Law Biden Moves To Restrict Noncompete Agreements, Saying They're Bad For Workers

[MMAisGod]

Would be the best thing Biden has done so far if he can pull this one off.

 

[jefferz]

So if I discover a way of making a widget that’s more efficient then anyone else makes a widget…. I want to protect my way of making that widget so I can maintain my advantage in the widget market for as long as possible.

Why is this a bad thing?

He’s saying I’ll have to pay my workers more in order to keep them at my factory and not run over to the competition ?

Ok well what about the guy that doesn’t like me for (random reason) and quits ?

Or the guy that decides he lives closer to the other factory and would rather work there?

Or the guy that doesn’t like being on the night shift at my factory anymore?


I think protecting my methods of operating is more important then competing wages because my factory and my profits are WHY Joe Blow has a job in the first place.

This is what’s wrong with America.

 

[Amerikuracana]

Well yeah what reason would there be not to keep hurting small businesses??

 

[nostradumbass]

HR checking in.

Non-competes are, for the most part, frivolous. The idea is that you don’t want that inside knowledge transferring directly to a competitor. The actual knowledge transfer risk is pretty low unless it’s a very senior employee.

Now, there are things like garden leave, where the exiting company actually keeps you on payroll for an extended period of time(maybe a year) and then you’re free to join another company. The idea there is your knowledge would be outdated by the time you join another company. That kind of makes sense in some ways.

My industry is big tech now and non-competes were much more prevalent in the finance industry. No one cares if a Google Engineer joins Facebook. It happens daily. I can see certain small businesses really being screwed by this though with some trade secrets.

There's a pretty wide range of what it covers, some more valid than others.

There are things like tech engineers where it makes little difference, but it seems pretty valid to not want people in a sales department taking their client list over to a competitor.

 

[second sight]

why don't they just make all intellectual property and trade secrets public information then, just poach everything from the people that did all the heavy lifting


the short sightedness of stuff like this is, they think they are helping the little guy and hurting the big companies, what will end up happening is another larger company will come and steal employees and ideas from successful businesses and it will be back to square one with the worker bees, likely worse because these new guys only care about profits.
the original company likely started with a passion to fill a need or solve a problem at least.

 

[Farmer Br0wn]

United States eliminates all non-compete clauses, making proprietary information easier to access.


China's reaction:

 

[second sight]

United States eliminates all non-compete clauses, making proprietary information easier to access.


China's reaction:

thats the word I was looking for

 

[reveler]

There was an example of Jimmy Johns doing it with their workers. They eventually dropped the practice. Obama suggested around that time to eliminate these type of agreements so it looks like the Biden administration picked up on it.
https://www.reuters.com/article/us-jimmyjohns-settlement-idUSKBN13W2JA

yeah that seems punitive, just to stop people from being able to quit and go somewhere else. theres nothing an entry level working is going to do to undermine the proprietary practices or competitiveness of any employer.

 

[12ga.]

do low level jobs even have non-compete clauses? like you cant work at burger king after mcdonalds because of all the "trade secrets" you learned. doesnt seem to address working class wages.

Yes. I signed one selling hardwood floors in college. Probably no more entry level sales position from a smaller company in the universe. We had a salesmen who was sued when he got his contractors license and went out on his own. They are standard fair all over. Usually unenforcable but costs you a bundle to find out. Thats the point. His parents had the $20,000 for a judge to throw it out.

 

[12ga.]

Sounds like a great idea to someone who generally despises the government getting in between people voluntarily making deals.

You're not voluntarily doing it. Employees signing are under duress because things like eating are important.

 

[HockeyBjj]

Yes, non compete clauses are the reason wages are stagnant. Nailed it.

Not every solution to a problem, has to be a root cause solution to the biggest problem in the field

This is definitely something that will help workers, moreso the 70-90k wage middle class. So many positions out that have non competes you have to accept to get the job.

 

[jrams]

why don't they just make all intellectual property and trade secrets public information then, just poach everything from the people that did all the heavy lifting


the short sightedness of stuff like this is, they think they are helping the little guy and hurting the big companies, what will end up happening is another larger company will come and steal employees and ideas from successful businesses and it will be back to square one with the worker bees, likely worse because these new guys only care about profits.
the original company likely started with a passion to fill a need or solve a problem at least.

You seem to not know the difference between an NDA and a non-compete.

A 1 year non-compete wouldn't prevent someone from leaking a trade secret a year later.

 

[Kana Li]

do low level jobs even have non-compete clauses? like you cant work at burger king after mcdonalds because of all the "trade secrets" you learned. doesnt seem to address working class wages.

Years ago when I worked at Walmart they forced us to sign one. It was basically saying we couldn't work at a place like Target at the same time we were working at Walmart.

 

[4daLuLZ]

Yes, non compete clauses are the reason wages are stagnant. Nailed it.

They're stagnant because everyone’s waiting for that trickle down economics.
Any day now.........

 

[djacobox372]

First Biden pushes "right to repair," now he's fighting back against "non-compete."

It's almost as if he does care about the little guy.

 

[cooks1]

So if I discover a way of making a widget that’s more efficient then anyone else makes a widget…. I want to protect my way of making that widget so I can maintain my advantage in the widget market for as long as possible.

Why is this a bad thing?

He’s saying I’ll have to pay my workers more in order to keep them at my factory and not run over to the competition ?

Ok well what about the guy that doesn’t like me for (random reason) and quits ?

Or the guy that decides he lives closer to the other factory and would rather work there?

Or the guy that doesn’t like being on the night shift at my factory anymore?


I think protecting my methods of operating is more important then competing wages because my factory and my profits are WHY Joe Blow has a job in the first place.

The protection of trade secrets are among the items in non-competes that courts actually enforce. Though they are usually protected better with NDA's. They rarely enforce the work restriction components however, especially if the geographic component is onerous. Even in states that technically allow it.

Both the company and employee have interests that must be protected. If an employee has spent considerable time in specific positions in an industry, they will have knowledge and skills that make them more valuable to other companies with those positions in that industry. NCA's should not be able to take that value away.

The problem with the way many companies use NDA's today is that they are trying to protect things that are not really 'theirs'. For example, they try to use them to protect customers or accounts that a sales person brought on board. But those customers are not their property. They do not own them. Trying to keep a former employee from competing against them in that way is kind of nonsensical.

 

[cooks1]

There's a pretty wide range of what it covers, some more valid than others.

There are things like tech engineers where it makes little difference, but it seems pretty valid to not want people in a sales department taking their client list over to a competitor.

It's understandable, but it's not right. And it's one of the least enforceable aspects of a NCA. Companies don't own their customers and clients. If companies are that concerned about a rep migrating business if he leaves, they should work harder to keep him from leaving.

 

[cooks1]

Get your widget making process patented. You don't need a noncompete for the type of protection that you're thinking about.

Noncompete are primarily used in industries where the human relationships are highly valuable. Thus when the individual leaves, the customers who have a relationship with that person might follow him to his new job. A noncompete tries to prevent that by restricting where the person can go and disincentivizing the employee from taking clients or by making it more difficult for the client to follow the employee.

Take a sales agent who has worked a specific geographic region for 10 years. He knows the people in that in region better than anyone. If he's allowed to compete within the same geographic region, he's going to take the business with him when he leaves. Companies don't want that (since they probably invested in developing the region for themselves) so they say that he has to compete far away from where he used to work. It makes sense in some contexts but it's also easily abused.

That is different from your widget process where you can just get a patent on your process and then you can enforce it against any person or company that copies it.

Precisely this. I don't think companies should be allowed this kind of control however. It is punitive to both their former employees and their customers.

In essence the company wants to 'keep' all the value their employee provided, while no longer paying the employee. In many of these industries, the product or service itself is highly commoditized, and the real value is in the relationship and depth of knowledge between that employee and the customer.

If the company really wants to limit a persons options like this after they leave, they should continue compensating them.

 

[Fugazy]

So if I discover a way of making a widget that’s more efficient then anyone else makes a widget…. I want to protect my way of making that widget so I can maintain my advantage in the widget market for as long as possible.

Why is this a bad thing?

He’s saying I’ll have to pay my workers more in order to keep them at my factory and not run over to the competition ?

Ok well what about the guy that doesn’t like me for (random reason) and quits ?

Or the guy that decides he lives closer to the other factory and would rather work there?

Or the guy that doesn’t like being on the night shift at my factory anymore?


I think protecting my methods of operating is more important then competing wages because my factory and my profits are WHY Joe Blow has a job in the first place.

Those are awful reasons for a non compete.

You didn’t specifically say anything about IP or related issues.

Those reasons are all legitimate reasons to leave an employer and there is no reason to hinder those former employees from gaining employment.

 

[panamaican]

Precisely this. I don't think companies should be allowed this kind of control however. It is punitive to both their former employees and their customers.

In essence the company wants to 'keep' all the value their employee provided, while no longer paying the employee. In many of these industries, the product or service itself is highly commoditized, and the real value is in the relationship and depth of knowledge between that employee and the customer.

If the company really wants to limit a persons options like this after they leave, they should continue compensating them.

Mostly agree, I do think it gets tricky when the company invested significant resources in developing the market and training the employee. Which is why it has to be industry and state specific.

A noncompete in a city of 50k is going to hit harder than in a city of 500k and is less defensible. And the more specific the skill set the more nuanced it has to be - that one cuts both ways.

But if they're just trying to control market share by eliminating competition vs. protecting a definable unique investment then I'm going to be against the noncompete.