Non-competes are generally meant to deter employees from going to a competitor. They are almost impossible to enforce, even in the states that allow for such enforcement, and more importantly, incredibly expensive to attempt to enforce.

I have been a part of myriad non-compete fights in my career. The companies attempting to enforce them almost never win - and they spend hundreds of thousands of dollars in the attempt. It's not about winning - it's about deterrence.

The last fight I was a part of, my company hired a relatively low-level buyer from another company in the industry - a very well known name. They sued him and we chose to defend him. The case went to arbitration and we spent over $800k defending the suit. We won the arbitration but the arbitrator refused to award our fees. So, the former employer spent a fortune (I'm sure it was close to what we spent defending), the employee remained with us, and everyone walked away. But the prior employer had made a point to all of their current employees - go to a competitor and we will attempt to bankrupt you and your next employer.

I wrote the non-compete my former employer uses. It's over a page long. When I left I told them I would not honor it - and I haven't. They don't want to come after me b/c they don't want it on the record that their non-compete won't be enforced. They just want to be able to keep employees just afraid enough not to go to a competitor.

The solution - draft a strong non-disclosure agreement, ditch the non-compete, and move on.

It's not just labor. It might be what gets the headlines, but that's a very minor part of it.

In reply to TexasRebel

TexasRebel said:

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Would they be doing this because they aren't adequately compensated?

If they can go across the street and make more money with the same customers. You're doing something wrong

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All of my associates make more then industry standard. Owners, however do make more than associates...eventually.

Most owners usually lose money the first few years.

When I opened my own practice, I had a 10 mile, 1 year non-compete. I opened my practice 11 miles away, 17 months after leaving my job.

Even without the non-compete, there's no way I would have tried to open up near my old employer and poach clients. It's a scumbag move. But that's me.

In reply to Aggie Jurist So this basically screws over lawyers, no more litigation, and even when litigated, it rarely, if ever, succeeds.

Sounds like a win.

I'm still opposed to the executive branch doing this.

In reply to Ag00Ag And to my point- most individuals don't want to take the risk and deal with the headache of making nothing for several years by opening their own business.

Pay a good employee enough or have a vesting schedule that allows them to share in success.

A noncompete is not necessary.

In reply to Aggie Jurist

Aggie Jurist said:

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Non-competes are generally meant to deter employees from going to a competitor. They are almost impossible to enforce, even in the states that allow for such enforcement, and more importantly, incredibly expensive to attempt to enforce.

I have been a part of myriad non-compete fights in my career. The companies attempting to enforce them almost never win - and they spend hundreds of thousands of dollars in the attempt. It's not about winning - it's about deterrence.

The last fight I was a part of, my company hired a relatively low-level buyer from another company in the industry - a very well known name. They sued him and we chose to defend him. The case went to arbitration and we spent over $800k defending the suit. We won the arbitration but the arbitrator refused to award our fees. So, the former employer spent a fortune (I'm sure it was close to what we spent defending), the employee remained with us, and everyone walked away. But the prior employer had made a point to all of their current employees - go to a competitor and we will attempt to bankrupt you and your next employer.

I wrote the non-compete my former employer uses. It's over a page long. When I left I told them I would not honor it - and I haven't. They don't want to come after me b/c they don't want it on the record that their non-compete won't be enforced. They just want to be able to keep employees just afraid enough not to go to a competitor.

The solution - draft a strong non-disclosure agreement, ditch the non-compete, and move on.

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Question: Is that NDA supported by separate consideration?

I gave 12 hard years working for a private wholesale insurance brokerage firm. It slowly became toxic and the regional manager couldn't do anything about it.

So...I quit and accepted a higher position at a smaller public firm. The new public firm hired me despite a two year non-compete. Three other of my old colleagues quit shortly after I did.

I have had at least a dozen of my old customers begging me to look at accounts I worked with them on because they do not feel that they can get the attention, professionalism, or care that I provided. I have respected my non-compete and declined each time. I don't want to end up in a court room.

How is a non-compete better for the customer in this situation?

It's not.

There are some circumstances where non-competes are necessary...but I'm losing considerable income and my customers are losing business because of one.

Quote:

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FTC estimates 18 percent of the U.S. workforce is covered by noncompete agreements around 30 million people.

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18% doesn't seem like much, and it's likely limited to a higher-skilled workforce.

The government's desire to get 40 million uninsured workers insurance benefits brought us Obamacare.

In reply to aggiehawg

aggiehawg said:

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BadMoonRisin said:

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You think it's dumb that companies shouldn't be able to lay you off and also tell you who you can and cant trade your labor with for 6-12 months after you are gone?

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Not how that works. For most layoffs there is a compensation package offered and for higher compensated employees those come with a limited in time and place noncompete.

We saw that when Elon was booting twitter employees with the use of compensation packages.

I sold my business in the mid 2000s, part of the deal with separate compensation designated therefor was geographically restricted and time restricted noncompete. They were buying my company as a going concern but if I were free to set up shop and take my long term customers with me, that going concern value would be diminished, considerably if I took enough of them with me.

But had I wanted to move to Houston or Dallas and set up shop, that was allowed as therewould be no direct competition. There is a value in noncompetes for both sides.

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This is exactly what I was thinking. My wife was offered to buy out the practice of the individual she was working for, and was seriously considering it. But then she got word from some of the clients that the owner had revealed that the intent was to sell the name of the business, take a month off, then set up shop and compete under a new name and attempt to steal the clients back.

Knowledge of that tidbit resulted in a lengthy and expensive unwinding of the relationship.

In reply to AgResearch

AgResearch said:

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Hope it goes through. Noncompetes are stupid. I gave one the middle finger on the way out the door and didn't have an issue but one of my colleagues had to sit on the sidelines for a year.

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Did he receive a large cash payment in exchange for his non-compete?

In reply to captkirk

captkirk said:

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AgResearch said:

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Hope it goes through. Noncompetes are stupid. I gave one the middle finger on the way out the door and didn't have an issue but one of my colleagues had to sit on the sidelines for a year.

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Did he receive a large cash payment in exchange for his non-compete?

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New employer paid her to hang out and do nothing for a year.

This.is the type of thing that shouldn't be governed by a department policy.

This is something that should be governed by law passed through the traditional process.

I hope this sort of bureaucratic rule dies when chevron does

In reply to BadMoonRisin

BadMoonRisin said:

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You think it's dumb that companies shouldn't be able to lay you off and also tell you who you can and cant trade your labor with for 6-12 months after you are gone?

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But muh free markets

In reply to Agthatbuilds

Agthatbuilds said:

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This.is the type of thing that shouldn't be governed by a department policy.

This is something that should be governed by law passed through the traditional process.

I hope this sort of bureaucratic rule dies when chevron does

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This. There are pros and cons to non competes, and I can understand both sides of the debate. But for the Federal Trade Commission of 5 representatives to wade into this uncharted territory and decide on a 3 to 2 vote to upend longstanding business practices is an egregious abuse of power. This is best left for our elected representatives to handle -- and if they choose not to do anything about it -- that is still a decision on their part. I hope the Supreme Court smacks this down like other Biden over-reaches.

In reply to Logos Stick

Logos Stick said:

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Quote:

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From fast food workers

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lmao

fast food workers don't sign non compete agreements!

thats Biden's bull**** to justfy this.

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You don't know what you're talking about. I've seen daycares paying minimum wage not only have their employees sign one but even go through the trouble of enforcing it, suing an ex employee that went to work at another daycare.

The current state of non-competes in the US is very anti-free market

In reply to Saxsoon Where can I send my 9 year old to work in this free market of yours?

I'll send my 4 year old down to the company store to pay for a bus ticket to get wherever he needs to go.

Great news for the American middle class


lol at people complaining about this

In reply to BMX Bandit

BMX Bandit said:

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put aside pros/cons of a non-competition agreement.

Does anyone here think it's right for Feds to ban them? That's what this gets down to.

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National injunction in 30 minutes or less or your pizza is free.

In reply to P.U.T.U

P.U.T.U said:

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Big deal for engineers and salespeople. Pretty standard to have a 1 year non-compete. Due to some of my projects my company tried to make me sign a 2 year, I said nope nope nope

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Certainly a big deal for me as a Sales leader. Typically non-competes are highly enforcable and last 1 year minimum.

In reply to Muktheduck

Muktheduck said:

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Logos Stick said:

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Quote:

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From fast food workers

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lmao

fast food workers don't sign non compete agreements!

thats Biden's bull**** to justfy this.

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You don't know what you're talking about. I've seen daycares paying minimum wage not only have their employees sign one but even go through the trouble of enforcing it, suing an ex employee that went to work at another daycare.

The current state of non-competes in the US is very anti-free market

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That is an extremely rare exception. It mostly, by a very large margin, affects high skill, high wage employees. HTH.

In reply to BMX Bandit

BMX Bandit said:

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put aside pros/cons of a non-competition agreement.

Does anyone here think it's right for Feds to ban them? That's what this gets down to.

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**** no.

typically, anything which takes power from the employer is bad for the country.
let the market handle it.

In reply to Ags4DaWin

Ags4DaWin said:

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BMX Bandit said:

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put aside pros/cons of a non-competition agreement.

Does anyone here think it's right for Feds to ban them? That's what this gets down to.

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Too many times with noncompetes I hear the phrase "this noncompete is the industry standard"

When an entire industry basically conspires to limit the ability of the workforce to market their labor then the government should step in.

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yeah, it's called Congress.

It should be that full salary must be paid during non-compete period if one is included in a contract. Probably have to include language that it needs to be based on their highest level of compensation to prevent **** like companies lowering salary to $1 before firing someone. Dont ban non-competes. Dont want someone working against you in your industry? Well, pay them for it. Don't want to pay them when they leave, sign a release of non-compete. Simple enough.

In reply to TA-OP

TA-OP said:

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AgGrad99 said:

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But there has to be some sort of protection for the employer, for the myriad of situations where it's not that simple

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Employer's protections are they pay the employee more. You don't want someone poached? Don't create conditions where it makes financial sense to job hop just to get raises.

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Real life isn't that simple though

In reply to Ags4DaWin

Ags4DaWin said:

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BMX Bandit said:

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put aside pros/cons of a non-competition agreement.

Does anyone here think it's right for Feds to ban them? That's what this gets down to.

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Too many times with noncompetes I hear the phrase "this noncompete is the industry standard"

When an entire industry basically conspires to limit the ability of the workforce to market their labor then the government should step in.

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No.
The government should stay out of it.

Let the free market take over.

Some businesses need this as a reckoning. They need to treat employees better and operate better in general. It should not be hard to keep good people.

In reply to Urban Ag

Urban Ag said:

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BMX Bandit said:

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put aside pros/cons of a non-competition agreement.

Does anyone here think it's right for Feds to ban them? That's what this gets down to.

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Exactly this.

How does an alphabet agency have the legal authority to ban non competes? Feds are completely out of control.

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They don't.

In reply to aggiehawg

aggiehawg said:

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Not to put too fine a point on this but the FTC has no authority to take that action in negating existing contracts nor banning new ones. Not within their Enabling Act establishing the agency.

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I agree with you. I assume this will be challenged on multiple bases. What are your thoughts on whether the new rule will be implemented during those challenges?