The relevant part of the FTC law seems to be "any unfair method of competition or unfair or deceptive act or practice in or affecting commerce". When abused, sure, but I don't see in general how a non-compete that you knowingly and voluntarily enter into can be called unfair.
For example for security clearances often you have employees doing useless work for a year. They're getting carried for a year and say the company spends $200k on them which could just evaporate if they're denied. Then a competitor can just poach them for $200k more since they don't have to pay for that process? A company investing a year into you and then requiring you not actively work against them for a year isn't unfair.
So there's good uses of non-compete and bad ones. That's why a blanket ban is overreach.
It's not the employee's fault security clearances are expensive and take forever. If employees with clearances are that valuable, then pay them more to retain them, simple as.
What you're saying is just pay the same salary as your competitor can plus all the money you invested in the employee on top that, which your competitor doesn't have to pay.
Fairness is a two-way street and it's also not fair to the employer to invest loads of money into an employee and have them cut and run with that investment.
This mindset of only fairness for the employee and never the employer has predictable consequences, favoring large companies. I hope you like working for Lockheed.
As long as workers don't completely drop out of the applicable career, this all offsets in the long run anyway. Company A might pay for an employee's clearance only to have them leave for B, but then A can do the same to company C who then does it to B and so on.
That's a nice justification, kind of like how people rob stores and it's okay because stores have insurance, but that doesn't address what's fair or right.
You can say that over enough time it'll average out, but you can't innovate with average talent; you need to invest in exceptional talent and if there's no return on that investment nobody can do it.
An innovative startup can't poach from "Company A" because it's full of mediocre talent. Company A will only invest in people who Company B won't even bother with. Without non-compete you only get this mediocrity. The first company only invests the money in people who are too staid to leave even for more money.
They don't poach people from the 100k employee corps because those people can't innovate; instead they pay to get smart people clearances and then that investment is protected by non-compete.
You make good points, but I'm not sure this necessarily has an impact on the scenario you've described. I've seen (full disclosure, European) job contracts that have both a non-compete and a requirement to pay the company back part of the money they spent training you - it's something like 2/3 if you quit within a year, 1/3 after 2 years, 1/4 after 3 years, and nothing after 4. Companies often offer to pay these fines when they really want to hire you. There may also be obligations of providing notice to the company. All this is a lot more reasonable than "you don't get to work for a year" - what good does that do?
I also don't think the "voluntarily" justifies this sort of thing. I might 'voluntarily' enter into an agreement to never work again in my life, if I were desperate enough for a job because I was starving or something - but should that be legally enforceable? It's an extreme example, to be sure, but I'm just addressing the point that just because I 'knowingly and voluntarily' enter into an abusive contract should make it legally enforceable. Companies generally have a position of power against their employees.
I also don't think the "voluntarily" justifies this sort of thing. I might 'voluntarily' enter into an agreement to never work again in my life ... It's an extreme example, to be sure,
It's not an extreme example because courts have ruled non-compete has to be a reasonable time frame (even in the worst state it's like 2 years max). And the basis for this is all contracts must have compensation for the terms; if you don't get something of reasonable value from the contract then it's invalid. So if you were to make an agreement to never work again the other party would have to pay you a fair amount to not work.
I think any argument against non-compete would have to be the same as against fixed-length contracts. If you commit to work a full school term for instance you can't just decide to switch schools in the middle of the year; they're relying on the commitment you made. A movie actor that commits to do a sequel, is that supposed to be unfair because now they're 'forced' to do a second movie against their will?
Same thing with non-compete. You made a legal commitment and they compensated you for it with a higher salary, job security, or whatever made you decide to accept the job.
It can be abusive, like for instance a low-skilled job at landscaping company having a non-compete. They don't need a specific person's skills, they're not irreplaceable. The company just wants to lock them in without giving anything back to the workers. This kind of non-compete should be prohibited, but not all of them.
Surely an employer can attach a dollar amount to the harm caused to them by a former employer competing with them and compensate said former employee accordingly.
You can be sure if they took you to court for breech of contract for competing with them that they'd have it, because that's what they'd be asking for damages.
This happens sometimes with valuable people; the person's new employer essentially buys out their contract by hiring them anyway and then settles, paying the original company for the value lost.
How is that not the most fair? Everybody gets compensated, whereas without non-compete the original company would just get screwed over with no recourse.
Because most people are not "valuable people", nor are they your security clearance person doing useless work for a year while they wait for their clearance to go through. They get hired to work a process, and if they leave it's to work a process somewhere else. We're long past the days of Mr. Fezziiwig training his young apprentices to possibly take over the business when he retires.
Besides, companies try very hard to make their employees believe they are replaceable cogs, so what is even the purpose of non-competes if that is so? If they are replaceable, then how can harm be done by them leaving to work for someone else? If harm is done, then why the charade of making them think they're replaceable cogs?
Then maybe employers should have only used them for the handful of employees where they would actually be beneficial instead of making them a standard term of employment for everyone.
Instead they abused the concept so much they made it so the government said they don't get to use it anymore. Hard to feel much pity about that.
As if all employers were the same. But you shouldn't feel pity for them, you should feel regret for the oncoming mediocrity that always follows trying to protect people from being able to make poor choices.
Without that 10 you're losing innovation. How much? My personal experience with companies that probably wouldn't have existed or been successful without non-compete (or equivalent) says quite a lot.
Just to protect people from making bad decisions?
I'll leave you with the FTC announcement. According to this there's nothing good about non-compete clauses at all. No issue like this is entirely black and white and when somebody tells you it is they're lying and have some agenda; for instance they say banning non-compete "would close racial and gender wage gaps".
He does seem to misunderstand what that politician meant when he said "it's overreach" he didn't mean that outlawing non-competes is government overreach, he's saying that the FTC doing a rule change is FTC overreach.
The relevant part of the FTC law seems to be "any unfair method of competition or unfair or deceptive act or practice in or affecting commerce". When abused, sure, but I don't see in general how a non-compete that you knowingly and voluntarily enter into can be called unfair.
For example for security clearances often you have employees doing useless work for a year. They're getting carried for a year and say the company spends $200k on them which could just evaporate if they're denied. Then a competitor can just poach them for $200k more since they don't have to pay for that process? A company investing a year into you and then requiring you not actively work against them for a year isn't unfair.
So there's good uses of non-compete and bad ones. That's why a blanket ban is overreach.
It's not the employee's fault security clearances are expensive and take forever. If employees with clearances are that valuable, then pay them more to retain them, simple as.
What you're saying is just pay the same salary as your competitor can plus all the money you invested in the employee on top that, which your competitor doesn't have to pay.
Fairness is a two-way street and it's also not fair to the employer to invest loads of money into an employee and have them cut and run with that investment.
This mindset of only fairness for the employee and never the employer has predictable consequences, favoring large companies. I hope you like working for Lockheed.
As long as workers don't completely drop out of the applicable career, this all offsets in the long run anyway. Company A might pay for an employee's clearance only to have them leave for B, but then A can do the same to company C who then does it to B and so on.
That's a nice justification, kind of like how people rob stores and it's okay because stores have insurance, but that doesn't address what's fair or right.
You can say that over enough time it'll average out, but you can't innovate with average talent; you need to invest in exceptional talent and if there's no return on that investment nobody can do it.
An innovative startup can't poach from "Company A" because it's full of mediocre talent. Company A will only invest in people who Company B won't even bother with. Without non-compete you only get this mediocrity. The first company only invests the money in people who are too staid to leave even for more money.
Changing jobs isn't robbing. Holy shit, LMAO. How is your startup going to poach people under non-competes?
They don't poach people from the 100k employee corps because those people can't innovate; instead they pay to get smart people clearances and then that investment is protected by non-compete.
I never said anything about the size of the company. You can't poach people who are under a non-compete so where is the poaching to happen?
You make good points, but I'm not sure this necessarily has an impact on the scenario you've described. I've seen (full disclosure, European) job contracts that have both a non-compete and a requirement to pay the company back part of the money they spent training you - it's something like 2/3 if you quit within a year, 1/3 after 2 years, 1/4 after 3 years, and nothing after 4. Companies often offer to pay these fines when they really want to hire you. There may also be obligations of providing notice to the company. All this is a lot more reasonable than "you don't get to work for a year" - what good does that do?
I also don't think the "voluntarily" justifies this sort of thing. I might 'voluntarily' enter into an agreement to never work again in my life, if I were desperate enough for a job because I was starving or something - but should that be legally enforceable? It's an extreme example, to be sure, but I'm just addressing the point that just because I 'knowingly and voluntarily' enter into an abusive contract should make it legally enforceable. Companies generally have a position of power against their employees.
It's not an extreme example because courts have ruled non-compete has to be a reasonable time frame (even in the worst state it's like 2 years max). And the basis for this is all contracts must have compensation for the terms; if you don't get something of reasonable value from the contract then it's invalid. So if you were to make an agreement to never work again the other party would have to pay you a fair amount to not work.
I think any argument against non-compete would have to be the same as against fixed-length contracts. If you commit to work a full school term for instance you can't just decide to switch schools in the middle of the year; they're relying on the commitment you made. A movie actor that commits to do a sequel, is that supposed to be unfair because now they're 'forced' to do a second movie against their will?
Same thing with non-compete. You made a legal commitment and they compensated you for it with a higher salary, job security, or whatever made you decide to accept the job.
It can be abusive, like for instance a low-skilled job at landscaping company having a non-compete. They don't need a specific person's skills, they're not irreplaceable. The company just wants to lock them in without giving anything back to the workers. This kind of non-compete should be prohibited, but not all of them.
Surely an employer can attach a dollar amount to the harm caused to them by a former employer competing with them and compensate said former employee accordingly.
You can be sure if they took you to court for breech of contract for competing with them that they'd have it, because that's what they'd be asking for damages.
This happens sometimes with valuable people; the person's new employer essentially buys out their contract by hiring them anyway and then settles, paying the original company for the value lost.
How is that not the most fair? Everybody gets compensated, whereas without non-compete the original company would just get screwed over with no recourse.
Because most people are not "valuable people", nor are they your security clearance person doing useless work for a year while they wait for their clearance to go through. They get hired to work a process, and if they leave it's to work a process somewhere else. We're long past the days of Mr. Fezziiwig training his young apprentices to possibly take over the business when he retires.
Besides, companies try very hard to make their employees believe they are replaceable cogs, so what is even the purpose of non-competes if that is so? If they are replaceable, then how can harm be done by them leaving to work for someone else? If harm is done, then why the charade of making them think they're replaceable cogs?
The answer to your questions here is that sometimes non-compete is a good thing and sometimes it's abusive.
That's why the answer isn't a blanket ban on them.
Then maybe employers should have only used them for the handful of employees where they would actually be beneficial instead of making them a standard term of employment for everyone.
Instead they abused the concept so much they made it so the government said they don't get to use it anymore. Hard to feel much pity about that.
As if all employers were the same. But you shouldn't feel pity for them, you should feel regret for the oncoming mediocrity that always follows trying to protect people from being able to make poor choices.
I've spent most of my career working for companies in jurisdictions where non-competes are legally unenforceable, so I doubt much will change for me.
I think the difference is if the abusive to non abusive was 50:50 then it would be kinda fine, but it’s more like 90:10.
You're talking cost/benefit.
Without that 10 you're losing innovation. How much? My personal experience with companies that probably wouldn't have existed or been successful without non-compete (or equivalent) says quite a lot.
Just to protect people from making bad decisions?
I'll leave you with the FTC announcement. According to this there's nothing good about non-compete clauses at all. No issue like this is entirely black and white and when somebody tells you it is they're lying and have some agenda; for instance they say banning non-compete "would close racial and gender wage gaps".
"How is that not the most fair" is because trade secrets, working knowledge of current projects, NDA violations, etc.
He does seem to misunderstand what that politician meant when he said "it's overreach" he didn't mean that outlawing non-competes is government overreach, he's saying that the FTC doing a rule change is FTC overreach.
I thought it was interesting when I learned that lawyers don't/can't have non-compete clauses when employed to practice law.
You know, the people writing the non-compete clauses they subject everyone else to.
Like him or not, but the Biden regime is doing some good stuff when it comes to trust-busting and consumer protection.
This would put the US ahead of Europe in terms of employee protection, as non-competes are perfectly legal here as far as I'm aware.
I have no doubt they'll find a way to pervert this process in the ends, not just the means.
All this "good stuff" is strapping on the boots of tyranny while brainless seals clap because they dislike the first object trampled.