US judge throws out FTC's ban on non-compete agreements
ft.com
ft.com
>"A sweeping prohibition of noncompete agreements by the FTC was an unlawful extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage," U.S. Chamber of Commerce President and CEO Suzanne Clark said in a statement.
If you ever wondered what kind of moron would get this completely backwards and think that non-compete agreements give Americans a competitive advantage, now you know.
Brown is a member of ... the Federalist Society.
I think you are really confused about theory and reality.
But if I give you a good faith excuse, often time we prescibe evil motives to more mundane human heuristics like "All my friends tell me great things about small business owners and as such, we should try to protect their ability to hire people".
See, some of us know how to properly understand the banality of evil.
Is it perfect? No, probably not. But repealing it would likely increase the budget deficit according to the CBO and put a large number of folks into a much worse situation than they are in now.
The battle over cost was left for another day.
But beyond that... has average life expectancy measurably increased because of this "extra" insurance coverage?
Has the number of medical-related bankruptcies measurably decreased as a result of the expanded coverage?
I can't find solid data but everything I've seen suggests that those haven't really changed at all.
Given that, in the grand scheme of things, has anything actually improved for us, collectively? Healthcare is much more expensive now, but maybe that would have happened regardless.
Where on the chart did Obamacare get passed / implemented?
It was always about access, not cost. That pissed me off back then that single payer was not even on the table in negotiations. It was watered down to get it through, but I am still thankful that something got passed... I would still have a messed up rotator cuff from when I was 15 otherwise.
It is insane to me you are going to sit there and try to act otherwise.
https://www.kff.org/wp-content/uploads/2023/10/Figure-1-12.p...
It should be obvious, right?
I don't deny that it sucks that health insurance is so expensive. Of course it sucks. And I have tons of empathy for anyone who is suffering under the expenses. But blaming our current costs on PPACA is just not supported by the evidence I'm seeing. If you have other evidence I should look at, I welcome it.
If everyone is ensured, no matter the pre-existinf conditions, people take more risks, live more dangerously, drive a little faster, eat a bit worse, etc. Nobody ever talks about the hidden consequences of these oh so wonderful government programs.
This creates an incentive to pass laws prohibiting products and lifestyles deemed unhealthy.
Anecdotally, when the ACA marketplace went live, and I purchased individually, my health insurance costs decreased for a year (no subsidy)
Are you ok? Did you just wake up from a coma and suffering from some selective amnesia? Have you been living under a rock? Maybe you missed any and all libertarian content? Or the articles about how safety precautions give a sense of safety which result in more risky behaviors? (From bicycle helmets to OSHA stuff.) But maybe you have ran into articles about how car safety standards act as a birth-rate suppressor? No?
Spare us this "why nobody thinks of the consequences".
Premiums are going up because healthcare costs are going up, because there's a growing number of elderly, also because all services related costs are going up. (Because the Baumol effect, and so on.) Not to mention that as economic surplus grows (ie. GDP grows) people are willing and able to spend more on healthcare.
...
Check veterinary service costs and pet insurance premiums. Obama did that too?
They all have to report yoy increase of earnings right?
So there enjoy your capitalistic health insurance. Which by the way dumps you once you are old, then I have to pay for you too despite the fact it is you who wanted a completely deregulated health insurance market.
It's a prisoner's dilemma because even though the economy would be better if non-competes were banned, any individual business makes more money by forcing employees to sign one.
Workers' rights need to be an essential part of any trade agreement specifically to prevent a scenario where the United States can't legislate workers' rights because it'll put American companies at a disadvantage globally.
https://crsreports.congress.gov/product/pdf/IF/IF10046/24
This is already being done with USMCA (NAFTA replacement) enshrining collective bargaining rights in the auto industry, so companies won't outsource to avoid dealing with a union.
Maybe banning non-competes is something the USA should prioritize in future trade agreements. That's something that would address the problem she's pointing out and benefit the economy.
Counter point, you are conflating each individual business profits and motives for the profitability of the economy and country. But each business doesn't exist in an a vacuum, but inhabits the same environment for getting workers. By making it easier to start new companies, and to compete, by banning non competes, the surviving business might actually be more profitable than the ones before.
Example: California doesn't have non compete, and it rules the tech world, with a lot of the more profitable tech companies there. While each individual company might benefit if it was suddenly allowed to do non competes, they benefit way more for being located in such a center for innovation.
That was mentioned in the second paragraph.
> It's a prisoner's dilemma because even though the economy would be better if non-competes were banned, any individual business makes more money by forcing employees to sign one.
Global warming is the same thing. If everyone pollutes, we all die and the world ends. Individually however, if I'm in a world where everyone is burning coal, I don't see any gain to setting up my own wind turbine. Meanwhile everyone who kept burning coal has a slightly better existence until we all die a horrible death. The flipside is also true, if I'm the only one burning coal in a world of wind turbines, I won't have a significant effect on the climate and I get cheaper energy.
The economic solution to this is regulating greenhouse gas emissions so nobody can gain an advantage from burning coal. We all live and businesses make more money (because Earth will still exist to make money on).
It's also possible to do this with non-competes. If a world without them is economically better, we need to put our efforts into banning them globally. It doesn't make sense to only ban them in the US or Canada, because companies can just outsource to where it's acceptable.
I think everyone does really. In fact, I'd say this is the "big idea" behind conservative fiscal policy as a whole. This assumption is the seed of it all.
Since that basically happen approximately never, noncompete agreements without pay should be illegal.
If they did have to pay, it could definitely be advantageous to pay employees not to leave, on a selective basis.
The first statement is largely true, the second statement is not. Somebody has to buy the stuff you make. At the level of an individual company this isn't a thing -- Ford isn't really going to sell a big percentage of its cars to its own employees -- but at the national level it is, because Ford does sell a substantial percentage of its cars to Americans. And it's easier for companies to sell domestically than internationally because domestic customers will favor them and foreign governments use protectionism to varying degrees.
The reason that most "labor rights" make companies uncompetitive is that they're inefficient. Requiring companies to provide specific benefits, rather than money with which employees can buy whatever they want, lowers real compensation because wages adjust to compensate (typically by rising slower than global GDP) and then you're stuck with whatever version of the benefit the employer provides instead of having the option to take the money instead and being able to choose yourself in a competitive market. Which raises the company's costs relative to their perceived attractiveness to workers. Unions for structural reasons typically prioritize things like seniority rules that aren't to the benefit of all their members (namely the newest ones) and in turn make it hard for the company to attract new talents who don't want to wait 30 years to get the salary a foreign competitor can offer today. This is why, when given the choice between higher pay and some other employer-provided benefit, people typically take the money. But the rules get passed because they're sold as a free lunch, and then industries decline there because they're not.
Non-competes are the opposite because they have a similar effect on the industry as a whole as do the inefficient labor rules, i.e. they increase the costs of other companies in the same jurisdiction. John was working for company A and wants to work for company B, but isn't allowed to, so company B have to hire Chris, who isn't as good -- otherwise company B would have hired him to begin with. It hurts the workers and every company except for company A. Then company A (or as a group, large incumbents) go to the government to lobby to let them do this even though it hurts the industry and country as a whole.
In general, anti-trust rules improve the competitiveness of a country's industries, because they improve the competitive fitness of its companies and allow them to survive when new foreign competitors come who would eat the lunch of a wasteful bureaucratic incumbent that isn't accustomed to competitive pressure but can't touch a hundred nimble entrepreneurs who are already doing what it takes to win the customer's business in the face of stiff competition. It turns out this is also the same thing that actually helps workers.
https://www.google.com/search?q=non-compete+route+128+vs+sil...
How could an agreement that prevents a worker from switching to other companies that would be the most interested in hiring them possibly benefit the worker?
Do they really think American workers are moving en masse to EU/Asia or something? I don't even think they work that well if you emigrate.
We know the real reason. But PR at least needs to pretend to have a good excuse.
The proposed noncompete had a 10-year lockup for a freelance contract…obviously nonsense. But it was so helpful to say “these aren’t sticking around so let’s just cut it out.”
These changes make a big difference in encouraging entrepreneurs and helping our economy, as well as just reducing stress for a lot of people.
Point being, many/most companies know these clauses are insane, but they see no harm in try to throw in the kitchen sink in their contracts because they know a lot of people won't push back. But for the ones the do push back (in a reasonable fashion), decent companies will say "fine".
But even that can easily be unreasonable on its own. For example, think of people working at places like Google, Unilever or some other large entity with its hands it every industry you can imagine because just about everyone is their direct competitor in some industry or another.
If you're specialized to that thing, you're out of well paying work for a year.
If there's such a contract, the company should be paying you either equivalent or more to prevent you from working to your best ability
I once has an employer try to get me to agree to a broad noncompete clause for an unskilled laboring job. When I questioned it, he just deleted it. If he hadn't, I'd have turned down the job because it sounded terrible.
However, I wasn't commenting on my opinion, just the opinions of my local court system.
In many countries if you want to have an employee bound by a non-compete, you have to compensate the employee for that restriction ('garden pay', I believe?), because by restricting who they can work for, you're by that very nature restricting their ability to seek the most competitive pay. Not to mention, if going to work for a competitor would cost you, say, $1M - then surely you can afford to pay them $50k; that's the deal of the century, in fact! Allowing corporations to foist the cost of a non-compete onto the employee is a pretty American concept.
"But but otherwise it would be really expensive!", I hear the Entreprebros screech. "I couldn't possibly be in business! Muh Burn Rate!"
My response is, "...but I thought you said the employee going to work for a competitor is such a huge financial/competitive threat to your business that you should be allowed to restrict how they can make a living to be able to afford food, housing, transportation, to care for their family members, and so on? Which is it?"...and then I point to all their European competitors who seem to be doing just fine with these supposedly infeasible prohibitions on uncompensated non-competes (and requirements around greater benefits, lower work hours, greater workplace rights, etc.)
Technically non-competes should be illegal simply because the contract bears no benefit or compensation to the employee in exchange for the restrictions imposed that wildly benefit their employer. There's zero benefit to working for an employer who requires one versus ones who do not, but the employer gains (by the very nature of the claim of how necessary the noncompete is!) a great deal.
The situation is absurd. Imagine McDonalds requiring their burger-flippers to not work for any competitors because those competitors might benefit from proprietary McDonalds business practices, training, etc. We'd laugh them right out of the building and point out how stupid it is because all other things aside, where the fuck else is a McDonalds burger-flipper supposed to work, except a place that is likely a competitor to McDonalds?
But Google, MS, Amazon, et al do it to tech workers - even ones who work positions that are compensated an order of magnitude less than engineering talent - datacenter technicians, and it's okay?
If someone asks me to not work for anyone making widgets that measure the sun's IR emissions at 2222nm with a semiconductor, they can make that 10 years sure.
If they want me to not work for anyone that is competitive with General Electric, 10 seconds is too long because I'll be in breach as soon as I sign it...
Makes the -plantation- er I mean business owners very competitive.
Making rules like this is Congress's job not just because some judge says so—it's Congress's job because only Congress can make laws that aren't perpetually at risk of being stripped out when a new party takes power.
I want non-competes to be banned permanently, not just banned until the political winds shift by 5%.
Even if you think the back and forth isn't worthwhile, it's actually not politically avoidable because the other party will still play this game and you end up with a back and forth around an equilibrium further from what you might want.
Both major parties benefit from the status quo of Congress being incapable and everything being ephemeral—each can promise their stakeholders that if you elect them this cycle they'll make sure that things go their way for this cycle. The ephemeral nature of the "win" is valuable because if they actually made a permanent fix the urgency to elect party Y would be gone. It's the subscription model applied to governance.
My theory is that if you remove the administrative law game, things will quickly get broken enough that stakeholders will demand better, so both parties will get their act together and actually try to pass legislation again.
It's entirely possible that I'm wrong (and cue the inevitable "it's not both sides" comments), but unless something unexpected happens to the court system it looks like we'll get to see in a few years.
For example, now that the right has the supreme court, it has claimed a lot of extra power over regulatory agencies, elections and even congress. This effectively makes a right wing body the final arbiter; and end run over attempts to get the system working honestly.
I believe reform needs to be a lot more hands on to get things back on track.
If we want laws then we get congress to pass laws. This is how our system works. Congress' dysfunction is not an excuse to end-run around our system, it's a reason to fix congress.
Out of curiosity, is there a point in time where things were clearly "on track"?
One party doesn't believe that government should be making laws at all though.
Which means that the country, through their elected legislature, has not agreed on a policy. Not coming to a new decision doesn’t mean the executive branch gets carte blanche to make up the rules.
Not coming to an agreement means the country is not at enough of an agreement. If it’s truly popular it should pass Congress. If it’s not, it won’t.
And if it’s popular and it doesn’t pass, then there’s always elections to change Congress and try again.
The slow pace is a feature, not a bug.
The 50/50 part of it - still there is federal vs state jurisdiction. If there's stuff on federal jurisdiction that's just a mess as far as congress never fixing it (say - immigration), states can do this and that about it somewhat (sanctuary city) - they can manage some rotten branches - but they can't touch the rotten root of federal jurisdiction
Marijuana legalization is a great example. It's been consensus that it shouldn't have been as illegal as it was for decades yet it's only been consensus to treat it mostly like alcohol in a handful of states.
The consensus of "something should be done" can predate the consensus of "this should be done" by years or decades, especially nationally.
No, it means that the country has not agreed to the standard demanded by the constitution, which is an insanely high bar not required by virtually any other ostensibly democratic country.
The constitution is obsolete, undemocratic, and does not work in practice. Thus attempts to subvert it are completely legitimate. I don't understand the point of view that if the constitution says we have to do something a certain way, then we must do it that way, because those are The Rules, as if the constitution is some kind of law of nature.
Every use of "solutions" in the above comment originally read as "laws", which is what I identified as a nonsensical meme.
To wit:
* Immigration law
* Laws regarding who you can and can't marry
* Laws preventing access to a number of health procedures
* Laws regarding what types of substances you can put into yourself
* Laws forcing big platforms to not censor speech
* Laws enshrining churches as protected institutions
And on and on and on and on. If you listen to these memes you'd get the impression that Republican voters are overwhelmingly libertarian, which couldn't be further from the truth.
You may well disagree with many of the laws that they want (I do), but it's a bit rich to claim that they don't want any laws when the Democratic Party is basically running on a platform of "stop Project 2025".
This isn't creating solutions to problems, this is bringing back or upholding problems from some time ago so we can look at them and do nothing.
This is the fundamental difference between conservative ideology and progressive ideology. Progressives seek solutions to current-day perceived problems, and sometimes the solutions are bad. Conservatives seek to maintain problems, even across generations, sometimes bringing problems of long ago back into reality.
This is why, for example, conservatives brought Jim Crow during the reconstruction era. Is this not regulation? Yes, but it's also a return/continuation of the status quo. It's the opposite of a solution, it's a the problem extended and then actually PROTECTING the problem so it can't be solved. It's an anti-solution.
That's one, really old, example. But take your pick of any during American history and you will see this is always the case. Because that's what defines conservatism as conservatism.
"Stop Project 2025" implies what I'm saying: there is a status quo that the Democrats want to protect and the Republicans want to undo.
The whole reason we have elections is so that people can put into place new leaders who will change rules. There's no such thing as a permanent law, and anyone with two braincells to rub together wouldn't want there to be.
And then, once you've successfully changed the makeup of Congress to meaningfully slant in your direction, you still have to also control the presidency or at least work with the president in order to get a bill through.
So, yes, Congress can repeal bills that it's put in place. But it takes a lot of work and generally would represent a pretty fundamental shift in voter opinions, which is exactly when laws should change.
On top of this, you don't need to change every seat in congress, you generally only need a tiny handful to flip to switch control - for example at this moment the Senate is 51 to 49 and the house is 220 to 212 (with 3 vacancies). To flip both houses would require only 7 seats to flip, or 1.3% of congressional seats.
The big difference between congressional and executive elections is that congressional changes explicitly do not represent national shifts in voter opinions as they are regional elections. Only a national election can demonstrate a true shift in voter opinions, and when such a shift occurs is exactly when laws should change.
Edit: In 1941, so it's been a while
1. Whether Congress gave rulemaking power to the FTC under the provision cited supporting the ban on non-competes, and
2. Whether, assuming FTC had been granted the authority by Congress to issue the rules, it acted properly procedurally under the Administrative Procedure Act when it did so.
The court ruled "no" on both.
(I haven't reviewed it in detail to have an opinion on whether it is correct on either point; banning non-competes is good policy, and it would be good if Congress did so directly.)
That's not a policy judgement is a procedural one. Its not "it should not be done", but "the FTC did not do what is substantively required in assessing the facts and applying the law".
I'm not saying it is right, I am saying "arbitrary and capricious" is specifically a procedural finding in federal administrative law.
If we had a proper congress, we wouldn't need to rely on these powers, but the supreme court has used their past 4 years to play into that chaos.
Procedures are imperfect. But they were introduced to keep away worse imperfections.
FTR, I do think that unpaid non-competes should be considered null and void. I also want this to be codified properly, so that no judge would have grounds to proclaim it frivolous and revoke.
While the best approach would be a law, relatively few questioned the initial change because 1) It is good for nearly all parties 2) It makes sense that they could 3) Congress obviously was in no rush to make this change soon, if ever
Not only do you need to have the jurisdiction and authority, but some random judge can decide you haven't justified it to her liking and block it anyway.
Our legal system is far from infallible.
[1] Acknowledging that in this case, the judge also believes it's not within their authority.
However, the Supreme Court decided to legislate from the bench and transfer that authority to unelected judges. Now, the federal government is all screwed up because none of the laws work as intended, and, so far, the judges wielding this newfound authority have demonstrated some mixture of incompetence and corruption.
I'd like to think they're all taking night school engineering and economics classes to bridge the newly-created skills shortage, but, somehow, I doubt it.
For example: In this case, the courts have come to the nonsensical conclusion that (quoting the article) "The FTC, which enforces antitrust laws and regulates competition", doesn't have the authority to regulate non-compete clauses, and further claims there's no evidence that the proposed regulation would do anything beneficial (despite 80+ years of case studies from California, which happens to have the largest economy in the US.)
> (quoting the article) "The FTC, which enforces antitrust laws and regulates competition"
The issue is that you are quoting an article and not the actual law. There is no law that says the FTC has blanket authority to regulate "competition".
No, the idea was to supply more power to unelected officials who are not under the scrutiny of the people. Said unelected officials being bought for by various private interests and ruling in their favor whenever and however possible, regardless of the constitution.
> However, the Supreme Court decided… transfer that authority to unelected judges.
No they didn’t. The authority went back to where it belonged, the legislative branch. The legislative branch has no power to defer legislation to anyone but themselves.
> [The FTC] doesn't have the authority to regulate non-compete clauses
They do; in regards to the federal law as it is written, of which there are no laws currently. If they wish to see non-competes die (and I would like for them die) then they have to do it properly: by getting a law made. Not by making a “ruling” which has no legal standing in a post-Chevron world.
Its always up for debate whether that is a good thing or a bad thing, but without Chevron much of what the agencies have done for decades wouldn't have been allowed.
Yes. The FTC’s powers over employment aren’t as clearly defined.
Congress absolutely has the right to regulate employment.
On what basis? What provision in the Constitution gives Congress that power?
If there was anything in federal legislation that did so, California wouldn't need to.
"If there was anything in federal legislation that [banned marijuana], [Kansas] wouldn't need to."
It's entirely possible for a state to think the Feds have the ability but not the will to do something, and go further while they wait.
Edit: to the replies– It's not just housing. Granted, housing is a big chunk of the budget. But it's everything else too. My grocery bill would go up 33%. My state income tax would go from zero to 8%. Gas is, on average, 43% more expensive. And I'm not looking at moving to the Bay Area. I'm looking at moving to Fresno.
And yes, it's more expensive. But that's the price you pay for reaping the benefits of living in CA.
Edit: State of California Department of Finance also estimates this, but states that 2023 saw "Domestic out-migration slowed in 2022-23, to a net domestic migration loss of 260,400 people." [1]
What benefits? They said they are moving to Fresno, so not even decent weather.
In some important ways, CA is very expensive. In others, its ludicrously cheap.
If you can do your job remotely, then go for that.
If you can, but don't want to or you opted for hybrid, that's on you.
Otherwise, that shouldn't be a huge factor unless you drive a gas guzzler.
Is your job worth dieing for?
How many really "opt for hybrid" in these times where so many places are forcing RTO?
The anti-non-compete is a good thing but it’s not anywhere near a big factor for the vast majority of people.
The rule “is arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation”
California’s experience can be used to show that the rule is not capricious or unreasonably broad. The act establishing the FTC gave it broad powers and it does have the authority to do what it did. However, it is clear that the Supreme Court is going in a direction to greatly reduce regulatory authority. This ruling will likely stand but it shouldn’t.
I don’t want to live on this planet anymore.
Regardless, a federal judge need not consider the laws of any state when making a ruling on something like this.
Edit: read via archive link. So yeah:
> ... US District Judge Ada Brown in the Northern District of Texas wrote in the decision on Tuesday, concluding that the regulator “lacks statutory authority” to issue the rule.
And:
> Brown [...] was appointed by then-president Donald Trump
So she's a conservative-leaning judge who's skeptical of the executive branch's regulatory powers. Not news.
Which is to the opposite side of the spectrum... "even if you have the authority, I can just say "I'm not convinced by the argument that you don't owe me, so I'll still block it"."
Either way, this will likely end up in a different court, and at a higher level, and get decided again.
From which statute?
https://en.wikipedia.org/wiki/Federal_Trade_Commission_Act_o...
Non-competes are unfair methods of competition, unfair practices affecting commerce, etc.
I'm not sure what a mostly boring procedural case about standards for summary judgement has to do with the FTC and/or non-compete clauses:
https://en.m.wikipedia.org/wiki/Anderson_v._Liberty_Lobby,_I....
What would require a special explanation is if the court found the opposite. It’s really appalling how many supposedly educated lawyers would arrive at the wrong answer to something a bright 10th grader could figure out from first principles.
While the US's particular brand of federalism might imply that (or might not), that specific bit need not be a feature of federalism in general.
> separation of powers (executive branch agencies enforce the law, they don’t make it)
Decades of legislative delegation and executive rulemaking would seem to disagree with that, no? I'm not making a value judgment on whether or not this is a good thing, just stating the facts on the ground. (SCOTUS seems to want to dismantle all that, though.)
> It’s really appalling how many supposedly educated lawyers would arrive at the wrong answer to something a bright 10th grader could figure out from first principles.
Or maybe reasonable people well-versed in the law can disagree in their interpretations? Not sure if you're a lawyer yourself (I'm not), but it seems to me that disagreements on legal interpretation aren't particularly uncommon, especially when it comes to disputes around separation of powers and state vs. federal powers.
But there’s probably some version of both the minimum wage and the ban on non-compete agreements that’s constitutional under the Commerce Clause. For example, if they were limited to employers that do business in multiple states or if they purported to apply when employees moved to a different state where non-competes were unenforceable.
The bigger problem is the separation of powers aspect. As you seem to recognize, banning non-competes seems like banning an unfair labor practice. That something that should be the subject of Congressional legislation, like the FLSA. Congress almost certainly didn’t intend to delegate to the FTC power over employment contracts, nor could it have given the FTC such an open-ended delegation of legislative authority.
> Abruzzo asked agency lawyers to send cases to her office involving arguably unlawful noncompetes. Her office could use one of those cases to ask the board to restrict or prohibit the use of noncompetes.
https://www.uschamber.com/lawsuits/u-s-chamber-wins-lawsuit-...
I hope she leaves them nothing.
The idea has been pushed that the courts are apolitical, that judges (particularly Supreme Court judges) sit atop an Ivory Tower and come down every now and again to be consulted like the Oracle of Delphi. The truth is that the courts are, and always have been political. People are becoming increasingly aware of this.
Put another way: take any Supreme Court decision on a controversial issue and you'll probably find a reasoned dissent in addition to the majority decision. More often than not it's the politics of the justices voting that determine which of those became the majority opinion, not some objective argument of law. After all, on constitutional matters, the court is interpreting very few words that are rather vague. All sorts of tests and doctrines have been summoned out of thin air on top of this.
Courts, particularly in Texas, have become increasingly activist and have made sweeping nationwide rulings, giving little to no deference to Congress or the Executive. This is a power grab by the judiciary over the other two branches and a pretty serious one.
It's hard not to look at the court system we have and see it as nothing more than a tool to block any legislative action but only in one direction.
Who said that employers had the authority to tell ex employees what to do to begin with ?
I mean, you can't just put whatever you want in a contract. It's never worked that way. Not to mention that employees often can't amend contracts, and they can't say no either. In some industries it's impossible to find a job without a non-compete.
At that point, it's not an agreement, its coercion.
They either are contracts with all the requirements of being a contract (agreement, consideration, etc..), or they are nothing.
Courts can, and regularly do, find certain parts of a contract are unreasonable and won't be enforced. Doesn't matter if both parties understood and agreed. Just because something is a contract doesn't mean it's really for real!
AND as long as it's reasonable and well-understood. If I put something ridiculous in there, like "you can't ever work again after this", that doesn't fly.
which this was going to do...
Non-competes for anyone below director level is beyond useless and simply an abuse of employees.
Let's say this was marriage, and you had people requiring spouses sign a "noncompete agreement" with marriage, so that the person, upon divorce, agrees not to date or marry anyone else within a certain distance, which amounts to hundreds of miles.
Is there really any question that that would not be an enforceable contract?
It doesn't seem any different to me legally.
It might also seem extreme but I also don't see how this doesn't violate the 13th amendment ban on involuntary servitude. You're not working for the employer, but you are in effect providing some labor benefit to them against your will, without compensation.
I think legally, such bans can easily be justified by the fact that a corporation is not actually a person. Corporations do not have the constitutional right to free speech as people do.
Personally, I tend to lean much further on this issue as I believe that corporate personhood and limited liability are unethical, socially harmful and economically inefficient (in the long run).
Shocker.
You see, that's where the fantasy ends...
If congress is bought off I'd rather trust the administrations. They aren't perfect but are usually more on point.
You also vote for your Representatives and Senators. I’m surprised people are so willing to advocate against their democratic interests for short term gains.
yes, one represenative that has continually lost represenative power for a century, and one senate who's as effective in California as they are in Wyoming.
Senate was always built that way, but represenatives growing weaker is part of the mechanics reasons behind why nothing feels representative.
I wonder how the FTC would do that? "Targetting specific..." sounds to me like addressing people's contracts individually. That is a job for a lawyer not a commission (I am not a lawyer - I know little...).
>"The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition ... instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious," wrote Brown, [U.S. District Judge]
https://www.reuters.com/legal/us-judge-strikes-down-biden-ad...
Seems pretty low harm to the employee (it’s paid vacation) and it prevents some pretty ugly kinds of poaching.
Techincally, garden leaves are longer, mandatory termination period, not banned under the FTC rules.
More generally, in high turnover industries, we're taking out x% of the workforce and paying them to not work, not develop skills, etc.
Also, I thought this was a British-ism, because over there employers can't fire at will and instead once the employee (or employer) has given notice then the employer must keep paying them until the end of the notice period.
At the other end of the spectrum were the stories of fast-food workers being held to non-competes, which is just bullshit. If you can learn the job in a few weeks and basically anyone can do it, a non-compete agreement is absurd.
There's seems to be a conservative judge in Texas for just about any regressive thing you need.
Right. Like you actually have a fucking choice when every employer does it and you've come out of college with some $300k in student debt. This judge needs to step down on Earth. Or is he on a Boeing spacecraft?
Imagine you are cofounder of a startup that raised significant VC capital. But your base salary is less than 151k. Can you leave and start a competing firm?
And if you're thinking of taking the capital to the new competing firm - you'll want to set aside a hefty portion for lawyers.
I'm super puzzled though: are you in this situation? If you're asking here, you're obviously not talking to a lawyer and absolutely should be.
It's a summary judgement essentially saying that even though the FTC has a long-established history in both the law itself and legal precedent for making rules to protect people from "unfair methods of competition" apparently that was all an illusion and the FTC has no power to do that at all. This was based on (IMO) flimsy reasoning that a 1975 law[1] that granted the FTC some new, explicit rulemaking powers over warranties (including a provision that says something like "nothing in this law is meant to restrict powers already granted by the FTC Act") actually caused the FTC to lose all other implicit rule-making power, even though obviously that wasn't Congress's intention and isn't supported by the text.
The judge went further to claim the rule was "arbitrary and capricious", even though the rule was published alongside 570 pages of analysis[2] (that I also read), and the relevant Supreme Court decision[3] explicitly requires judges to defer to the expertise of federal agencies in these matters.
Once again, we can't have nice things, even if the law literally says we can.
[1]: https://en.wikipedia.org/wiki/Magnuson%E2%80%93Moss_Warranty...
[2]: https://www.federalregister.gov/documents/2024/05/07/2024-09...
[3]: https://en.wikipedia.org/wiki/FCC_v._Prometheus_Radio_Projec...
Since this was a separate agreement with me personally about me selling my option to do or not do something in the future, the board of the startup wasn't a party to the negotiation (although they were aware the acquirer had requested this and I'd agreed to negotiate). I did decide to sell my future personal rights for a limited number of years and I kept all the proceeds from that separate agreement. This turned out to be quite lucrative for me. Frankly, I really didn't want to compete with the acquirer anyway so it was literally a 'no-cost' thing for me to agree to. The acquirer, the startup and I all ended up being happy.
To the extent banning all non-competes would have prevented me from making that personal agreement, I think it's a bad idea. I own the rights to my own future behavior and I should be able to keep, sell or give away those rights as I wish.
At the same time, I also think non-compete agreements should not be allowed to just be automatically bundled into the terms of an employment agreement. Non-competes should be optional for all parties and negotiated separately from employment agreements. I'd also be fine with a limit on the percentage of employees a company can have non-competes with and requiring that any non-compete cost the company a significant amount of additional money compared to that employees base compensation.
More discussion: https://news.ycombinator.com/item?id=41304695
Seriously, I've read that sentence five times now and can't even begin to imagine what you're asking.
How is the power to regulate commerce not an enumerated power of Congress?
Also, even if we assume employment is commerce, is it commerce "with foreign nations, or among the several States"?
It's commerce because money exchanges hands. Labor is sold and bought. To me, and I think almost anyone reasonable, it is obviously commerce.
Personally, I think this entire textualist idea of "let's interpret the constitution like its the 1800s" is bogus. The founding fathers were not stupid and short-sighted. They could see the growth of this country and understood, as time goes on, technology changes and culture changes. They wrote the constitution in such a way where it will remain reasonable.
We can't interrogate them to find out and the world has changed enormously since then. Why should we be bound to the unverifiable world view of dead men?
You cannot have commerce without labor and the understanding of markets now include employees/labor as a market.
Historically (IANAL, etc.), if it didn't cross a state line, then it was not Congress' business.
On the other hand, it was also used to justify why the federal government can prevent states from legalizing marijuana, even if it won't leave the state. It's certainly a ruling with a complicated moral legacy, in that it has some clearly good use cases, a few bad ones, while also brazenly defying the clear meaning of the constitution because doing so was convenient to the state.
Not sure how I feel about it, but I guess it was inevitable anyway.
That’d effectively be a blanket ban anyway, so sure.
and Aliens, they forgot the Aliens.
For anyone reading this thread seriously, the job market is fine, feel free to market your skills. As a rule of thumb, if your employer didn't agree to the raise till you presented a counteroffer then you should almost always leave. No matter what your employer said when you started or thereafter, if you're doing a fantastic job the "once per year" bonus/promotion cycle is bubkiss, and they will absolutely compensate you accordingly (on the flip-side, if you haven't been hired yet, don't start underleveled with a promise of a promotion except in dire circumstances; this has been hashed out before, but reply if you want more details).
Non-compete agreements are extraordinarily anti-worker, and fundamentally anti-free-market. If you leave your job, you should be allowed to find another similar job without your former employer suing you for having a career.
>What comes next?
Actual workers rights in America, hopefully.
I think more and more people are asking "what has the 'free market' done for me lately", and are open to other ideas. It's a dangerous road. I see it a bit like the "defund the police" movement, people admit that police are good in theory, but the reality is a lot of people believe the police will never actually do anything to help them, thus, they want tear most of the system down and start over. Likewise, everyone agrees a free market with competition is great, but they see that the people upholding our "free market" do a lot non-free-market things which will never benefit regular people.
What does it mean when the things that happen in a healthy free market aren't happening?
To be clear, there are exactly 0 communist politicians in the US.
You're creating a false dichotomy. It's not the capitalists vs the communists, it's the capitalists vs the slight less capitalist capitalists. The American left isn't communist, and it isn't even close. Even the closest politicians like Bernie Sanders cannot be considered communists.
> What does it mean when the things that happen in a healthy free market aren't happening
It means we don't live in a free market. Because a free market is bad, and nobody actually wants a free market. They want an almost free market. But of course child labor is bad, and poisoning your workers is bad, and also blowing them up on the railroad is bad, and then poisoning the water is bad too. And then giving your customers HIV (yes, real) is bad as well.
So we decided we need some authority over that.
no different than the unelected judge who issued the ruling
The judicial takeover here (and more broadly in Loper Bright Enterprises v. Raimondo) was performed by unelected bureaucrats with lifetime tenure.