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FTC proposes a new rule banning non-compete agreements 
By Donna
January 14, 2023 6:13 am
Category: News

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I've never been required to sign a non-compete agreement, but I hope this goes through.


Have you ever been forced to sign a non-compete agreement when you started a job?

About 30 million Americans are trapped by contracts that say if they leave their current job, they can’t take a job with a rival company or start a new business of their own.

These clauses deprive workers of higher wages and better working conditions. In effect, they’re a form of involuntary servitude.

Last week, while America was fixated on Kevin McCarthy’s travails, the Federal Trade Commission (FTC) proposed a sweeping new rule that would ban these non-compete agreements.

This is a big deal. The FTC estimates that such a ban could increase wages by nearly $300bn a year (about $2,000 a worker, on average) by allowing workers to pursue better job opportunities.

Non-competes also harm the economy, depriving growing businesses of talent and experience they need to build and expand. California’s ban on non-competes has been a major reason for Silicon Valley’s success.

Employers say they need non-compete agreements to protect trade secrets and investments they put into growing their businesses, including training workers.

Rubbish. Employers in the states that already ban them (such as California) show no sign of being more reluctant to invest in their businesses or train workers.

The real purpose of non-competes is to make it harder (or impossible) for workers to bargain with rival employers for better pay or working conditions.

As we learn again and again, capitalism needs guardrails to survive. Unfettered greed leads to monopolies that charge high prices, suppress wages and corrupt politics.

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Comments on "FTC proposes a new rule banning non-compete agreements ":

  1. by Curt_Anderson on January 14, 2023 8:39 am
    40 years ago or more when I was working for an advertising agency as a graphic artist, my employer asked me to sign a noncompete agreement. I’ve already been working there for sometime and I don’t know what put the idea into his head, but I refused to sign it. My boss was concerned that I would be hired by a competing advertising agency, and that my artwork would be used to steal his clients. Since graphic art and advertising was how I made a living, it was possible that I would eventually work for another ad agency. I assured him that I would consider it unethical and would never accept a job or work at a place if the intention of the other place was to use me to steal his clients.

    He dropped the topic and never brought it up again. I never did work for another agency. After many years, I left that ad agency and took a job running the marketing department of a manufacturing firm.

    Yes, noncompete agreements are probably in nearly all situation is a bad thing. I can imagine exceptions for proprietary work in which somebody is working in a laboratory on a secret formula or something.

  2. by oldedude on January 14, 2023 9:01 am
    Curt- both of your examples are why these are done. Stealing clients is a big thing in some genres. Advertising, marketing, sales, and medical are some of those. My doctor wasn't allowed to say where she was going. Only that she was going out of the group. So I had to wait until she got into the other position, then move to her (after checking the insurances of course).

    The other thing in tec, pharm, and other fields is corporate knowledge and trademark infringement issues. Apple does this and is routinely sued. Although I think MSM was being sued by Apple last time. Also with the aerospace industry where cutting edge technology changes by the month. But to your point, this is a big deal also.

    I have never been in that position, so my thoughts on it may be moot, but I'm like you, I think there's a moral issue with stealing stuff from your prior employer to give to a future employer.

    In all the things I've worked in as a civilian, you changed jobs because of your knowledge of a subject. But working in the Intel genre, there's a whole different view of being poached by another division within an agency, or another agency.

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