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…)
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.
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 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.
The judge is female.
It's still harmful, but you're at least able to get compensated for the harm.
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?
Here's the original from recap: https://www.courtlistener.com/docket/68463428/212/ryan-llc-v...
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.
It's a highly-paid industry FWIW.
I think it makes sense to ban them.
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.
https://www.courtlistener.com/docket/68463428/211/ryan-llc-v...
https://www.courtlistener.com/docket/68463428/212/ryan-llc-v...
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]
[0] https://finance.yahoo.com/news/whether-wall-street-garden-le...
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.
>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.
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.
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.
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.
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.
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.
So “at will” also has to do the anecdote.
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.
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?
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.
[1] https://assets.publishing.service.gov.uk/media/5a7f68b440f0b...
The lucky ones live in states that slap these things down.
Then fucking pay me, naked capitalism
Anyway, this action will certainly help come Election Day. Maybe the Democrats will mention it during their convention, good PR for them.
Or you sign in advance, in exchange for what you feel is good enough compensation, so again, they are paying you.
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.
I think that's the only fair non-compete.
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.
Else trade secrets can easily be hired away from competition
Until these kinds of cases are assigned to a random district court, nobody's fooled by this.
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.
NDAs already cover trade secrets.
As a result of this ruling, non-competes are now enforceable; workers are not allowed to compete with ex-employers.
If you live in a state that banned non-competes (California, Illinois, etc), your employer can try to sue you, but it won't go anywhere.
The noose is closing.
Whatever happens when you mix Altman, Summers, and Simo?
It’s a biohazard.
Surprise, surprise
Oh yeah, any time you have to deal with a non-compete, just ring up the FTC. Because everyone has the resources to litigate. Ridiculous.