FTC announces rule banning noncompetes | Hacker News Reader

FTC announces rule banning noncompetes

ftc.gov

1,169 pointsnull0ranje500 comments

Full text of the ruling here:

https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...

It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued.

> In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule.

I've always thought of that as representing a stifling of innovation.

I'd say the number of patents filed and granted by practicing entities of small to mid-size would be a pretty good measure of innovation. I think patent fees and complexity should be progressive, esp if you have working hardware and don't just flip the patent to a troll.

> I've always thought of that as representing a stifling of innovation.

The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.

Depends on the industry, 20 years is a lifetime in software.

In theory? Yes. In practice? No.

For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good.

Patents are no longer about protecting R&D investments. They have become more about patenting the vaguest concepts possible, in the hope of making a profit when someone else does an actual invention which somehow stumbles into your patents' wording.

Patents are no longer about protecting R&D investments.

Patents are always the tool of the moneyed and the lawyered, which is not the same thing as protecting R&D investment. There are exception, such as the guy who spent 12 years suing car companies over the windshield wiper, but that actually proves the rule because of time spent. It even apparently cause his marriage to break down. [1]

1. https://en.wikipedia.org/wiki/Robert_Kearns

To be fair, this appears to be a case of greed:

> Kearns sought $395 million in damages. He turned down a $30 million settlement offer in 1990 and took it to the jury, which awarded him $5.2 million; Ford agreed to pay $10.2 million rather than face another round of litigation.

Presumably, the point of a patent is to 'protect' the little guy which I would argued actually doesn't.

Not that I don't agree with you, what makes Kearns' pursuit 'greedy'?

He rejected $30,000,000.

Jury awarded 1/6 after litigation.

Ford payed double to get rid of this nuisance.

$30 million in 1990 was fuck you money. It’s still enough to comfortably retire on for a high school aged person.

Inflation begs to differ. That much money left liquid for 60 years at 10% inflation will be worth less than 100k of today’s money.

Edit: sorry about the non sequitur. Bitterly learning about inflation and fiat recently.

Seems like kind of a non sequitur. Who would keep the money purely liquid? GP was pretty obviously talking about if it were invested, which statistically would have beat inflation using even pretty conservative options/funds. Using the 4% rule, it would have yielded $1.2m annually in 1990 value, and adjusted up for inflation every year thereafter. That's more than $2.8m/year in today's dollar.

Not only that, but in the odd scenario where it was "kept liquid", or kept purely in cash, it'd be worth $30m in today's money, not $100k. It's not clear where the $100k figure is even coming from. Even $100k/year doesn't make sense in any context I can derive.

10% inflation? And left liquid and earning literally nothing?

I guess if he lit the money all on fire, it would be worth nothing, too.

What? That's not how inflation works. Even left to rot in a bank account it would still be 30 mil today. Not worth as much as 30 mil in 1990 but still worth as much as 30 mil in 2024 because it is still 30 mil.

The only way I can think of it making sense is if @syklep is from a country with a currency that has inflated 10% every year with respect to the dollar for the past 60 years, and that they assumed you'd buy local currency with the $30m when you get it and now would try to sell it back for dollars.

I don't think that currency exists though. The closest current example I can think of is if you're Argentinian and you bought $30m worth of Argentinian pesos in 1992 which would be worth ~$35k today. But that is due to relatively recent hyperinflation, not yearly 10% inflation, 10 years ago it would still be worth $4.3m, 15 years ago $8.8m.

You'd have to be seriously asleep at the wheel (or being strong-armed by local law enforcement, unfortunately) to keep your liquid currency parked in a hyperinflationary currency.

You should learn some more.

I don't know when exactly it happened but you can be 100% sure anyone complaining about fiat currency has no idea what fiat currency actually is, has something to sell you, and if you don't get out soon enough you'll be standing there listening to them misunderstand Nixon at you.

Don’t forget that the lawyers probably took 33-40%, after costs.

He acted as his own layer, or at least, it's what Wikipedia reports

$30m is still fuck you money today. Invest and live off the dividends and you’re pulling down an absolutely insane salary

Definitely agree — software patents should be abolished, full stop. They serve no purpose but to impede innovation and progress.

I’d argue the same applies to all patents; the world would be better off without them in general.

Maybe software patents require releasing the source code and last for a shorter term related to the pace of technological change. Then the incentive to share the advance is preserved instead of everything being a trade secret.

There’s not much in software that other people can’t figure out on their own though. Not too much social benefit in sharing.

Aren't the details of algorithms usually secret? E.g. my understanding is that the primary value that Tik Tok brings to the table is their recommendation algorithm.

The primary value of any social network is the network effect

I think Linux is a strong counter argument. And software might be simple to recreate, but it’s a shame to have so many smart folks spend time reinventing the wheel instead of building on each others work.

But the value in Linux is not the innovation but the sheer effort to (re-)create it. Patents don't protect that at all, copyright does (not that I am arguing for copyright, it also causes more problems than it solves).

There are no software patents.

https://www.uspto.gov/sites/default/files/documents/RT2%206-...

Is there a video that goes with those slides?

I mean look at slides 8 and 9.

    There is no such thing as a software patent.
    There is no such thing as a rubber patent.
    There is no such thing as a steel patent.
    There is no such thing as an electricity patent

    There is only ... a patent.

OK fine, but there are patents covering applications of rubber, steel, electricity, and software.

So either you think "well it's not a software patent, it's a patent that covers the application of some software" is a useful point to make, or you're being pedantic for pedantry's sake. To the former, I don't think that makes a difference to someone being sued by a patent troll.

> overworked USPTO granting clearly invalid patents

Well no system can work that way - if judges in court were overworked and making invalid judgements, then the legal system would fail no matter what kind of laws you have and no matter what police does

These are pretty strange arguments. Why should an overworked USPTO lead to more patents? That assumes that the default is to grant the patent. If the default is to reject the patent, then an overworked office would not lead to more patents.

An overworked Supreme Court does not lead to more Supreme Court decisions.

I think we are mixing up two different ideas

Suppose an institution is overworked, it has two options - long queue or rush the job.

Courts understand their role is important, so you have a long wait, but they d0 the job properly.

Patent office, perhaps, rushes the job. Now whether they issue too many or too few patents is maybe equally bad, in my view, it’s screwed up either way.

The problem is, it is in the interests of the wealthy and powerful that both those things be true—that the USPTO be so overworked they can't adequately review most patents, and that the default be to grant the patent.

And the wealthy and powerful use that wealth and power to influence how government functions.

Thus, the current situation.

> Why should an overworked USPTO lead to more patents? That assumes that the default is to grant the patent. If the default is to reject the patent, then an overworked office would not lead to more patents.

Former USPTO patent examiner here. I'll answer why an overworked USPTO will lead to more patents at present, but I make no claims that it should be this way.

The effective default is to grant patents. Why? Because the examiner has a finite amount of time for each application and has to have some sort of justification for a rejection. Unless there are some formal problems with the patent application, "I couldn't find prior art" means that a patent will be granted. Examiners could try "official notice" to basically say that they don't think it's novel or non-obvious without providing a reference, but that's easily defeated by attorneys. Examiners must provide a clear justification for a rejection.

If the amount of time an examiner has is too low (and it's far too low), that increases the chance that no prior art will be found, and consequently increases the chance that invalid patents will be granted.

Contrast that with the Supreme Court: The Supreme Court can decline to see a case. You can't do that as an examiner. You can try to have an application transferred, but that will just give it to another overworked examiner!

> The effective default is to grant patents. Why? Because the examiner has a finite amount of time for each application and has to have some sort of justification for a rejection.

The path of least resistance makes appearance once again. If we don't understand that this guides the default final state, we would argue about nothing constructive.

> Former USPTO patent examiner here.

Interesting. Did you enjoy it? Why did you stop?

There were some enjoyable parts, but I personally thought the job was quite stressful because of the high quota. Psychologically, I found it difficult to reduce my quality of work enough to meet the quota. Many examiners at the USPTO can knowingly reduce their quality to an appropriate level, but I wasn't one of them. (Others don't care about quality or aren't able to discern good quality from bad.)

I stopped for the simple reason that the job was far too difficult, and poorly paid on top of that.

I think different patent lengths for different industries would do much to improve the current insanity.

I think full audited accounting of research costs should be included in the patent filing and that the patent should end either after 20 years or until profits from the invention (including payments from other companies licencing the invention) match 10x the costs.

And the maximum payout on violating a patent should be the remaining profit to end the patent.

Differences between industries then look after themselves.

Oddly all patent creators realize that extended Cabo vacations are the best way to brainstorm, and private Jet flights help with collaboration. Obviously only affordable by wealthy companies.

"short lifetime" is relative. Had Apple been granted a patent on the idea of a smartphone the same year they released the iPhone, that patent would only expire in three years.

There are some industries where due to slow-moving markets the 20 year patent period is still sensible, but for most sectors we would be better off with a 5 or 10 year patent period to account for the increased speed of innovation.

Apple did not invent the smart phone. The invented several features that make them useful (even their version one lacked apps), but others made smart phones before them. What Apple really did was make them useful by eliminating several of the things that made them annoying not not useful before.

They didn't say Apple invented the iPhone. That was a counterfactual example to make a point.

Also, the point counts even if Apple just patented enough to block comparable phones.

The point: For the smartphone market, 20 years would be a very long effective time for any foundational or gatekeeping patents.

Didn't Samsung and Apple have a tiff over the shape of the phone? "Rectangle with rounded corners"

> What Apple really did was make them useful by eliminating several of the things that made them annoying not not useful before.

that’s literally every patentable invention ever, though.

Remington didn’t invent the hunting rifle… they didn’t even invent the first self-loading or lever action rifle, probably.

“removing the annoyances and downsides that make a previous approach infeasible or impractical” is more charitably described as “a useful innovation that advances the field”.

Now, the problem is that a lot of patents are issued for things that someone else already has done, so the recipient of the patent isn't actually advancing the state of the art. But on the face of it, "removing the annoyances and downsides that make a previous approach infeasible or impractical" is literally what patents are supposed to be granted for.

The difference is you can work around those patents*

> The short lifetime of patents

20 years is not short! 20 years might be appropriate for capital-intensive innovations (e.g., in pharma), but definitely not for industries where innovations are not typically capital-intensive. E.g., 20 years for cryptography and software patents is a disaster.

In theory maybe, but in practice it seems like the opposite. The current growth of the 3D printer market is in part directly tied to the lapsing of several key patents in the area.

Further, most patents may contain key details, but they also intentionally contain as much broad information as to create a massive exclusionary zone, not to mention burying any legitimately useful information.

How is the lifetime of patents short? I mean they last for 20 years, that's an entire generation of time to make a profit?

They're short relative to other IP (like copyright), and short relative to inventions that have long R&D and cost recovery timelines. If $NEW_DRUG takes 5 years to develop, 5 years to trial, 5 years to market, and 5 years to profit...20 years isn't all that long.

If the invention takes 3 weeks and $0, yeah, 20 years is a long time.

> If the invention takes 3 weeks and $0…

…then the patent can be invalidated on the basis that it is obvious.

If the invention is commercially valuable, then invalidating it (or just pretending it doesn’t exist until you get sued, then invalidating it) can make more sense than licensing it.

A related issue is that there are many, many patents that most people (e.g., competitors) mostly ignore, because everyone, including the patent owner, knows that they would be invalidated if challenged.

Yeah, it seems like we should have stricter "obviousness" testing when patents are issued. At least based on some of the software ones I've seen.

for software patents they should have to disclose the sourcecode

Any patent that fails to “teach” the innovation can be challenged and will likely prevail if it’s an egregious gap. That’s the public benefit part, in writing.

that's the idea, but challenging a patent in court is extremely expensive and not at all a slam dunk even for garbage patents

Respectfully, how do you define the current patent terms as “short”? Sure copyright is much worse, but innovation regularly happens on the scale of months! The current term of 20 years seems incredibly long to me, and it’s not clear that even at 5 years patents would provide more benefit than harm.

Most of the purported benefits of patents seem based on theories that most people don’t understand. We all take some received knowledge about their supposed operation, and usually proponents of patents know nothing about how powerful innovation in open source and other patent-free spaces can be.

> significantly mitigates this.

not if patents become a weapon against actual innovation - which it has devolved into being today.

Far from being made to progress science and the arts, patents have become a method for which large corporations can add moats to competition. Things like codecs for video/audio, which are purely mathematical expressions, have been patented. Genes and molecules, even tho they might occur naturally, can be patented (a very tenuous form of invention - it's discovered, even if not naturally occurring!).

And not to mention design patents.

I say the entire patent system needs to be abolished, or at least, made such that only applicable to physical mechanisms, and not software, nor biological systems.

FRED has a good blog post on measuring innovation.

https://www.stlouisfed.org/open-vault/2021/june/how-to-measu....

Text of the rule itself starts on page 561, "XIII. Other Matters"

Both things - that the number of patents measures innovation, and that they serve to stifle it, can be true at the same time. Under a fixed patent regime, the more innovation there is, the more individual patents are necessary to stifle it. Of course, if we allow the patent regime to vary, then if it changes to make patents easier to acquire then that means less innovation.

However, it's true that this property - of being a valid measure, but interventions to change it having the opposite effect on the inferred variable - is a very unfortunate one in a metric.

It'd put it like this: the more patents there are, the (exponentially) more "innovative power" you need to achieve the next one.

> leading to an estimated average increase of 17,000 to 29,000 more patents each year

Insane to me that they use this as a measure of innovation, when almost by definition it is the antithesis of innovation.

What definition is that? Because the legal definition of patent I’m familiar with requires each patent to be a unique innovation.

That fewer patents are filed is not evidence that fewer innovations are taking place. Absence of evidence is not evidence of absence.

That fewer patents are filed is not an absence of evidence. It's evidence that fewer patents are being filed. If one believes patent filings are correlated with innovation (which is debatable either way), then it is (non-probative but still significant) evidence that fewer innovations are taking place.

> If one believes patent filings are correlated with innovation

This is exactly the claim I'm taking issue with. The OP implied that the legal definition of innovation was "patents filed" and implied that this is somehow meaningful, and I'm saying that the absence of patents is not evidence of a lack of innovation.

a patent is a legal restriction affecting what others are allowed to produce. a person/group hit by such a restriction may elect to not produce the (innovative) thing they otherwise would have.

so that's the viewpoint in which patents may be "the antithesis to innovation". i won't argue which one's correct, just providing it here since you requested.

Patents also require disclosure of how something is done, and the history of innovation in the Western world has been one of iterative improvements on patented inventions so as to be granted a new patent.

Software arguably is not suited for a patent system, but patents have worked well for centuries.

So... yeah a patent restricts what others can produce. But parents are supposed to be for things that are novel, which means if it's unlikely for someone else to produce it to begin with. Parents are supposed to help encourage people to innovate. I do think to many patents are given and many aren't novel enough. But I do believe, at least historically, they led to innovations. I also don't think software works be patentable

What objective metric would you recommend they use, instead?

Productivity improvement in a physical application - it now takes fewer people less time to build a house

It takes less resources to remedy a failed over bridge. You’d have to have a basket of measurement like how we measure CPI - current approach is lazy.

What if an innovation makes things better, instead of faster?

The house takes just as long to build, but it's sturdier, longer lasting, better insulated, etc?

Well those are all measurable quantities, and you can measure them in proportion to their economic importance - like house insulation is a big change if you live in cold climate, etc.

I am not saying it’s easy, but economics is full of complex measurements, financial derivatives, and god knows what. Maybe they should spend some effort measuring the real world.

Without opining on the validity of the overall patent count as a measure of creativity, here's a cool paper I saw describing how to determine 'creative patents' - https://raw.githubusercontent.com/aakashkalyani/WebsiteUploa...

Wonder ultimately how this will be handled once the Chevron Deference case is ruled on by the Supreme Court. The interpretations I've seen from other sources is that this will be overturned if the courts decide against the principle

They do stifle innovation when one company locks up a huge portfolio of them. Forcing the employees who came up with the patentable ideas to sign non-compete agreements prevents them from working on anything related to those inventions elsewhere.

I feel like, much like BMI, patent volume can be used to measure a population.

Sure, for any individual‘s fitness or a company’s “innovativeness” they are useless, but in aggregate they can be revealing.

> I've always thought of that as representing a stifling of innovation.

Sadly, over my long career as a tech startup entrepreneur, my experience has been that your assumption is correct the vast majority of the time. Now when I teach or mentor young tech entrepreneurs I'm often explaining why they probably don't want to prioritize filing patents as part of their startup strategy. While there are certain exceptions, especially in pharma, biotech, materials science or medical fields, the years it takes for a patent to become enforceable and then the upfront cost + further years required to actually get a judgement, make patents largely ineffective in most startup contexts. There's also substantial uncertainty as to whether a startup can get the patent granted at all. After that, there's the challenge of getting it granted in a form which remains defensible and can't be easily worked around. Many people don't realize patent examiners can refuse to grant a patent unless the applicant narrows the claims.

Conversely, as a tech startup these days you do need to worry about patents potentially being used against you. The majority of tech patent cases are giant vs giant fighting over turf, a large incumbent trying to kneecap an emerging startup competitor (usually filing suit to make the startup unattractive to investors for a year and never intending to actually go to court) or patent troll vs everyone. Personally, I had both a giant trying to stop my startup's Series A funding and several patent trolls. Despite having no actual merit, the giant's suit did freeze our Series A and we nearly died. After seven months we'd demonstrated we could survive without a Series A so they dropped the suit (of course) but by then they'd cost us more than half our cash in just defending an obviously sham claim. As one investor told me, "Yes, it's clearly a bullshit claim but it will still cost serious money and a lot of founder attention over the next 18 months to get it thrown out and that, unfortunately, tips this deal over our risk threshold." And responding to the constant patent trolls just burns up startup founder attention and scarce cash in nuisance legal fees.

Despite the old-school trope of "garage inventor patents invention, makes fortune", frankly, from the perspective of fostering typical tech startups, you'd probably prefer a world where there were no patents outside of pharma, medical, bio, etc.

Pardon my language but the patent thing has turned into a **** measuring contest, and serves no useful purpose.

When I worked at FAANG you had a whole class of PE engineer who literally couldn’t build anything to save their lives. But they would constantly file patents with a frenzy like IT guys rack up certifications. Of course when the patent office gets an application from $FAANG they approve it.

And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something, unfortunately.

> And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something

Wouldn't that mean they are accurately identifying ego-driven candidates that aren't actually engineers? :P

I wonder how frequent that is, the "We've pointless patents. And legal budget larger than your last round. Thank for playing, goodbye." It seems a reoccurring theme.

But as for the usefulness of patents to startups, at least with material-science-y hardware, I've heard possession of a defensive patent portfolio described as "table stakes" for existence, with enforceability et al being secondary.

It was interesting watching patents and unicorn dreams shape VR. Instead of years of commercial ferment exploring low-hanging niches, we wait for monoliths to eventually create maximally-hard mass-market consumer tech, and will then backfill easier niches, eventually. An industrial policy optimized for pharma, yielding pharma-shaped industries.

With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation

https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...

> "same total annual compensation and benefits"

This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected

Sure, but to some degree bonuses are completely discretionary. A very bad year at some shops or on some desks could land you with a 0 bonus, although when that happens expect everyone to start looking for other jobs.

Must be nice to have a bonus. Never worked in a place that had one!

Pros and cons? As you increase in seniority your bonus ranges can grow significantly faster than your base salary, so while some years might be great, others may not be. And then if you leave mid-way though a year you miss out on any "bonus" you would have received if you stayed the entire way.

Bonuses come out of the money used to pay salaries. All things being the same, any company that pays bonuses will pay a lower base salary. That being said, if you're good at convincing people of your worth, you can come out with higher than the "base" bonus, so ahead of the curve. But you're also paying more in the way of risk (lower income of the company doesn't do well, or you can't convince people you were important).

Totally agree. I worked at a company where everybody was always paid the full bonus target. We were acquired by a much larger company that was confused. Eventually after much persuasion they just folded the bonuses into our base salary.

Usually the new firm picks up the tab for the lost bonus.

Isnt the whole issue that the non-compete prevents a new firm from entering the picture? I did have a friend who got hired by a new firm, which then waited out her garden leave for 18mo...but I wonder how many firms would do that in, say, technology

The new firm makes you whole after the non-compete period ends.

Continue reading:

> Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation

I think TC is not included, will still get a base, but benefits seems to be included

This seems incredibly important. I know non-compete rules personally held me back at a previous tech job.

I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

I was subject to one as well, but it was just on my base, not total comp, which was not the majority of my compensation. And while my base was fine, it was more or less explicitly stated that this was meant to make it painful for employees to leave and had almost zero to do with any special information the employee had.

They have other tricks. My comp was about 80% bonus, most of which went into deferred comp for a few years. If I was to go to a competitor without permission (independent of the non compete) I would forfeit the deferred comp.

Reject the handcuffs. Once enough people do, they will stop making it deferred. They know that if you're willing to reject the money, you're willing to leave (the handcuffs aren't keeping you there), and that scares them.

That's called a multi-agent coordination problem and game theory tells us it is not so simple to solve.

I don't know about game theory, but a few of us did it at one company and they changed their policy.

But at a certain point that deferred comp is “enough” that if you just go to work each day and hide in the loos it’s worth waiting around and collecting the cash. And the company won’t benefit from a mostly checked out workforce

Worse. The next employer will just repay you. They all do this, so no one really gets and advantage, but they all pay.

The bar is quite high at these kinds of companies. If you let off the gas and try to coast like that, you'll just get fired and thus lose the deferred comp that way.

I'm not sure that I understand. What does it mean for a noncompete to apply only to base compensation? Is the idea that if you join a competing company within X months of leaving your old company, you need to repay your base salary to the old company?

No, it just means that during the period after you stop working at the old job but before you can start working at the new job, you are paid only your base. This can be a significant reduction in total comp in industries such as finance.

I have worked jobs where the best bonus over 5 years was $500, while the typical year all we got was a promise that if things go well there will be a bonus. I've worked other jobs where the worst bonus was $15000 (a really bad year for the company), and could be up to $50,000. This is as a regular engineer, management can get a lot more. The first company taught me at until the money is in my account the bonus is meaningless. The second taught me that they aren't just a rumor. Most companies don't even pretend to offer a bonus which is acceptable - at least I know what I will make.

I think everyone should make 2-3x the poverty level income (we can debate exact numbers), and everything after that is bonus. So long as the company pays a bonus most years it means in a bad year you have enough to live on and don't need to find a new job, while in a good year you have a nice bonus to buy nice toys.

In finance, it's common to see a base of 150,000 and a VR of between 300k and 750k for engineers. During garden leave, you get paid your $150,000 as part of payroll, but are ineligble for VR. Your total comp goes from 450,000 (in mediocre years) or 900,000 (in good years) to 150,000 for whatever your non-compete period is (6 months, 12 months, 24 months are all common).

I suddenly feel like I’m in the wrong industry

Remember to consider $/hour and stress/$/hour.

In finance you make more money, but work more hours and have more stress per hour typically. Still probably a good deal, but it's not a Pareto efficient deal.

I think they are saying that the compensation they their previous employer paid them to not work for the competition for a year was based on their salary, not their salary plus bonuses, so it was not as good a deal as it sounds.

It means that GP was paid their salary for the non-compete time. In finance it is common for total compensation to be the salary plus a "bonus" of 100% of salary in normal years + any performance bonus. This means that if you had a non-compete in the finance industry and you left your employer for a competitor, then your previous employer could pay you your salary (meaning 50% of your usual compensation) to not work for that competitor for a year.

(These numbers are typical of finance industry compensation and non-compete terms.)

    > In finance

This would better written as: In 0.01% of finance jobs...

It's worth noting that the so-called "garden leave" you're describing usually doesn't come with things like bonuses. That may even be a majority of your compensation depending on the role.

> I know non-compete rules personally held me back at a previous tech job.

Yeah. Remember this when you go to vote in November. Elections matter.

Is this rule a partisan issue?

I have yet to see a Republican led government advance banning of non competes (or really anything that benefits W-2 workers as a whole) in the last 25 years.

Washington (Democrat led), I think, most recently passed a non compete ban for those under a certain salary, but I cannot think of any Republican led states that have advanced such legislation, or espoused views that they want to.

It falls in line with similar worker friendly legislation passed by Democrat led states such as longer family leave, paid sick and family leave, higher unemployment benefits, higher minimum wages and minimum salaries for exempt workers, eliminating non tipped minimum wages, and publishing of salary ranges on job listings.

Edit to respond to below:

Is it partisan in California? If anything, I would have thought the California non compete ban is the most un-partisan issue since it has been in place since 1872, so neither of today's parties would be credited with it.

I've yet to see this be a partisan issue anywhere.

If support is along party lines, that makes it a partisan issue.

Tends to be because it's ostensibly pro-labor and one party tends to favor pro-labor policies and the other tends to favor pro-business policies.

Yes.

> The vote on the final rule, which fell along party lines, with three Democratic commissioners voting in favor and the agency’s two Republicans voting against

https://www.forbes.com/sites/mariagraciasantillanalinares/20...

What about elected officials?

They're still free to change parties.

They appoint commissioners

Is this some kind of weird attempt to ask me to teach you how to do research? You've got the whole Internet in front of you, same as me. Go do your own research and come back when you have a point to make.

Another interpretation is that the ruling party is bribing people now that election season is ramping up by passing rules it knows has no standing in court, but won’t get shot down until post-election. Imagine all the people who voted for Biden thinking he would absolve them of the contract they willfully entered to pay their student loans. This is not much different. It is another group of people who have contracts they wish they didn’t have relying on government overreach to save them rather than not having put themselves in the position to begin with.

I've heard this talking point before, and it's really silly to frame it as shenanigans somehow because of the timing, rather than elected officials enacting popular policies that the voters want.

That's literally their job.

And, they didn't rush this. They've been working on it since they got elected. It's perfectly reasonable that it took some time to get done.

There is a body of actually elected officials whose job is to create legislation to enact public policies. The FTC is neither elected nor capable of creating legislation. This is an overreach of their power and will likely be ruled as such in court.

The same thing happened with Roe; it is not the job of the Supreme Court to enact public policy. That is for the legislature to do. If you talk to anyone in law, they will tell you that, regardless of their personal opinion on abortion, Roe is perceived as one of the worst court rulings ever because it was specifically designed to “legislate through the court”. Here we are in the same position again, with a non-legislative body enacting public policy; we don’t learn.

To quote Congress, in chartering the FTC:

"Under this Act, as amended, the Commission is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress and the public."

Noncompete acts are an unfair method of competition (see (a)), which Congress granted the FTC the power to define and restrict (see (c)). It is, quite literally, their job.

Contracts are only as enforceable as the legal system thinks they are. They get voided if they're against public policy. This is public policy.

I personally believe that lack of non-competes was one ingredient for Silicon Valley becoming what it is.

It was! https://en.wikipedia.org/wiki/Traitorous_eight

>I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

If a company wants to pay someone not to work for a year, they're free to do that whenever they want. Maybe without noncompetes, they'll have to pay more to make it worth it for the guy being paid to sit around!

We'll have to see what the finance industry does. My guess is that they will only make sizeable counter-offers to key employees, and the employees will not be forced to accept them and typically won't. In the long run there might not even be sizeable counter-offers to key employees.

EDIT: Er, the FTC explicitly does not comment on garden leave:

> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.

My guess is that garden leave will be offered, but in right-to-work states there will be no way to enforce that the employee remains employed.

Page 83-84 provides some guidance on garden leave and suggests that it will still be allowed under the new rule:

> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition, because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.

Doesn't this mean the end of 'at-will' for anyone that a company wants to cover with a non-compete? At present a company can have their cake and eat it, giving you one day notice of end of employment but then enforcing a non-compete for x months.

If this survives the Supreme Court, wouldn't a company would have to put in your employment contract that you/they must give x months notice to end employment if they wanted to restrict you? Otherwise you could give one days notice and they wouldn't be able to put you on gardening leave.

The gardening leave still works as long as it's beneficial to both parties. The employee gets an effective long, paid holiday and the company gets a non-complete equivalent. Now they have to really ensure that pay is worth more than changing the employer though.

It's less "end of at-will" and more "if you want effective non-competes, it's going to cost you".

Or the employee agreement you sign includes a notice period of 6 months from either side.

I think you're right that negotiated gardening leave will happen but I can also see companies baking in the gardening leave at the start of employment (so no longer at will) as being cheaper.

> Or the employee agreement you sign includes a notice period of 6 months from either side.

Those are illegal in at-will states.

Source? My understanding is that at-will states have a default presumption of at-will employment in the absence of a contract, but parties are free to contract alternatively. Which states invalidate mutually agreed upon notice periods?

You are right and my memory was faulty:(

It’s not illegal, but from what I understand an excessively long notice period would very likely be shot down by the courts. There are a lot of arguments to be made here (for example, what’s stopping an employer from putting a 5 year notice period from day 1 if they can put an arbitrary one?). I imagine if companies do increase it or introduce one in general, it would be closer to 1 month, maybe 2, not 6.

They are not illegal, and even if there is a grey area good luck defending.

I worked at a hedge fund in NYC. I gave my 2 week notice. HR said that the employee contract that I signed when I joined stated a minimum of a 4 month notice period. This would have completely killed my next job which I already accepted.

I should have known this was in the employee agreement, but I didn't know they they would threaten lawyers on me if I didn't stay 3 months.

I am currently on one of those deals by working for an HFT, then taking a competitor's offer. It is really very nice. From a wealth-accumulation POV, I am losing out a lot of earning each month I'm not working, but I am still paid a very cushy six-figure salary that covers a comfortable lifestyle for my family plus decent savings. I value my time at prime working age much more than the net worth I potentially lost. I have been able to travel, hone hobbies, start and finish personal projects, just help out my wife, and much more. Honestly I don't want it to end.

How does health insurance coverage work during the garden leave period?

There is the option to COBRA. I just switched to be on my wife's insurance.

In my (limited) experience, COBRA is far, far more expensive than buying on healthcare.gov.

COBRA just means that you’re continuing whatever plan you had under your employer, at full cost to you (vs. the employer presumably subsidizing some of the cost while you’re employed by them). The amount you pay is entirely dependent on the plan(s) your employer has chosen to provide its employees.

For me, the full cost of my current employer’s health plan is about $1800/month, and a comparable plan from the healthcare exchange is $2200-3000, depending on the plan. So if I were to lose my job, it’d be significantly cheaper for me to use COBRA than get a plan from the exchange.

Since you are still employed by your previous firm during garden leave you are still covered by your employer’s health insurance policy. I’m also on garden leave at the moment and that’s how it works in my case.

I’ve had this where it’s covered, but also had it where it’s not covered.

I was denied a job I was well qualified for because, (paraphrased, besides the quoted part): Our CEO and your CEO have a "gentleman's agreement" not to hire people that work at eachother's company.

I have no idea why the recruiter was willing to put this in writing, and thankfully, I was able to find other work instead.

I know it's not a non-compete, but there are other ways that companies can illegally form cartels to suppress labor.

I saw this happen to a colleague in the fiber industry, it is very back room dealy.

That got Google, Apple, Adobe and a few other companies in a lot of trouble because they all agreed not to recruit each other's employees.

It got them a slap on the wrist and a nothing fine for years of depressing wages. No one went to jail and the head of HR at Google during this period also got a book deal.

> I have no idea why the recruiter was willing to put this in writing

You passed on a juicy class action lawsuit.

I'm not a lawyer, so I wouldn't make any money. I know it's a common refrain, but look at what happened with the Google & Apple class action. Those folks got less than $6,000 each for what must have been hundreds of thousands in damages each.

It's also career limiting to be the person that sued their employer. I didn't have any monetary damages, as I was able to find alternatives.

For the record, in this context your payout would come from the sweet, sweet pot of funds the lawyers divy up. And it'd be a lot more than your direct monetary damages as the lawsuit would likely impair your ability to later work in the industry.

The "class actions never make money for the plaintiffs" refrain is 99.8% true. The people who get a postcard mailer about their eligibility usually get shit. The 0.2% outlier are the people who put themselves at risk by providing the testimony that wins the case, and they're rewarded for it. And the blood-sucking lawyers of course.

Yes, this is a huge win for labor from a very pro-labor administration.

I'm wondering whether EU will decide to adopt similar laws

The rule goes into effect 120 days after it gets published in the federal register, and at which point all previous non-competes are unenforceable EXCEPT for senior executives.

Senior executives cannot enter into new non-competes though.

How is Senior Executive defined? C-Level only? Named Executive Officers on the 10-K?

Making over ~$160k and making policy decisions

'A “policy-making position,” according to the final rule, is a business’ president, CEO or equivalent, or any other person with “policy-making authority” for the business similar to a corporate officer with policy-making authority. The term “policy-making authority” in turn means the authority to make policy decisions controlling “significant aspects of a business entity or common enterprise.” Expressly carved out, are positions that only have the ability to “advis[e] or exert influence over such policy decisions” or positions only having “final authority to make policy decisions for . . . a subsidiary of or affiliate of a common enterprise.”'

This seems written to stop even VPs being covered.

My attorney friends tell me that the FTC doesn't really have the ability to do this, since contract law is part of state law. (My poor paraphrasing, not theirs.)

I've been surprised I haven't seen this mentioned on social media or in the news. Are my friends wrong, or are people celebrating because this is just a step in the right direction even if it may not do anything yet?

It is both true that the FTC's mandate is broad enough to include this and that this might get successfully challenged in the courts.

Options are also contracts and the FTC seems to have succeeded in regulating those.

the FTC regulates options?

it seems like thats a mixture of the SEC and IRS

CFTC regulates commodities-based options, the SEC securities-based ones. The FTC and IRS are not proximately relevant.

I was charitably hoping they were referring to employee stock options where their existence is primarily due to tax regulations of granting RSUs of illiquid company shares, hence IRS

but yes, not at all relevant

its hard for me to understand why people get the agency acronyms mixed up and interchanged. I can sort of see it, but I’ve just never seen people be so confidently wrong outside of perhaps the eastern medicine crowd.

That's the CFTC

Oops you are correct! Broader point still there that federal regulators can regulate contracts though.

> FTC doesn't really have the ability to do this, since contract law is part of state law

The federal government can absolutely regulate both employment and contract law. (Merger agreements are contracts. The FTC was established to block bad mergers.)

Whether the FTC can do this is untested. But that’s more a Chevron issue than a federal powers one.

Relying on a Chevron argument is not particularly wise given the pending Supreme Court cases Relentless Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo where the Court is expected to overturn Chevron:

https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...

Yup, and the motivation is explicitly to go after unelected “administrative state” technocrats legislating by decree… such as through exactly what they’re doing here.

Unelected technocrats legislating by decree is the purview of the Supreme Court not the FTC, so sayeth the majority of current Supreme Court justices. I imagine a bunch of stuff is about to break since elected officials cannot pass jack shit in this hyper-partisan era.

Generally federal law will preempt state law. See the Court's decisions regarding California's attempt to ban arbitration agreements in employment contracts.

Now, that doesn't mean the Supreme Court won't come up with their own hot take, but at some point appeals and district courts are just going to say no when they send a case back.

What is the Supreme Court going to do? Federal judges can only be removed by impeachment of the House and conviction of the Senate. The Supreme Court has no power to enforce its decisions.

The odds of the conservative activism SCOTUS siding with employees and COTUS (bought off by corporate lobbyists) passing a worker-friendly prohibition on noncompetes are both zero. OTOH, it's not outside the realm of possibility that COTUS might pass a federal law superseding laws in California, Colorado, Illinois, Oregon, Nevada, Washington state, and Washington DC to roll back states rights favoring workers. Similar state bills in NY and NJ died in committee in 2022.

There is widespread bipartisan support for noncompetes. NY, a bastion of liberal politics still overwhelmingly refuses to make noncompetes illegal.

> There is widespread bipartisan support for noncompetes. NY, a bastion of liberal politics still overwhelmingly refuses to make noncompetes illegal.

NY Governor Hochul vetoed it because she is a hack politician and yielded to Wall Street pressure. Politicians with a spine (or constitution, if you prefer) are in short supply.

https://apnews.com/article/noncompete-agreement-bill-veto-ne...

> But in recent months, the legislation had come under fierce attack by Wall Street and top business groups in New York. They argued the agreements are necessary to protect investment strategies and keep highly-paid workers from leaving their companies with prized inside information and working for an industry rival.

That's the rule rather than the exception in the US as politicians go. Campaign finance reform failed because most (not all) politicians are indeed crooks who accept gold bars from foreign governments, embezzle from their campaign to buy luxury goods, or pay hush money to porn stars.

Let me refer you to George Carlin's approach: https://youtu.be/xIraCchPDhk

> There is widespread bipartisan support

At which level(s), or do you mean voters? Voter sentiment has essentially no bearing on public policy, and it was even proven with data in a Princeton study confirming what we already knew. [0]

If I might quote Gore Vidal: There is only one party in the United States, the Property Party … and it has two right wings: Republican and Democrat. Republicans are a bit stupider, more rigid, more doctrinaire in their laissez-faire capitalism than the Democrats, who are cuter, prettier, a bit more corrupt — until recently … and more willing than the Republicans to make small adjustments when the poor, the black, the anti-imperialists get out of hand. But, essentially, there is no difference between the two parties.

Partisanship tribalism is a divide-and-conquer gambit that has been largely successful in keeping Americans fighting each other counterproductively and voting against their own interests.

0. https://www.cambridge.org/core/journals/perspectives-on-poli...

As Jackson quipped; "John Marshall has made his decision; now let him enforce it." We'll see where this goes, and if it's honored.

The quote is likely apocryphal.

There was nothing to enforce as the court didn't impose any obligations on Jackson.

Jackson was VERY vocal about his disapproval for the Marshall Supreme Court.

The obligations imposed by the ruling within Worcester v. Georgia was that states (specifically Georgia) could not enact and enforce regulations on Reservations and Native American land because of pre-existing treaties. It was never claimed that the quote is about what decisions were made with regards to Jackson; it was about what decisions were made for Georgia, and that Jackson had no intent to enforce them.

Jackson was very much complacent to Georgia's continued intent to regulate, and later remove, Native Americans from their designated land.

Chances are extremely high that the current Supreme Court nullifies or greatly restricts Chevron. These kind of announcements are fuel for the fire and are likely to accelerate its demise.

They will kill this faster than they killed the COVID vaccine mandate. Govt. agencies can’t make laws, even if we may agree with them (I actually do in this case). However this isn’t the role of an unelected government agency.

It is wise to look at an argument with extra caution when you see the phrase “unelected government agency”.

There are (of course) valid powers available to agencies. The question is what powers are valid.

Beware the dark arts of rhetoric. I’m familiar with spotting this one because my constitutional law professor used it often. He helped us to see right through it.

Logic and argumentation should win, not words designed to scare or muddle.

Intellectually honest comments reveal their fundamental guiding moral and political philosophies, rather than painting a one sided picture.

Edits done as of 6:30 pm eastern time.

Indeed. Government agencies are overseen by officers of the United States, appointed by the president with the advice and consent of the senate, typically to terms greater than the length of either a presidential to senate term.

Just like Judges.

The idea that courts are the only delegates of the elected representatives of the people who are allowed to figure out the nuances of how to carry out the democratically legislated responsibilities of government is a bit of a brainworm that has infected US politics and makes the Supreme Court a little too important.

The Supreme Court often dismisses cases for the entire reason that constitutionally it can't make laws. That's Congress's job. It's fair to be critical of how much Congress can punt its responsibility to a 4th branch of government with little oversight.

Kicking back a law because it's constitutionally not the business of government to have laws that say that, is very different than kicking back a law because while it is something upon which legislation could constitutionally be had, and the executive is acting in accordance with the law as written, the judiciary doesn't like the way in which the legislature chose to phrase how it delegated authority... that's a different story.

Executive agencies aren't a "fourth branch of government with little oversight", they're article II section 2 'departments' of the executive, established by law, and controlled by the president and appointed officers, with as much oversight as congress legislates to require, plus accountability to the courts for remaining within the bounds of their legal and constitutional authority.

The FTC is not an executive department. It is an independent agency. Though nominally considered part of the executive branch, it has been delegated Congress's authority while also been given intentionally limited executive oversight/control.

Personally, I feel Congress giving its authority to the executive branch breaks constitutional separation of powers period. Could Congress grant the President autocratic authority? SCOTUS says it has to give sufficient standards to delegate authority and inconsistently says yes or no to different attempts, but really what congressional standard did the FTC use to arrive at this (admittedly good) rule?

It’s not really a brainworm, it’s the fact that people see the government in radically different ways.

My view is that as long as there’s genuine consent, two parties agree to something, no one is coerced, both are of sound mind, two human beings should be able to enter into any contract you can imagine. It doesn’t matter if that’s Gay Marriage or a firearms transaction.

The role of government should only be to ensure that that both parties engaged fairly. The minute you want to start using the government to ban one thing or another based on some moral imperative, is the minute you stopped respecting the autonomy of other people and decided to force your morality on another through collective force.

> no one is coerced

How do you square that up though with the power differential in employer / employee relations? The employee has to work or be destitute. That gives employers a tremendous amount of power in any contract negotiation.

Coercion doesn't have to be a gun to your head. Every person in the workforce is under a pretty coercive force which is that without gainful employment you are going to go without housing, medicine, transportation, etc. Without any collusion on the part of the employers, the market works to select those employers who can create the contract conditions most favorable to profit production. We shouldn't be surprised that "favorable to profit production" and "disadvantaging the worker" are often closely aligned, every company would like to pay as little as possible for their input and get as much profit as possible out of their outputs. Labor, or Human Resource, as corporations like to call it, is an input and so there's a tremendous systemic pressure to craft contracts in the way that will get the maximum profit out of every employee.

Sure the employee didn't have to sign that unfair employment contract, they could have elected to sign one of hundreds of unfair employment contracts. The fact that they have a large variety of unfair contracts to select from doesn't on its own increase the fairness of the contract. The "collective force" of "you need money to operate in society" means that all workers are coerced to sign "the best deal they can get" which doesn't mean it's going to be a good deal or a fair deal for the worker, just the best that the market has.

The world consists of more than two people. It isn't just about them. Am I misunderstanding your point?

Many individuals care about society as a useful construct -- a construct that is not easily calculable from individual utilities. [1] This would suggest that even utilitarians should care about society -- unless they think they get to define what matters to their precious individuals. [2]

[1] Sure, one can say society is _causally_ derived from individual actions, but... (1) the derivation of what society looks like is not predictable enough for the time scales we care about; (2) individuals are influenced by society, as a matter of perception

[2] If I may attempt some satire, I wouldn't at all be surprised if some utilitarians are a sort of "mini-autocrat" at heart -- in the sense they get to decide what counts in every individual's utility function. e.g. "I value you, individuals!, yes I do!... but I get to tell you what really matters for your happiness! and after I do that I decree that the summation operator is how we put it all together!"

There’s not a better, more compact way to explain the problem. Congress, when they delegated powers to the FTC, did not envision them banning private non-compete agreements. It’s a non-trivial issue. Lawmakers weren’t stupid, non-competes existed at the time they formed the FTC. They had the power, the knowledge, and the intelligence to draft a law. They did not.

The burden of proof is on the Government to prove that Congress explicitly intended the agency to regulate this part of contract law. Like I said before, I personally support banning non-competes. But it has to be done legally. It has to be done within the constraints of a system of laws.

> Govt. agencies can’t make laws

This is an unfortunately common response that often misses the point: U.S. government agencies do indeed have the power to make decisions with the force of law. Rule-making is a valid authority (subject to legal review of course)

There are two cases in the Supreme Court right now that are expected to rule on this, overturning the ability for regulatory authorities to make rules covering things not explicitly stated in law.

I'm not familiar with those cases, but it seems to me that if such rules go in favor of "agencies only get to clarify where explicitly allowed" then there will a lot of undesirable consequences. Assuming legal ambiguities remain, with less administrative power, there will be less clarity! Less clarify on application, administration, and enforcement.

Perhaps the courts will have to step in clarify? But this won't solve the administrative issue. If agencies don't have "agency" to do their jobs well, that would be ironic.[1] Perhaps Congress will be motivated to write better laws?[2]

[1] I'm deeply suspicious of efforts to undermine agencies under the cover of "only Congress makes law"... I suspect is it often a guise of undermining the laws one party does not like. Or, sometimes, even as an effort to undermine the idea of regulation at all. The latter point is hardly hidden -- it is central to a lot of right-leaning rhetoric which seems to boil down to "regulation bad, freedom good". This level of reasoning would have Milton Friedman rolling in his grave, as some regulation _provably_ helps reduce market failures. (And even center-left people typically want markets to work well.) But I digress.

[2] Hah. The idea that we would give Congresspeople and their staff even more responsibility to specify laws _without_ an associated increase in their competence for those areas where the law applies strikes me as foolhardy.

It’s called Chevron deference / doctrine, and yes the consequences would be far reaching. Whether the net benefit is good or bad is largely a subjective matter of political opinion.

Thanks. I just read [1].

> Whether the net benefit is good or bad is largely a subjective matter of political opinion.

Without knowing the intention of the author above, when I see the phrase "subjective matter of political opinion", it makes me wonder if it serves as a "semantic stop sign" or "thought-terminating cliché"[2].

WRT net benefits... it is one thing to have differing predictions about what will happen and quite another to assess each possible scenario.

I recognize differences of opinion and want a society that protects the freedoms to have them. However, to me, opinions matter much less than reasonable claims based on evidence. Luckily, when reading [1], there are many testable claims embedded in the arguments of the various justices.

For example, in the cases of an ambiguous law, who is better suited to understand the ambiguity... agency experts or judges? Which groups have better knowledge of the domain? Which have experience in engaging in sustained discussions with the industries they are regulating? Agencies have an objective advantage for both.

Here is my point: say we go through the, say, top twenty arguments and we dig into the details. I predict that most opinions one hears at the outset from the public don't survive contact with reality. Those opinions have to get tossed. What remains? Nuanced assessments of better and worse scenarios. By making these assessments more nuanced, the hope is we find workable and sensible compromises.

[1] https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...

[2] https://en.wikipedia.org/wiki/Thought-terminating_cliché

We live in a representative democracy where the powers of the government are constrained by constitutional law to be specific and enumerated, and aside from common-law precedent derive from a mandate by the people. Yet it is increasingly the case that the actual rules which citizens and corporations are required to follow are being set not by elected representatives but by unelected bureaucrats of government agencies, in some cases where there isn't even relevant and specific congressional authorization for action. In the case of TFA, the abolition of non-competes is something I can be 100% behind... but where is the specific law passed by congress authorizing the FTC to make and enforce this determination?

One side will say with some justification that these rules make sense and are definitely a net benefit, and we should expect this to be the case because the agency is run by technocrat experts who evaluate these policy decisions for a living and do a far better job than we can expect of even the best congressional staffers.

The other side will point out that it's a very fine line between the current, mostly harmless rule-setting actions of benevolent agency experts, and an unelected deep state that can become a tool of fascist ideologues. Our freedom is dependent on safeguarding our democracy, and that means no rules that don't trace their core to laws passed by elected representatives. These people would point to the disastrous actions of the DEA and FDA, for example, which is currently waging war on ADHD patients via the artificial Adderall shortage, or Operation Choke Point (google it).

Where you fall on this debate is a subjective matter of political opinion. There are pros and cons to both sides.

For what it is worth, in my comments I am attempting to put aside any subjective assessment of the noncompete ban being good or bad. I am very interested in the rational basis for the FTC having the authority to do it (or not).

> Our freedom is dependent on safeguarding our democracy, …

Yes, I agree.

> and that means no rules that don't trace their core to laws passed by elected representatives.

I think this is too strong of a claim. Why?

We live under many rules that don’t trace back to laws elected by elected representatives. Many of our laws descend from common law which predates representative democracy.

Not to mention that there are tremendous sources of power outside one’s governmental sphere that constrain our options, such as culture, corporations, and other governments. Whether one calls these “rules” or “constraints” is sort of beside the point when you focus on a society’s ability to respond to undesirable forces. This leads to how I would restate your claim…

Perhaps a more accurate statement would be this: freedom depends on mechanisms such that the people can drive policy.

You say some things that make sense to me, but then you use the phrase “waging war”…

> FDA, for example, which is currently waging war on ADHD patients via the artificial Adderall shortage

Why do you choose this loaded language? This does not build credibility in my eyes. War means something, and it not that.

Sorry for the typo. I meant "War means something, and it is not that". By "that" I mean the above claim that what the FDA is doing (or not doing) is some kind of war.

I don't mean to split hairs nor imply that I alone get to decide what words mean. But I do have good reasons to suggest that words matter and that we should pay attention to them.

I am saying that rational people seeking truth strive not to use phrases "waging war" in a spirit of rationally discussing an issue. The way it is used above doesn't shine light on the core issue. The phrase invites tribalism and gut reactions rather than reason.

At the very least, such a phrase (1) presumes intention; and (2) assigns blame. These are two additional claims beyond the claim of harm to people with ADHD. I think one can make a decent argument about how agencies with too much authority can cause harm without invoking the war metaphor. Invoking that metaphor makes it harder to discuss the issues that seems to be driving this (interesting) discussion. I would frame that issue broadly as: (A) To what degree do agencies have legal and rational authority to clarify ambiguous laws? (B) Given what we know about human nature and organizations, what are some possible downstream outcomes?

Again, I'm making the case that a sentence like "But people have different opinions", when offered in the sense of e.g. "and that's all we can really say about that" is a disservice to understanding. As I see it, we have much necessary work to do that has nothing to do with pointing to differences of opinion. I think we need more substantive truth-seeking. If we engage in that fully, yes, differences of opinion will remain, but they will likely be applied to more nuanced aspects of the issue. This would be a good thing. It would help us talk in clearer ways.

I hope you can see that I am not dismissing rational claims of harm. I am instead expressing concern about the rhetoric used.

If you find yourself disagreeing with me, it might help to know that (i) I generally push back against moral relativism. Also (ii) I don't assign moral worth to mere opinions. I assign moral worth to people and their well-being, not merely to any and all electrochemical fluctuations that we call thoughts and beliefs. To summarize, I respect the ability of people to have opinions, but I don't give those opinions some kind of fundamental moral weight.

Why? Many such opinions are unconnected with reality. Sometimes, they don't even make sense _for them_; i.e. for their own self-interest! Moreover, enlightened people who pay attention to their own thoughts can notice this -- it is not something I have to impose on them.

I didn’t choose that language. The “war on drugs” is the DEA’s own marketing.

I grant that the DEA deserves scrutiny for its handling of the Adderall manufacturers. [1]

[1] https://reason.com/2024/02/26/dea-shuts-down-drug-factory-ev...

Stepping back (hopefully to clear the air), I hope you can see this: it is hard for others to tell when you are using a phrase sarcastically to criticize some other party's usage of the same phrase.

Aside: unfortunately, the use of "war" as in "war on drugs" often corresponds with armed conflict... though to my knowledge, this is not a recognized problem with amphetamine mixed salts.

War on Drugs.

War on Poverty.

War on Cancer.

America just loves war metaphors. I think you're reading too much into it.

https://www.hoover.org/research/rise-war-metaphor-public-pol...

I’m aware. I am hoping to persuade it is better to not abuse the word as well. How we choose to frame things can help promote useful conversation or hinder it.

I’m detecting an argument that “other people muddle words, so I can too”. Yikes. Can ain’t the same thing as should.

Maybe I should be more specific: The words you wrote can be easily read as a crackpot suggestion that the FDA is seeking to actively harm people with ADHD. (I write this now after having reread the source comment.)

Cancer doesn’t know we are at war with it; neither does poverty. There is no one we can kill to solve these problems. Instead, hopefully, we are seeking understanding of science and human nature so that we can reduce these problems.

Anyhow, I can’t tell if any of my main logical arguments have gotten through, which is a symptom of a bad conversation in my eyes at least. I don’t view this as a debate —- rather as a process of understanding.

>For example, in the cases of an ambiguous law, who is better suited to understand the ambiguity...

"Understanding the ambiguity" is fine if we are talking about trying to figure out what was intended by the people who put the ambiguous phrases in. But the issue isn't about who can "understand" the ambiguity, it's about who's going to be making things up and giving the ambiguity as an excuse. Asking whether bureaucrats or judges are better at "understanding the ambiguity" is the wrong question--understanding something and doing it are very different things. They'd just understand that the law is supposed to be X, and give a spurious justification about it being Y instead anyway.

Your use of phrases like "thought-terminating cliche" makes you sound like a rationalist. In which case I hope you know what a quokka is. (For the uninitiated, a quokka is an animal that can't understand that someone might want to hurt it.) If someone has an agenda that is against your interests, having "better knowledge" and being "better suited to understand" and "having experience" just makes it easier for them to harm you.

Yes, I agree. Understanding the ambiguity is not the only criteria.

My comment two levels up was not a comprehensive assessment of the pros and cons of this policy issue. My goal was to highlight that while I recognize subjective opinions, I care about them relatively less until we fully pursue rational means of understanding.

> The federal government can absolutely regulate both employment and contract law

Where in Article I Section 8 does the Constitution grant that power?

The snarky answer would be the 13th amendment.

> Where in Article I Section 8 does the Constitution grant that power?

The Commerce Clause, when interpreted expansively — as federal courts have largely done. (We'll see what happens with the 6-3 conservative majority of this SCOTUS incarnation.)

They've actually gone through different eras of interpreting expansively or restrictively.

The federal government has the constitutional right to regulate interstate commerce, and 100 years ago it discovered that all commerce is now interstate commerce, followed by the supremacy clause which is selectively applied (ie. not for scheduled drugs, but for everything else)

This Supreme Court could be friendly to invalidating that expansive interpretation though

so, big mismatch from the executive branch / agencies with the judicial branch which could completely warp our relationship with the Federal Government and what we find familiar in our way of life

But I dont think its as simple as saying “contract law is part of state law”

The Supreme Court doesn't have any power to enforce its decisions. District and Appeals Courts could just say no to their decisions and there isn't much they can do.

> The Supreme Court doesn't have any power to enforce its decisions.

Sure it does. US Marshals are the muscle of the court system. They enforce federal court orders when necessary.

When district and appeals courts do what they like, the SCOTUS can reverse every one of their decisions. The inferior courts can then go on a spree of incorrectly deciding every relevant case and delay the final judgement by years, but then the SCOTUS could just speed up its process of reversing every such decision by the inferior courts. The SCOTUS also has options for removing judges from certain types of cases, IIRC. It's a game that the SCOTUS invariably wins in the end -- unless it gets packed.

There has been times in the past where the other branches ignored the Supreme Courts rulings. They cannot call out troops. The only people that give them power are the other branches that enforce those rulings, but they could decide not to.

Yes, this is true, but within the judicial branch itself, the SCOTUS does have a fair bit of power.

I think if we got to the point that we could not rely on Supreme Court rulings being upheld without the mobilization of troops, we will already be in a situation of fundamental institutional collapse anyway, and questions of constitutionality and legality of anything will become moot as we descend into a raw state of nature.

Not agreeing, but just posting the other side of the argument from the US Chamber of Commerce. Not a fan of legislation by fiat, maybe this will prompt Congress to do something. USCoC said they will sue...

https://www.uschamber.com/finance/antitrust/chamber-comments...

>The Chamber and its membership are strongly opposed to the Proposed Rule. It would categorically ban nearly all noncompete agreements—regardless of individual circumstances, such as a worker’s skill, job responsibilities, access to competitively sensitive and proprietary information, bargaining power, or compensation—and require that organizations rescind all existing agreements and provide notice to affected workers of such rescission. Such a proposal fails to recognize that noncompete agreements can serve vital procompetitive business and individual interests—such as protecting investments in research and development, promoting workforce training, and reducing free-riding—that cannot be adequately protected through other mechanisms such as trade-secret suits or nondisclosure agreements. For centuries, courts have recognized the procompetitive benefits of noncompete agreements and balanced those benefits against any negative costs imposed by particular noncompete agreements. As perhaps acknowledged by the Commission’s request for comments on narrower alternatives, the Commission’s categorical ban would sweep in millions of noncompete agreements that pose no harm to competition, and in fact benefit the U.S. business community, economy, workers, and consumers.

https://www.uschamber.com/finance/antitrust/u-s-chamber-to-s...

>The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked.

Interstate commerce is broadly recognized to include just about anything.

Where I am, I know people who are under noncompetes that have a geographical clause. You can’t leave to join a competitor within X miles. In my part of the country, that would include at least three states (maybe more), but other locations would include many more.

So, yeah, seems like at least those non-competes impacts interstate commerce.

You're conflating two different things.

The reason those geographical clauses are in those contracts is because many states have ruled that non-competes are illegal unless they are limited in some ways to be "reasonable", and one common way states courts measure this is by ensuring that they are limited to something that might be a reasonable 'business area' that the company competes in. Corporate lawyers typically write in the exact radius that state courts have historically enforced into their non-competes to avoid them being disqualified for being too broad.

"Interstate commerce" on the other hand, just means any sort of business activity that crosses state lines. Basically every business engages in interstate commerce, just because commerce requires many interstate activities, like using the internet, or accepting electronic payments, or ordering supplies made in a different state.

No, I’m not conflating them. I do appreciate why they are written with geographical clauses, but I have always found it odd (and probably unenforceable).

I’m just saying that non-competes like this should be regulated under Federal authority because they explicitly cover geographic areas that include multiple states. That’s in addition to the impacts on “interstate commerce” proper (which as you said is basically all commerce).

Said another way: I find the argument that non-competes should be allowed or disallowed under the authority of only state laws to be lacking. If a contract in state A dictates what you can do in state B, it’s an interstate issue and Federal law could (should?) be involved.

I think you're putting the cart before the horse. First of all, basically any company with a noncompete clause is already doing significant interstate commerce. And if a company is arguing that a neighboring state is within their area of competition, they're implying the same.

And regardless, federal power to regulate commerce hinges on actual interstate commerce taking place. A contract between two entities in one state, under the laws of that one state, that merely mentions another state, isn't interstate commerce.

It may have the ability to, but it's not really anything to do with trade.

If growing food for your own use is interstate commerce, contract law is interstate commerce.

Ask your attorney friends if a farmer growing food on their own land to feed to their own animals is "interstate commerce", and ask them to explain that to you.

What I'm referring to here is Wickard v Filburn in which the Supreme Court ruled that a farmer growing food on his own land to feed to his own animals was participating in "interstate commerce" and could thus be regulated by the federal government.

This is a big part of why the federal government can control things like which plants you are allowed to grow in your home.

But when the FTC tries to regulate something like non-competes and protect average workers the corporate attorneys come out of the woodwork, "oh no, the federal government can't do that!"

The difference here is that Congress isn't banning noncompetes. The FTC is doing it. Different branch of government.

Congress established the FTC.

People seem a bit confused. There are a few separate legal questions here:

1. Whether Congress can ban noncompetes nationwide through its ability to regulate interstate commerce.

2. Whether Congress can say "so-and-so can make any laws he wants about x".

3. Whether this is in scope of the FTC's mission of preventing unfair trade practices.

To me, #1 is a clear no for intrastate agreements, but under Wickard it is constitutional.

#2 is yes under Chevron.

#3 seems an obvious yes.

The only question would be if SCOTUS decides now is the time to correct what it sees as prior incorrect decisions.

The SCOTUS likes to decide things on the narrowest possible grounds. That means that if it wanted to reverse this rule it would want to find grounds relating to (3), which as you note it probably could not.

The court could still decide that this rule is a "major powers question" and so belongs to Congress. This would allow the court to not have to reach any question of whether the FTC has broad powers, whether the act that created the FTC is constitutional, or whether Wickard was correctly decided. Therefore it seems more likely that the court would do that -again, if it wanted to reverse the FTC here- than anything else.

Can you imagine if the court ruled the FTC to be unconstitutionally created? They wouldn't risk that chaos.

Yeah, regardless of how the justices feel about this, I can't imagine them striking it down for the reasons you describe.

I don't think they will strike this down at all. The reasons I listed would be if they were to strike this down, and it's just my guess.

I know. I'm agreeing with you. I meant your reasons make sense as to why they won't strike it down haha

Congress established many parts of the executive branch. Nevertheless they remain part of the executive branch, a separate branch of government from Congress, and this distinction is legally important.

Is it the same people? It seems like the current Supreme Court is very much against decisions like the weird farmer one and likely to roll such things back.

During the Federalist Revolution period of the the 90s, before Scalia got spooked by drug legalization, the court was definitely heading in the direction of reversing Wickard. Perhaps now that the court is willing to reverse big cases like Roe and Chevron (so it seems) it will also be willing to reverse Wickard.

Your friend may recall that the FTC occasionally acts against "deceptive" conduct in the marketplace. If you read the relevant law, it also can act against "unfair" conduct.[1] Sometimes people forget there are two words there separated by "or".

This would be an example of an "unfair" practice, which mostly are about predation in the context of unequal bargaining position when litigated under "Little FTC Acts"[2]. I don't know offhand whether these similar laws have been used to achieve the same thing state-by-state, but the FTC rule meets the straight face test for sure. So, regardless of what happens next at the Federal level, this is about to become a white-hot area of litigation under state "Little FTC Acts".

[1] https://www.law.cornell.edu/uscode/text/15/57a

[2] https://litigationcommentary.org/2021/06/15/a-fresh-look-at-...

It is a good question. I am glad that the FTC is testing it.

If a noncompete agreement between a former employer, and a person who resides in a particular state, purports to prevent that person from taking up an employment contract with another employer - including by one who is located in a different state… well that seems like that could be an unfair restraint on interstate commerce.

I’m not a constitutional scholar, but I’ll say this —- there’s a reason this one is debated. It seems to me (with around 70% probability) that there are many possible constructions that could emerge which would more or less conform to the (rather contingent) bar for Supreme Court decisions.

I say contingent because the history of the Supreme Court is far from a deductive process of pure interpretation.

I recognize the utility of the Supreme Court while dismissing any grandiose claims of objective morality or obvious legality. It is a body of people after all.

The U.S. Chamber of Commerce is likely to file suit: https://www.uschamber.com/finance/antitrust/chamber-comments...

I suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.

It'll be interesting to see what happens. It does sound like this clearly falls under interstate commerce, so within the scope of Fed action. Is there something that makes you think otherwise? Beyond court composition, that is.

That this is coming from the executive branch, not the legislative branch.

Sure, but FTC was authorized by congress (FTC Act 1914) to "prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce" which seems pretty cut and dried? I may be missing something, this just feels pretty reasonable.

You're missing the fact that the current Supreme Court has been doing everything they can to kill Chevron Deference.

Yup, this is very much the key to why I think this will be killed.

This supreme court is very much on track to eliminate any authority federal agencies have that aren't explicitly written into law. Effectively destroying federal agencies ability to make rules.

> This supreme court is very much on track to eliminate any authority federal agencies have that aren't explicitly written into law. Effectively destroying federal agencies ability to make rules.

Very dramatic. Really, it's a reaction to Federal Agencies — unelected governmental representatives — unilaterally making their own rules out of the gray areas.

> it's a reaction to Federal Agencies — unelected governmental representatives — unilaterally making their own rules out of the gray areas.

Eliminating Chevron will trade "unelected governmental representatives" who work at Federal Agencies like the FTC with "unelected governmental representatives" who are work for Federal Agencies that are the US Courts. Progress?

> Eliminating Chevron will trade "unelected governmental representatives" who work at e.g. the FTC with "unelected governmental representatives" who are paid by the US Court system. Progress?

Where do you get that from?

Reversing Chevron will mean that Congress will have to work harder to get the regulations that it and the Executive want. If Congress were not disfunctional that would be a very good thing. And heck, reversing Chevron might well function to help Congress function more normally.

Republicans originally celebrated Chevron because it took regulations out of the courts' hands.

Did they? I wasn't there. But a reversal of Chevron doesn't necessarily mean that the courts get to do what they like. It may mean that the courts simply get to gut the bureaucratic state and kick the can to Congress -- that what's not forbidden by statute is allowed rather than that the courts act as regulators. There will be lower courts who will want to push their role as regulators, but the SCOTUS seems uninterested in playing that game given its "major questions" doctrine.

It would be very strange for the court to create the major questions doctrine then impanel itself as the ultimate regulator.

Someone has to fill in the multitude of gaps that exist between a law and its enforcement. Chevron moved much of that decision-making authority out of the court system into the executive branch.

Even a fully-functional representative body can't write laws that are explicit enough to cover every possibility. And the U.S. Congress is far from functional.

This is a key point that gets overlooked so often.

The Court accepts that governments outsource regulation to e.g. the private developers of building codes. Similarly, we don’t benefit from a Congress mired in details over the minutae managed by many areas of the federal government.

"Major questions" have to go to Congress. That seems like a good rule.

It's not though. The only people that can apply it are the supreme court and the only time they'll apply it is when precedence and the letter of the law goes against their own political ideologies. In short, it's lazy judicial activism.

It's anti-textualist, anti-originalist, anti-legal theory. It's a rule that the Supreme court has to invoke to achieve their objectives because they have no other avenue. The law was clear, the intent clear, and what congress desired was clear. Major questions should be solved by congress passing a revision to the law. The supreme court invoking it robs congress of their power because "we know better".

The reason it's such a bad rule is no lower court or litigant can really invoke it. It is only something the supreme court can use because it's undefined what qualifies as a "major question". Boiled down, it's "we don't like the law congress passed but we can't come up with a constitutional, textual, or historic reason why that law or it's application is invalid".

They would not use "major questions" if there were any other legal reasoning to go to.

> The only people that can apply it are the supreme court and the only time they'll apply it is when precedence and the letter of the law goes against their own political ideologies.

Not really. First, any inferior court can also apply the major questions doctrine -- the SCOTUS is merely the final arbiter, but presumably in many cases either there will be no case (because the Executive will preemptively go to Congress) or the Executive will accept a lower court's decision w/o having to go all the way to the SCOTUS. Second, the doctrine is pretty clear: if the impact of a regulation is politically very controversial and its impact on the economy or liberty is quite large by comparison to more mundane regulations, then it belongs to Congress.

Since "major questions" has no concrete definition, this means each minor point can/will be litigated until the court determines whether that individual point is a "major question."

Quite arguably, Congress deemed the precipitating questions were not "major questions" and expressed as much by delegating to agencies.

> Quite arguably, Congress deemed the precipitating questions were not "major questions" and expressed as much by delegating to agencies.

That's a tremendous stretch because Congress can be very vague in its delegation of authority and decades later the agencies it delegated power to can interpret anything they want into that language and -because of the oft-repeated point about Congress' disfunction- the agencies can't be stopped.

> Since "major questions" has no concrete definition,

It's like obscenity: you know it when you see it. But it's simpler: if there's a controversy, there's a chance that the issue is a major powers issue, and then you have to look at whether the liberty/economic impact of the regulation is extreme enough that Congress must decide it.

I feel like this is a circular argument. On the one hand, Congress isn't allowed to delegate to the executive (agencies) because the agencies then act as delegates (by interpreting their mandates), so Congress must explicitly legislate everything.

But then on the other hand, Congress is dysfunctional and is incapable of legislating.

This feels like a recipe for the unelected branch (the courts) to run everything.

It's more like:

- Congress is allowed to delegate to the executive (agencies)

- but if an agency goes so far in beyond the original understanding of its delegation as to cause a major political controversy, then it has overstepped its mandate

For example, if Congress were to delegate to the EPA the power to ban internal combustion engines at the EPA's choice, then the EPA could absolutely do that. (Perhaps Congress couldn't if the court revisits Wickard, who knows, but if Congress could, then so could EPA). But if Congress were to pass a bill regarding clean air and decades later the EPA decides that a clean air mandate means the EPA can ban ICEs, then that would clearly be a major question (well, today it would be; maybe in another two decades it wouldn't be), the courts would not (today) allow such a regulation, and EPA would have to go ask Congress to ban ICEs or to delegate that authority to the EPA.

> This feels like a recipe for the unelected branch (the courts) to run everything.

If the courts were to decide that EPA can't ban ICEs under the Clean Air Act but that the courts can, that would be pretty insane. Perhaps before Chevron the courts sometimes did that sort of thing, but they wouldn't now if Chevron is reversed because this SCOTUS absolutely does not want that and will write an opinion that reflects that -- that much is clear. So I think this is hyperbole. Instead if Chevron is reversed, and together with W. Virginia vs. EPA, "major questions" will not be decided by the courts -- major questions would go undecided as long as Congress leaves them undecided, with the status quo preserved. That would not be a bad outcome!

> if an agency goes so far in beyond the original understanding of its delegation as to cause a major political controversy

Because "major political controversy" is very subjective and subject to manipulation (we had a "major political controversy" over the name of French fries in the 2002 era), the "then" part of your clause governs in most cases. That is "it has overstepped its mandate."

Congressional oversight of the executive agencies involves the two elected branches working together to govern. Delegating more power to the unelected branch is not a healthy way for a republic to operate.

If Congress is disfunctional then every vague delegation of power can be abused by the Executive because Congress will not be able to say no after the fact. That means Congress stays disfuncitonal. That's not a good recipe.

Congress is dysfunctional because there is a populist political movement that does not believe in governing. Eventually, that fever will break. (Or they will succeed and we will lose the republic, in which case discussions about the efficacy of Congress become moot.)

I don't think so. People have been complaining about Congress' dysfunction for decades, even when it was fully in the hands of one or the other party. I don't think Congress' dysfunction has anything to do with partisanship. And yes, "populists" get to have a voice -- that's what it means to have a representative democracy and republic. If "populists" (or whatever) need to be negotiated with, so be it, but it's not intransigence that makes Congress dysfunctional. I suspect the problem here is that you want activist agencies to ratchet-like interpret power delegations ever more broadly as long as you agree with those interpretations, but that is a very risky game.

The Chevron scheme essentially leads a disfunctional Congress to abdicate all its regulatory power slowly but surely and to never claw it back. Why even have a Congress? Reversing Chevron might or might not help Congress get its pants back on, but it's worth a try, and I hope the SCOTUS does it. If it doesn't work, then we'll have to confront the possibility that the Founders' design no longer works and some serious reform is needed (though what that would be I've no idea).

Congress does not abdicate power at all. Congress is not prevented from regulating when it feels like doing so.

Just because some people do not like the results of their delegation does not mean that Congress is similarly dissatisfied with those same results. Some parties want Congress to be dissatisfied and exercise its powers. Congress regulated a single app made by a single company this week; Congress can act when it wants to do so.

I think it's pretty certain that under Chevron and w/o W. Virginia vs. EPA the EPA could ban ICEs tomorrow and the courts would allow it, and Congress would be unable to stop it, but that would be a very drastic thing to do and it should require debate, and we wouldn't get it. If you don't think that scenario is likely, there are others somewhat less extreme and more likely ones one could conjure up.

I think that's abdication.

Congress won’t instantly have written laws to cover every regulation currently enforced by the federal government. Reasonably, it could take many years for those gaps to get filled. In the meanwhile, that means the courts are the key decision makers for large areas of government policy.

Which is what Congress created them to do. And they are appointed, which the appointers are elected. In essence, they are elected, through the elected representatives which themselves are elected.

This is like saying that the US President is an unelected governmental representative. The population actually votes on a Representative for the Electoral College (EC). The Representatives in the EC then vote for President and Vice President. And yes, the EC Representatives are voted for because they say they will vote for a particular candidate (and as we figured out in 2012, many states have laws penalizing EC Representatives who don't vote how they committed to).

> This is like saying that the US President is an unelected governmental representative

No, that's not how that works, ironically because in the name — Electoral College — the President is, elected. Regardless by the populous or not.

Appointees are politically chosen, yes by a representative, but usually with major political leanings built into the rules they make, with little to no oversight.

The SCOTUS had its "federalism revolution" in the 90s, and it ended in the Raich case when Scalia decided that leaving drug policy to the States was too much.

Under current precedents all the State decriminalization of marijuana and other drugs that we've seen are all unconstitutional. It was the liberal justices + Scalia who made it so. Those State laws decriminalizing various drugs are being tolerated by the feds -- for now.

The federalism revolution and its opposite both cut both ways.

On the whole I would prefer that the court resume its federalist revolution, even though some results I wouldn't like.

And the current Supreme Court is not a huge fan of Chevron Deference, which this certain falls under...

From a purely meta point of view:

This was something passed by a Democratic administration. Therefore Republicans hate it, and since 2/3 of the Supreme Court is Republican, it's likely to be struck down.

The actual reasoning comes later. Something-something-Federalist-Papers-something. I'm sure they'll have no trouble digging up some Founding Father who said something that sounds like banning this, if you squint right.

I know a great many lawyers, of both parties, who have more respect for the Supreme Court than I do. They are more informed and better educated than I am, so you should take my cynicism with a grain of salt. But in my experience, treating the Supreme Court as a partisanship machine yields extremely accurate predictions.

I'm sure they'll have no trouble digging up some Founding Father who said something that sounds like banning this, if you squint right.

When this country was founded, a lot of its residents were slaves, so I'm sure Thomas and Alito will find plenty of fodder in that for their "originalist" stance denying workers rights.

I'm pretty sure the constitution was not written for slaves and no "originalist" stance would consider them. This is a silly "gotcha" that you just made up so you can get mad.

The 3/5th clause has been used by prior SCOTUSs to justify decisions, so it is not a gotcha. It's history...

On that note, Alito and Thomas had to use a pre-U.S. colonial law as their grounds to overturn Roe, so there is no limit to how far they will go to use "orignalism" to further their ideology.

>constitution was not written for slaves

That's the point.

Interstate commerce would allow congress to make such a law. However, the real question will be if congress gave or intended to give the FTC the authority to perform this action.

This supreme court has been very down on federal powers, so it really would not be surprising if they pulled "the major questions doctrine" to ultimately kill this off.

> Interstate commerce would allow congress to make such a law. However, the real question will be if congress gave or intended to give the FTC the authority to perform this action.

That's my take as well. There is almost certainly no doubt that the commerce clause (under current precedents since the 30s) gives Congress the authority to make legal rules like this one. If there be doubt here then it will be about a) the ability of Congress to delegate this power with b) such a vague and all-encompassing term as "unfair" to describe the practices that the FTC may regulate, and/or c) whether this particular rule violates the "major questions" doctrine found in the recent W. Virginia vs. EPA case.

> suspect this won’t survive a challenge in front of the current Supreme Court

It may be aimed at prodding the Congress into action.

I am not entirely sure.

Without anti compete stealing your competitors staff becomes a valid business strategy. Buy up the competitions best people and cripple them.

This favors those with the most capital not the least.

It also favors workers. By increasing salaries. And forcing companies to compete for them.

Labor is a market. It is too often ignored in favor of private equity concerns.

I believe it will die more because of the originalist/textualism of the supreme court rather than considerations to which big businesses benefit (or are harmed by) this the most.

The question will ultimately arise "by what authority can the FTC make such a sweeping judgement" and it would not surprise me to hear the SC rule that this is an overstep of the authority they were given by the laws creating and maintaining the FTC.

Previously, the FTC could have argued that the chevron doctrine gives them this right. However, that is almost certainly about to be completely abolished this term.

The right of contract is almost certainly going to be more important to most members of the supreme court than any other considerations. That's my 2 cents.

"Unfair" is an awfully vague term. This rule might be a test of the recent "major questions" doctrine. The SCOTUS appears poised to reverse the Chevron doctrine, which would have given the FTC a great deal of cover here. There are a lot of reasons that the Court might reject this rule or even the FTC's authority in general.

I'd love for my company's competitor to buy me up. Shit let them all go to war for the privilege of employing my ass.

I doubt you are that valuable. Sure software developers are high priced, but without even knowing what company you work for I bet I can do your job at a competitor and after 3 years I'd be just as good - that is worst case when I have to learn a new programming language to expert level as well as the domain. There are only a few people who have special skills that it is even worth thinking about protected. Someone who hires you away from a competitor gains at most a couple months vs hiring someone with similar skill who doesn't work for a competitor (and thus doesn't have domain knowledge).

Then the person I responded to has nothing to worry about.

> This favors those with the most capital not the least.

So does the US Supreme Court lol

More seriously I think the issue is going to be whether it's executive overreach, not whether it's good or bad for a competitive marketplace.

Interesting how you call it “stealing” to hire someone who worked at a competitor. They aren’t property, companies don’t own people.

If you don’t want to them to leave, then entice them to stay.

Getting rid of noncompetes puts workers and companies on more even footing, reducing the large power difference.

>> They aren’t property, companies don’t own people.

Ideas aren't property and they are stolen. You can steal a glance as well, but you know that has nothing to do with property either.

I also could have used the colloquialism poaching, but then I would be hearing about how people aren't big game and hunting is bad.

> Getting rid of noncompetes puts workers and companies on more even footing

We already know it doesn't have to: https://forums.appleinsider.com/discussion/185051/judge-appr...

That fine was probably minor compared to the wage suppression.

> If you don’t want to them to leave, then entice them to stay.

Poaching all the staff away from a company is illegal in CA, it's called raiding. This change will not create laws out of thin air.

> We already know it doesn't have to: https://forums.appleinsider.com/discussion/185051/judge-appr...

You argument is that this case demonstrates there isn't any problem and that companies don't have actually have a significant power advantage? Not very convincing.

> Poaching all the staff away from a company is illegal in CA, it's called raiding. This change will not create laws out of thin air.

This is only true in the specific narrow situation where there is intent to harm the company. There is nothing wrong with the general case where you simply want to hire those workers.

> Without anti compete stealing your competitors staff becomes a valid business strategy.

And how would that not be an "unfair business practice"? Vague legal terms are problematic.

Given that these rules are very similar to those in California, and California has a big enough economy to be a good representative sample, I don't see this being a real issue.

Otherwise, why aren't well capitalized competitors in California hiring up the best people at their competitors and crippling competition, as it were? We just don't see this happen on a large scale like this suggestions.

Now, that's my take on it at charitably. My honest opinion about it is simply: who cares. If you want people to stay, give them reasons to stay that aren't the legal equivalent of holding a gun to their head

>> Given that these rules are very similar to those in California...

CA has a corresponding law that prevents this. The last time I looked the FTC wasnt creating at NEW law to prevent the other side of this coin:

Rule 3: Workforce “Raids” Are Illegal in California

Technically, poaching employees is not illegal in California, but restrictions on workplace raids are mentioned in the legislation. In fact, state law prohibits companies from acting in bad faith to solicit a mass amount of employees from their competitors to intentionally hurt their business. This is called “raiding,” and when your competitor does it, you can file a tortious interference claim against them. Most of these cases require an employment contract to be successful in pursuit of damages.

FROM: https://www.flclaw.net/is-poaching-employees-illegal-califor...

I did say similar, not exactly. There may or may not be some effective law preventing this type of thing specifically, but in my mind, this is an edge case[0] and doesn't detract from my overall point, which is that eliminating non competes will overwhelming not end up with this being a plausible scenario.

[0]: that the California government anticipated and defined, to their credit

So employers end up competing with higher wages putting more money in the hands of employees, and talent goes to where it produces the most value, yeah that’s the point.

If the SCOTUS overturns the Chevron doctrine, then this rule and probably all of the FTC's authority is on thin ice until Congress passes an act that says something more substantial and significantly less vague that "unfair business practices".

Which would be great. These agencies and bureaus have grown to an enormous scope, completely without the consent of the governed. Doesn't sound like a republic to me.

It would be catastrophic, because Congress as it stands is utterly incapable of legislating. This is why the little stuff gets delegated to unilateral decision-making withing the executive branch: If making new rules was left to congress, they could never keep up. The world moves fast, congress moves slow.

Instead, they delegate powers to agencies that can make rules within some tight purview and pursuant to some defined purpose, and if they step out of line Congress is completely within their power to legislate their preferred stance into law.

> It would be catastrophic, because Congress as it stands is utterly incapable of legislating

That is one theory; another is that they don't legislate because they have no need to -- because the bureaucracy handles everything.

>It would be catastrophic, because Congress as it stands is utterly incapable of legislating.

Congress is very capable of legislating about something that's relevant to their interests: look how fast the TikTok ban was passed.

I thought that non-governmental business association was pro-competition; guess not.

Edit: it was a dig to the pro-competition façade some pro-business people put forward.

They are pro-business (and maintaining the rights of businesses to control their labor force), not pro-competition.

Why would you think that? Lobbying organizations exist to advance the interests of their members. Their members in this case are businesses. This will restrict the control businesses have over their former employees. Therefore, they don’t like it.

Ironically, it hurts their business overall (unless control of employees is something they intrinsically value).

Needs a /s.

Total aside, but I think it is ridiculous that CoC larps as a quasi governmental organization. When in actuality it is a Union of Capitalists.

I don’t get that appearance. Their website does not end in .gov and their about page does not indicate they are an official agency:

https://www.uschamber.com/about

I have heard the name "US Chamber of Commerce" before, and as someone who isn't a politics/government nerd, I always assumed that was some kind of government organization responsible for something...commerce related.

Clicking through to the website and seeing the kind of articles on there makes it pretty obvious that's not the case though, even ignoring the .com domain.

It's the largest lobbying group in the USA. It was created by Taft to fight organized labor. It's a core part of the Republican party, though it will diverge in the interests of capitalism. They denied climate change until 2019.

I think people get that idea due to most cities also having chambers of commerce with lots of influence, sponsoring and hosting events and such.

Yes, it was started by Taft as a business 'union' that the government could deal with. Now they're funded primarily by multinationals and so they place the concerns of those large corporations first and well before upstart startups.

> "‘Robbing people of their economic liberty also robs them of all sorts of other freedoms,’ said FTC Chair Lina Khan, who appeared at a House hearing in 2023."

Should be the motto of every government in the world.

I wonder if she applies this maxim selectively, or if she would also oppose other impositions on economic liberty, such as minimum wage laws.

That’s why we need two parties

The two-party system is a blight on democracy. You ever read George Washington's farewell address?

> George Washington

I'm a huge fan but nobody's perfect. Two parties were not only inevitable but work unbelievably well.

I'm not American, and I really don't want to inflame the political passions of either side, but take the US 2020 election, for example. I remember reading an article comparing various polling results on policy points and candidate popularity to the election outcome.

The polling results suggested that people didn't want Trump again, but liked many of his policies, and didn't want a far-left candidate either. Through votes for president, governors, senators, etc, they got exactly what the polls said they wanted.

Using the two-party system, over a hundred million US voters were able to send a very clear and nuanced message to the political system. How's that for a solution to a distributed co-ordination problem?

Well if your goal is "freedom" all-around then it would make perfect sense that sometimes that would lead to regulations that prevent things and other times it would lead to regulations that allow things. In each case the regulation does whatever is best for people's freedom?

I seriously can't understand how anyone could be opposed to this. Laws that help people and protect them from people who have power of them are... good. That's what laws are for.

The point is that some people will be priced out of the labor market because they are only allowed to exchange their labor at/above a set rate. If your labor is worth $10/hr because you have very little job experience, you will be unemployed in a jurisdiction where the minimum wage is $15/hr.

It is not "best for people's freedom" to have that restriction; it benefits some people (those who remain employed) and worse for others (those who are laid off or cannot get a job). And it's good for companies that make tools to automate jobs away (we've seen more fast food kiosks recently).

But the big picture point I was making is that it's silly to wave the flag of economic freedom if you don't actually embrace that concept wholeheartedly (which I am assuming she does not).

Very simplistic view. A worker at $15/hour isn’t as productive as someone who also makes $15/hour - that happens every day at all levels of the labor industry.

There is a net economic loss - externalities imposed on society - to people working at jobs where their basic needs aren’t being met. That comes in the cost of mental and physical health issues of the worker as well as their family through their inability to properly care for their children; which is a humanitarian issue but an economic one as well because those children don’t reach their full potential. Police, jails and health services all have this burden fall on them, and we all experience a lower quality of life as a result.

Ah, so better to have them be unemployed?

What point is there pretending that the giant debate about minimum wage doesn't exist? These points have been argued to death. It is not like everybody hasn't thought of "with a minimum wage people whose labor is worth <15$/hr won't be employed", and that's a first-order "naive" observation that is only useful when considered alongside all the other arguments that correct it.

If a person working can't afford basic expenses they're slightly better off than not working, locally, but at a policy level neither outcome is acceptable---and part of the solution is to ensure that there is a floor because, surprise, employers will pay powerless people less if they are allowed to do so. It is a tradeoff between "making some jobs uneconomical" versus "putting a floor on people's ability to be exploited", and the obvious next step of logic is to look for, given that that floor is in place, what other parts of the economy will transform around it? Well: some jobs are removed (bad maybe) but other jobs will pay more than they would (good maybe), plus some prices for things will go up (bad) but they go up in a way that allows people to make non-exploitative wages (good), which means that the much richer and greater-agency employers may have to share more profits with labor (good) which means that some business ventures might not be profitable anymore (maybe bad) but then they'll have to innovate to find more profitable ones (good)...

etc.

Pretending like there is one argument and ignoring the rest of the picture is ignorant and a waste of everyone's time.

""" Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions. """

Given in tech industry / FANG, most people earn above the $151,164 I wonder how they define "policy-making positions" ?

As I read the above sentence I understand that this is a binary and and not an either you earn that much or are in policy making positions?

This is nice but I think it's small potatoes compared to what could be achieved economically by decoupling healthcare from employment.

Yeah, this is a big one. How'd that happen in the first place?

You're looking for ERISA. And the ACA.

The whole system remains a disaster, just slightly less of a disaster than it was.

FDR froze wages during WWII while excluding insurance benefits.

That plus tax subsidies for third-party insurance and we ended up in the current mess.

I never knew that. Thanks.

A good example of disastrous 2nd order effects.

It's one less tool for abuse from employers in an otherwise imperfect system

This would be such a game changer for worker mobility and entrepreneurship.

Regardless of whether this is a good or bad outcome, I'm still totally non-plussed that the best we can do in the law is to ban "unfair" business practices. What exactly is "unfair"? We all know it when we see it, I suppose, but we don't all see things the same way.

More importantly, and especially if the Chevron doctrine falls, I don't see how the Congress can delegate so much power, so ambiguously, to the FTC. It seems like a "major questions" issue, especially if the FTC then uses this to regulate practices in a way that amounts to usurping Congress's power. For example, imagine that the FTC declared walled gardens an unfair practice. Or suppose the FTC set a maximum transaction fee (think of Apple here). Such examples would have such tremendous impact as to arguably require legislation rather than bureaucratic fiat.

There has to be a better way. Perhaps the best way would be for Congress to every term consider banning recent innovations in business practices that are "unfair" -- to do it before the businesses using those new practices can use them to gain so much power that Congress might have a hard time banning those practices later.

Unfortunately, what you, I, or any non-billionaire voter thinks is reasonable or not is impertinent to the "free speech" of super PAC corporate lobbyists and $5 ideological fringe zealots near total monopolization of legislative output. No amount of grassroots action, voting, or dumb insurrections can break through entrenched corruption that is in the tank for billionaires, Russia, QAnon, and militant evangelical Christian white suprematists.

Ah man, go outdoors... fly a kite or something.

I’m sure all the politicians in the United States, who champion the “right to work”, will of course support banning legal contracts which have the sole purpose of restricting your right to work.

I suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while.

(how bad? I don't know.)

Eh.... any impact will play out over a long period of time. Everything interesting happens on the margin, so I do agree with you that CA's laws around non-competes has had a beneficial impact on new business formation, and contributed to CA's economic growth. If this gets fully implemented, it will level the playing field with other states, but it will take some time (a decade would be my bet) for the impact to be fully felt.

I'd guess it will have the opposite effect as companies have one less big reason to avoid CA.

The reason no non-competes has helped CA is increasing startup formation. California has shown over the last 30-50 years that startup formation > attracting legacy businesses for growth. Unless that changes, California becoming less differentiated for startup formation but getting more legacy businesses is a bad trade for California.

One of the biggest issues I have with economists theory of comparative advantage is it ignores the self sustaining ecosystem aspects of economics.

Some places if you need someone to do specialized thing X you can just walk down the street. Most places you'll need to find someone willing to move and and take a big hit on his career options. So that deep bench of skilled labor and business resources is a big deal.

It's not bad when people are copying you, it signals that California is ahead of the curve on the issue and - upon further examination - others too like decriminalization of cannabis including removing it from background checks and drug testing for most employment, as well as certain tenant and landlord rights other states don't have.

Some of those non-competes were ridiculous with their "in perpetuity throughout the ends of the Universe" type wordplay, I'm surprised governments haven't been more vigilant on things like the stifling of entrepreneurial mobility, since it only helps their economies in the long run to do so.

Make it possible to disrupt, design economies for entrepreneurs as much as for corporations, and reap the benefits IMO. Let those big evil uglies get disrupted if they can't stay relevant or retain top talent.

It is bad for a state - at least in relative terms - if it has a good thing and suddenly every state has that good thing. It means that people that might have once moved to California for its laws will no longer do so.

That mentality is like saying "I'm only rich if others are poor" - you can of course still be well off, even when others occasionally catch up, and maybe better off if the tide lifts all boats. Also what you say doesn't go against the point about signaling. There's something to being on the cutting edge vs not.

> people that might have once moved to California for its laws will no longer do so

Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right?

I am making a diagnostic statement that is true. You are incorrectly inferring that I think this FTC action is therefore bad which I did not say anywhere.

> Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right?

Yes, that's why I expressed uncertainty on how bad this would be for California.

> You are incorrectly inferring that I think this is therefore bad which I did not say

Did you not say in your opener:

> It is bad for a state

I should have appended the other statement with /s

That is to say, people don't typically move to California because they love the legal system, it's typically for other reasons like our weather, economy (jobs), diversity, schools (difficult to find hard data, but just search for it and see what things you see listed). Even in the case where someone does base their moving decision on a state's stance on entrepreneurial mobility, California being many years ahead of this FTC decision would only make it a better candidate, not worse.

Others passing the same measures years later does not make California seem "bad" in comparison. It would signal that they're just ahead of the curve on the issue, so I think your take is flawed.

Yes, it is bad for the state of California. That is a different question from is it good or bad for the FTC to do this.

Most hilarious attempt at moving goalposts I've seen all week - this conversation has been about whether or not its bad for California the whole time, now you're switching to say whether or not its good for the FTC! Just funny

I said "I suspect this is bad for California" which I stand by. That statement says absolutely nothing about whether or not I think this is a good decision by the FTC. However, you treated it like I was against this action by the FTC and started arguing about why it's good to ban noncompetes and why it's good California is on the leading edge of such policies.

As it happens, I am very against noncompetes and I very much like this action by the FTC. You should have read more closely and shouldn't have assumed the opposite.

I have to remind you that your original comment was:

  It is bad for a state - at least in relative terms - if it has a good thing and suddenly every state has that good thing.

You were not talking about the FTC, you were talking about the state. Furthermore, the parent comment to which you're replying was:

  It's not bad when people are copying you, it signals that California is ahead of the curve on the issue...

which was a reply to

  I suspect this is bad for California

We were all - and especially you - very clearly talking about whether or not it's bad for California. Only later in the conversation did you start to shift your statements to seem as if you're talking about the FTC.

Moving the goalpost fallacy:

  Moving the goalposts is an informal fallacy in which evidence presented in response to a specific claim is dismissed and some other evidence is demanded.

e.g. "It might be bad for California, but not the FTC", "you can't read", "incorrectly inferring", "assuming" etc. Nope, none of those, just sticking to the topic.

Yes, I agree that I was always talking about whether this was good or bad for California. You then provided arguments against non-competes:

> Some of those non-competes were ridiculous with their "in perpetuity throughout the ends of the Universe" type wordplay, I'm surprised governments haven't been more vigilant on things like the stifling of entrepreneurial mobility, since it only helps their economies in the long run to do so.

> Make it possible to disrupt, design economies for entrepreneurs as much as for corporations, and reap the benefits IMO. Let those big evil uglies get disrupted if they can't stay relevant or retain top talent.

My point all along is that "is this a good thing for the FTC to do?" and "is the FTC doing this thing good for California" are separate questions. My initial comment only opined - in the negative direction - on the latter question which is why I have been perpetually confused about you arguing the former question.

It's not. California isn't the only municipality to have banned NCAs.

https://natlawreview.com/article/state-law-restrictive-coven...

It seems this also allows you to accept another job for a competitor "after hours".

I wonder how many companies will start offering "consulting" over brunch on a saturday to their competitors employees?

Sure, NDA's still apply, but have fun proving that if it's all verbal over brunch...

No. It explicitly does not do that.

"The Commission declines to extend the reach of the final rule to restraints on concurrent employment. Although several commenters raised this issue, the evidentiary record before the Commission at this time principally relates to post-employment restraints, not concurrent employment restraints. The fact that the Commission is not covering concurrent-employment restraints in this final rule does not represent a finding or determination as to whether these terms are beneficial or harmful to competition. The Commission relatedly clarifies that fixed-duration employment contracts, i.e., contracts between employers and workers whereby a worker agrees to remain employed with an employer for a fixed term and the employer agrees to employ the worker for that period, are not non-compete clauses under the final rule because they do not restrain post-employment conduct."

Do you folks think this is going to just sail right through?

Isn’t it premature to get excited before the proverbial ink is dry?

I’m very much in favor of a total ban of noncompete agreements.

That said, it seems like all the parties that stand to benefit from them will fight tooth and nail to see this doesn’t come to pass.

Thoughts?

I think its pretty clearly a ploy by the biden regime. It follows the same playbook as the student debt cancelation plot.

Use gray areas in the law to do things that it was obviously not intended for, then advertise how you did the thing, and then when it inevitably gets shut down because its not legal you blame the other side for killing it.

He is just playing with voters.

This is past the NPRM stage, if I am reading correctly, so final rule is getting published in the federal register. That is as baked as regulations get.

Currently:

0. Get hired by any MAANG or tech company of sufficient size outside of California.

1. Watch as the employment agreement is marked on the edges or in the metadata as being specifically tailored to that state with different protections and obligations than employment agreements signed by other workers doing the same job in different states.

2. Negotiate on onerous terms that are harmful to your interests.

I don't know if this is more of an "executive order" wish because if the FTC had the power, it probably would've done so already.

This is fantastic news. This will make USA even more innovative.

Can they also ban tipping culture?

Tipping culture stays because consumers don't want to pay what the product is worth. You reduce salaries and suddenly the food looks cheaper, and the "tip" is what they took out of the salaries. When restaurants end tipping, consumers revolt at the real prices.

That's a bunch of bullshit. The tips advantage the EMPLOYER because there is zero transparency to the consumer.

I have no idea how much every server I go to is making. How do I know if it's good or bad? How do I know if they have any benefits? Especially now that everyone wants a fucking tip. I buy some ice cream with my kids and I'm supposed to tip 20% to someone for scooping my ice cream? I have no idea if the server is making $15/hour or $4/hour to determine if the tip is part of their pay or pure bonus etc.

It's baffling you blame the consumer. Employers are the ones that don't want to pay what their employee is worth.

Honestly the entire country is broken because of simple issues of non-guaranteed healthcare and non-guaranteed time off etc. If basic human rights were guaranteed we wouldn't have to play this constant game of figuring out what to pay people at a minimum.

Countless American restaurants have experimented with removing tipping over the years. Nearly every single one of them goes back to tips, and the reason cited is the customers balk at the prices.

most of the rest of the world where tipping isn't the norm isn't revolting at real prices

Compared to outside the US, the US tipping culture is really bizarre. It's gotten to the point where baristas ask for a tip with their self checkout machines, before they having even made a drink. Tips were never meant to make up a difference as you allege, especially not when "tipping" before service, which is not a tip, but a donation or bribe.

You can ban tipping culture for yourself if you want. The government doesn't need to get involved.

One of the best decisions made. Non-competes are harmful and the problem they claim to solve can be resolved in other ways.

Why economists are so critical of non-competes - https://www.nominalnews.com/p/to-compete-or-non-compete

This is pretty big given the current stagnant job market. I expect a lot of startups to come from this change.

big news for amazon employees

If I have an existing non compete — what does this mean for me ? Is it invalid?

> Instead, under the final rule, employers will simply have to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future. To aid employers’ compliance with this requirement, the Commission has included model language in the final rule that employers can use to communicate to workers.

> Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions.

> The final rule will become effective 120 days after publication in the Federal Register.

Going off of the press release, it doesn't go into effect until 120 days after publication and doesn't apply to current senior executives which are defined as "workers earning more than $151,164 annually and who are in policy-making positions." I would also imagine that it will immediately be challenged in court.

Sr execs can’t start new noncompetes

How does a challenge work? Is the law valid until a ruling decides or is it put on pause?

A stay on the ruling could happen, but that would be up to the courts. Not a lawyer, but considering that there could be damages from the removal of non competes and someone leaving to get another job, there could be a stay on the order rather than letting it go into effect. While it works its way up the court system.

I was under the impression that workers earning less than $151,164 annually usually don't have noncompetes anyway? Sounds like a lot of people will get bucketed into "senior executives" group. At least new noncompetes can't be created.

I've know places that pay 1/3 of that and have noncompetes.

Although, someone in this type of a role can often get away with ignoring noncompetes as long as they're smart about how they exit.

>Although, someone in this type of a role can often get away with ignoring noncompetes as long as they're smart about how they exit.

Simply put though, they shouldn't have to.

I absolutely agree, but I make it a point to mention their limits of enforceability whenever I can because it is information worth spreading for those worried about one.

Non competes are everywhere. Famous case with Prudential Security[0] where they had everyone sign non competes, that includes minimum wage workers, and they enforced them, which put an outsized strain on the minimum wage workers in particular.

Its a harmful practice across the board.

[0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...

That's the motivation behind this rule. About one in six food outlets were demanding non-compete terms in employment, to prevent their employees from quitting to work for higher-paying outlets.[1] (Not McD and Burger King; mostly the smaller ones.)

[1] https://thecounter.org/biden-targeting-non-compete-agreement...

Just a thought: I think patents do tend to favor the little guys. Coco cola has never had to patent their recipe, as it's a trade secret. I believe ASML and TSMC don't patent some of their technology, since it's a trade secret. They don't want to patent it, as that would reveal details. Also, iirc, if you can patent something that is shown to significantly improve on a previous patent, you can get a patent for that.

That's not to say that patents can't be abused—they certainly can—but it can give a smaller person leverage.

Is this just clarifying existing case law? When working on contracts with my attorney he mentioned on multiple occasions that noncompetes were unenforceable. I'm in Michigan for whatever that is worth.

Will this lead to companies getting creative with other types of agreements?

For example, I could see this leading to overreaching non-solicitation agreements, where you can't approach "any person/company ever added to our CRM" (for a period of time), thereby effectively ending any chance of you have of building or working for a competitor.

Many companies already try this approach

Thank you the FTC. The very idea of non-competes clauses in a contract is absurd and anti right to quit or to work.

This is going to get challenged and the conservative majority supreme court will overrule them. 100%

Would you mind linking to some of examples of their prior decisions that makes you think that? I am curious.

And this is just the start of why Apple cancelled Jon Stewart over a purported Lina Khan interview.

Lina Khan, AI, and China.

Apple+ is like MSNBC: they only want incrementalist pseudo-agitators rather than those who speak truth to power. (MSNBC has a history of firing hosts who Washington king makers or Comcast executives disapprove of.)

I'm not a senior executive, but I'm curious about:

"existing noncompetes for senior executives can remain in force."

So what happens to these people, are they stuck with the noncompete forever?

so if they leave, they can still be sued?

or is it that they can't start a competing business at the same time?

-best- -reason- -ever-:

The Commission also finds that instead of using noncompetes to lock in workers, employers that wish to retain employees can compete on the merits for the worker’s labor services by improving wages and working conditions.

This would definitely affect me, but I guess I should wait until it goes into effect and then someone else tests the law? I can't afford to get sued by my former employer.

One last economic stimulus for startup lawyers before getting replaced by Mistral + RAG + your jurisdiction's .txt files and PDFs :D

Mistral (or even Mixtral) + RAG + txt/pdf files of law is nowhere close to usable to replace lawyers, and probably wouldn’t even provide reliable legal tooling.

(A decent LLM + RAG + LexisNexis or Westlaw’s proprietary extremely extensively human annotated datasets of constutitons, statutes, case law, precedent, and scholarship, OTOH, would likely be ingredients from which a powerful professional tool could be built.)

It was said in jest, but you went a little overboard with:

> wouldn’t even provide reliable legal tooling.

There are already funded companies and even hobbyists in Discords I'm in doing this with RAG, also patient medical docs, etc. it's really great for that use case of specific document data like laws or a patient's medical history.

Here are some AI assistants that I created that can interpret law, examine medical docs, help you buy shampoo, or even give you price and parts comparisons at your local auto parts store: https://github.com/bennyschmidt/ragdoll-studio/tree/master/e...

I say said in jest because (and this is counter to your second point) it very likely will not replace lawyers, but become tooling for lawyers.

Is this really legal? Do they have the authority to do this? I’m not against it. I’m just shocked they are able to do it.

My prediction – this will be litigated in courts for the next few years until eventually being struck down by the supreme court in a 6-3 decision. And if Trump becomes president we won't even need to wait that long.

Although I agree with noncompetes going away or being limited, I don’t feel good about agencies making broad changes that feel like they should be the outcome of a legislative process. I wonder if this will be challenged.

Also - what happens in situation where someone is leaving one company to work for a direct competitor? How do noncompetes function there to prevent sharing of confidential information or trade secrets that will help the competitor?

I see a lot of discussion about interstate vs intrastate commerce/non-competes. I would bet the farm that all these businesses have an EIN, an employer identification number, which is issued by the federal government and thus would be enough to show nexus and jurisdiction for federal regulation and allowing the FTC to take action here.

I’m curious if it’s actually legal for them to ban noncompetes.

It's about time! Nice to hear some good news for a change!

I think the FAANGs are gonna come out on this one and take it all the way to the supreme court. I don't see this sticking at all, especially with the current SCOTUS

CA already makes non-competes unenforceable and aren't most FAANG employees in CA?

CA isn't federal law and this involves the FTC. Sure they could have taken them before but I think a nation wide limit might stir up the hornet's nest. FAANG have offices and data centers all over the country

But the headquarters are mostly CA

To my knowledge, none of the FAANGs utilize noncompetes, because they are pretty much completely illegal in California, including ones that were signed out of state. It's too much of a headache for something that can be invalidated simply by moving to California.

Quite the opposite, I suspect one of the reasons FAANGs are successful is the lack of non-compete in CA.

Folks can easily hop around, ask for higher wages and take their skills to a new company that directly competes with the old.

There's a heavy competition among the tech companies both for talent and for their businesses

Good, thank god, I have a non compete...

The ban of non-competes is Silicon Valley’s not so secret advantage. Its literally part of its origin story with the Fair Children companies like Intel.

The next few years will be interesting. We’ll see if any other metro outside of California will offer it real competition now that the ban on non-competes is national.

Why now?

Political will.

Because excesses finally became so ridiculously over the top that it was finally politically viable to address it. Remember, chain restaurants have started using non-competes to ban servers and cooks from moving to another employer. The situation is finally in the eyes of the general public.

That's just absurd. Non-competes should never apply to commodity-skill jobs. I wonder how often they were ever enforced?

Enforcement does not matter. It is the chilling threat an employer can use against someone without options.

If you are flipping burgers for minimum wage and your boss says they can sue you if you leave for a competitor, are you willing to chance it?

If I had no real net worth, yeah probably. What are they going to take? I'd like to see a judge's reaction to a non-compete on a burger-flipping job. Non-competes already get voided if they are too restrictive; you can't prevent someone from earning a living. But yeah, I can see a young kid might be intimidated.

They absolutely were, such in the case of Prudential Security[0]

[0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...

> Remember, chain restaurants have started using non-competes to ban servers and cooks from moving to another employer.

It's so dystopian that this was ever a thing.

Non-competes were supposed to exist to prevent employees from bringing trade secrets to competitors. Instead, they were used to trap people in poorly paying jobs.

I had not heard about the chain restaurants; that is one of the scummiest things I've ever heard and it angers me that it takes place.

Never forget: college degree requirements, high housing costs, union busting, salary secrecy, return to office, sub-inflationary raises, 1099 contractors and "temporary" permanent workers, outsourcing, H-1B visas, NCAs, and lack of universal healthcare are just some of the ways corporations lord power over employees to reduce wages and worsen income inequality. (Oh and illegal things like wage theft.)

Lina has been pretty busy, but she's been making progress on a large backlog of bad corporate behavior.

What were these guys up to? https://www.ftc.gov/about-ftc/commissioners-staff/former-com...

> What were these guys up to?

Not losing in court every other month.

Because we have a Democratic administration that is taking this stuff seriously.

Seriously, though. Why now?

Because that administration needs red meat to activate their base ahead of an election cycle

Same as student loans. It’s election season.

Oh no, a sneaky politician trying to win my vote by making material changes that improve my life!

They could/should have been doing this stuff from day one tho not waiting until the 11th hour.

See my comment above; administrative rules generally take a couple of years to work their way through the system before they can take effect.

But.. why did you have to wait so long? Politicians should have been making material changes to improve your life without it being an election year. We should demand better of public servants.

New rules take time. Depending on the complexity of the regulation it can take a year or two to write (lots of internal reviews) and then there's a long statutorily-required public comment period during which an agency is required to read and address every comment. For this regulation, the public comment period appeared to start Jan 8, 2023.

You can see the public history here: https://www.regulations.gov/docket/FTC-2023-0007/document

Election year

Which is good, right? Politicians serving the interest of their constituents in the hopes of being re-elected is, like, the intended operation of democracy.

If only we could have an election year, every year, without all the annoying ads and stress.

Lina Khan

Why not now?

Lot's of devs will be surprised to discover they are in policy making positions.

New policy: no more non-competes

Unlikely they are in a policy making position.

You're missing the subtle sarcasm here. OP is implying that companies will deem engineers making $150k+ as making policy decisions in order to continue enforcing the existing non-competes they have most likely signed.

I wish I was being sarcastic! IME the sort of people putting non-competes in contracts will claim things like "programming is simply the act of defining company policy in machine form".

That type of wording reduces programming to a mere policy-translation job, not a policy-making job.

I'd imagine that would be considered a role change and a new non-compete, and thus forbidden. That's definitely how I'd approach it if someone told me I was suddenly an exec. "Sweet, sounds good. Send over the new employment contract, then! With a 10% raise, of course."

Yep, this would impact basically any dev at Microsoft, Apple, Facebook, etc. From my own point of view (at MS), policy making decision do basically happen at my/our level too, unless policy is on the tier of "buyout Infection.AI talent". Any kind of planning research/work could be considered policy. Decisions like what kind of framework or listing to use? Policy!

I suspect that "policy-making positions" is a term of art that is more narrowly defined than it looks and that it'll actually be difficult or impossible to abuse it enough to made it apply to SWEs. Most likely big 4 accounting firms have a definition of what that means and it is part of accounting and auditing standards. At any rate they'd need to first abuse it to apply to managers who are below VP levels.

It's defined in the rule...

Yeah, so its based on the SEC Rule 3b-7 definition of a company officer, only with some changes to make it even more restrictive to senior executives.

They're not going to be able to claim that a SWE is now the VP in charge of changing lightbulbs and is now a policy-making position. There is a whole lot of text in the rule about what a "policy making position" is, and I'm certain that there is a considerable amount of legal and accounting history behind that SEC Rule which will act as precedent.

> The Commission also finds that instead of using noncompetes to lock in workers, employers that wish to retain employees can compete on the merits for the worker’s labor services by improving wages and working conditions.

I absolutely love this.

Hogwash! I demand a free market for my business, but a closed market for my assets.

Privatized gains, public losses. It is the capitalist way.

I didn't know the FTC was this savage lol

I do too and it feels to some extent that its about sending a message. I worked at Citadel, and they had these posters about Integrity, Winning and being a meritocracy and all that but their ever more constraining non-competes completely flew in the face of it and it was upon them putting one of those agreements on me that I started to become disillusioned with the firm (around the same time that I found that Ken Griffin was donating to Trump's campaign).

I tried to negotiate to get them to at least agree making the non-compete periods pay out my full comp and not just base, but they absolutely refused to budge an inch. Some people I knew there had non-competes locked in at their base salary when they started, which in some cases was 10+ years ago, meaning that it was a relatively paltry amount. They also had a clause in them that stipulated that it was 100% at the discretion of the firm as to whether they would enforce it or not- meaning that it wasn't even a guaranteed paycheck if you left... they would decide- and only after you left or were fired- if they were going to enforce it, leaving you in limbo until they made their decision.

F non-competes. Mine worked out okay, my wife got burned hard on them and it took her career at least 2 years to recover from hers.

I am 100% for this, but it makes me sad that the legislative branch has nearly completely abandoned its duty to pass laws in favor of granting the executive branch the authority to regulate just about everything.

This is a problem for two main reasons:

1. The executive branch can unilaterally revoke these regulations, making them more volatile. Maybe my non-compete is invalid today, but will it be in 4 years when I actually want to change jobs? Changing a law takes approval of either majority of both chambers plus the president, or a supermajority of both chambers.

2. It lowers the stakes in congress, which I believe causes more misbehavior. When the stakes are actually high enough, congress tends to get things done. When the stakes are low, congress grandstands for reelection.

> The executive branch can unilaterally revoke these regulations

The US Constitution + amendments delineates the powers of the branches. Is the situation you describe possibly a window in time when executive branch constitutional overreach has not been yet challenged?

[ edit : great explanations below -> sincere thanks ]

It’s not overreach, it’s delegation by Congress to the executive parent is discussing. Congress often gives the executive the right to regulate things instead of regulating it themselves, and it’s a controversial topic.

Congress created the FTC, congress could eliminate or curtail the FTC's power.

Some have argued that it's unconstitutional for congress to give away its power (even conditionally) in this way, but AFAIK that's a rather fringe legal theory. Certainly the FTC has existed for over 100 years at this point, so there's been plenty of time to challenge it.

The same fringe legal theory that is likely to win in the Chevron Deference case[0] before the Supreme court, which will gut agencies (including the FTCs) ability to regulate things in this manner?

[0]: https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...

Not even remotely the same legal theory; the theory there is that the courts should be able to review regulations the agencies make for e.g. if there were less burdensome ways to accomplish the same goal even when the regulations themselves are "reasonable"

The major questions doctrine announced in W. Virginia vs. EPA, and the upcoming, likely reversal of Chevron together will greatly limit the Congress' ability delegate power broadly to the Executive. You might call that a "fringe legal theory", but it seems poised to be the legal theory of the land.

Live by regulation, die by regulation. GP's point is that since this rule is made by this Administration, the next Administration could undo it. GP is right. As long as one Administration has the power delegated to it by Congress, and so does the next one, then the next one can change and even reverse the previous one(s)' regulations.

The court recently found (in W. Virginia vs. EPA) that Congress cannot delegate power in "major questions". This rule might not be a "major question", but given the vagueness of the statutory foundation of the FTC, it's possible that all of the FTC's work is on thin ice. The Court would likely not rule the whole FTC and its past regulations unconstitutional, but it might start looking askance at regulations that seem remotely like major questions.

Is this rule a "major question"? I don't know, but I'm inclined to think "no".

While your points are good, on the other hand, Congress at this point is totally broken, it’s hard to imagine it becoming unbroken (since it would require an amendment which is usually passed by Congress and they have no desire to make things harder for themselves), and it’s beholden to special interests in a way that the executive branch often isn’t.

So at least this way, things can get done.

> Congress at this point is totally broken

If Congress can delegate authority at will and with tremendous vagueness vagueness (as in the case of the FTC) then that allows Congress to be more disfunctional. If the Court reverses Chevron and later guts the FTC then Congress will have to get its act together -- they might not, but if they do then the Court will have helped us enormously.

I don’t agree with that mental model because it assumes Congress has to make sure the job gets done. They don’t. They can be as dysfunctional as they want.

Polls show that the vast majority of people are unhappy with Congress, and yet they get re-elected at very high rates. There’s no real reason to suspect that their job performance had anything to do with getting elected anymore.

They could very easily just fail to regulate everything that actually needs it. The alternative to the FTC isn’t Congress doing the regulation, it’s no regulation at all.

Perhaps I’m overly pessimistic but I think we’ve gotten to a point where gerrymandering has just broken Congress irreparably by divorcing their job security from their effectiveness. I hope I’m wrong and you’re right.

Perhaps we have reached the scalability limit of the Founders' scheme.

> completely abandoned its duty to pass laws

That's the duty of the legislature? To make more rules?

Pass, repeal, and revise laws, yes. That's literally what the word "legislator" means.

Legislator is a person that can write laws, it does not mean it's their duty to write laws. In the United States their duty is to uphold the constitution and represent their constituents. Not to create more rules.

Unless their constituents think the current laws of the land are 100% perfect, then representing their constituents would involve passing laws.

And they would need to convince enough other representatives and the constituents those representatives represent, which they can't because the country is extremely divided.

I don't think the point is they have to spend their time writing more rules if they don't feel they have to, but they are the ones who would do it: with respect to the rules and policies and procedures of our government, we have a legislative branch that is supposed to draft and maintain them, an executive branch that is supposed to implement and enforce them, and a judicial branch that is supposed to interpret and adjudicate them... only, the boundary between the first and second (and arguably also the second and third) of those branches is a bit blurred as congress keeps writing vague laws that say "there shall be an agency which will prevent X" where X is something extremely high-level like "unfair business practices" and then the executive branch is forced to figure out what that means, and in the process is effectively doing the wrong jobs :/.

This has been a problem for decades. Congress' focus is more on self-preservation than good policy. For example, granting abortion rights through case law was always incredibly tenuous and now that's been proven.

I predict this will be kicked around the executive branch and bounced in courts. Even if it stands, like you point out, future administrations can just revoke it. All the while, Congress should be taking action and codifying this.

Noncompetes for fast food workers are totally unconscionable.

whoa, that existed? sheesh

Yes. It's totally repulsive, and has no reasonable justification to exist.

Yes, Jimmy John’s did this and got in trouble:

https://www.reuters.com/article/idUSKBN13W2J9/

The best time to do this was 50 years ago, but the second best time is now. Congrats and thanks to anyone involved in the effort!

This is a stunning change. We already have a uniquely strong economy. If the US keeps trending toward tackling anti-competitive behavior, we may avoid a downturn for quite awhile!

Anyone can have a “strong economy” if they can print $2T a year. The question is for how long.

Good! If you don't want your SMEs taking your secret sauce to a better employer, then be the better employer.

Trade secrets and NDAs can still be enforced.

everyone who had a noncompete should be compensated.

How does this not have any discussion? Banning noncompetes was one of the biggest drivers of innovation in California that allowed Silicon Valley to outperform other tech hubs.

Just out of curiosity, were any non-competes ever actually enforced by the courts for a reason other than stealing clients or trade secrets?

https://appleinsider.com/articles/23/09/25/rivos-countersues...

Phillip Shoemaker. https://www.theverge.com/2019/5/29/18643868/apple-app-store-...

A case that isn't even a tech company: Prudential Security enforced non competes against minimum wage security guards[0]

[0]: https://www.cbsnews.com/news/noncompete-agreement-feds-sue-3...

Does anyone know the history of noncompetes? It seems like a case of Tacit Collusion[1]. But if there is no competitive advantage to the noncompete, how did it catch on?

1. https://en.wikipedia.org/wiki/Tacit_collusion

Does this change a lot for many people?

This doesn't mean you can scurry off a just build a competing product/service to your existing employer. You probably also have NDA and/or IP agreements too.

> The Commission found that employers have several alternatives to noncompetes that still enable firms to protect their investments without having to enforce a noncompete.

> Trade secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Researchers estimate that over 95% of workers with a noncompete already have an NDA.

Trade secrets would generally include anything from code, approaches to problems, product roadmaps, customer lists, etc (so spans not only engineering... but also product, sales, etc).

I've often wondered how often noncompetes get enforced/litigated.

I had to sign a noncompete once, in order to get a severance package when the company was going out of business. I asked a lawyer about it, who said don't worry about it, there isn't going to be anyone who will ever enforce it.

A buddy of mine worked in a niche industry and their noncompete didn’t allow them to go to competitors, even to do something different and in an arm of the competitor that was not directly competitive with the company. The company spent a lot of time and resources suing people and threatening litigation. Enough so that employees desire to leave and still work in the industry was chilled and the competitors in the industry started becoming very reluctant to hire from my buddy’s company.

It was pretty messed up and this rule fixes that awful situation.

You already cannot use trade secrets from your last job at a new role. That's in pretty much every single employment agreement, spelled out clearly. That does not mean you cannot go work for a competitor and do something new there.

Removing the risk of legal consequence simply for changing who you sell your labor to is a big change for many people.

Yes, as this eliminates the threat of lawsuit I've had made against me for just changing jobs (multiple times).

Noncompete clauses have often been used by employers to scare their employees into thinking they'll be sued just for simply finding a new job at a different company.

Banning noncompetes discourages companies from training workers, since they can leave immediately after their training is over. It also impinges on worker freedom. Currently I can apply for jobs with and without noncompetes, and if the job with the noncompete pays substantially more or is more attractive in some other way, I can take it. The FTC rule would deprive me of that choice.

I have been hired to write software to implement investment strategies. My noncompete prevents me from leaving and immediately taking a job at company that invests in the same markets. That is a reasonable way for the company to protect its intellectual property.

Using investment strategies developed at Company A to make money for Company B would likely be a violation of your NDA. Even if you didn't use anything you learned at Company B, you might still expect a trade secrets lawsuit if they really suspect you did (printing out docs, storing docs off network, etc.) There already is plenty that companies can do to protect trade secrets from leaving with employees that don't require you to find a new career field. Like maybe Company A can better separate the work so that every software engineer doesn't need to have access to the secret sauce or simply making the job more attractive so that the ones with the secret sauce don't feel the need to leave at all. Why would a company bother to work hard to retain you if they know that leaving would involve taking a pay cut, relocating, or having to restart your career elsewhere? Employers may offer more initially when hiring non-compete workers but there's little incentive to grow their wages. As for training costs, many companies already require extra years of service for educational assistance. Simply make the employee pay back any training costs if they voluntarily leave for a new job within 6 months after initial training is concluded.

I see the point, but wouldn't this new rule also force employers to pay more to prevent workers from leaving in the first place? Employees won't leave if they are well compensated.

You can have training repayment and non-disclosure clauses in contracts, leaving cost recovery and legal remedies for employers.

Takee your investment industry example - a non-compete could prevent you from taking a lucrative position in a competitor of your current employer, doing completely unrelated work like writing software for their settlement system. I would rather have the freedom to choose where I work.

    > My noncompete prevents me from leaving and immediately taking a job at company that invests in the same markets. That is a reasonable way for the company to protect its intellectual property.

Eliminating non-compete doesn't mean you can steal intellectual property; it just means that they can't prevent you from working at a competitor. The IP is still protected under existing laws.

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