FTC has voted to ban noncompete clauses
The ban will be retroactive except for executives earning over a certain threshold and is expected to begin 120 days after being published in the Federal Register.
Noncompete clauses may become a thing of the past now that the Federal Trade Commission has voted 3-to-2 in favor of a ban. This move would see businesses banned from making employees sign noncompete clauses that prevents them from working for a competitor.
On April 23, 2024, CNBC reported that the Federal Trade Commission (FTC) has voted to ban noncompete clauses, which will affect new contracts as well as existing contracts for employees. The only employees that will still have noncompete clauses will be senior executives who earn more than $151,164 per annum and who make policies.
![ACTION: Final rule. SUMMARY: Pursuant to sections 5 and 6(g) of the Federal Trade Commission Act (“FTC Act”), the Federal Trade Commission (“Commission”) is issuing the Non-Compete Clause Rule (“the final rule”). The final rule provides that it is an unfair method of competition—and therefore a violation of section 5—for persons to, among other things, enter into non-compete clauses (“non-competes”) with workers on or after the final rule’s effective date. With respect to existing non-competes—i.e., non-competes entered into before the effective date—the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date. DATES: The final rule is effective [INSERT DATE 120 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].](https://d1lss44hh2trtw.cloudfront.net/resize?type=webp&url=https%3A%2F%2Fshacknews-www.s3.amazonaws.com%2Fassets%2Feditorial%2F2024%2F04%2Fftc-noncompete-ruling-pdf.JPG&width=986&sign=fFXChcdakvqV96A-LuJpDD-MgjJXE8ucJR5fCJgdZMg)
Source: FTC
It’s expected that there will be pushback from industries and business groups. Most of those against the ban state that their position is in a bid to protect company secrets and intellectual property.
According to CNBC, the FTC suggests that businesses find other ways to secure their IP, including non-disclosure agreements instead of relying on a practice that, in the Federal Trade Commission Chair Lina Khan’s eyes, “keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned.”
With more than 26,000 comments on the proposal that was first introduced at the start of 2023, the majority of them in favor of the ban, it’s clear that noncompete clauses are not a favorable means of protecting business secrets. Ironically, the FTC’s recent lawsuit against Microsoft’s acquisition of Activision Blizzard resulted in documents being leaked which revealed an Xbox Series X mid-life refresh.
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replySam Chandler posted a new article, FTC has voted to ban noncompete clauses
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I know some folks from a previous gig took temp jobs for a year after leaving, to avoid running afoul of our company’s litigious noncompete agreement. This means none of that bullshit — they can go where it makes the most sense ASAP.
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Another reason why it's critical to vote Democrat in every election. Something like this would never have happened under a Republican.
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We can't have you telling another companies customers to unplug it and plug it back in.
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[deleted]
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Nah, fuck that. There's no legitimate reason to prevent someone from working in their own industry just because they happened to work for you, regardless of their salary level.
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If we want to get hypercapitalist about it, noncompetes are toxic to the system too.
If monopolies are illegal because their anticompetitve nature undermines the basic driving force of a competitive system, noncompetes are also literally anticompetitive.-
My first job I was trained in a specific trading technique developed by my boss. He made over $500K/yr and the more people he trained the more it reduced the profits per person since we would be fighting over the same stock. His incentive to train people with his technique was that he made about 15% off their profits if they became a successful trader. Eventually, he had 10+ people underneath him and made about 15% off each person. Most people lost money the first year but by year 2-3 they would make over $100K/yr with some making $200K-$400K. The boss would get his extra $200K+ or so per year which more than offset the times we reduced his profits on trades we all got into.
I totally understood the 3/yr noncompete clause he had us sign because if there was no non-compete we could walk out the door after we learned how to make money. If we traded on our own, we would instantly save the money being kicked back to the boss and many people did leave after the 3 year mark. The incentive for the boss to train people was the noncompete clause and kickback on the back end. Perhaps this job could have been structured differently but the structure I went under seemed fair for both sides. We had high school graduates making six figures who would otherwise be parking cars in valet. We all saw the training like school where we learned a skill.
I don't mind the government is banning noncompetes because they have been abused but I certainly benefited from a person using it to grow a business. Without it, I have no clue if he would have ever hired a single person because he could have stayed solo and enjoyed a wonderful career without any administrative headaches.-
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In case you aren't joking, we had no clients. Boiler Room was a pump and dump movie where brokers convinced naive gullible people with money (doctors!) to buy penny stocks saying it will explode up in value. They would buy up the stock before doing this. After getting everyone else to buy their shares at a higher price, they would be left holding the bag. Kind of like how influencers hyped up crypto or NFT while selling to the idiots.
My job was scalping. For example, if someone had $300,000 in shares of a small company that traded at $10 they would have 30,000 shares. The company only trades 15,000 shares in a day and is very illiquid. However, this person just died and his estate is selling the shares at the market because they aren't allowed to hold. They take the price from $10 to $9.50 and I buy 2,000 shares at $9.55. Over the rest of the day, long term holders notice their favorite stock is trading cheaply and buy the shares back up to $10. I sell my 2,000 shares at $9.8 for a $500 profit. Not the most complicated setup but the trades involved proprietary software and specific setups in volume, sector of stock, and a lot of other little variables.
If you were joking, yes I was played by Vin Diesel
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That sounds like a ponzi scheme?
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A ponzi scheme is where people pay money into a system and each person underneath them pays the person above them. No money is created or earned.
https://m.media-amazon.com/images/I/614ltjRhfVL._AC_UF1000,1000_QL80_.jpg
My boss was a trader in the stock market. He made money and he taught us how to make money. He got a cut of our profits because he taught us the techniques he used. Think of it like an experienced plumber training a person with no skills. The training takes time and money and the only way to recoup that time and money is for the person to continue working for their trainer for a period of time.
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It was always an anti-worker tool to control people and I am glad they are gone.
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US Chamber of Commerce has files suit. https://arstechnica.com/tech-policy/2024/04/business-groups-sue-ftc-to-block-ban-on-noncompetes-claim-they-help-workers/
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Oh missed this goodie, see the bold.
Separately, a lobby group for cable TV and broadband companies issued a statement opposing the ban on noncompetes. "It is disappointing the FTC is poised to undercut small, independent, and rural broadband providers with a sweeping ban on non-competes," said America's Communications Association (formerly the American Cable Association). "This unjustified action will make it more challenging to provide quality service, crush competition and allow large incumbents to raid talent and obtain propriety information."
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