> "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
All non-competes are harmful, end of story.
Link to the ruling: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rj8_52.B... (…though this PDF is kinda horrible, since it seems to somehow not be searchable at all, but it's the only one I've found in like 7 different news sites, all but one of which can't cite their sources…)
That level of "argument" from a federal judge should be grounds for instant removal. It's bafflingly stupid, and nakedly partisan and outcome-motivated. Some ideas are just categorically bad, and the regulator needs to be able to say that, rather than pretend that the answer is always "halfway in between".
For his next decision, will he forbid the SEC from regulating all insider trading, since they didn't find a way to target "specific, harmful" patterns? And yet somehow I suspect he wouldn't bat an eye if the FDA were to decide that all abortifacients were disallowed, instead of looking at each one individually...
And of course, all of that is ignoring that he's flagrantly lying about the facts of the case, in at least two ways:
1. The summary is misstated. The FTC did not find that all non-competes were invalid. It specifically carved out cases where the balance leans toward non-regulation - namely, non-competes for executives.
2. Some of the "arbitrary and capricious" reasoning claims that no states have passed non-compete bans as broad as what the FTC did, and therefore none of their quantitative evidence can matter. That is, again, blindingly stupid on the face of it - but it's also factually false, because California has had just as broad a ban on non-competes for many decades.
It specifically carved out cases where the balance leans toward non-regulation - namely, non-competes for executives.
This is false. The FTC tried to ban for all workers and senior executives. The only difference for senior executives is that the FTC didn't retroactively invalidate existing non-competes. Under the FTC's rule, no new non-competes could be signed.
For his next decision, will he forbid the SEC from regulating all insider trading, since they didn't find a way to target "specific, harmful" patterns?
Insider trading is prohibited by federal statute. Non-competes are not.
Yes, the SEC and FDA and EPA and all similar regulatory agencies are headed for the chopping block too. You only need one judge to say so.
And yes, the quality of the reasoning is going to be just as bad. Sure, Congress passed a law which says in so many words "the agency has the power to do...", but here I am a duly appointed judge, and I can write a decision saying "Congress never gave the agency the power to...", with impunity, and so I shall.
Well, it's even worse. In this case the judge said that even if the agency had the power, she didn't feel sufficiently convinced by their argument (to act within their power) and would block it anyway.
I'm inclined to support well-compensated non-competes, eg "you can't work in this industry for 1 year, but we'll pay you 100% of your salary for that year." That would allow non-competes for people where it really matters to a company (eg where they're willing to throw a lot of money after it), but ban it the rest of the time.
It's still harmful, but you're at least able to get compensated for the harm.
>but we'll pay you 100% of your salary for that year.
if you can't work in the industry, and you get just 100% of your salary that's completely not worth it as you waste time not becoming a more competitive hire in the market - unless you aren't that specialized, but then why bind you with non-compete anyways?
But they're not paying you to enjoy your life, they're paying you to not work for their competitors, which has impact on your career in the longer term. So they should compensate you based on that, not you wanting to take up pottery or whatever.
While I agree that they should go outside, I will point out that the common tactic is to make salary than less than 1/2 of the total compensation. In tech, they issue RDUs and then they can claim that those were always bonus and never part of salary. In finance, they give big bonuses depending on performance. This is a little more legit but usually takes recessions for bonuses to actually disappear.
Gardening leave typically is only salary, and doesn’t include extremely lucrative bonuses (that can exceed salary, sometimes by some multiples) in certain investment industries. So, it’s a pretty big hit to your income.
That's a good point, but an entirely different one to 'you waste time not becoming a more competitive hire in the market', which is what I was responding to.
Oh come on nobody gives a shit about this bullshit except new employers. Even if you bought into it there's no reason to broadcast your weaknesses like they're public entertainment. Without the pressure of new employers this just comes off as histrionic simping.
There is absolutely no reason to allow this kind of strict anti-labor bullshit in almost any case barring high level leadership positions. Giving you 100% of your salary for a year doesn't cover the damages incurred by foregoing potential career advancement and skill acquisition.
Eh, this has literally no upside for humanity. It's just a straight negative for everyone. Even compared to wage-fixing—at least wage-fixing results in lower wages for corporations! This implies no such effect.
>though this PDF is kinda horrible, since it seems to somehow not be searchable at all, but it's the only one I've found in like 7 different news sites, all but one of which can't cite their sources
Based on the metadata for the pdf you posted, it looks like for whatever reason they ran the original pdf through microsoft print to pdf, which stripped off all the OCR/text metadata.
I don't see harm in non-compete agreements between non-natural legal persons.
In fact, were IP developed by a person tied to a personal proxy body, it would be possible for them to recieve payments for the IP from past employer, who could have sort of right to buy exclusive license for limited time. Probably better structures exist; the idea remains same.
"Link to the ruling ... (...though this PDF is kinda horrible, since it seems to somehow not be searchable at all, but it's the only one I've found in like 7 different news sites, all but one of which can't cite their sources...)"
Ah. How could I be so foolish as to think there might be some nuance to the situation! For what it’s worth a lot of friends in finance are/were bummed about how this law might affect gardening leave. [0]
That does sound anti-competitive. Imagine if Google poaches hot people in industry and then just sits on them during a critical market time, doing nothing, because they don't have any particular work for them, they just don't want them working for the competition.
Those garden contracts sound like a variation of the same idea.
Anyways, if I understand FCC's position right, they also had nuance for specific non-competes.
at least with garden leave the person is at least getting compensated. it's substantially better than a minimum wage worker at ~~Subway~~ Jimmy John's being told they're not getting paid and they also can't make sandwiches for six months.
That's one scenario I'm afraid of... that businesses have rational incentive to push boundaries for workers that aren't ultra high value, and that terms like these basically force you to stay at Subways.
I'm not on the "100% of non-competes are harmful". But definitely 98-99%. I agree with California's exceptions:
>The only exceptions are non-compete or restrictive covenants that fall within one of the narrow exemptions authorized by statute, all of which relate to the sale of the goodwill of a business, or of a substantial ownership stake in the business. Courts interpret these statutory exceptions very narrowly.
If you have enough skin in the game that you can make life or death decisions for a company (or take out money in stock that can sink the company), you probably have enough money that a non-compete won't put you on the streets.
It's interesting how many US people think that non-compete agreements are fair. In the EU and UK, the general rule is that you employment contract ends as soon as the company stops paying you. Once you have left the company, you cannot be bound by the old employment contract. Some companies choose to pay gardening leave, but in practice you cannot be forced to accept it for any longer than your agreed notice period, and while there might be grounds to sue for breach of contract if you just walked away completely, in general a company can't force anyone to work somewhere if they don't want to.
The protections that the non-compete are intended to provide are already provided through other means that will almost certainly apply - things like NDAs or IP theft (which would include knowingly transferring proprietary secrets or processes). Sure, it'd take more time in discovery to prove such an issue, but in general employee protections are considered more important to society than commercial concerns. On the other hand, someone found guilty of IP theft or breaking an NDA will probably find getting a similar level job very hard in the future, because their reputation would be ruined.
How many EU countries did you work in those 50 years?
Come to Austria and you'll see non-competes everywhere and they're enforceable since they're legal by federal labor/employment law since the private industry lobbied for them because quote "employees taking IP knowledge with them is the biggest threat to employers, bigger than industrial espionage".
In other EU companies you can find them too but they might not be enforceable if they're not backed up by local laws in those countries so always check local laws before doubting over non competes in contracts.
Indeed thy are but there are so many aspects that it's quite difficult to compare with the US. You have duration limits, salary conditions, special situations in which it might be effective, proof of damage, and in any case, it is not allowed to block the employer from working. So like the meme: yes, but actually no.
It's not the people living under these rules that think they're fair. It's the capital owning executive class trying to control everything in their favor, regardless of the outcome on their workers lives. Well them and their judge friends in Texas apparently.
> In the EU and UK, the general rule is that you employment contract ends as soon as the company stops paying you.
It's essentially the same in the US, you cannot really enforce a non-compete without pay. Some companies still do this relying on the fact that nobody wants to go to court, and this is why the judge tells the FTC to go after those.
> but in practice you cannot be forced to accept it for any longer than your agreed notice period
But you can be forced to work through notice period? Think of a non-compete as a 6-12 months notice period when you don't have to work (and can actually work for a whole bunch of different jobs, just not for the competitors).
>The protections that the non-compete are intended to provide are already provided through other means that will almost certainly apply - things like NDAs or IP theft (which would include knowingly transferring proprietary secrets or processes).
Consider a sales manager going to a competitor with the knowledge of prices for the top 10 customers. You can easily memorize these even if you already don't know them by heart. So he takes the same position at the competitor and tells the sales people to go to X and offer $YYY contract, which just happens to be a decent discount from what they currently pay to the former employer. How do you invoke NDAs, IP theft or whatever to deal with this?
> But you can be forced to work through notice period?
No, they can't force you to work per se, but you could (in principle) be sued for breach of contract if you don't serve your notice period.
Most employers are fairly pragmatic in the UK. If the employee requests a shorter notice period at resignation time, and they're not actually on the critical path for something, most employers will agree. If the employee doesn't request a shorter notice period, many companies will stipulate that all unused holiday allowance must be taken at the end of the notice period - so the pay period is exactly the notice period from resignation, but the employee finishes early.
> Think of a non-compete as a 6-12 months notice period when you don't have to work
That's fine if you're on paid gardening leave. If you're not being paid, they have no right to dictate whether, or for who, you can work.
> (and can actually work for a whole bunch of different jobs, just not for the competitors).
Typically in the UK, the provisions of gardening leave explicitly state that you cannot undertake any paid work. You can study, you can do DIY, you can do garden work (hence the name), even do voluntary work, but you can't take on any other paid work.
> Consider a sales manager going to a competitor with the knowledge of prices for the top 10 customers.
Typically, if the employee took commercially sensitive customer data (and that includes names, position, phone, email address), then they could be sued for breach of contract. It doesn't matter if they copied the data via USB stick, printed it out or memorised it - they're still breaking the non-disclosure agreements they'd have signed.
I should probably clarify that there are non-compete agreements in the UK, but typically they're not enforceable and the real reason they're there is to scare the employee. They're not part of employment law, and so it would be deemed to be a normal contract that would be tested in court based on reasonableness, and in general an employee's right to work would override any restriction in a previous contract. There's actually consideration going on right now that recognises that non-competes exist and to restrict the scope of them. To quote the document [1] that describes the status quo:
> There is no provision in the UK employment statutory framework for non-compete clauses, including in Northern Ireland where employment law is devolved. As such there is no statutory definition. However, non-compete clauses are subject to the common law principle of “restraint of trade”. The principle provides that a worker should be free to follow his trade and use his skills without undue interference, thereby rendering a contractual term (such as a non-compete clause) purporting to restrict that worker's freedom to work for others or carry out his trade or business void unless it is: (a) designed to protect
legitimate business interests; and (b) no wider than reasonably necessary.
> Consequently, even where non-compete clauses are found in employment contracts, they may not necessarily be enforceable, unless a court considers that the non-compete clause is to protect a “legitimate business interest” and is no wider than reasonably necessary.
> Simply proving that the employer will suffer from “more competition” is not counted as a legitimate business interest. In broad terms, the courts have recognised that a legitimate business interest may include protecting trade connections (with customers, clients or suppliers) and, more generally, goodwill; trade secrets and other confidential information; and maintaining stability of the workforce.
So it appears the US non-competes are more relaxed than UK ones? In the US non-competes are limited to the actual competition though the pay may or may not be reduced if you work.
>Typically, if the employee took commercially sensitive customer data (and that includes names, position, phone, email address), then they could be sued for breach of contract. It doesn't matter if they copied the data via USB stick, printed it out or memorised it - they're still breaking the non-disclosure agreements they'd have signed.
I don't know what kind of NDAs people sign in UK, but in the US NDAs have defined scope and in this case, since you have not revealed any protected information, there is no grounds for an NDA breach. If the UK NDAs punish you for using the knowledge you obtained, then it sounds like a unpaid broad non-compete without a term to me.
I shouldn't have mentioned NDAs there to relate to customer lists, it got left in that paragraph after I trimmed the comment down a lot. Taking customer data would be considered as a form of corporate espionage.
There are so many different types of "knowledge you obtained", there's no one size fits all answer. If it's generic training, no issue. If it's learning an industry standard practice, no issue. If it's years of solving problems, and having an intuition about solving a new, unrelated problem, no issue. If it's taking a list of customers and contact details, that's commercially sensitive data and a big issue. If you were personal friends with say 5 of the 20 customers, and could show you regularly met outside of a work context then you could arguably show that you hadn't stolen commercial data, you'd just contacted old friends. You might be opening yourself up to undeclared conflict of interest problems though. If through your work you knew of a secret process that was better than the rest of the industry and provided a competitive advantage, and then the new employer you left with also started that technique, that's a big issue and you'd have a real job to prove you weren't stealing secrets. If some technique had already been made public, e.g. by a patent, and your experience allowed someone to replicate the method in the patent, then you'd probably be OK, but then opening up the new employer to a patent infringement case. If it's a non-patented process improvement to a well known process, then probably fine. If you were a high level manager for e.g. Intel and moved to an unrelated tech company, no issue. If you moved to another chip manufacturer, it'd be very hard to prove that you didn't ever make any decisions based on the commercially sensitive information you learned at the previous company.
Maybe your new employer might want you to take gardening leave in many cases to protect them from liability of claims for corporate espionage. Alternatively, it might be prudent for the employee to make sure he works on projects at the new company that don't relate to their old work.
But essentially, it all boils down to how what the commercially sensitive material is and much damage might be caused by that being given to a competitor. This is where it's back to NDA territory. If you know any company information that's not public knowledge, then there isn't a term limit for when you're allowed to talk about it. Obviously, the longer it's been, the less relevant it's going to be commercially sensitive, and so the less likely you'd be sued for divulging trade secrets, but it totally depends on what that situation is. I also don't think the situation would be wildly different compared to the US. I'm pretty sure Coca Cola would sue someone who knew the recipe for Coke and decided to leak it, and they'd probably win regardless of when they left the company, because maintaining that secret is still critical to their ongoing business.
>Taking customer data would be considered as a form of corporate espionage
Again, the same point: if you left the job where you used customer data then how do you deal with that data in your memory? Either you don't give any reason to believe you used it, least you're getting charged with espionage and this would include not working for the competition, effective putting you under indefinite unpaid non-compete. Or you don't perform your job duties, and this gives no reason for someone to pay you.
If it's really like this in UK, I can see how you can think non-competes are not needed. I'd rather have an American non-compete where I get money and a defined term though.
Maybe you want to give an example of a specific type of data, but I think I covered everything I can think of.
I think there's a big difference between "data" and understanding principles of something. If you knowingly use "data" that your old employer hasn't made public for the benefit of your new employer, then you are probably not acting ethically. If your new employer is interested in you because of the things you know that they don't have access too, you are definitely not acting ethically. If you happen to know something that gives you an advantage, you can probably make advantage of it without disclosing that proprietary information to your new employer. Example: you now know that all avenues of trying to do X don't produce results. If you want to do Y at the new company, you can just not waste your time doing X, but you don't need to say why, and suggest trying a different approach. If someone else insists on doing X, you could still say that you think it's a bad idea, and suggest general reasons why, but probably you shouldn't say "No, at Blah we tried variants of X many times and it never worked." You can't unlearn the things you know, but you can handle that information ethically. Generally people have a pretty good read if what they're doing is ethical or not.
Whether you're in breach of a non-compete would ideally be exactly the same as whether you acted unethically or not. The purpose of enforcing the non-compete is to try to prevent the situation happening. In the UK, we rarely have non-competes and where we do, it'd have to go to a court to determine if you acted unethically or not (assuming honouring the contract is ethical) and attempting to prove if you did or not and/or the damage caused if you didn't.
But like, I say, there's a big difference between "data" (which you seem concerned about) and something you know/learned (which seems to be what your argument is predicated on). Using "data" would be corporate espionage, using something you learned because you understand the concept wouldn't be.
> effective putting you under indefinite unpaid non-compete
Not really, because most people do the decent thing, and there is generally no reason to suspect otherwise, and so these things never even go to court. If the company is convinced you have appropriated trade secrets, it probably will.
But people aren't under "indefinite unpaid non-compete" because most people just do the decent thing, and so most people are assumed to do the decent thing, and people just start their new job and get on with life. Non-compete agreements going to court almost never happens.
But it's important to add that I think this issue of trade secrets is different to non-compete, because years after you leave a company, if you leaked proprietary information of theirs that is still important in giving them a commercial advantage, you should expect to get sued even if you'd had a period of obeying a non-compete.
I gave you an example in my first response to you: a sales manager, knowing the current contracts, can offer better contracts from a competitor without revealing any protected data. I am not interested in ethics, I asked how do existing things like you mentioned cover this situation.
If the clients are already customers of the new company, then he can make them offers which he knows they would find tempting. There'd be nothing to suggest he ever did anything untoward, and even if a case was made, it'd be thrown out of court pretty quickly.
If the clients weren't already customers of the new company, but as soon as he joined they were approached, then there's a good case to be made that his actions were taken using commercially sensitive information. There's a good chance the court case would find against him. If it could be shown that other people cold called those clients, maybe phoning their public reception phone number and asking who they should contact, that's good evidence that there was no misuse of commercially sensitive information. If the new company suddenly knew exactly who to contact in procurement for the clients, and had phone numbers and e-mails, it's basically a slam-dunk.
If the prices they offer to the clients are in-line with the prices they offer other clients, there's not much of a case to be made. If the client is receiving unusually high levels of discount that are slightly better than what the old employer gave, it's pretty clear.
Like I say, in the UK, in general it is assumed that when someone moves to a new company, there will be some level of customer loss if there is a particularly good relationship between the employee and the client. That kind of stuff can easily be dismissed in court as a genuine existing close relationship (or maybe even the client knew them on linked-in and saw they'd changed to a competitor and approach them for a better deal) and almost no company would even bother trying to pursue this kind of case. In the opposite case, where it's very clear an employee had "stolen" a customer list, they definitely would pursue it because there'd be a high probability of winning that case.
Sadly, it's impossible to give a clear cut answer without talking about ethics. If you conduct yourself honourably and do the decent thing, there's close to zero chance someone would sue you for moving to a competitor, and even if they tried, it's almost certain they would lose the case. If you do the opposite, it's very likely they will sue you and also very likely they will win the case.
There's no magic line to try to skirt close to. But it's also not, as you seem to think, some kind of perpetual hold over a previous employee for people in the UK.
I also think the situation in the US is pretty similar. It doesn't really matter if you'd obeyed a year long non-compete, if you then gave year-old information to a competitor firm while it was still commercially sensitive, you could still be sued and have a good chance of being found at fault.
>If the clients are already customers of the new company, then he can make them offers which he knows they would find tempting. There'd be nothing to suggest he ever did anything untoward, and even if a case was made, it'd be thrown out of court pretty quickly.
I am not sure what are "clients" here (I asked about customers but you have some distinction between these two terms, important enough to turn same behavior from benign to criminal). Let's make it simple: I work for Widgets & Stuff Ltd. and our biggest customer is Google. Google buys widgets at $20 a pop, and we make 100% profit on these because Google is not renegotiating price for some reason. The Widgetco Inc. offered me a job. I come and see it's not selling widgets to Google. I call Google (not using some secret number, which you seem to be so concerned about, it's literally Google, the famous tech company) and tell them that I am offering widgets at $15 now.
Who is a client and who is a customer here? Am I going to prison for espionage in UK? What is Widgets & Stuff Ltd. to do if Google decides to buy widgets from Widgetco?
There's a lot to unpack even in this expanded question, and it's still not possible to give you the clear-cut answer you want.
Firstly, the difference between client and customer to me is that a client is someone who you've built up a strong business relationship with over years, maybe across different products, maybe with support or other value added services, and probably you might have a couple of people whose main job is looking after this relationship. A customer is much less personal, maybe they just bought a few things that represent a small fraction of your company's revenue, it might even be a fairly insignificant part of the revenue you personally brought to the company. Obviously, if a company loses a small customer it's annoying, but not a big deal. If a company loses a big client, it will have serious repercussions - maybe there's no longer work for an entire team.
> and our biggest customer is Google
This is the most important part of the information. It still doesn't give a full picture of the situation, maybe you have 1000 customers and Google is your biggest by revenue but still only a tiny fraction of your overall sales. In that case nobody cares, apart from maybe for PR. On the other hand, this "widget" might be really specialised and Google was 75% of the company's revenue. You can be very sure that if Google suddenly stop buying more widgets, and when asked why they reply by saying that they're buying from you at your new company at a cheaper price, they will immediately get their legal team preparing for a possible lawsuit and start investigating what information you had access to.
> Google buys widgets at $20 a pop,
This almost swings it the other way for me, as these widgets are relatively cheap commodity items that sound like they could probably be sourced from many other companies. If they can, then losing this customer to another that makes these same widgets is probably something that was on cards anyway, whether you moved to a competitor or not. Probably no case.
The significant thing though is revenue, not price. I assume the volume sold must be incredibly high, because you said they're the biggest customer.
> and we make 100% profit on these
I assume you don't mean 100% profit, because then you'd be making them for free. But whatever, it's an unusually high markup, and they'll want to protect that business investment if possible.
But, on the flip side, if these widgets are being produced at basically zero cost, then you should always expect a competitor to undercut you.
> The Widgetco Inc. offered me a job.
Why did they offer you a job? Did they hire you because you worked for a competitor and they'd seen through linked-in that you regularly mentioned being responsible for some of the big clients they wanted to poach. Or did you just appear on their search for "salespeople for blah widget"? Did you apply for a job there, and if so did you give them the impression that you'd be able to bring some of your clients with you? Or was it just a simple case of being able to get a job with slightly better pay, benefits or promotion opportunities?
> I come and see it's not selling widgets to Google. I call Google (not using some secret number, which you seem to be so concerned about, it's literally Google, the famous tech company)
It's not about it being a secret number, per se, it's about whether you had some kind of privileged connection to a key decision maker in the purchasing department because of your previous company. If so, that is commercially sensitive information. If any random person could e-mail this company, and the email would be read, taken seriously and acted upon, then it's probably not.
The fact that it's "the famous tech company" makes it even more improbable that they just happened to start buying things from your new company rather than your old as soon as you moved, and so much more likely that you were misusing the old company's commercially sensitive information.
> tell them that I am offering widgets at $15 now
There are several very telling bits of information in this phrase. "I am ... now" implies that you're continuing the established business connection in a way that "Hi there. I represent Widgetco Inc and we're selling widgets at only $15 each. Could you put me in touch with the revelant person and we'll go from there."
Now, again at that price point $15 and $20, and the fact that your company seemingly sells widgets that are interchangeable, then they're just commodity items and it sounds like normal business wins and losses, and so would probably be written off as bad luck by Widgets & Stuff if you left and then some other person at Widgetco Inc got a deal with Google. If, however, you were the main point of contact between Widgets & Stuff and Google, and then after moving to Widgetco Inc you became the main point of contact again, then it's a clear misuse of that relationship.
If you'd said, "I know Google buys a lot of these widgets. I can't be involved due to my previous connection with their existing supplier, but it's worth getting somebody to approach them.", then it's almost certainly fine, especially for commodity items that seemingly any company can make. Doing it that way leaves a paper trail that can trivially dismiss any attempt to later sue you. On the other hand, if Google being a customer of Widgets & Stuff was a trade secret, then disclosing it at all is a bad idea.
> Am I going to prison for espionage in UK?
That's a simple one. No. You'd only go to prison for stealing state secrets. Stealing commercial secrets would just be a breach of a civil contract, and the purpose of going to court would be to establish financial losses that result from that.
> What is Widgets & Stuff Ltd. to do if Google decides to buy widgets from Widgetco?
They would weigh up all the different things I mentioned above, and more, to decide whether to pursue it.
Again, the point I'm making is that if you don't intentionally use commercially sensitive information in the new company, you won't have anything to worry about. If you do intentionally use commercially sensitive information that harms your ex-employer and helps your new employer, then you do have something to worry about. Anything in between those extremes has the potential for litigation.
And again, to bring it back to the original topic, I believe you'd have largely the same outcomes in both the UK and the US relating to stealing commercially sensitive information, regardless of whether there was a non-compete in force or not. The only difference is that in the UK, even if there's a non-compete clause in your contract, it's almost never enforced unless the old company has a strong expectation that there will be misuse of trade secrets and is able to convince the judge that those loses outweigh your right to seek any work at the new company. Perhaps the outcome might be that you sign an affadavit re-affirming that you understand your obligation to not disclose such trade secrets, as a condition for the judge ruling that you can work for the new company.
So, in the US all such "unpacking" is done by lawyers at $500+ per hour. You just showed that in absence of non-compete hiring someone from a competitor could turn into a multi-million lawsuit. This is why such a legal climate is an effective indefinite non-compete without pay: why would anybody hire somebody from competition when just deciding who is a client and who is a customer requires discovery? Hopefully you can see yourself how non-competes make it possible for people to switch jobs and simplify life for everyone.
No, because as I keep saying, this kind of issue almost never goes to court in the UK because they know that a company needs to demonstrate a severe financial loss to override the employee's right to work for a company of their choosing. So the result is that in practice, we don't have non-compete agreements, and in almost every case where we do, they're not enforced.
The examples that were mentioned elsewhere in the thread, of restaurants in the US using non-competes to prevent their staff leaving to work for a competitor simply do not exist in the UK, because if a company did try to pursue such a case, it would be laughed out of court.
In the very few cases where somebody does steal trade secrets, then they can expect to get taken to court. This very rarely happens, and with a presumption of innocence, requires significant proof that this has occurred. It simply isn't something that a normal person, conducting themselves professionally needs to worry about.
> Hopefully you can see yourself how non-competes make it possible for people to switch jobs and simplify life for everyone.
Quite the opposite. How does a non-compete help a waitress paid $5/h switch jobs when the restaurant across the road pays $6/h, but she can't work there without surviving several months without pay? How does a non-compete help an accountant switch jobs? How does a non-compete help a programmer switch jobs? Simply, it doesn't. Whatever the profession, a non-compete does not help the employee at all. It only helps the employer keep wages lower, by restricting their employees ability to move to a better paid job.
The only case where non-competes are genuinely useful to a company, other than for restricting employees seeking better paid jobs elsewhere, is when an employee has access to sensitive company information and actively uses that information at a new company. A non-compete period would just slow that down, not eliminate it, and there are other legal ways of handling that situation should it occur.
UK courts could be different, or you actually might not know the law as much as you think you do, or you might not be informed of job prospects of people who had access to important business info and no non-compete... Fact is that if what you described had been even 10% true then people wouldn't be able to change jobs in some industries, where non-competes are now employed. Check out Bethesda vs Facebook lawsuit, there were no even damages and yet FB lost and paid cool ~$0.5B, imagine what would be happening when some damages could be suggested?
That’s true for tech workers and other highly paid folk. That’s not at all “usually” true - I think you should go and look up all the cases of fast food workers, veterinarians, dentists etc that are slapped with non competes with no severance. They’re 100% abusive, and the majority
Not everyone can afford to just walk away more than once or twice.
And people may perceive the uncertain alternative of not getting that job right now as much worse than it would actually turn out, and agree to stuff they don't really want. Like the point made in this short comedy scene: https://www.youtube.com/watch?v=-yUafzOXHPE
As a young corporate go getter, I signed a few non-compete contracts. In two cases, I was lured away by a competitor. In both cases, I tried (unsuccessfully) to hide where I was going. My old companies found out and tried to enforce the non-compete as punishment.
Both times, my attorney filed the necessary paperwork, we showed up in the first case and my boss was threatening me outside in the lobby before we went in, telling me I'll never work in this city again. We go in and judge basically laughed at the company and tossed the case immediately.
I don't remember the slew of cases he listed, but the message was clear. You cannot keep someone from working in their chosen field simply because you don't like your competitor. Since no laws were broken and I left with literally nothing but the suit I wore in on my first day - they didn't have any reason to keep me from working in my field.
The other case went the same way a five or six years later.
Right-to-work laws only affect employees' relationship with a union if one exists in their workplace, not employee<->employer relationships. So “living in a right-to-work state” has no relevancy to your anecdote.
I'm guessing OP probably meant an "at-will" employment state [0], which is rather more relevant.
Those two terms are frequently confused, and I place a lot of the blame for that on the blandly Orwellian naming of "right to work" laws, which actually take away rights instead. Specifically, it outlaws any group of workers and employers from making a certain kind of voluntary agreement between one-another.
1) Can you explain specifically how living in an "at-will" state (or "right to work" state), assisted you in being able to ignore/defeat your non-compete agreement?
2) Do you think that if you were living in the only state that is not an "at-will" state (Montana) that the outcome would have been any different for you? How so, specifically?
3) Are you aware that many people living in an "at-will" state still have just-cause contracts? My dad did as a school administrator. Living in an "at-will" state does not mean that your employer is forced to use at-will employment contracts, it merely allows them to.
I'm completely failing to see any connection at all between "at-will", "right-to-work", and non-compete agreements. While at this point I think you're simply wrong, I'm sincerely very open to learning what I might be missing here!
For context: 49 states are "at will", which only means that employers can fire you for any (non-protected) reason or no reason at all. The only state that is not, Montana, has a law that employment is categorized as "just cause". Montana's just-cause employment law, unique among U.S. states, requires that after a probationary period, employers can only terminate employees for "good cause." This means that an employer must have a legitimate, job-related reason for firing an employee, such as poor performance, misconduct, or other actions that are detrimental to the business.
At-will is the counterpart to “just-cause”. “Just cause” contracts like the ones in Montana only bind the employer, not the employee. So this explanation still is irrelevant to the anecdote at hand.
That's true, but right-to-work states tend to also have lots of other employer-friendly legislation. In theory, you could have a state with a right-to-work law and good employee protections. In practice, I'm not aware that one exists.
Right-to-work has become an almost sarcastic shorthand for a state that gives employers strong powers against their workers, and then wonders why they don't have more startups.
You're fortunate you could afford an attorney and successfully argue your case. Most of the folks under a non compete (like hourly restaurant workers!) probably can't do that.
That really is an abuse of employees to enforce non-competes on restaurant workers. There's nothing proprietary or top secret from one place to another, it's just a way to screw someone over if they leave so that they have no choice but to stay. In the UK and EU, we prohibit non-competes specifically to stop this kind of employer power over employees, seeing it essentially as a form of modern-day indentured slavery.
On the other hand, for extremely top-level managers or workers with access to commercially sensitive information, I can understand the desire for non-competes, but we would typically solve that by having contractually agreed long notice periods (putting people on gardening leave for the notice period) and NDAs.
My wife was sued by the very large company she worked for under a non-compete after she went to a company that they saw as a competitor. They sued her in Texas (even though she worked for them in a Northeast state) and the two companies spent $500K battling it out before it even made it to discovery. We were out $20K personally just in legal fees to have an independent lawyer advising us. Neither company cared about her particularly, but were really fighting each other. When the old employer successfully got an injunction against her, then moved the case to Federal court, and laid out what the first year of the case was going to look like (while she was unable to work at all because of the injunction), she pulled the plug and settled with her old company with an incredibly one sided agreement, basically hamstringing her from working in the industry for the next 18 months.
Jeez those two companies must have really hated each other. That sort of legal investment is usually a personal thing by CEOs as much as about business.
The new company was in California, where there are stricter non-compete laws, and had been poaching people from the old company. They were at the point, I think, where they both wanted to get federal precedent on non-competes to settle matters. This is what one of the lawyers in Texas told us (we had lawyers in three different states working on "our" team), when he suggested we might not want to play defendant in that game.
Right to work is 100% anti-union. In reality, it's "the right to work without any protections."
The idea used to sell it is that you don't owe your employer any loyalty, and they don't owe you any loyalty; either of you can walk away at any time.
In reality, this creates a completely asymmetric power dynamic. You can be fired at any time, for any reason, which means you have little power to advocate for better compensation, safer working conditions, and so on.
Which is to say, it's only anti-union if people don't actually feel they get value from being in the union. If people do feel they get value from being in the union they'll join the union.
But if the majority are in a union and those that don’t join reap all the benefits the union gains in contracts how is that fair for those who are supporting the union.
That's not exactly it, either. Right to work means unions and companies can't negotiate union security agreements. These are agreements that non-union workers have to pay to support the union, since they are benefitting from the union. Essentially they allow the union to coordinate individuals in a prisoner's dilemma.
Where your comment misses the mark is that workers in non-rtw states don't have to join or even pay for unions. They can work for companies that do not have union security agreements. There is no coercion in any step in the chain.
most of what you've said is pure pro union. propaganda is not necessarily untrue in every regard, but it selectively paints a rosy picture toward a particular agenda. Union workers can always "walk away any time", your "right to work selling point" doesn't even make sense.
right-to-work laws simply say that you can work for a company without being forced to join the union that is representing some/all of your fellow workers. Forcing workers to join unions (and pay dues) in order to get a job greatly enhances the power of union bosses, and as we all know, power corrupts.
It's not that simple. Right-to-work laws say that even if you don't join the union, you can't be left out of the benefits that the union negotiates with the boss. "Right-to-benefit-from-the-union-without-paying-dues" doesn't sound as fair as "right-to-work" though.
On that note, I fell for a union scam. They got an entire day of propaganda to give me, and made it clear I had to sign up if I wanted to keep working there. Turns out they're paper tigers, but it took 1 click to sign up online, and I have to send them a signed certified letter at the start of the year to cancel...
Your “or by you” is superfluous. Just-cause contracts in the only state which requires them for most general employees (Montana) only limit what the employer can do, not the employee. The vast majority of just cause contracts allow the employee to leave whenever they want.
Serious q: what was the basis for that being thrown out? I am anti-"blanket uncompensated non-competes signed by everyone making over 60k", but it would be nice to know what particulars might have helped you out
Note that the ruling was ostensibly about whether the FTC had the authority to ban noncompete agreements across the board, it was not per se a ruling on whether noncompetes are good, bad, scary, awesome, legal, or illegal.
It's a very good point to keep in mind. I think that non-compete agreements should be illegal, but that doesn't mean the FTC's ban was the right way to accomplish it. Unfortunately I don't have the legal knowledge to evaluate whether the judge ruled well on this case.
I think you're still giving too much away: you're saying that a past employer has the right to block you from other employment opportunities (so long as they pay some predetermined amount).
Instead, how about get rid of noncompetes entirely. If someone doesn't want you to go to be employed by a competitor of theirs, they'll have to make you a deal (employment, or other contract) that you'll accept at that time. No past noncompete clause in an imbalanced power dynamic required.
(Side note: This would also be incentive for companies to go back to inspiring loyalty, by example. And not hiring mercenaries who will hop at the next better deal.)
As long as you keep paying me my full salary, and I keep accepting it, I won't work for anyone else. If you stop paying me, or I stop accepting the money, I can go work for anyone else I choose to.
If that happens to look like me sipping a pina colada on a beach in Bali while you're paying me to do nothing, so be it. You're paying my salary for me not to work for another company.
Nah, it should be the higher of current pay or potential pay so that i can offer jobs at ridiculous salaries to my competitor's workers and stick my competitor with huge bills if they choose not to waive the non compete. Weaponize this the other way to end the utter stupidity
I avoided stating what the full compensation should be. In my world, if your skills become more valuable or a competitor were willing to pay more than your current compensation, the current company should be given the option of either matching that compensation or releasing you from the noncompete.
This. Companies typically get these non-compete and non-solicit clauses in place when you accept RSUs or other equity award. In some cases they don’t even vest for a few years or could be worth only a few thousand dollars. It’s hard for me to get my head around the fact that nearly no meaningful consideration is actually given to employees when in fact the potential down side of loss of income is so huge when you are prohibited from working in your field for a year or more. The deal is absurd and should be prohibited.
If there is a real threat of damage to a company’s competitive position then the company should pay you to stay on the sidelines, instead companies are stifling individuals ability to grow and earn an income.
This is Texas so I am inclined to think the judge is a political hack installed by someone to issue judgements that are paid for. As much as I don’t want to, after seeing the recent Supreme Court and other rulings, this is the first thought that came to mind.
Another hypocrisy of people who advocate liberal and free economy. Many of them criticize the state because it is a monopoly and claim that the state prevents competition. However, they try to do the same thing themselves.
I personally believe the FTC noncompete rule is not strong enough, rather than too strong, because it doesn’t protect the public from customer noncompete clauses like those of closed AI companies like OpenAI, Anthropic, Microsoft, Google, and even Mistral’s platform side. They learn from us and then prohibit customers from using output to improve our own models. This creates big safety issues as near misses cannot be used to instruct future models.
IMO negative of negative is a less efficient comm strategy. For example, I'd word this as US Judge allows workers to compete with ex-employers or something similar.
I don’t like or support trump. A president can nominate anyone and as many anyones as they want for a judicial position. Congress says yes or no to the appointment, not the sitting president.
Making things about trump even when they aren’t is getting tired.
Teamsters lost 8-1 in the Supreme Court just a year ago[0], for example.
What are you even arguing here? That a judge is appointed by a Democrat means they rule in favor of unions at all times? That wouldn't be virtuous, that would be corruption.
I'm personally glad the world is not as black and white as you seem to see it.
Only the Senate approves judicial appointments. The Presidency and the Senate are the least representative elected institutions. Trump lost the popular vote quite considerably, twice, and the Senators who approved his appointments represent an even smaller minority of the USA. It's hard to paint judicial appointments as democratically representative.
Beyond that, in most advanced democracies, it is a norm that judicial appointments are apolitical. Often there are non-partisan judicial appointments commissions and other processes used to suggest nominations, and the norm is that these processes are followed.
> Making things about trump even when they aren’t is getting tired.
Plus incredibly toxic for the community and blatantly against the HN guidelines. These are the comments that the flag button is built for - use it! Politics is, generally, not on-topic for HN (https://news.ycombinator.com/newsguidelines.html).
Regardless of whether “money is a form of free speech” or not, nothing in the constitution prevents you from signing contracts that limit your free speech, directly. It’s totally legal to agree to a contract not to say certain things in public, for example.
The OpenAI contracts are nine kinds of illegal in countless jurisdictions and a source of constant scandal with an emphasis on compete and disclose rights.
Whatever happens when you mix Altman, Summers, and Simo?
I’ll stop trying to put @sama in prison when I’m dead. Long after OpenAI is a hole in the ground where a hundred billion dollars used to be I’ll never, ever stop bringing him to justice.
Unpopular opinion, but this is great. FTC has been overreaching the past 4 years and it needed proper checks and balances from the court. As the Judge mentioned, there are specific cases where Non Compete doesnt make sense and there are cases where it does especially if you are paid highly for the specific reason that you are long term investment for that company.
Else trade secrets can easily be hired away from competition
There's just no way to spin this as the proper workings of an elegant system of checks and balances when time and time again these decisions about federal regulatory issues or other matters of national importance are nakedly forum (sometimes judge) shopped into Texas district courts. The debacle with Kacsmaryck and the Fifth Circuit's dismissal of the randomization guidance from the judicial conference is an absolute disgrace.
Until these kinds of cases are assigned to a random district court, nobody's fooled by this.
>Else trade secrets can easily be hired away from competition
Misappropriating trade secrets is already a crime in several states and federally.
>you are paid highly for the specific reason that you are long term investment for that company.
Sounds like the company then should make staying long term an attractive proposition. I mean I understand, but "investment" usually implies some amount of risk.
I think you’re misunderstanding the original FTC Noncompete Rule Ban. It would currently apply to employers other than senior executives to prevent trade secrets to be hired away. Additionally, they provide alternatives that won’t allow for trade secrets to leave a company such as NDA’s, which is what most non-competes have to prevent dissemination of trade secrets.
All non-competes are harmful, end of story.
Link to the ruling: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rj8_52.B... (…though this PDF is kinda horrible, since it seems to somehow not be searchable at all, but it's the only one I've found in like 7 different news sites, all but one of which can't cite their sources…)