FTC bans noncompete agreements

[noodleoo]

This seems like a big deal!  Sounds like it takes effect in 180 days, although it may be delayed by appeals.  I've signed non-competes before and it felt like bullshit that a company could do that.

FTC bans noncompete agreements for workers

The new rule requires companies with active noncompete agreements to inform workers that they are void

wapo.st/4d8O9cO (gift link)

[pixy0stix]

Whoah. I bet this is something that's challenged until it get to SCOTUS. There's no way big industries are going to like this.

I hope it stands, and I wonder what enforcement will look like.

[starburst604]

I really hope this stands. This has caused STBX to stay in a pretty lousy work environment for way too long and it was pretty impactful on our marriage. It's outdated and irrational.

[UMaineTeach]

I hope it sticks!

[wawa]

good. I hope the challenges are overcome quickly.

If you don't want somebody to "steal" your clients, then be a good employer to keep your people and hang onto your own clients by doing good business. that applies at all levels.

[intheden]

Wow!! I'm shocked by this, but I hope it sticks.

[cherry1111]

My H was laid off in December and had to sign one to get his severance. He did because that was a lot of money but it is such bullshit. You don’t want him to work for you anymore but he’s also not allowed to look for jobs in the industry in which he has experience…

[noodleoo]

Apr 23, 2024 15:12:43 GMT -5 wawa said:

good. I hope the challenges are overcome quickly.

If you don't want somebody to "steal" your clients, then be a good employer to keep your people and hang onto your own clients by doing good business. that applies at all levels.

Agreed. And same for the argument in the article that companies don’t want to invest in training employees only to have them leave for the competition. Maybe if you pay and treat your employees well, they won’t leave!

[noodleoo]

Apr 23, 2024 15:31:25 GMT -5 cherry1111 said:

My H was laid off in December and had to sign one to get his severance. He did because that was a lot of money but it is such bullshit. You don’t want him to work for you anymore but he’s also not allowed to look for jobs in the industry in which he has experience…

Wow, that sounds unenforceable even before this ruling.

[cherry1111]

Apr 23, 2024 15:32:43 GMT -5 noodleoo said:

Apr 23, 2024 15:31:25 GMT -5 cherry1111 said:

My H was laid off in December and had to sign one to get his severance. He did because that was a lot of money but it is such bullshit. You don’t want him to work for you anymore but he’s also not allowed to look for jobs in the industry in which he has experience…

Wow, that sounds unenforceable even before this ruling.

I keep telling him to ignore it but he’s worried about it.

[Velar Fricative]

Good! They’ve gone way too far. I was reading on NPR about a security guard earning minimum wage or close to it who lost his new job because the old job made him sign a noncompete clause. The new job paid a few dollars more per hour and allowed him to work days versus nights. But somehow a security guard is a danger to trade secrets or some shit? They can’t be serious with that.

[aurora]

Apr 23, 2024 15:34:02 GMT -5 cherry1111 said:

Apr 23, 2024 15:32:43 GMT -5 noodleoo said:

Wow, that sounds unenforceable even before this ruling.

I keep telling him to ignore it but he’s worried about it.

Not a lawyer and I'm sure it varies by state, but when my H quit his job to start a new company he was told by several employment lawyers that non-completes are not enforceable in our state because people have a right to earn a living in their chosen field. (Not the correct legal terminology.) Probably worth him reaching out to ask in your state.

[clairebear]

Yay!!! I'm so happy. I remember working for a large graduation photography company doing customer service work in office for $6.75 an hour and having to sign a non compete. So incredibly stupid. I hope this stands up to any appeals that it goes through. 

[jlt19]

Apr 23, 2024 15:31:46 GMT -5 noodleoo said:

Apr 23, 2024 15:12:43 GMT -5 wawa said:

good. I hope the challenges are overcome quickly.

If you don't want somebody to "steal" your clients, then be a good employer to keep your people and hang onto your own clients by doing good business. that applies at all levels.

Agreed. And same for the argument in the article that companies don’t want to invest in training employees only to have them leave for the competition. Maybe if you pay and treat your employees well, they won’t leave!

Yep. Salaries for “loyal” employees aren’t going up nearly as much as they are for people coming off the street. Millennials and younger have caught on, hence the shift in job hopping being normalized. Maybe just pay your trained employees!

I started my job in fall 2021 at the 44% “penetration rate” of my level’s salary range. Our ranges increase each year to “keep up with the market”. Yet, somehow even with raises, I’m now at the 12% PR. And when I asked for an increase for lateral move a couple of weeks ago, I was denied. Knowing damn well if they hired off the street, they’d pay more and I’m saving them a LOT in time/training. I wish I’d have had the guts to decline the “offer”, but I really wanted the job.

[kath16]

Apr 23, 2024 15:34:02 GMT -5 cherry1111 said:

Apr 23, 2024 15:32:43 GMT -5 noodleoo said:

Wow, that sounds unenforceable even before this ruling.

I keep telling him to ignore it but he’s worried about it.

Not a lawyer but I do work in HR… It may vary by state but it is very unlikely that this would hold up to a challenge.

[cherry1111]

Apr 24, 2024 11:16:21 GMT -5 kath16 said:

Apr 23, 2024 15:34:02 GMT -5 cherry1111 said:

I keep telling him to ignore it but he’s worried about it.

Not a lawyer but I do work in HR… It may vary by state but it is very unlikely that this would hold up to a challenge.

I googled last night and it seems our state does seem to allow them. But now that he’s almost 5 months into unemployment it may be time to take the risk.

[msmerymac]

Apr 23, 2024 17:31:00 GMT -5 aurora said:

Apr 23, 2024 15:34:02 GMT -5 cherry1111 said:

I keep telling him to ignore it but he’s worried about it.

Not a lawyer and I'm sure it varies by state, but when my H quit his job to start a new company he was told by several employment lawyers that non-completes are not enforceable in our state because people have a right to earn a living in their chosen field. (Not the correct legal terminology.) Probably worth him reaching out to ask in your state.

Are you in CA? I know they are already non-enforceable there although I worked for a company that had me sign one.


When I was laid off last fall my company told me they would waive my non-compete anyway and if any of our clients had openings I wanted to apply for to let them know and they’d help in any way they could.

[georgeglass]

It doesn't include "senior executives" - The Final Rule defines “senior executives” to include either: (1) a business entity’s president, Chief Executive Officer or the equivalent, or (2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business.

[kittywalker]

Apr 24, 2024 17:53:36 GMT -5 georgeglass said:

It doesn't include "senior executives" - The Final Rule defines “senior executives” to include either: (1) a business entity’s president, Chief Executive Officer or the equivalent, or (2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business.

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

[meanie]

This IS a big deal! A former employer just threatened to sue H over a client (they didn't have a leg to stand on anyways though), this is huge in his industry and I can see both sides but I think this is the right move. 

[glw]

Apr 25, 2024 7:48:26 GMT -5 kittywalker said:

Apr 24, 2024 17:53:36 GMT -5 georgeglass said:

It doesn't include "senior executives" - The Final Rule defines “senior executives” to include either: (1) a business entity’s president, Chief Executive Officer or the equivalent, or (2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business.

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

I think the "and" in the second clause is very important: "(2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business." So salary alone does not exempt an employee.

This will be life-changing for MH's industry; employees in in his role are not  "policy-makers" but bound by non-competes that mean that if you quit your current job you'd have to move to another region of the country before you could get another similar position.

[notreal]

Apr 25, 2024 7:48:26 GMT -5 kittywalker said:

Apr 24, 2024 17:53:36 GMT -5 georgeglass said:

It doesn't include "senior executives" - The Final Rule defines “senior executives” to include either: (1) a business entity’s president, Chief Executive Officer or the equivalent, or (2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business.

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

A lot more people are covered by noncompetes than this perception. For instance, people in the service industry are often barred from working at another similar type of business when leaving. Jimmy Johns was having employees sign one that stated they were not allowed to work at a place that makes 10% of its earnings from selling sandwiches

[jane6672]

Apr 26, 2024 18:36:11 GMT -5 notreal said:

Apr 25, 2024 7:48:26 GMT -5 kittywalker said:

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

A lot more people are covered by noncompetes than this perception. For instance, people in the service industry are often barred from working at another similar type of business when leaving. Jimmy Johns was having employees sign one that stated they were not allowed to work at a place that makes 10% of its earnings from selling sandwiches

Jimmy Fucking Johns acting like sandwich artists are gonna run off with trade secrets to Subway and sink the business?

The absolute dipshittery.

[TR]

Apr 25, 2024 14:35:19 GMT -5 glw said:

Apr 25, 2024 7:48:26 GMT -5 kittywalker said:

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

I think the "and" in the second clause is very important: "(2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business." So salary alone does not exempt an employee.

This will be life-changing for MH's industry; employees in in his role are not  "policy-makers" but bound by non-competes that mean that if you quit your current job you'd have to move to another region of the country before you could get another similar position.

And I’m pretty sure I read or heard on NPR that this is only for existing non-competes. They couldn’t put a new one on an exec.

[ECB]

I didn't realize that sandwich shops were making employees sign non-competes!! Utterly ridiculous and an obvious sign that the concept of non-competes is being abused and taken too far.

[wawa]

Apr 29, 2024 8:57:51 GMT -5 ECB said:

I didn't realize that sandwich shops were making employees sign non-competes!! Utterly ridiculous and an obvious sign that the concept of non-competes is being abused and taken too far.

I think one of the the most ridiculous use of them I've seen is salons, since the business model of being a stylist is usually all about building up a PERSONAL book of clients, trying to tell people they can't "take" their clients wiht them if they move to a new salon is hilariously awful. Like, fuck you?  Of course I'm going to go to the new place WITH the girl who's been doing my hair for 3 years, and goddamn it's annoying that it's now 10 miles in the wrong damn direction because she had to move outside the non-compete radius!!!  

quick google turned up several sample template employment contracts with Noncompete clauses on salon industry websites.  it is (was?) totally common.

I am actually curious if there's any issue where stylists won't be protected by this because a lot of them are technically contract employees or are "renting a chair." So it's not a condition of standard employment, it's a clause in a rental agreement or the like.

[expectantsteelerfan]

Apr 25, 2024 14:35:19 GMT -5 glw said:

Apr 25, 2024 7:48:26 GMT -5 kittywalker said:

This is a shame. The effect of this new rule will probably be minimal because most companies are only imposing non competes on execs and people who make more than 150k. My husband has been stuck for years due to his noncompete but this would mean his will still be enforceable. And his huge tech employer has a history of suing people in his role for violating noncompetes. It is a real deterrent to leaving.

I think the "and" in the second clause is very important: "(2) an officer with “policy-making position, meaning any individual who earns more than $151,164 annually and has final authority to make controlling policy decisions on significant aspects of a business." So salary alone does not exempt an employee.

This will be life-changing for MH's industry; employees in in his role are not  "policy-makers" but bound by non-competes that mean that if you quit your current job you'd have to move to another region of the country before you could get another similar position.

I'll be interested to see if the AND holds up if the whole thing holds up.

My dh is a doctor, and in our area there are 2 competing medical facilities that are associated with 2 competing insurance companies.  And both make their employees sign noncompetes (although I think it's only for 1 year after leaving, it might be longer but it's definitely a time-period dependent clause) with a mile-radius that includes the other facility, so that basically, if you wanted to leave your job, you would need to move or work remotely for the time period.  A lot of the doctors leave and work remotely (and those jobs are primarily overnight hours) for the time period, then switch to the other facility.  And I think the noncompete IS enforceable due to the number of people we know who have done this to get around it.  

[basilosaurus]

Apr 29, 2024 8:57:51 GMT -5 ECB said:

I didn't realize that sandwich shops were making employees sign non-competes!! Utterly ridiculous and an obvious sign that the concept of non-competes is being abused and taken too far.

Since the example was jimmy johns, and he's an absolute pos, I'm not surprised that's the example used. I'm wondering if he's the exception or the standard.

[ellipses84]

California pre-emptively banned non-competes prior to this so aspects of the new law supersede the FTC ruling. It applies to out of state employees for CA companies.