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Holy shit, I can’t believe it. This is massively good news for workers!
They are going to vote again in 120 days. Let’s hope the corporate lobbyists don’t sway this back in the other direction.
Lina, the FTC chair, is a stone cold anti monopolist motherfucker. She may be the best appointment the Biden admin has made, and has been non stop kicking corporate ass. The FTC isn’t winning them all, but they are actually trying to.
I dont think they will be swayed.
That’s good to hear.
Weren’t noncompete agreements essentially unenforceable before this because of court rulings? Forcing employers to notify employees of this is definitely good, though.
Unfortunately no. There are people being sued today for violating non compete clauses by their employers. Particularly in the healthcare industry.
Jesus, real love for essential workers there. I might be confusing it with district court rulings, either way I’m glad it’s getting addressed!
Prior to this, the restrictions on non-competes varied by jurisdiction. Many were similar to Texas:
Under Texas law noncompete agreements can be enforceable if:
- The noncompete provision is part of an otherwise enforceable agreement.
- The non-compete requirement is supported by valid consideration (consideration meaning something of value provided to the employee).
- The non-compete requirement is reasonable in geographic scope, timeframe, and activities being restrained.
The factors were issues for a jury. Even with this change from the FTC, I expect companies will still be able to pursue prohibitively expensive litigation against former employees for things like theft of trade secrets. Even a bogus claim can cost many thousands of dollars to defend even if it is meritless.
From the story: Business groups opposed to the rule, such as the U.S. Chamber of Commerce, have said that the contracts are necessary to protect proprietary information and training, and justify investing in workers who might otherwise immediately jump to a competitor.
No employer in any field I’ve applied in since around 2006 has wanted to do any training beyond operating requisite proprietary vendor software. The expectation is that you’re fully educated in all other skills that might ever be needed, preferably having worked in Rust for 63 years and internal-combustion-engine design since the Late Bronze Age Collapse.
Proprietary info has always been need-to-know and, where possible, distributed such that no one below the C-suite knows how all the parts interact, even as those same leaders have no functional understanding of how the parts actually act.
All noncompetes do is drive down wages.
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They are used in a wide range of industries, including technology, hairstyling, medicine and even dance instruction, while imposing restrictions on both high- and low-wage earners.
The FTC estimates that banning noncompete agreements could create jobs for 30 million Americans and raise wages by nearly $300 billion per year.
“I think the FTC has done a real public service here by compiling all this evidence, making a really strong case for a complete ban and establishing a new gold standard for policymaking in this area,” said Sandeep Vaheesan, legal director at the Open Markets Institute, which proposed a noncompete ban to the agency in 2019.
Business groups opposed to the rule, such as the U.S. Chamber of Commerce, have said that the contracts are necessary to protect proprietary information and training, and justify investing in workers who might otherwise immediately jump to a competitor.
In recent years, 11 states and Washington, D.C., have passed laws that prohibit the agreements for hourly wage workers or those who fall below a salary threshold.
Some legal experts said that companies include noncompete clauses in employee contracts regardless of state prohibitions, knowing workers and competitors will be wary of litigation.
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