The FTC realizes noncompetes are garbage

This one will be a game changer

The FTC is moving to ban noncompete agreements and I can’t wait. 👀

News broke yesterday that noncompete agreements may soon be banned from labor contracts. Existing noncompete agreements would be ripped up, too.

The driver? Noncompete agreements stifle wage growth since people’s career options are taken away. As the New York Times noted, 20-45% of Americans have an noncompete in their current employment contract. Me being a (remote) office dork, I had no idea this nonsense was being applied to workers in retail, construction, hairstylists, etc. 

A rant:

👉Awful companies lean into noncompetes because it’s the only way they can keep people.

If the only reason someone stays at your company is because you’ve taken away their ability to make a living elsewhere, you’re a joke.

Straight up. Hill I’ll die on.

The knee jerk reaction to this news is that everyone is going to bail on their jobs. Which also isn’t true.

Some people actually like their jobs. They’re happy with their environment. And growth opportunities. And pay.

It’s everyone who isn’t in that group who’s out the door. If you’re worried about that happening at your firm, 2 words for you: suck less.

👉Even when they aren’t unenforceable, it’s weaponized legal threatening.

I’m no lawyer. I can’t break down legal specifics. But working in recruiting I’ve seen how these play out.

Currently everything is state by state. Laws in California vs Alabama are totally different. Some states simply restrict employees from “stealing clients.”  Others restrict them from working in an entire industry entirely. (Maybe the only one they’re experienced in.) 

Even in states where noncompetes aren’t enforceable, companies still try.

By ‘try’ I mean they send their goon squad of lawyers after former employees and their new employers. Even when they don’t have a case.

It costs money. And most people don’t have the cash to fight it.

Those of you who work in recruiting know exactly how petty this gets. A decade ago we got a cease and desist after hiring a 2 year recruiter. As did the recruiter.

Did they think an early 20-something would take down their business by working for a competitor? Probably not.

Why do it? To scare every other kid right out of school that moving onto something better could come with a fat legal bill.

(Side note: I’ve got more ridiculous examples, but we’ll let sleeping dogs lie. But know that Hirewell will go to the mat for team members we bring onboard who have to deal with this garbage.)

👉Noncompetes are anti-capitalist.

The irony from opponents of the ban isn’t lost on me. Companies who want the government to stay out of their business, as long as staying out of their business benefits them.

Free markets work great. As long as it applies to everyone. 

The good companies will benefit. The bad ones will suffer. The bad ones will be motivated to become good ones. Or perish.

That’s exactly how this is supposed to work.

James Hornick

Partner at Hirewell. #3 Ranked Sarcastic Commenter on LinkedIn.