Of course, there will be legal challenges to this decision.
What say you?
What say you?
NonDawg FTC rules today (3-2) that most noncompetes are unenforceable.
- Thread starter TivoliDawg
- Start date
I learned this in law school 18ish years ago, they are tough to enforce but many people who enter into them don't have the means or will to challenge the contract.
They’re disfavored by law anyway and almost no one gets compensated for them appropriately. This is the correct decision
I think non-piracy and non-solicits are more enforceable anyway. I’ve seen companies start to use these rather than non-competes lately.
Non-competes are BS. Not sure how the FTC can rule on it though. Will get challenged in the courts and not go into effect anytime soon.
In the industry I work in I can count on a couple of fingers the number of times in the last two decades in the industry that I’ve heard of a non-compete being enforceable, let alone enforced.
Non competes are garbage. I got hired by a place and a week in they tried to get me to sign one. I flat out told them no and never heard a word about it.
They are prevalent in my industry (media) and I’ve never been a fan. If you don’t want to work for me/my company, hit the door. Being in a right to work state I’m sure they aren’t going to hold up anyway. That being said, I’m sure this sweeping ruling will be held up in courts for a while.
Unless the is intellectual property involved they should not be enforced.
Have to make a living
Have to make a living
I've had non-competes my entire career in sales and ignored them. Relationships are mine. Like my customer said, "Your old company doesn't get to dictate to me who I do business with."
I have one from my previous employer currently still in effect, which my employment law attorney told me was "without question, enforceable". I don't really care about most of that business anymore, but a lot of them care about not being able to be with us.
Have my own now, so should I test the enforceability yet? What say you Dawgvent Legal Eagles?
I work in medical and so they are standard. Not only have I never seen one be successfully enforced, I’ve literally never even heard of it. Like not even a rumor.
They are an intimidation tactic.
My current employer uses them the same way, threaten to sue, make $20/ hour employees scared to death so that they don’t leave. It artificially holds their wages down and this will go 9-0 at SCOTUS.
Like one of the only things all sides agree on.
They are absolute bullshit and as long as you aren't dealing in trade secrets there is no reason for them to be enforceable.
My wife works for a European company and has one - my favorite part about it is if her company enforces it, they are obligated by French law to pay her full salary and benefits until the expiration of the non-compete. My wife said if she ever leaves for a competitor she 1000% wants them to enforce it so she can sit on her ass for a year while they pay for her salary and our health insurance.
FTC made the absolute right call.
My wife works for a European company and has one - my favorite part about it is if her company enforces it, they are obligated by French law to pay her full salary and benefits until the expiration of the non-compete. My wife said if she ever leaves for a competitor she 1000% wants them to enforce it so she can sit on her ass for a year while they pay for her salary and our health insurance.
FTC made the absolute right call.
This one is particularly relevant to me, specifically my wife. She works for a company based in Jacksonville called Hueman, who is a recruiting services contractor. Her team specifically is in the medical recruiting field. She was just reassigned from a hospital in Utah on a team that she loved, to a more strict and "work is king" team that works with Baptist Health in Jax. The internal people with the hospital in Utah (Intermountain) want her as an internal, but there is some sort of a non-compete deal in place where she can't be hired as an internal there as long as Hueman has a relationship with them (they have one remaining employee with Intermountain) and then for one year after. She wants to work directly with Intermountain, they want her, but there's that red tape. So am I correct in surmising from this thread that she should just go for it, and it likely won't be enforced? Or because she is relatively low-level, neither her nor Intermountain would probably have the means or want to spend the time/effort on fighting it?
We've tried to get someone from the Intermountain side to send her a copy of the contract, but have been unsuccessful thus far. She is hesitant to ask for a copy of it from the Hueman side, because she doesn't want to get canned. Can't really afford to take that risk. What say y'all? This may need to be a separate thread.
We've tried to get someone from the Intermountain side to send her a copy of the contract, but have been unsuccessful thus far. She is hesitant to ask for a copy of it from the Hueman side, because she doesn't want to get canned. Can't really afford to take that risk. What say y'all? This may need to be a separate thread.
if the agreement is between the two companies it is still enforceable...... the ruling from the FTC is based on non compete between a company and an individual.
I believe if the agreement is between two companies then it is a contractual agreement that will be difficult to circumvent.
Unless they pay you for them. E.g.: sign this non compete and it comes with options to buy equity at a pre-set price. Options are in the money, you execute or sell the options. OR…they pay you during the term of the non compete. Break the non compete-they stop paying. Non competes are virtually worthless…unless they give you something for them.
When did law discussions become political ? Geesh
Hope this doesn't get overturned. Total intimidation tactic by companies. Jimmy John's was making sandwich makers sign them.....just a way for them to try to keep wages down.
Come on man - you know that kickin' ranch is a trade secret. We can't have the JJ slicers and sandwich makers going over to Jersey Mike's giving out that delicious recipe!
Exactly. I was asked to sign one at a previous employer. Everytime they left it on my desk (I'm old), I threw it in the trash. When HR brought it to me to sign, I asked them to amend to include that as long it was in force, they would pay me monthly based on my previous two years W-2 income. They looked shocked. I told them this job is how i feed my family and I couldn't afford to not work for two years. Never had to sign it.
Mine from my previous employer covered any market they had a television station…which is 115 markets throughout the country. My attorney told me to go get a job wherever I wanted and dare them to try to enforce it. He was more than willing to fight that battle for me…he knew that one was way too overreaching even in an industry where non competes were the norm. Of course my former employer agreed to let me out of it so it never came to that. The other side of it though, is that most companies in my industry are reluctant to interview a candidate who has a non-compete so they are often enforced that way.
This is what really matters....it might be unenforceable, but the other company doesn't want to take on the risk of onboarding someone just to have them leave in 30-60 days.
Had to pay $8M to old firm for clients and people we took. They are enforceable. Went up against the best attorneys in NYC through mediation and we got it down from the $10M we actually owed under the agreement. This is not something to celebrate as it will now go through years of trial and end up at the SCOTUS.
Checks notes, “Unless it’s a Jr Partner or high earning associate with a portfolio of evergreen clients leaving one’s own law firm’
The decision by the FTC is too sweeping and most likely will be held Ultra Vires. It’s a State by State legal statute or case law on what is and isn’t enforceable. Very questionable if a Federal Regulatory Commission can “Seat of the Pants” / “Boot Strap” revamp a multitude of state statutes and stare decicis judicial decisions.
That said, it would be good to quarantine common law to specific circumstances and minimum amounts.
That said, it would be good to quarantine common law to specific circumstances and minimum amounts.
Non-compete agreements were originally thought to violate the antitrust laws (and read literally, they would), until the Supreme Court appropriately realized that there are instances where they are necessary to actually promote competition. Even the FTC didn't dispute that notion when they made various exceptions to their ruling yesterday. Per usual, people in this thread are evaluating them as if there are zero benefits, and lots of costs, which is how most policy issues are debated these days.
The reality is that there are without question pro-competitive aspects to most non-competes, and anti-competitive features that are inherent in the nature of these agreements. It's harder to let someone peak under the tent if tomorrow that person can go across the street and work for a competitor. And lol on the notion that you can achieve the same things through an NDA, that's one of those pretend arguments from someone who's never actually tried to enforce an NDA.
We tolerate noncompetes all the time; a labor union is a massive noncompete agreement between members of the union. In any other context, it's price fixing, which is the other side of the same coin (agreeing not to compete). There is a statutory exemption for it.
Most of them are garbage and are drafted poorly, and it's no surprise that people who have an incentive to abuse them (I.e., anyone with leverage) do. But that doesn't mean conceptually they are without benefit, because that's nonsense. Without them, you will see people being more guarded with information than they have been previously.
None of this matters, of course, because the rule is DOA. That's a subject for another day.
The reality is that there are without question pro-competitive aspects to most non-competes, and anti-competitive features that are inherent in the nature of these agreements. It's harder to let someone peak under the tent if tomorrow that person can go across the street and work for a competitor. And lol on the notion that you can achieve the same things through an NDA, that's one of those pretend arguments from someone who's never actually tried to enforce an NDA.
We tolerate noncompetes all the time; a labor union is a massive noncompete agreement between members of the union. In any other context, it's price fixing, which is the other side of the same coin (agreeing not to compete). There is a statutory exemption for it.
Most of them are garbage and are drafted poorly, and it's no surprise that people who have an incentive to abuse them (I.e., anyone with leverage) do. But that doesn't mean conceptually they are without benefit, because that's nonsense. Without them, you will see people being more guarded with information than they have been previously.
None of this matters, of course, because the rule is DOA. That's a subject for another day.
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I am in medical and I have seen them enforced against physicians. Several good friends went to court to try to get out of them and the non compete was upheld even when the employer terminated the physician employee. I always refused any position requiring a non compete. And I have seen medical assistants making less than $20/hr threatened over them but never taken to court.
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