Non-Competes Ruined Your Career... Now They Are Banned

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#career #business #work

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Corporate America just lost one of its most powerful tools to keep people from getting better jobs.

Non-compete contracts that ban workers from finding a better job have been used to keep wages low, and even if you have never personally signed one of these agreements, they will almost CERTAINLY still be hurting you. Late last month the FTC banned these deals from being put into the contracts for MOST employees, and most existing non-competes will be phased out over the next three [3] months…Unless you run a business that relies on keeping employees in bad conditions for poor pay, this ruling will be good for you.

But… that doesn’t mean that corporate America is going down without a fight.

A non-compete agreement is a condition in a contract which bans an employee from working for a competitor company for some amount of time after they quit or get fired from their current position. Companies claimed that these terms were very important because they didn’t want to spend time and money training staff, and giving them proprietary information, just for them to get a job with their competitor and take all that valuable information over to them.

They have also said that without non-compete agreements their competitors could “free-ride” off them by just poaching their staff after they have made the investment into hiring and training inexperienced workers. The Federal Trade Commission and its controversial new chair Lina Khan have basically called this out as complete bull. In their announcement non-compete agreements being put into employment contracts, the FTC also said that even if this does hurt some big businesses that’s actually a good thing. The free-rider argument doesn’t really work because, those businesses could also attract their own talent from their competitors TOO, all they need to do is give their employees a more attractive job offer and most people are happy to switch jobs… f people do take company information with them, the FTC argues that the only group this is bad for is a company that doesn’t want to compete. Most successful companies are started by people who were previously employees working for a company in the same industry.

Gary Tann the CEO of Y-Combinator an early stage startup incubator has said that the best companies he deals with are ones started by people who first gained experience in the industry they want to disrupt, by working in it… The Federal Trade Commission estimates in their report that this new will lead to the formation of at least eight thousand five hundred [8,500+] extra businesses every year, and between seventeen thousand, and TWENTY NINE THOUSAND [17,000 – 29,000] new patents every year.

According to the organizations research these are all currently being blocked because people aren’t legally allowed to innovate or start a business. The only people that lose in this situation are the companies that don’t want to compete, which is why it’s the FTC not the Department of Labor that made this ruling. The FTC is normally the organization in charge of making sure that businesses aren’t forming monopolies. It does this by blocking mergers or acquisitions that would give the new mega corporation too much power. In the last three years FTC has been trying their best to stop some large company mergers but they have so far lost all of their recent cases in court, allowing the mergers to go ahead. The FTC can also break up companies that have too much market power but it hasn’t done that in over FOURTY YEARS…

So what the FTC really does most of the time is make rulings like, non-compete agreements being a form of anti-competitive practice, which is illegal. You wouldn’t think this would be a hard case for them to make since the words non-compete are right there in the name, but the FTC is already being sued over this ruling by an industry body representing companies.

But let’s be honest with one another, even though the companies and the FTC won’t admit it, non-compete agreements were never about competition between one company and another, it was about competition between a company and its employees.

[dwoolf]

Corporate apologists will argue "if you don't like your job, leave" Well people couldn't before but sure can now.

[LayKxD]

Companies complaining about losing valuable information in their business.... meanwhile collecting and selling all of it's users information is funnily ironic.

[masonm]

It's gotten totally out of hand.
My friend works with special needs kids.
It's only a $30k/year kind of job.
She has a non-compete.

[tll]

mind-boggling how such a criminal thing was allowed for so long..

[stischer]

They used to have them in IT but the courts ruled they were illegal a number of years ago. Glad to see it being expanded.

[RILDIGITAL]

Banning non-compete agreements is a massive step towards empowering the workforce and promoting healthy competition. Investing in employees' growth rather than confining them under restrictive contracts is the best way to thrive in today’s dynamic market.

[victoriancu]

Businesses don't care if their employees survive or do well in the long term. Why should an employee reciprocate?

[andljoy]

How was this ever even legally enforceable, you are an employee not a slave.

[PXAbstraction]

As someone who was previously had an employer cause me severe mental distress by trying to sue me over a non-compete clause that was later ruled unlawful, the banning of these corporate weapons is ONLY a good thing. Learn to compete the treat your employees like more than disposable widgets and you'd be surprised how little you'd need these clauses to begin with.

[keylanph]

Getting out of my non compete allowed me to 4x my income. One piece of paper stifled the careers of millions of Americans. Pay your employees of compete with them

[bcgibson]

So many employers don't actually train their staff any more. Surprised this took so long....

[danycashking]

the funny part is most top executives almost always come from other firms in the same business, so the non-competition agreements are definitely aimed mostly at shafting lower level staff and not to protect company information

[stevefarb]

I had to get a lawyer to leave an abusive company that treated me and others as indebted servants that couldn't take another job anywhere in the world. Thank Goodness for this legal change.

[Geobeetle]

These companies are already whining about how gen z won’t be their slaves, and now they’re whining about the law that will make it so they can’t force their current employees to be slaves either

[rdl]

They can talk about how much they've invested in my training when they cosign my student loans.

[joshmnky]

My wife was a dog trainer at PetSmart, and she had a non-compete. PetSmart doesn't even give a crap about their trainers. They're constantly trying to reduce their compensation and make their commission deals worse. Any kind of soft benefits to the company, like getting customers in the door weekly, is completely lost on the people in charge.
Edit: I want to add that if you ever come up with pet products, you shouldn't sell it through Petsmart. They'll sell it for a year or so, create their own crappy generic knock-off, and kick you to the curb.

[Tranbify]

French perspective here : companies still sometime write down non-compete clauses in work contracts, but they are mostly unlawfull. To be valid, a non-compete clause must be :
1- Limited in time
2- Limited in terms of geography
3- And maybe most importantly : Paid

[ghostmane]

Laughing at all the executives crying over this 😂

[jmizzonini]

I love how all companies will bring up "training" lol. Unless you're in a skilled trade, a pilot etc - training in a white collar professional setting is typically just how to use whatever proprietary software is used in-house. Gaining new experiences through performing your job is NOT training lol, get out of here with that

[iTzDritte]

I can’t wait to see what workaround the business community comes up with to make a functional equivalent to a non-compete, instead of actually competing.