FTC cracks down on companies that impose harmful noncompete restrictions

About 20 years ago I joined a large company in California, where non-compete clauses are essentially disallowed.<p>A few years later, I moved to the company&#x27;s offices in Washington State, where non-competes <i>are</i> allowed. Before the move I emailed HR and asked if I needed to sign the WA state employment agreement (with that non-compete clause) and they said &quot;no&quot;. I saved that email.<p>Forward a decade, I resigned to work for a competitor.<p>That exit interview was <i>fun</i>. :-)<p>[I was working on completely different stuff at the new company. I do take NDAs and trade secrets seriously].

For all its faults, California really got this one right. In some ways, this goes to show just how remarkably harmful non-competes are to the economy. If you make non-competes unenforceable, you can put all kinds of barriers up and still have a thriving tech industry (a high concentration of research universities didn&#x27;t hurt either).

FTC seems to be down right now, but The Archive has it already:<p><a href="http:&#x2F;&#x2F;web.archive.org&#x2F;web&#x2F;20230104170101&#x2F;https:&#x2F;&#x2F;www.ftc.gov&#x2F;news-events&#x2F;news&#x2F;press-releases&#x2F;2023&#x2F;01&#x2F;ftc-cracks-down-companies-impose-harmful-noncompete-restrictions-thousands-workers" rel="nofollow">http:&#x2F;&#x2F;web.archive.org&#x2F;web&#x2F;20230104170101&#x2F;https:&#x2F;&#x2F;www.ftc.go...</a>

15 or so years ago I worked in a small company that specialized in wind predictions and was me and 10 meteorologists<p>I remember them saying Accuweather is close to the main campus of Penn State which has a large meteorology program. They were saying if you joined accuweather and quit you couldn&#x27;t work in any weather related field for 5 years after leaving accuweather. Basically the NDA locked you in and you were a prisoner.

Noncompetes should 100% require full-paid gardening leave to be enforceable.<p>You don&#x27;t want me ot work for a competitor for a year? Great. You get to pay me full pay and benefits for that year. Let&#x27;s see how keen companies are to enforce a noncompete then.<p>Even then they should be limited in scope but without paid gardening leave they should be utterly unenforceable.

I wish federal law would just abolish non-competes completely.<p>When I gave advanced notice to Tudor Investment that I would be quitting they threatened to fire me with cause so that they could still enforce the non-compete without paying me in accordance with NY state law.<p>And they followed through with their threat, sending me a letter telling me I was being terminated with cause the day I officially quit.<p>To make their shitty shenanigans worse, they made the unpaid non-compete just short enough so that it wouldn&#x27;t be worth it to sue. The NY Department of Labor also doesn&#x27;t handle complaints if you&#x27;re salaried above a certain threshold.<p>Don&#x27;t ever work for Tudor Investment, they&#x27;re two-faced assholes, but I shouldn&#x27;t be telling you that when the government should.

I worked for (and my wife still works for) a small company that provided a boutique set of engineering services. They had a non compete that was very narrowly tailored and called out by name the competitors that you couldn’t go work for directly (6 months or a year), all of which were also small companies.<p>That sort of non-compete that seems reasonable to me- very specific, time limited, and only for people with actual trade knowledge.<p>A good test is the number of openings a prohibition covers. The non-compete I signed covered maybe 30 openings nationwide in a good year, and zero in my local metro area.

They &quot;cracked down&quot; on...two glass manufacturers and a security firm?<p>Posting this on the website and claiming that it constitutes &quot;vigorous enforcement&quot; shows just how ineffective these underfunded Government agencies typically are. They rarely choose to go after large companies, who can keep flouting regulations with impunity.<p>Smells like an Abacus Federal Savings Bank [1].<p>----------------------------------------<p>[1] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Abacus_Federal_Savings_Bank" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Abacus_Federal_Savings_Bank</a>

What&#x27;s really interesting about this is that the FTC is now considering labor to be a market in which anti-trust rules apply. That is a development of the past two years.

I&#x27;m not clear on why those non-competes were illegal when others aren&#x27;t. Any lawyers in here willing to shine their flashlight on the right rabbit hole for me to descend? (I do have some experience in legal research tools and documents by proxy as a developer, just no significant knowledge of law.)

This is a step in the right direction. However, I don’t know how much more the FTC can do on a case by case basis.<p>I’m curious if the Supreme Court has taken up cases about non-competes and analyzed if they violate the constitution since they clearly block individual freedom to pursue a living.

Something that may be worse than non-competes is arbitration clauses and jury waivers. Heck, most employment law is heavy-handed against the employee.

Is there a place I could learn about non-compete law? I&#x27;m curious whether my existing NC could be enforced.

Just curious, but how would your employer find out who you&#x27;re working for when you go somewhere else?

Will they do it with hospitals?

Things like this are the best way to increase per-employee productivity in the economy, which has been flatlining.<p>Another example could be tacitly encouraging holding multiple jobs.<p>When the interests of employers conflict with the interests of overall economic productivity, government should lean towards the latter, instead of always taking the side of the employer. Let capitalism do what it does best.

From the article:<p>&gt; <i>“In its complaints, the FTC said the restrictions constituted an unfair method of competition under Section 5 of the FTC Act. In each case, the FTC has ordered the companies to cease enforcing, threatening to enforce, or imposing noncompete restrictions on relevant workers. They also are required to notify all affected employees that they are no longer bound by the noncompete restrictions.”</i><p>Here is the full excerpt of section 5 as it currently stands in the United States Code as section 45 (15 U.S.C. § 45(a).) [Text in square brackets are my own]:<p><pre><code> §45. Unfair methods of competition unlawful; prevention by Commission (a) Declaration of unlawfulness; power to prohibit unfair practices; inapplicability to foreign trade (1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful. (2) The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except […a dozen exceptions…], from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce. (3) This subsection shall not apply to unfair methods of competition involving commerce with foreign nations (other than import commerce) unless— […insert paragraphs of exceptions…]. If this subsection applies to such methods of competition only because of the operation of subparagraph (A)(ii) [“on export commerce with foreign nations, of a person engaged in such commerce in the United States”], this subsection shall apply to such conduct only for injury to export business in the United States. (4)(A) For purposes of subsection (a), the term &quot;unfair or deceptive acts or practices&quot; includes such acts or practices involving foreign commerce that— (i) cause or are likely to cause reasonably foreseeable injury within the United States; or (ii) involve material conduct occurring within the United States. (B) All remedies available to the Commission with respect to unfair and deceptive acts or practices shall be available for acts and practices described in this paragraph, including restitution to domestic or foreign victims. </code></pre> Notes:<p>Why we are reading section (§) 45 of USC, not section 5: “Almost every provision of an act that is classified as a section of the Code is assigned a designation that differs from its act section number. For example, section 401 of the Social Security Act (act of August 14, 1935, chapter 531) is classified to section 601 of title 42. Most Code sections are based on an entire act section, but a few sections,[…], are based on less than an entire act section.” [3]<p>Citations:<p>[1] The Federal Trade Commission Act of 1914: <a href="https:&#x2F;&#x2F;www.govinfo.gov&#x2F;content&#x2F;pkg&#x2F;COMPS-388&#x2F;uslm&#x2F;COMPS-388.xml" rel="nofollow">https:&#x2F;&#x2F;www.govinfo.gov&#x2F;content&#x2F;pkg&#x2F;COMPS-388&#x2F;uslm&#x2F;COMPS-388...</a><p>[2] Current United States Code (of law): (15 U.S.C. § 45(a).) <a href="https:&#x2F;&#x2F;uscode.house.gov&#x2F;view.xhtml?req=granuleid%3AUSC-prelim-title15-chapter2-subchapter1&amp;edition=prelim" rel="nofollow">https:&#x2F;&#x2F;uscode.house.gov&#x2F;view.xhtml?req=granuleid%3AUSC-prel...</a><p>[3] A guide to reading US Law <a href="https:&#x2F;&#x2F;uscode.house.gov&#x2F;detailed_guide.xhtml" rel="nofollow">https:&#x2F;&#x2F;uscode.house.gov&#x2F;detailed_guide.xhtml</a>

We really need general regulations on non-competes. Bare minimum, it should be required that a company pay you a full salary if they want to block you from seeking employment elsewhere with your skills.<p>If a company really cares that much about stopping competitors from taking advantage of your skillset, they need to be willing to pay up.