Non-Compete Clause Rule (NPRM)

OTOH it also reduces employers' incentives to provide training.

Notably US employers provide far _less_ training than employers in Europe do. Likely that's driven by employees moving jobs more frequently in the US; something this would worsen.

Even if you think the proposal is a good one, there are second-order downsides...

Truck drivers also have this training-repayment issue, as profiled in Planet Money from NPR’s episode “Big Rigged.” They state turnover for drivers can be as high as 300% per year.

https://www.npr.org/2023/01/18/1149870147/long-haul-trucking...

This does not reimburse the employee for lost job experience and career advancement.

Too many abuse employees and lock them into not being able to tell the truth.

Acquisition deals often include clauses to address exactly these sort of things, they include both carrots (e.g. earn out details) and sticks (specific prohibitions).

Company Alice should amend their contracts with it's clients to preclude working with ex-employees - including Bob.

> Company Alice buys out Company Bob

“The proposed rule would include a limited exception for non-compete clauses between the seller and buyer of a business“ [1].

[1] https://downloads.regulations.gov/FTC-2023-0007-0001/content... page 5

> As the Commission explains below, the definition of non-compete clause would generally not include other types of restrictive employment covenants—such as non-disclosure agreements (“NDAs”) and client or customer non-solicitation agreements—because these covenants generally do not prevent a worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer. However, under the proposed definition of “non-compete clause,” such covenants would be considered non-compete clauses where they are so unusually broad in scope that they function as such.9F

AFAIK - IANAL, and in California only - that's not covered under the non-compete stuff, it's covered under the value-of-sold-goods stuff, even if it's also mentioned as a specific exception to non-competes.

CA blocks non-competes b/c you can't prevent someone from using their skills to make a living.

Poaching clients back undermines the value of the thing you _just_ sold.

It might be different if/when it's not a voluntary sale, and I bet there's ways to contract out of it - I've certainly idly daydreamed about clauses along the lines of "if you fuck up the product I just sold you enough, I can make it again and you can't stop me" - but TBH that probably just ends up as a "can't release a competing product within a year".

I think an employer should be able to require that. Expecting the attention of someone 40 hours a week seems reasonable.

Beyond that it is another matter IMO.

No. My obligations to the employer end at the termination of my employment and whenever through the course of the day I'm not working for them.

How I choose to spend that time is none of their business so long as I don't do anything that can be construed in a way that implies I represent them.

For example, if I say, to be silly, work at hotdog on a stick and do adult dancing with the company provided uniform, that would probably cross the line. If they then fire me and I continue to do the dancing in uniform, fair game.

It's voluntary (and, indeed, probably at-will) employment on both sides - if you want to work full-time at two jobs, then find two companies that are OK with it. The problem with non-competes and anti-disparagement is that they bind your behavior after you're no longer employed.

> non-competes should be banned, yes.

There isn't really any problem with them if they are properly compensated. Which isn't to say they are a great idea, but not worth banning if it is a contractual agreement on both sides.

> non-competes should be banned, yes.

I like my non-compete. I'm a highly paid professional with rare skills/experience, I negotiated hard on my employment contract with multiple rounds of edits in consultation with my employment attorney, I will generate and be exposed to valuable trade secrets during my employment, and I look forward to being paid millions of dollars to sit on my ass for a couple of years if/when I eventually leave.

Should it be banned? Seems fair to me. Or you just mean noncompetes that don't include monetary consideration, or which don't establish protectable interests? In many jurisdictions those are already unenforceable.

Higher competition doesn't translate to higher GDP. In fact, monopolies produce more profits at the expense of consumers. If enough of your consumers are international, the national GDP would rise. If you are talking about competition for workers would increase costs and therefore prices would go up - that's inflation and should be discounted for in real GDP. If this is a meta argument that higher competition drives innovation which drives real GDP growth, then maybe.

It would probably raise GDP since we wouldn't have people locked out of work for an unreasonable amount of time because of intimidation forced on them.

And then we end up in a dystopian cyberpunk timeline...

I thought it was odd as well that this is coming from the FTC. Does it stem from their authority with regard to antitrust legislation?

Given the multistate and remote nature of many companies, it would be a huge headache for the courts to deal with the criss-crossing patchwork of what is and isn't permissible. As an employer I would much prefer that this be resolved at the federal level.

> And if they are to exist at the federal level, then it is Congress's job to do: not the FTC's.

Congress did that already when it created the FTC and vested it with the power to decide what makes sense for trade and commerce. That is the role of agencies.

Congress created the FTC and gave it power to act so they didn't have to deal with these issues constantly. So you're wrong, this is explicitly the FTC's domain as specified by the congressional bill about 100 years ago that created them: https://ballotpedia.org/Federal_Trade_Commission_Act_of_1914

Why?

I live in State A. I work for an employer who has little or no presence in State A, and they are based in State B.

I leave them and go to work for a new employer in State C, all while still remotely working from home.

Why should I be beholden to the laws of State B, that I've never resided in, as it determines my ability to conduct TRADE with a company in State C from State A?

And that's also why the FTC is involved. My professional work output is the service I have to offer. And I offer it in trade for an income. The FTC oversees more than just 'sale of consumer goods and product'.

Is there something about the FTC that means they don’t or shouldn’t have this authority?

Regulating anticompetitive business practices falls explicitly within the charter of the FTC which is empowered by Congress so you basically got what you wanted.

Without a broad ruling that says that Congress isn’t allowed to establish agencies and delegate their power, which might happen with this court, this is pretty much the process.

The process for making laws matters. In the USA, a law made by the Supreme Court is the whim of an individual. A law made by the President, or a department director, etc is also the whim of an individual.

I agree with chrisco255 that things this important need to be done right. Nobody can rely upon it until it is properly done.

Sure, you can pay that person enough so that they won’t leave. You can retain people without a non-compete

No need for that complexity.

You want to keep me from working for someone else?

Keep me in payroll.

Who is to say that they learned it from you, though? Presumably you hired a high-salary person because they knew what they were doing.

You can do that by paying more than the competition is willing to. Not that complicated.

Should a doctor who learned a lot about perfecting a surgery in one job not be able to apply that at a new job? They shouldn’t be able to steal equipment for example, but learning through your career is exactly what you should do and is what makes you valuable.

Can you articulate why though?

My kneejerk reaction is that I disagree but I can't explain why and that's not a good enough reason.

Maybe more people should be contractors and this would be written in as part of the agreement.

Why are nondisclosure agreements not sufficient for this kind of concern? If the concern is taking what they learned from you, why do you need a non-compete instead of requiring them not to share what they learned?

To me it seems that non-competes are a very blunt instrument to lazily solve problems that could be solved more focused solutions.

You can do a paid non-compete, which is basically X years garden leave w/ pay. Many finance / trading firms do this.

It is illegal to steal software or proprietary technology, and will continue to be. Outside of this, anting to stop someone from using skills they acquired to practice their desired profession is an awful take.

> I also think if I pay enough whatever enough is, I should damn well be able to make sure the person I hire doesn’t take everything they learned from me and turn around and play for another team.

I agree in general, but it should probably be in X% of reasonably achievable total compensation (i.e. at least the blocked industry's average, or matching the offer if the former employee has one), where X >= 100, since you'd be essentially blocking someone from working in the industry they're experienced in.

Silicon Valley has worked fine without noncompetes. (Actually, the California economy as a whole has done fine without them, to the extent that it is one of the largest in the world.)

People leaving to play for other teams has led to beneficial competition and innovation, starting from the very beginning with Fairchild spawning AMD, Intel, and a ton of other companies.

You don't buy people and you don't own their skills. You pay them enough to stay, or you let them leave.

Stealing trade secrets is already illegal and that isn't going to change.

I'm with the others here. Noncompetes are just bad. Nondisclosures should cover you for any knowledge unique to your business.

General skill improvement, though? Not so much. Noncompetes don't really address that anyway. It's not like the employee will have forgotten what they've learned by the end of the noncompete, and it's not like the noncompete compensates you. It's just a bit spiteful.

Also, every employer benefits from what their employees have learned at the companies prior anyway. Presumably, that's part of why experienced people command higher salaries. So in that view, it's a bit of a wash.

I'm not sure the salary matters much in practice here. What we should avoid are scenarios that force folks out of their livelihood when they're subject to a non-compete through lawsuit or threat of one.

I'd love to see them go the way of the Dodo, but failing that I'd at least like for some hard requirements on what forms non-competes may take so that they could be more equitable for employees:

1. Require non-competes compensate the employee for the salary they've been denied when enforced. If someone with key knowledge is a big enough issue to sue over and an organization hasn't done the work to retain said employee, the employee shouldn't have to bear the burden of extended unemployment for valuable skills or knowledge they may have.

2. Require non-competes have maximum durations. A non-compete for more than 6 - 12 months is likely excessive and can used to discourage job mobility.

3. Require non-competes be scoped to knowlege, know-how, or skills specific to that employee. Many non-competes I've seen say something along the lines of "you can't work for a competitor" without elaboration. If you work at a large organization or one with subsidiaries in multiple industries, "competitor" becomes a large swathe of potential industries you could feasibly work at. This also prevents one from working at a similar company in a completely different role.

I get the desire to discourage job hopping, but that is rarely what these agreements are used to do in effect and there are better ways to take legal action in cases where proprietary info or know-how is stolen.

Free agency shouldn't be salary dependent. No amount of compensation turns employees into chattel.

Society as a whole is worse off if we let you buy or rent people. So badsically society shouldn't care what you want.

That already exists: it’s called gardening leave and it must be compensated.

Noncompetes are already illegal in California. Facebook, Google, Apple, Intel and the rest of the 14% of the country's GDP demonstrate that you can innovate and build a business just fine without them.

Using noncompetes is a sign of a lousy business, that doesn't deserve to survive the market.

Can you explain how an expensive professional that generates 100-300 in a 10 minute visit constitutes a loss for 2 years?

All practices simply cannot just not hire enough doctors unless they want to be unable to service business and lose our long term they have to hire collectively they can't all afford to insert their heads into their anus so smart money is they simply keep hiring like before and nothing changes.

Ultimately the prices of health care are set by insurance companies and the government (e.g. via Medicare), not by any kind of free market mechanism.

You could potentially cover that with a non-solicitation agreement, no?

That seems much fairer than banning the doctor from medicine.

I am a surgeon currently employed by a private equity group and bound by an absurd non-compete.

None of your points are accurate here from my perspective. Personally, I was profitable within 3 months of my hiring. The longest I've heard of it taking for a physician to become profitable is around 6 months and that's going completely independent. The idea that a doctor is a money-loser for 2 years is absurd. The need for physicians so greatly outstrips demand that I don't see this applying even in large metropolitan areas.

To your second point. The way private practice used to work was a new physician would take a low initial salary in order to be offered the opportunity to become a partner in the practice. The assumption being that for the first few years the new physician is making the partners money. There are a lot of advantages to being a partner in a practice rather than being completely independent and it was worth a few years of a depressed salary in order to be able to purchase equity in an established practice.

What's much more common now is for senior partners to recruit young physicians and then flip their practice to an equity firm after binding them with a non-compete, essentially canibalizing the future of independent private practices in order to ensure themselves a nicer retirement.

Relevant to the discussion is the fact that equity firms, and to a lesser degree hospitals, must chase growth at all costs - inevitably driving up the cost of healthcare. I think this is something that we agree on.

The short answer is that non-competes take power away from independent physicians and give it to equity firms and hospitals. If you sincerely want to see independent physicians flourish then these need to go away as soon as possible. If you read the comments submitted to the FTC you'll see that my perspective is common.