FTC proposes ban on non-compete clauses

[Glennfs]

If people are quitting after training to go somewhere else, it's all part of the same package. You have to be competitive to keep employees.

In my case, I only would be required to pay back money I was directly given. How do you pay back for training? Who decides what that cost is?

The cost should be and probably is decided before you enter the program

[gounion]

The cost should be and probably is decided before you enter the program

Do you think you should have the right to quit a job and go to a better one? Yes or no?

[Glennfs]

Do you think you should have the right to quit a job and go to a better one? Yes or no?

Of course but they should not be able to steal from their previous employer.
What is the difference between stealing customers or intellectual property and stealing from the tool crib

[bird]

Of course but they should not be able to steal from their previous employer.
What is the difference between stealing customers or intellectual property and stealing from the tool crib

Customers aren’t “stolen”. Under the theory of the (non-existent) free market a customer MUST be allowed to go where they wish. If they wish to follow a salesperson or truck driver to another supplier/vendor then that is their CHOICE. Now, incentives aka bribes by the employee to induce a customer to change is a far more dangerous scenario. By way of example I have had multiple potential employers ask me how much business would I be able to bring with me should I become employed by them. The answer is always none. Not because of some moral principle or non-compete but because the new company would have to earn their business. I would help with that but I could not arbitrarily cause them to change just because I went somewhere. On the flip side if a customer has developed a personal relationship with a salesperson and chooses to follow them then that is their choice. Businesses do not OWN customers. I had to edit to put in this caveat: if a customer is under a contract with a company then their leaving might constitute breach of contract. That onus, however, is on the customer.

Intellectual property is something else. Processes, formulations that are unique to one company should certainly be protected. Pricing enters a gray area. Costs should be protected. Selling price is determined by what companies think they can squeeze out of their customers and is frequently already “known” to a degree by competitors.

As for taking physical items owned by the company? That is theft unless approved by the company. That does not apply to customers.

[gounion]

Of course but they should not be able to steal from their previous employer.
What is the difference between stealing customers or intellectual property and stealing from the tool crib

Is “stealing customers” stealing? Yes or no?

I had the same barber from when I was a baby into my forties. He worked for different employers, until he started his own shop.

Was he “stealing customers’? Did I have a right to decide where to get my hair cut? Yes or no?

In a free enterprise country, if they aren’t breaking contracts, a company can change who they do business with.

What is your problem with that?

I’ll tell you what it is: Your own personal interest. If those salesmen had brought their business to YOUR company, you would have been overjoyed.

[Number6]

Is “stealing customers” stealing? Yes or no?

I had the same barber from when I was a baby into my forties. He worked for different employers, until he started his own shop.

Was he “stealing customers’? Did I have a right to decide where to get my hair cut? Yes or no?

In a free enterprise country, if they aren’t breaking contracts, a company can change who they do business with.

What is your problem with that?

I’ll tell you what it is: Your own personal interest. If those salesmen had brought their business to YOUR company, you would have been overjoyed.

The issue of "stealing customers" is a business ethics problem. If your barber started his own shop and asked his customers from the barber shop he previously worked at to following him to his new barber shop that would be "stealing customers." However, if he didn't do that and his customers followed him to his new barber shop then that wouldn't be "stealing customers" because the customers made the decision to switch without incentives or coercion.

[Glennfs]

Is “stealing customers” stealing? Yes or no?

I had the same barber from when I was a baby into my forties. He worked for different employers, until he started his own shop.

Was he “stealing customers’? Did I have a right to decide where to get my hair cut? Yes or no?

In a free enterprise country, if they aren’t breaking contracts, a company can change who they do business with.

What is your problem with that?

I’ll tell you what it is: Your own personal interest. If those salesmen had brought their business to YOUR company, you would have been overjoyed.

A barber's customers are his customer not the shops in most cases.
While a person who takes Roadways customer list and rate chart is much different than your straw man comparison.

[bird]

A barber's customers are his customer not the shops in most cases.
While a person who takes Roadways customer list and rate chart is much different than your straw man comparison.

Change the goalposts?

A customer list is not intellectual property. They are the very definition of “the market”

Rate lists which likely include things like volume discounts are something else.

[gounion]

A barber's customers are his customer not the shops in most cases.
While a person who takes Roadways customer list and rate chart is much different than your straw man comparison.

You know, you'd have been happy if they were "stealing customers" for YOUR company.

Sounds like the company should have been paying their salespeople better. OR giving better rates to their customers.

[ZoWie]

Apples and oranges. Barbers, or hair stylists as they tend to call themselves now, are typically free lance workers. They rent chairs in a shop. Technically, they work for clients, and the owner gets compensated for providing a place to work.

An engineer in a company using their talents to help design products is not free lancing. The company owns the patents and they are proprietary information. Thus the noncompete clauses, though I agree they are abused, just like everything else, as a means of binding personnel to a company and keeping wages down industrywide. Once again we see the general hypocrisy of "free market capitalism." They actually want a free market when it benefits the rich, otherwise it's all a commie plot.

This could be a legislative priority, but it won't be. As we have seen many times, the Republicans would rather spend the country's time investigating the Democrats. Deep down, though they'll never admit it, they're anarchists for the rich and autocrats for the poor.

[Number6]

A barber's customers are his customer not the shops in most cases.
While a person who takes Roadways customer list and rate chart is much different than your straw man comparison.

Substitute "barber" for "lawyer" and make it where a lawyer is starting their own firm or joining another firm. Does that lawyer have a legal right or professional ethical right to take the law firm's client list to his firm or the firm he's joining?

The topic of this thread is a proposed ban on non-compete clauses and the point I've been trying to make is the proposal is going to have to be tweaked to cover a wide variety of scenarios because there are literally hundreds if not thousands of situations where this could negatively impact either or both sides .

[Glennfs]

Substitute "barber" for "lawyer" and make it where a lawyer is starting their own firm or joining another firm. Does that lawyer have a legal right or professional ethical right to take the law firm's client list to his firm or the firm he's joining?

The topic of this thread is a proposed ban on non-compete clauses and the point I've been trying to make is the proposal is going to have to be tweaked to cover a wide variety of scenarios because there are literally hundreds if not thousands of situations where this could negatively impact either or both sides .

I am guessing that lawyers have to sign some sort of no compete clause

[gounion]

In the “land of the free” then people should be able to quit and take a job they want.

But some people want corporations to own employees. I don’t.

[JoeMemphis]

Substitute "barber" for "lawyer" and make it where a lawyer is starting their own firm or joining another firm. Does that lawyer have a legal right or professional ethical right to take the law firm's client list to his firm or the firm he's joining?

The topic of this thread is a proposed ban on non-compete clauses and the point I've been trying to make is the proposal is going to have to be tweaked to cover a wide variety of scenarios because there are literally hundreds if not thousands of situations where this could negatively impact either or both sides .

Non compete agreements are often difficult to enforce. They can be too long. They can be too broad. I got one of them kicked out because the employee was asked to sign a non compete after the employee had been with the company for a couple of months and the employee received nothing in exchange for his signature.

Well written reasonable non compete / non solicitation agreements can be enforced in court. They are often defined quite succinctly and are not overly broad. You cannot prevent an employee from making a living but you can protect your intellectual property and your customer list. That IMO is as it should be.

[gounion]

Non compete agreements are often difficult to enforce. They can be too long. They can be too broad. I got one of them kicked out because the employee was asked to sign a non compete after the employee had been with the company for a couple of months and the employee received nothing in exchange for his signature.

Well written reasonable non compete / non solicitation agreements can be enforced in court. They are often defined quite succinctly and are not overly broad. You cannot prevent an employee from making a living but you can protect your intellectual property and your customer list. That IMO is as it should be.

I have no problem at all with protecting intellectual property, and there are reasonable ways to do so.

But when Jimmy John’s Sub Shop made every employee down to the kids making the subs sign a non-compete, where they couldn’t quit and go to work for, say, Subway, is insane and it shows why such agreements need to be banned.

Full disclosure - after the contracts were made public, they did stop the practice. But it still needs to be banned.

[JoeMemphis]

I have no problem at all with protecting intellectual property, and there are reasonable ways to do so.

But when Jimmy John’s Sub Shop made every employee down to the kids making the subs sign a non-compete, where they couldn’t quit and go to work for, say, Subway, is insane and it shows why such agreements need to be banned.

Full disclosure - after the contracts were made public, they did stop the practice. But it still needs to be banned.

I would not ban all non compete agreements. That isn’t necessary or required. In your example, I doubt a Jimmy John’s non compete would be enforceable. Was it ever challenged in court?

[gounion]

I would not ban all non compete agreements. That isn’t necessary or required. In your example, I doubt a Jimmy John’s non compete would be enforceable. Was it ever challenged in court?

They always enforced it. But when it was made public and attacked in the press, they dropped it.

Again, why should a company have power over a person's right to quit and take another job?

[JoeMemphis]

They always enforced it. But when it was made public and attacked in the press, they dropped it.

Again, why should a company have power over a person's right to quit and take another job?

Who enforced it? The courts? Parties can draft and sign all sorts of agreements but that does not mean they are legal and enforceable in every circumstance.

I have seen some cases where non competes held up in court and other cases where they did not. My question is whether the example you gave for Jimmy John’s was ever challenged and enforced in court? Was there ever a case made in court?

[bradman]

https://www.reuters.com/article/us-jimm ... SKBN13W2JA

(Reuters) - Fast-food franchise Jimmy John’s has agreed not to enforce a prohibition on workers at its sandwich shops from taking jobs with competitors in order to settle a lawsuit claiming the agreements were illegal, the attorney general of Illinois said on Wednesday.

The Illinois-based company, which operates nearly 300 stores in the state and 2,000 in the United States, also will provide $100,000 for programs to raise public awareness regarding so-called non-compete agreements, Attorney General Lisa Madigan’s office said.

“This settlement helps ensure Illinois’ workers have freedom to change jobs in order to seek better wages, further their careers and improve their lives,” Madigan said in a statement.

Jimmy John’s in a statement said it took steps to rescind non-compete agreements even before Madigan’s office first contacted the company last year. The attorney general had no evidence that Jimmy John’s ever enforced a non-compete agreement against an hourly worker, the company said.

+

Requiring white-collar workers to sign non-compete agreements is common and frequent legal battles over the validity of such agreements focus on the length of time they are in effect and their geographical limits. But the pacts are almost unheard of in fast-food and other service industries.

Seems the difference is whether or not you serve the chicken or have access to the colonel's secret recipe.

[Bludogdem]

Substitute "barber" for "lawyer" and make it where a lawyer is starting their own firm or joining another firm. Does that lawyer have a legal right or professional ethical right to take the law firm's client list to his firm or the firm he's joining?

The topic of this thread is a proposed ban on non-compete clauses and the point I've been trying to make is the proposal is going to have to be tweaked to cover a wide variety of scenarios because there are literally hundreds if not thousands of situations where this could negatively impact either or both sides .

The courts have historically tweaked non competes. I don’t think the FTC is looking at a ban. If they are then the courts will shut that down. I think the FTC will target those overly broad and general restrictive covenants.

[JoeMemphis]

https://www.reuters.com/article/us-jimm ... SKBN13W2JA

+


Seems the difference is whether or not you serve the chicken or have access to the colonel's secret recipe.

I can’t imagine a non compete on an hourly sandwich maker would be legal and enforceable in court. That’s my point. JJ would have to prove damages against an hourly sandwich maker. I doubt they can do that without getting laughed out of court.

As far as salaried workers, that also depends on a number of factors. I have seen some non competes that were strong agreements and enforceable and I have seen others that were not. It all depends on the position as well as how the agreement is written and whether the terms are reasonable.

Bottomline, I would agree with a previous poster that you can’t outlaw all such agreements. Businesses do have a right to take reasonable steps to protect their intellectual property and trade secrets.

[Bludogdem]

They always enforced it. But when it was made public and attacked in the press, they dropped it.

Again, why should a company have power over a person's right to quit and take another job?

“The attorney general had no evidence that Jimmy John’s ever enforced a non-compete agreement against an hourly worker, the company said.”

https://www.reuters.com/article/us-jimm ... SKBN13W2JA

Nobody would bother to enforce a non compete like that. It would cost money and business owners know they would loose in front of a judge.

[gounion]

I can’t imagine a non compete on an hourly sandwich maker would be legal and enforceable in court. That’s my point. JJ would have to prove damages against an hourly sandwich maker. I doubt they can do that without getting laughed out of court.

As far as salaried workers, that also depends on a number of factors. I have seen some non competes that were strong agreements and enforceable and I have seen others that were not. It all depends on the position as well as how the agreement is written and whether the terms are reasonable.

Bottomline, I would agree with a previous poster that you can’t outlaw all such agreements. Businesses do have a right to take reasonable steps to protect their intellectual property and trade secrets.

Yep, they did get sued - by several states. And they didn't get laughed out of court. They didn't do anything unusual. Companies across the nation have such agreements that you're forced to sign.

And it's a great threat to a low-wage worker. You scare them with a letter from a lawyer, saying you'll have to pay for their costs for suing you. It's how big corporations lean on workers without the resources to fight back. But then, you guys love that, don't you?

And it was certainly unreasonable:

According to state prosecutors, the agreement prevented Jimmy John's employees from working in any other business that earns more than 10 percent of its revenue from selling “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches.” The non-compete clause applied to any competing restaurant located within a three mile radius of any Jimmy John's store in the country.

And while they may not have actually sued an employee in court, they likely DID threaten many workers. They were also sued by franchisees over a "no-poaching" of employees that franchise owners were forced to sign.

And this from a legal site makes some good points:

Second, if your company requires employees to sign noncompete restrictions, is it prepared to enforce those agreements? Debra Pressey of the News-Gazette reported that Jimmy John’s issued a statement in response to the Illinois lawsuit that it was previously sued in federal court over the use of its noncompete agreements. That lawsuit was dismissed after Jimmy John’s represented it would not seek to enforce such agreements. In response to the Illinois lawsuit, Jimmy John’s again reiterated it “would never enforce a noncompete agreement against our employee that might’ve signed one.” So why have a noncompetition restriction if it is not going to be enforced?

Third and building on the preceding point, Jimmy John’s has now been sued, at least twice, for non-compete restrictions it has no intention of enforcing – assuming they were to begin with. Certainly this is not a great strategy or use of company resources. But where were its attorneys when it came to discussing these practical and legal issues? Perhaps too busy billing for the recycling old drafting of non-compete restrictions that may or may not fit the company’s business needs and that may not be enforceable in the first place?

In our experience over the years representing individuals sued for purportedly violating noncompete restrictions, cases like the Jimmy John’s noncompete agreement are not the exception. It is common to see employers seek to enforce non-compete restrictions under ridiculous circumstances on par with the Jimmy John’s example.

In my brief google research, I found that several states, all northern states, had sued Jimmy Johns. I'm not surprised. I guess that's why southern states brag about being "business friendly". Is that because the "business friendly" states will just ignore businesses using such agreements to threaten their workers? THAT'S why there needs to be a nationwide ban.

[Glennfs]

They always enforced it. But when it was made public and attacked in the press, they dropped it.

Again, why should a company have power over a person's right to quit and take another job?

I call shenanigans I doubt it was ever enforced against an hourly employee

[gounion]

I call shenanigans I doubt it was ever enforced against an hourly employee

BUT they most likely sent threatening letters, which would scare low-wage workers.

But you never gave a shit for workers, did you?