to something.

 

[CaptUSA]

I admit to not being very knowledgeable on this topic, but how on earth can the FTC "strike down" existing legal agreements between businesses? The FTC isn't a judicial body with power to strike down anything done between consenting parties during the course of business, especially retroactively. Declaring existing contract agreements null and void??

It seems the feds are now fully in "Constitution be damned, we'll do (say) whatever we want and hope it sticks" mode lately. Time must be getting short to something.

I mean, yeah... That's what this means. This is happening all over. They know they have no justification for paying off student loans, handing out stimulus checks, locking down societies, not securing our borders, increasing our debts, starting and continuing wars, telling you what mode of transport you're allowed to buy, mandating injections, or about a billion other things that they just did by dictate with some shitty legal logic they could use for an excuse. They know and they don't care.

Every organization, whether business, non-profit or government, operates with the incentive to increase their scope. EVERY organization of humans does that. Governments are not in the business of solving problems, they are in the business of exploiting problems to grow their importance (and wealth, and power, and control). The bureaucrats, the politicians, the consultancy, the lobbyists... They all have the same incentives and your little constitution is just a petty inconvenience.

Is something coming?? I mean, it's already here!

 

[CaptUSA]

AND.... It's blocked.

https://www.msn.com/en-us/news/us/ftc-ban-on-worker-noncompete-deals-blocked-by-federal-judge/ar-AA1p8Fne?ocid=BingNewsVerp

FTC Ban on Worker Noncompete Deals Blocked by Federal Judge

A federal judge ruled the US Federal Trade Commission can’t enforce its near-total ban on noncompete agreements because the agency lacked the authority to enact the rule.

US District Judge Ada Brown in Dallas sided with the US Chamber of Commerce and a Texas-based tax firm that sued to block the rule, writing in her decision Tuesday that the FTC’s rule is “unreasonably overbroad without a reasonable explanation.”

Brown had previously delayed implementation of the ban, which was scheduled to take effect on Sept. 4. The ruling is the judge’s final word on the case. The FTC could appeal the decision to the 5th US Circuit Court of Appeals in New Orleans.

Just one more unconstitutional edict this administration tried to push that got shut down by the courts. We'll see if they'll bother appealing.