In reply to Waffledynamics

Waffledynamics said:

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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.

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I've worked for, advised and consulted with MANY companies over the past 20 years where non-compete issues were discussed. I can count on one hand the number of times a company actually went after someone to enforce this. The idea that this is some "reckoning" for evil companies is not rooted in reality

In reply to aggiehawg

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Question: Is that NDA supported by separate consideration?

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Depends on the jurisdiction. In some continued employment is adequate, in others - simply being given access to the data to be protected is adequate, in many - if part of an offer of employment, consideration is sufficient.

In our case, participation in a bonus plan or stock plan was the consideration.

In reply to JW

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Businesses took it too far and this is the backlash.

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Sorry, but that's just not the case. Non-compete (and more broadly, restrictive covenant) enforcement is a state issue. Dems have been trying to kill such covenants for years. Heck, they tried to use the NLRB to kill them.

Many states will not allow them (California, Oklahoma for instance) and most have incredible restrictions on their use. All states have a robust book of case law on enforcement and they are ALL different. Many also have different standards for when they are part of a business sale.

This is just Ds trying to make a constituency happy by bulldozing an area of law with a robust history.

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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It's very dumb. Nobody forces anyone to sign them.

Fast food workers can work wherever they want.

In reply to AgGrad99

AgGrad99 said:

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I see both sides of this.

As an employer, I dont want an employee taking my trade secrets to a competitor, without a reasonable time to protect myself. And training costs are ridiculously high, before an employer typically sees a return on their investment. So you train, expose your trade secrets, and then get your best employees immediately poached without any recourse?

I understand the argument from an employee, who simply wants to use a skill they've acquired (especially if they've been laid off).

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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If they signed an NDA saying they won't disclose IP, Sue them. That's the way this country works.

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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But trade secrets! What if some disgruntled former KFC manager gives away the company's list of 11 herbs and spices to a competitor? The lawsuits! Or KFC adding a 12th spice to throw people off. The horror!

Most non-competes are unenforceable anyway.

In reply to BonfireNerd04

BonfireNerd04 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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But trade secrets! What if some disgruntled former KFC manager gives away the company's list of 11 herbs and spices to a competitor? The lawsuits! Or KFC adding a 12th spice to throw people off. The horror!

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Well, since that guy won't sign a noncompete, I doubt he has the recipe.

Noncompetes are not forced upon anyone - they are entered into willingly as part of free market transactions.

To support banning them you are supporting government restriction on free market transactions, which show time and time again to hurt the economy not help it

In reply to FrioAg 00 Haha. Freedom of contract? Are you mad, man? We can't have freedom of contract.
/s.

This effects more than just employees...and quite frankly I'm shocked to hear so many posters on this board ( a generally conservative lot) shouting "workers of the world unit!" That's sure what it sounds like.

Take for example a business owner in any business. When he's ready to retire, he sells his business. The buyer is purchasing more than just his building and equipment,He's buying the name and goodwill that comes with the businesses reputation. So when he buys, he make the seller sign a non-compete stating he won't open up a similar business in the same area and advertise to his old clients. If he did, all the good will the buyer purchased is vanished.

Now, the seller, who sold his business yesterday, can ignore his non-compete today. Open up next door the the guy he sold his company, client base, company reputation and name to...advertise in the community and completely devalue the business he sold.

And for those of you who are content to be salaried employees for the entirety of your lives. Do you have a retirement account? Is any of it invested in private equity funds? Hope your ready to lose that!

Private equity companies make there investors money by buying and consolidating businesses in one sector or another. When they buy those companies, they make the sellers sign non-competes. As in the scenario above, the purchases they made are no longer protected from rapid devaluation.

I understand that in some cases, non-competes are overly restrictive but in the vast majority of those cases, they don't hold up in court anyway.

In high skill and professional industries like medical fields and certain tech sectors, this is going to be devistating. Not only to those in those sectors but in the over all economy as others invest in those sectors.

And for those comments like "just pay your people what their worth and they'll stay" you can't possible imagine how ignorant you sound. The investment a medical professional practice owner makes in an associate is significantly more than just their salary and the associate typically benefits from the arrangement far more than the owner...but the owner takes all the risk.

I'm told that specialists at major hospitals are nearly always required to sign non-competes because the hospitals want to force the specialist to work for them and nobody else. The last thing they want is for them to leave and take their patients with them.

I also knew an engineer for one of the major NASA contractors who accepted early retirement and had already set up a job working on a different project for another contractor. He had a month long vacation scheduled between his early retirement and starting at the new contractor.

While on the vacation, the company he had retired from contacted him and let him know that they were blocking him from working for the new contractor. When he pointed out that the contract he was hired to work on by the new employer was not in competition with anything his previous employer did. They responded that it didn't matter because they might want to bid on that contract in the future.

So that left him at about 50 or 55 without a job. He eventually went to work installing air conditioning systems because he could not get a job in an area he was trained in.

The only people who think non-completes are "wrong" are people who never built a business and had little dip****s try to steal from them.

aren't non-compete agreements legal constructs; who in some alphabet agency was given any authority to change the law without proper due process

The rule carves out non competes associated with a sale of a business.

The laws on non-compete agreements should really be on a state by state basis, not imposed on the states by the federal government.

In reply to Ags4DaWin

Ags4DaWin said:

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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.

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Jeeze the ignorance of this comment is overwhelming!

Most people don't want to take the risk and deal with the head aches...but pay them like an owner anyway?

Go away commie.

In reply to Ags4DaWin

Ags4DaWin said:

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Aston04 said:

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This is gonna make a huge impact in the medical field. Health systems spend a ton to recruit and train... Now can be poached immediately after...

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Most healthcare workers work for peanuts before their training is complete.

The Healthcare system gets more than enough bang for their buck before the training is compete. If they want to retain them then they should pay them more.

0 sympathy

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Most doctors work for peanuts? really? because that's whose signing non-competes in the health care industry. My wife works for one of the largest health care systems in San Antonio and only the Doctors and upper level nurses have non competes. Most (al most all) non professional employees do not.

If someone is important enough to your business, you should pay them and treat them well enough not leave. If not, you deserve to get beat by your competitors instead of holding someone hostage.

In reply to Ag00Ag Look I don't think this rule is good. But your story sounds like bull. What physician position did you fill that cost you hundreds of thousands up front? Patient loyalty is at an all time low, most patients will see another doctor for $10off the bill. Honestly I support non-competes in healthcare less now than any other time

In reply to eric76

eric76 said:

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I'm told that specialists at major hospitals are nearly always required to sign non-competes because the hospitals want to force the specialist to work for them and nobody else. The last thing they want is for them to leave and take their patients with them.

I also knew an engineer for one of the major NASA contractors who accepted early retirement and had already set up a job working on a different project for another contractor. He had a month long vacation scheduled between his early retirement and starting at the new contractor.

While on the vacation, the company he had retired from contacted him and let him know that they were blocking him from working for the new contractor. When he pointed out that the contract he was hired to work on by the new employer was not in competition with anything his previous employer did. They responded that it didn't matter because they might want to bid on that contract in the future.

So that left him at about 50 or 55 without a job. He eventually went to work installing air conditioning systems because he could not get a job in an area he was trained in.

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The two examples that signed those contract terms - the specialist doctor and the nasa engineer - were they coerced into signing them?


When they decided unilaterally they wanted to violate the terms of their agreements they entered, did they also offer back the compensation they had accepted in the deals that included those agreement provisions?


Are there other examples of contracts you think should be ignored by the people who enter them?

In reply to The_Thinker I never said I spent hundreds of thousands of dollars on an associate. I said "The investment a medical professional practice owner makes in an associate is significantly more than just their salary and the associate typically benefits from the arrangement far more than the owner...but the owner takes all the risk. " and that's absolutely true.

I own a 5 DVM veterinary practice. Veterinary customer loyalty is not at an all time low...in fact it's pretty high. I won't post my associates salaries but I will tell you that most new graduates do not produce enough to cover their salary for 12-18 months. In addition to that, we offer services that require me to spend several thousand dollars (not hundreds of thousands) in specific additional training for new associates.

Hiring a new associate is a long term investment. Some times you just strike out on an associate that just doesn't work out, moves away or what ever. Fortunately that's rare for me because 1) I DO PAY THEM WHAT THEIR WORTH, In fact I pay at the very upper end of industry standard and I provide significantly above industry standard flexibility with scheduling and time off, and 2) I am very selective in hiring.

However, if after investing in an associates growth and development, providing them access to clients that the good name of my practice generated as well as the staff and facility for them to engage with my clients in, they can now decide after a couple of years that they want to open up next door and market directly to the client base I provided them with, I don't see why I should continue to do that.

In reply to Ag00Ag In the medical world, most health systems don't break even on a new primary care doctor until year 3, and some specialties can take even longer.

For senior hire in the specialist arena, they often demand large staff expenses, facilities and equipment packages in addition to their high salaries. The economics will absolutely be recalibrated if non-competes are eliminated, and it will hurt the bargaining power of those doctors.

In reply to Proc92

Proc92 said:

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The rule carves out non competes associated with a sale of a business.

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wow...the commies really have taken over here.

So if you've never owned or sold a business, regardless of how much money you were paid at the job you agreed to sign a non-compete for, you can now ignore the non-compete.

But if you sold a business, regardless of what you sold your business for, then you shouldn't be able to market your skills anymore.

Workers of the world unit!

If you don't want to sign a non-compete then don't. You aren't working for me though.

In reply to Ag00Ag

Ag00Ag said:

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I never said I spent hundreds of thousands of dollars on an associate. I said "The investment a medical professional practice owner makes in an associate is significantly more than just their salary and the associate typically benefits from the arrangement far more than the owner...but the owner takes all the risk. " and that's absolutely true.

I own a 5 DVM veterinary practice. Veterinary customer loyalty is not at an all time low...in fact it's pretty high. I won't post my associates salaries but I will tell you that most new graduates do not produce enough to cover their salary for 12-18 months. In addition to that, we offer services that require me to spend several thousand dollars (not hundreds of thousands) in specific additional training for new associates.

Hiring a new associate is a long term investment. Some times you just strike out on an associate that just doesn't work out, moves away or what ever. Fortunately that's rare for me because 1) I DO PAY THEM WHAT THEIR WORTH, In fact I pay at the very upper end of industry standard and I provide significantly above industry standard flexibility with scheduling and time off, and 2) I am very selective in hiring.

However, if after investing in an associates growth and development, providing them access to clients that the good name of my practice generated as well as the staff and facility for them to engage with my clients in, they can now decide after a couple of years that they want to open up next door and market directly to the client base I provided them with, I don't see why I should continue to do that.

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You shouldn't. This is a bull**** rule that fixes a problem that wasn't there. The people *****ing about this have never once been a job creator. Noncompetes have a place and a federal agency has no right to invalidate these agreements.

Non-competes, and arguably patents to some extent, slow innovation and entrepreneurship.

It's better for the consumer and overall prosperity of society if the more efficient business is allowed to operate rather than the less efficient business be protected by non-competes and patents.

There is some middle ground where the person taking the initial risk should get some protection and claim to the reward, so high risk innovation is incentivized. But there is a strong case to be made that too much protection is a net negative.

In the case of non-competes, I think they are a net negative. It's bad for society if businesses survive only because of their non-competes.

If someone can just work for you for 3 years then leave and open up a better offering to customers that puts you out of business, then you're the less efficient and inferior service. Consumers shouldn't be limited in choice and have to suffer through inferior quality.

Established businesses are not entitled to continue the status quo and should not be protected from new innovators just for being around first.

In reply to bmks270 You are correct that the balance is between favoring the protection of the person investing the initial capital and risk against the potential employee who seeks to be the second or next investor, or join a competitor.

Where you are dead wrong is in assuming the government can calculate or regulate that decision with more efficiency than free markets.

In Free Markets v Government on efficiency, the current score is eleventy-billion-to-zero.

Neither the FTC nor any other governmental agency has any business making laws like this, nor should the federal government insert itself in private employer-employee relationships.

In reply to FrioAg 00

FrioAg 00 said:

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eric76 said:

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I'm told that specialists at major hospitals are nearly always required to sign non-competes because the hospitals want to force the specialist to work for them and nobody else. The last thing they want is for them to leave and take their patients with them.

I also knew an engineer for one of the major NASA contractors who accepted early retirement and had already set up a job working on a different project for another contractor. He had a month long vacation scheduled between his early retirement and starting at the new contractor.

While on the vacation, the company he had retired from contacted him and let him know that they were blocking him from working for the new contractor. When he pointed out that the contract he was hired to work on by the new employer was not in competition with anything his previous employer did. They responded that it didn't matter because they might want to bid on that contract in the future.

So that left him at about 50 or 55 without a job. He eventually went to work installing air conditioning systems because he could not get a job in an area he was trained in.

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The two examples that signed those contract terms - the specialist doctor and the nasa engineer - were they coerced into signing them?


When they decided unilaterally they wanted to violate the terms of their agreements they entered, did they also offer back the compensation they had accepted in the deals that included those agreement provisions?


Are there other examples of contracts you think should be ignored by the people who enter them?

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What are you talking about?

Sure, some doctors would like to move to another employer but can't because of the non-compete agreements. The only one I know personally, a cousin of mine's husband, had to move to another city in order to change. I would imagine that is not uncommon.

The engineer was not going to a another company to compete against his former employer. He was going to another company to work on a contract that the other company had that was not in competition against his former employer. The former employer nixed that because at some point in the future they might compete for the contract. I think that hidden between the lines there is that the contract can come up for renewal from time to time and when it does, other companies can bid for it, but I don't know if that is the practice.

In neither case did they decide to violate the terms of their agreements. I don't know what could be going through your mind to imagine that they were trying to violate those agreements.

In reply to bmks270 "Established businesses are not entitled to continue the status quo and should not be protected from new innovators just for being around first. "

But they are entitled to decide who they hire and the conditions under which they hire them. If you want to be an innovator...fine, just do a little more than 5 miles away from the place where I introduced you to my clients.

And for what it's worth, potential employees are not entitled anything until 1) they earn it, and 2) they agree to the terms of employment.

In reply to Ag00Ag

Ag00Ag said:

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Proc92 said:

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The rule carves out non competes associated with a sale of a business.

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wow...the commies really have taken over here.

So if you've never owned or sold a business, regardless of how much money you were paid at the job you agreed to sign a non-compete for, you can now ignore the non-compete.

But if you sold a business, regardless of what you sold your business for, then you shouldn't be able to market your skills anymore.

Workers of the world unit!

If you don't want to sign a non-compete then don't. You aren't working for me though.

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I interpreted his "The rule carves out non competes associated with a sale of a business" as meaning that the rule leaves those in place.

Is my interpretation wrong? Does it say that those agreements can no longer be upheld? I would be surprised if that were the case.

In reply to FrioAg 00

FrioAg 00 said:

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You are correct that the balance is between favoring the protection of the person investing the initial capital and risk against the potential employee who seeks to be the second or next investor, or join a competitor.

Where you are dead wrong is in assuming the government can calculate or regulate that decision with more efficiency than free markets.

In Free Markets v Government on efficiency, the current score is eleventy-billion-to-zero.

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You can't seriously think all businesses aren't sometimes just as if not more anti-competitive than government?

Businesses also stifle the free market sometimes. See patent trolls. See frivolous ADA lawsuits. See lobbying for burdensome regulations on their competitors.

In reply to eric76 In the example of the doctor, they never had to enter those agreements and they knew what they signed. Health systems often lose money in doctors ramping up their practices for years and they expect a financial recovery of costs if those doctors leave early to competing practices (including their own). Many of the contracts also have pre-negotiated buyout clauses - so the doctor is free to exit on the terms they agreed to including a repayment.


As far as the engineer - clearly the company disagreed with him. But if the new employer and the engineer were confident they could tell the old employer to pound sand and take them to court. If he wasn't violating the non-compete terms, he'd prevail and he could even counter sue for his legal costs.


I just don't understand how anyone supports the government outlawing these agreements two parties mutually seek to enter.

In reply to Ags4DaWin

Ags4DaWin said:

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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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That's different for someone selling their business versus a laborer wanting to market their skills.

I agree with noncompetes on the one, vehemently oppose them for the other.

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Non competes I don't believe are enforceable if you're laid off. And they're mostly non enforceable for anyone below the senior executive levels. A non compete for your regular Joe are almost unenforceable per a few lawyers I've talked with.

In reply to eric76 No i think you're reading it wright. I just think that's makes it even worse.

Another example of the rule applies to one group of people but not others.

Say you're an engineer and you build a business around developing some new process. After 20 years you sell the business and sign a non-compete. Now you can never work on that process or for any company that has anything to do with that process again. The company you sold to, hires a bight young engineer who works on the process for 5 years and learns all about it. He quits and starts his own business on based on teaching that process to other companies. A process that he would never have otherwise learned had the company that hired him had not exposed it to him. He now sells the knowledge he's learned because you can't enforce a non-compete against an employee but you can't work because you can enforce a non-compete against anyone who sold a business.

In my case, my employee is free to take advantage of using my investment and goodwill to build a following and then open up next door and try to take clients from my business, but if I sell my practice to them, I can't do the same. They can enforce a non-compete against me, but I can't enforce a non-compete against them.