your non-compete agreement is now illegal (or it will be in 4 months)

The Federal Trade Commission yesterday banned non-compete agreements for most U.S. workers, saying that they stifle wages.

The ruling not only makes non-competes illegal, but it also requires employers to to inform employees with existing non-competes that they are null and void.

An exception was carved out for existing non-competes for senior executives; the ruling would allow existing non-competes only for that small group but bans new ones for them too. It’s also important to note that the ruling will not apply to nonprofits since the FTC doesn’t have authority over them.

The ruling is slated to take effect in 120 days … but court challenges from business groups are expected.

Meanwhile, non-competes have already been banned in California, North Dakota, and Oklahoma, and 11 more states and Washington, D.C. prohibit them for hourly wage workers or workers below a salary threshold.

{ 220 comments… read them below }

  1. alex*

    What about when companies tell employees they must leave immediately if they are going to a competitor? Would that still be allowed?

    1. Seashell*

      I would think that they can tell you to leave immediately even if you’re quitting to go back to school or live in a monastery or whatever.

        1. Birb*

          I can see how it is up to them if they let you stay, pay out that 2 weeks, or let you collect unemployment for the lost wages… But do you legally HAVE to tell your boss where you’re going when you quit?

          1. Kevin Sours*

            You do not. I mean legally you don’t have to tell them that you’re quitting, though it’s really pretty rude not to.

            1. Some dude on the Internet*

              It’s a double standard. At-will employment means companies can let you go on a moment’s notice, and this is actually a very common practice. Yet it’s considered “burning bridges” when an employee leaves without giving notice.

          2. MassMatt*

            Not only do you not have to tell them where you are going, but in the case where your bosses have shown themselves to be vindictive nuts, you absolutely should NOT tell them anything about where you are going.

          3. mlem*

            Nope. But most US employees could legally be fired for refusing to say. (That’s not relevant if you don’t give notice, though, of course.) And the nosier ones will haunt your contacts/media to track down where you’ve gone anyway, if they’re vindictive.

          4. becca*

            i feel like non competes c*ckbl*ck people from earning a living wage; to have your livelihood controlled by someone else determining whether you can persue other passions, or make up hours at a facility in an industry they are an expert in already… maybe the employer can pay a living wage to begin with lol

            1. Princess Sparklepony*

              Especially when they use it to trap fast food workers. Seriously, no one working the front counter or the fryer knows the special spice blend, it stirred up in a factory somewhere.

              1. MigraineMonth*

                Speaking of fast food non-competes, there was a mediocre sandwich chain founded in my city a generation back. Apparently the owner’s two sons fought over who would inherit, and one went off and founded another sandwich chain with the same menu. Currently, these two sandwich chains in the same city have vicious non-competes with each other, despite the fact that they serve identical terrible sandwiches.

                (I’m bitter because I ended up going to both places in search of a decent sandwich, not realizing they were functionally the same. Clearly there’s some trade secret they’re protecting that allows them to make singularly unappetizing bread-cheese-vegetable combos.)

    2. TarquinOnTheShelf*

      Yes. In terms of information security, this is a critical ability, and is both legal and best practice for positions with access to sensitive information.

      1. Antilles*

        1.) How much does that actually help though? If you have an employee who plans on poaching clients or sneaking off with secrets, they could still very easily do that. It just requires an extra few minutes of planning (e.g., by adding clients on LinkedIn or your personal cell).
        2.) I am pretty sure the vast majority of cases where employers do this don’t actually have legitimate worries about “sensitive information”; it’s either applied broadly without consideration for whether it’s necessary and/or they’re wildly overthinking what is actually “sensitive information”.

        1. TarquinOnTheShelf*

          It actually does help. There was a study done a few years ago by a DLP (data loss prevention provider) and a Big Four accounting firm that found that on the order of 80% of IP and trade secret thefts by departing employees occurred AFTER an employee had given notice.

          For many thieving employees, it appears to be either an afterthought, or they are concerned with being caught and fired before they have a new job lined up.

          It also gives the company a little time (presuming they won’t start the new job for two weeks) to investigate what files the departing employee downloaded and accessed, and pursue a temporary restraining order or a demand letter to the hiring company before the employee actually starts with the competitor.

          It’s not perfect by any means, but considering how useless most employees are after they have given notice, it is both prudent and reasonable.

          1. Kevin Sours*

            “presuming they won’t start the new job for two weeks”

            If a company makes a habit of not paying for the notice period this is not a good presumption.

          2. Antilles*

            Interesting. Hadn’t seen that study, but that seems like a really high number.

            However, I do believe the amount of times companies THINK employees have access to Super Important Trade Secrets ™ is far higher than the amount of times the information is *actually* that relevant. Imagine you lose several clients who drop your service to follow the employee to their new firm. The company would likely claim it’s because of insider information because he had the client list on his way out…but is that really true? In most cases, the honest answer is no. If your client jumps to a new vendor based on the employee/client relationship, it seems likely that they would have swapped away from you anyways once their preferred Client Manager left; whether that’s to the job the new employee moved to or one of your other competitors. Maybe take a long look in the mirror and honestly ask yourself why that is. If your firm was truly doing the best possible to serve the client, would they still have jumped ship?

            It’s not perfect by any means, but considering how useless most employees are after they have given notice, it is both prudent and reasonable.
            In my experience, I’ve inevitably found that when someone leaves, the last couple weeks involve a LOT of time spent trying to close out things, get an information dump on their projects so others can step in, etc. Even if the employee is no longer giving 110% and cuts back their workload to a lower level, that sort of wrap-up usually has value.

            1. SoloKid*

              “the amount of times companies THINK employees have access to Super Important Trade Secrets ™ is far higher than the amount of times the information is *actually* that relevant.”

              Relevance is all about what your legal team deems it to be. Some places consider the food vendors and maintenance companies they hire to be just as confidential as a chemical compound.

          3. Reputation is all*

            Oh geez. “How useless those employees are after they’ve given notice”? Seriously? When I think of the hours and effort I’ve put in when I’ve left a job to leave things in a good state….As an employee my professional reputation is my prime asset in terms of my future employability. I’m not about to endanger that by screwing over my former employer.

            1. Plate of Wings*

              Yes this can be a BIG undertaking if you are a conscientious departing employee with a lot of responsibilities! I can’t stay, but I can spend 60 hours softening the disruption for the team I cared about, and leaving them with a good impression of me.

      2. constant_craving*

        Eh, I’m doubtful it’s actually helpful. There’s no reason someone planning to do something wouldn’t just go ahead and do it before informing you that they’re leaving.

        1. anon_sighing*

          I think this is more in the case of people who are fired (to prevent a last minute retaliation) rather than quitting voluntarily. In the latter case, I agree that if they were going to do something, they would have done it already so it’s a moot point but if it’s a policy for one group of “out the door”-ers then may as well apply it to all.

      3. amoeba*

        I mean, it’s common practise here in Europe as well – *but* you’re still paid for that time. (Actually, I believe that also often benefits the company – I guess the reasoning is that you’ll be out of the loop on the newest critical developments by the time you start there?) Of course, we also have really long notice periods, so being on gardening leave at full pay for 3 or even 6 months is pretty common in our industry. I don’t think most people have a problem with it when it’s done this way!

    3. I'm just here for the cats!*

      that’s different. You are not being blocked from working elsewhere. A lot of companies do that for various reasons.

    4. TootsNYC*

      the ruling has nothing to do with that situation.
      And except in Montana, they can fire you for any legal reason at any time, and this would be a legal reason.
      Some states might say you qualify for unemployment if they fire you at the start of a notice period.
      And lots of companies will pay you for the notice period but just refuse to allow you in the office anymore.

  2. Administrative Professionals Day Sucks*

    I used to work at a hedge fund that would do this to traders/finance dudes. Glad to see they’re not doing it anymore (even though ‘Hedge Fund Dudes’ are literally at the top of the “Least Oppressed People” list)

    1. Jen*

      But did the new company pay for them during the garden leave period while they waited out their noncompetes?

      1. Jen*

        Actually, I just checked my noncompete (in a similar company) and it looks like my current company would be the one to pay if they chose to enforce my noncompete.

      2. Ally McBeal*

        That was the way it worked at my Wall Street company. We paid for our new analysts’ garden leave. Of course, there was usually SOME level of work happening during garden leave – one of the people I supported continued his monthly field research so that his data would still be reliable when he officially started researching and writing again – but that was handled very quietly/delicately and I assume there were some established guiderails governing what kind of work he was absolutely not allowed to do.

    2. Sloanicota*

      I kinda feel like there’ll probably be a lot of companies pushing through non-competes for their executives in the next 120 days. However, this is not the most pressing injustice to be dealt with in my opinion.

  3. periwinkle*

    Good to know that I can make sandwiches anywhere I want to work!

    (I explained NCAs to someone using the Jimmy John’s case as an example, and they swore I had to have made that up because no company would implement such a ludicrous policy…)

    1. Slow Gin Lizz*

      Whoa, I hadn’t heard about the Jimmy John’s one so I looked it up. That’s absolutely ridiculous. Akin to not being allowed to work at a competing clothing store for two years after working at another clothing store. Like, what trade secrets would you possibly be giving away, how to make a sandwich? How to fold shirts? Sheeeeeeesh.

        1. starsaphire*

          “What’s the secret sauce at Bronco Burger?”
          “Ketchup and mayonnaise.”

          #I am old

      1. Beatrice Belladonna Eastwood*

        I’m pretty sure I had a non-compete when I worked at Burger King in high school and made $5.15 an hour.

      2. Former Retail*

        When I was a lowly part-time manager at a retail store making $12/hr, I had to sign a non-compete. It wasn’t as strict as some, but I couldn’t work at another retail clothing store while I was working for them. So, I could work part time at a grocery store or autoparts store but not in the apparel department at Walmart.

        Like I was gonna tell Uncle Walmart that all our holiday clothes had sequins on them this year or something and Walmart was actually going to do something about that. It was insane, especially since a lot retail folks work multiple jobs.

        1. NotRealAnonForThis*

          Know what? This just nudged a corner of my brain – I think I had a similar situation in retail heck as a teen.

          I worked at Department Store A. You could not work for Department Store B while under employment with Store A. It almost made sense (obviously they didn’t want us telling Store B’s customer’s about Store A’s sales that week) to my teenaged brain.

          1. NotRealAnonForThis*

            I think that the big difference as to why this one wasn’t foul was that it was null and void upon leaving Dept Store A. It had nothing to do with future employment.

            1. Starbuck*

              Yeah, employers can put plenty of valid conditions on your existing employment – don’t do X while you work for us – but it’s a much bigger deal to have things stay in effect after they are no longer paying you, that’s a huge intrusion on your life that you’re no longer being compensated for. It’s correct that there should be a very high bar for that. Good ruling.

            2. Lea*

              Yeah I’ve not been thinking of those as ‘non competes’ but I think we are technically supposed to get second jobs approved although I don’t think it’s enforced?

              The Jimmy John’s one was nuts

        2. TootsNYC*

          one of the things about the two retail stores is that customers do end up associating faces with stores, and they might not want the confusion that could result if a customer says, “You told me I could return this,” but that was you at a different store.

      3. Wendy Darling*

        My favorite noncompete I’ve ever had was the one I had to sign to work for a former employer through a staffing agency. So I was an employee of Teapot Temps, who placed me at LlamaCorp.

        LlamaCorp required me to sign a noncompete prohibiting me from working for any company that competed with LlamaCorp in any way, anwhere LlamaCorp did business, for 2 years. LlamaCorp’s lines of business included every possible job in my professional field and they were a global company. So I maybe could have gotten a job in Antarctica. Maybe. But realistically it said “If you leave you can’t work in your field anywhere, in any capacity, for 2 years”.

        I signed it because 1. I’d been out of work for a fair bit at the time and 2. it was so ludicrous that I was confident they wouldn’t even try to enforce it. But I thought it was hilarious that I wasn’t important enough to actually employ directly, but so very, very important that me doing any work in my field for anyone else for 2 years was apparently too great a risk to bear.

        1. Sloanicota*

          Ugh I was confronted with a terrible noncompete as a freelancer that I just couldn’t sign. They were paying me to provide services for like, one meeting, and the document tried to say I couldn’t in future work for any of their competitors, clients “or potential clients” (they were a contracting firm and I was a subcontractor) – meaning, I’d basically have to shut down my entire business to be in compliance, since all of my clients were arguably potential clients of theirs. It was the end of a bog-standard NDA that I was willing to sign, so I just crossed it all out and returned it – I was willing to walk away over it. Fortunately they didn’t seem to care and I did still get that job.

          1. Orv*

            I’ve had this happen when companies try to use their standard employee contract with anti-moonlighting clauses to hire freelancers. It’s something to look out for.

      4. Never Boring*

        There’s a barbecue joint in my hometown that made all employees sign a non compete, supposedly to protect the recipe for the secret sauce. Including 16-year-olds whose only relationship to the secret sauce was having it stain their uniforms.

        1. Elizabeth West*

          This is so easy. Just make it ahead of time and don’t tell them what’s in it.

      5. Scarlett*

        Or the medical professions, where your trade secrets are literally published in scientific journals for all to read?

      6. I Do Flips*

        I coached gymnasts through college and grad school (and a little beyond). One gym I interviewed at when I moved cities for grad school insisted on a non-compete that prohibited anyone from working at another gym within a 30 mile radius for 2 years upon leaving. I nope’d right out of there. It’s not like I was some high level coach taking girls to the Olympics–I mostly taught recreational classes and low-level competition team.

        They had a rather inflated sense of their importance in the world. There were other red flags I rationalized away, but the non-compete snapped me out of it. Happily found another gym club slightly further away without an insane non-compete.

    2. urguncle*

      I had a non-compete for a company that did multi-lingual preschool and elementary classes for kids. I made like $28,000 a year and was apparently forbidden from, I don’t know, playing red-light green-light in Spanish, a highly guarded industry secret.

  4. Jay (no, the other one)*

    Restrictive covenants are almost universal for docs. Wonder if this applies to us, too.

    1. Avyncentia*

      From a quick perusal of the final rule, the question of the restrictive covenant came up a lot and the answer appears to be “it depends.”

      1. Forrest Gumption*

        Does anyone know how this affects those of us who no longer work for the company for which we signed a noncompete, but are still within the three-year “non compete” period specified in the contract?

        1. MigraineMonth*

          Unless you were a senior executive at the company, I believe the non-compete contract you signed will be rendered null and void when the rule change goes into effect. #NotALawyer

    2. Three Cats in a Trenchcoat*

      I am also wondering!

      I had been very happy when DC made their noncompete law, they had put a salary cap for non-physicians and a separate (higher) one for physicians. I would argue that complete stop to noncompetes would be better, but at least they acknowledged that physicians are particularly likely to be subject to restrictive agreements on practice.

    3. Garblesnark*

      The hospital I just left pretended really, really hard that all doctors were executives and therefore would still be held to their restrictive covenants.

      Of course I think it’s tricky to define someone as an executive when they’re prohibited from seeing any finance data related to the work they do, but I am merely a lowly office worker.

    4. Jason R.*

      This will be interesting to watch. The FTC doesn’t have regulatory authority over all non-profits, and many hospitals are nonprofits–but physician practice groups aren’t. It may depend on exactly where the doc works.

    5. Kevin Sours*

      You probably need to talk to an attorney. There are some carveouts not mentioned here and one of the involves partnership agreements. My understanding is that it follows California law pretty closely.

    6. NonprofitsAreWeird*

      A fairly large percentage of hospitals and insurance companies are technically non-profits and thus this rule doesn’t affect them. IMO they shouldn’t be, but they are.

  5. Avyncentia*

    Ooh, my company is definitely going to be on the list of groups challenging the ruling. They love their non-competes…

    But I’ll be very excited if this goes through! Very disadvantageous for job-seekers.

  6. Resident Catholicville, U.S.A.*

    Large third party logistics companies must be *losing their minds*. (Yeah, I’m looking at you, TQL.)

    1. AnonInCanada*

      Don’t get me started with TQL. We used them maybe two or three times to pick up an order and deliver it to us since we needed a FTL a few years ago and our normal logistics company didn’t have a truck available. They have not stopped bothering me ever since. Every few days they’re calling me, asking if we have a load to pick up and deliver. “No, no, we’ll call you if we need it.” They won’t take the hint. I’ve blocked their number, but they’ll still leave voicemails. Small wonder why they would have no-compete clauses, undoubtedly even for contracted O/Os.


      1. Resident Catholicville, U.S.A.*

        These will become your new favorite words, “We are all vendor and customer routed. We do not book our own freight.” I can only block 30 phone numbers, so I’ve started adding all logistic companies to my contact list with a certain letter combo on the front of the ID so that I know which ones I’ve talked to already and just send them straight to voice mail.

      2. Anonomatopoeia*

        I have since concluded that an FTL is a truckload of something, but my brain was 100% sure it was a faster than light, and I was like ……….you needed a warp drive so you called someone who communicates with a telephone and does voicemail?

        1. Resident Catholicville, U.S.A.*

          Full Truck Load- if we had had faster than light travel, my job would have involved a lot less learning Department of Transportation regulations for how long a driver can legally drive and how many hours I should expect a typical drive to take given those parameters. I suspect I’d have some really different other problems with faster than light travel, though, mainly with damage claims.

    2. Lana Kane*

      The US Chamber of Commerce is going to sue the FTC. It’s not over, but the fact that this passed is a huge win.

  7. mlem*

    Just to clarify, because the sequence in the post could be read two different ways — as I understand it, *all* new non-competes are banned; and existing non-competes for non-senior-executives are null. Existing non-competes for senior execs can remain and be enforced.

    This ruling only applies where the FTC has jurisdiction; from what I’ve seen, that’s businesses that are individuals, partnerships, and corporations, but not other areas like non-profit healthcare.

    1. Katrine Fonsmark*

      As I read it, senior executives are completely exempted from the rule – existing AND new non-competes will still be legal for that group.

    2. The Gollux, Not a Mere Device*

      Note that healthcare workers are only exempted if they work for a non-profit. A lot of medical technicians and phlebotomists work for for-profit companies like Quest, not for a hospital (which is more likely to be a non-profit organization). Most drugstores these days are run by for-profit companies like CVS.

      Your local hospital may be a nonprofit, legally speaking, but the dental clinic down the street probably isn’t.

      1. Lexie*

        And doctors may work for a separate practice even if their office is located in a hospital.

  8. K in Boston*

    I saw the ruling this morning and am super curious about how it will be enforced! I worked at a company that had a non-compete clause — It was very common for people to work at this vendor, and then either go into consulting or work for a customer of said vendor, where the customer would essentially be employing you to deal with the vendor. The company would never actually come after you in court over violating it, but they’d make everyone at the company stop answering your phone calls, which effectively made you useless as a consultant or customer-side employee.

    1. SweetestCin*

      Similar situation. I’m guessing the “non compete” that I see all the time is really more of a “gentleman’s non-poaching agreement” and is likely to come out intact.

    2. doreen*

      From what I can tell (based on some recent incidents I’m linking to separately) , it seems the end result of the enforcement is ordering the company to take certain steps ( such as notifying employees that the non-competes are void and/or that they must notify all new employees for the next 10 yrs that they can work anywhere they choose)and requiring compliance reports to be submitted yearly.

    3. Cranky-saurus Rex*

      I had a similar experience (perhaps even the same vendor employer). I left without a new job lined up, not intending to stay in that industry. After 6 months Iwas struggling so much to find another position locally that didn’t assume I was going to leave as soon as my non-compete year was over. It became a self-fulfilling expectation, because I eventually took whatever I could find and did leave as soon as my non-compete time had elapsed. I’m still consulting on the customer side for that vendor 10 years later. Without the non-compete, I would’ve likely left the industry when I left my job with the vendor.

    4. TootsNYC*

      I’d imagine that enforcement would be thus:
      Employee quits
      Former employer tries to enforce a noncompete by sending a warning letter of intent to sue.

      Employee calls the state or federal department of labor.
      Labor department calls or writes former employer to tell them to cease and desist.
      Either before or after this, labor department issues fine.

      Employee writes back (or gets a lawyer) about it being illegal.

      Lawsuit commences
      Employee gets a contingency lawyer who countersues for legal fees and takes it to court.
      Judge rules.

      1. Slow Gin Lizz*

        Yeah, excellent point. One would hope someone at that level would have enough power to negotiate salary if they get promoted to senior executive.

    1. Nespresso Addict*

      I came here to ask the same – is there a standard / common definition, Alison? (If there is not I could totally see my company suddenly deciding to call everyone Director-level or higher a “senior executive” …)

    2. leeapeea*

      It’s a two-part test that consists of a salary threshold and job duties test. Must meet both requirements to be defined as a senior executive. This excerpt is from a newsletter I received today from our employment law firm:

      First, to be deemed a “senior executive”, the worker must have been in “a policy-making position” when the non-compete was executed. The rule defines “policy-making position” as an entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has “policy-making authority”, or any other person with policy-making authority for the entity similar to an officer. The final rule further defines “policy-making authority” as “final authority to make policy decisions that control significant aspects of a business entity or common enterprise….”

      Second, to satisfy the definition of “senior executive” under the final rule, the worker must have received for their employment:
      -Total annual compensation of at least $151,164 in the preceding year;
      -Total compensation of at least $151,164 when annualized if the worker was employed during only part of the preceding year; or
      -Total compensation of at least $151,164 when annualized in the preceding year prior to the worker’s departure if the worker departed from employment prior to the preceding year and the worker is subject to a non-compete.

      1. Slow Gin Lizz*

        Ah, thank you so much for the clarification, law firm employee! (I assumed lawyer but then realized I should never assume. Either way, thank you!)

  9. Former Retail Lifer*

    Non-competes make sense for many senior positions, but Jimmy John’s employees and hair stylists have to sign them. Can’t wait to see those banned.

    1. Zephy*

      What?? Many hair stylists aren’t even employees of the salons where they work, they’re contractors renting the space!

    2. Kevin Sours*

      Eh. I don’t think a company should be allowed to prevent somebody from working at their trade without compensation. Full stop.

      1. amoeba*

        I mean, I feel like it also depends a tiny bit on how broad they define “competitor”. My boyfriend’s in a field where there’s basically three huge companies in Europe who are actually really, really paranoid of each other – as in, constantly watching, trying to figure out what they’re working on, super scared any new research could get to them… and yeah, they do definitely not let you work out your notice period if you have access to sensitive information! (So, like, higher ups but also people in research). If you leave for anywhere else, no problem.

        However, they pay you for the period – and it doesn’t change anything for the new company, either, because the other option is working out the period in your old job, so they have to wait either way. You basically get a nice, long, fully paid vacation. But those periods can get really, *really* long even for European standards – I believe it’s 3 months for junior people and it can go all the way up to a whole year. Doesn’t make changing jobs easier, I guess – but it’s also common in the field, so you’ll still be hired because it’s understood as standard.

        All that saying: I do understand that there can be a legitimate need to keep people from joining the competition really quickly – but you should then do it in a way that the companies pay the price for that and not the employees. It’s possible.

        1. Kevin Sours*

          Generally with non compete agreements you don’t get paid. “Garden Leave” arrangements are different (though even then not being allowed to practice your trade can have consequences beyond lack of salary).

      1. Kevin Sours*

        Combination of negative publicity, getting sued, and their home state of Illinois passing a law making the agreements illegal. I think that having the situation go viral online was a significant factor in them backing off.

    1. Retired Vulcan Raises 1 Grey Eyebrow*

      Fat cats want to be able to punish any peons who dare to quit

    2. Ally McBeal*

      I saw this earlier today and found it amusing… like did the FTC not consult with CoC when they were developing this rule?

      1. Blame It On The Weatherman*

        The chamber of commerce is not a branch of government. It’s just a business lobbying organization.

      2. My Boss is Dumber than Yours*

        You do realize that the FTC is a government regulatory organization and the USCC is a private lobbyist, right? It’s not that lobbyists and regulators never talk (in fact, they probably talk too much), but they also are categorically not on the same side.

        1. Starbuck*

          There’s so much misconception out there, business orgs love to bluster and pretend they have authority to throw around when they technically don’t. It’s like how some people think the BBB is some kind of regulatory or enforcement org when it’s basically just Yelp.

      3. MassMatt*

        They probably did not, and why would they? Non-compete clauses are falling more and more out of favor, the Chambers are welcome to try to sue but I doubt even the current Supremes would be interested in overturning the new rule.

        1. Hot and cold*

          This SC? They would probably rule Minimum Wage laws as Unconstitutional if they thought they could do it without the country being stopped with a full general strike.

  10. Miss Muffett*

    This is great news. I remember years ago my hairdresser was asked to sign a non-compete for anywhere within 120 miles — this, for an industry/occupation where people regularly move around. She said she literally laughed out loud and said, no, I won’t be doing that. So many people wouldn’t have the nerve to respond like that though!

    1. Slow Gin Lizz*

      Yeah, I know that until I hit my 40s I would have been way too timid to say no to something like that. Now that I’m in my 40s life is way better and I have an IDGAF attitude about that kind of thing, but so many people even my age still haven’t quite gotten to this stage yet (and I don’t blame them because life is hard, y’all). Good for your hairdresser, that’s awesome!

  11. Amy*

    The amount of time companies in my industry spend suing each other over non-competes as well as orchestrating elaborate non-compete workarounds is absurd.

    Even businesses should be glad to be done with this nonsense, even if they care not a whit for labor.

    1. bamcheeks*

      Yeah, it’s definitely one of those things where it seems really obvious it’s better for we ruined, and the only reason it needed legislation is because everyone was too chicken to go first. Surely a non-compete culture is just as much of an inhibitor when you want to recruit the best people to come to you as it is a useful layer of protection to help you keep people (who don’t want to be kept.)

  12. Toots La'Rue*

    How do they decide what a “senior executive” is? Is it based on title, which can vary depending on your workplace? How many people are above you? Salary?

    1. doreen*

      “Specifically, the final rule defines the term “senior executive” as workers earning
      more than $151,164 who are in a “policy-making position.”

    2. Chris*

      The rule defines a senior executive as someone in a policy-making position who gets paid at least $151,164 a year.

  13. Brain the Brian*

    Interestingly, senior execs seem to be able to negotiate their way out of noncompetes a lot more regularly, anyway. Good news for anyone not working in nonprofits!

    1. My Boss is Dumber than Yours*

      They’re also far more likely to either be able afford their own attorney to fight it, and/or get support from their new employer in buying them out.

  14. Chris*

    “An exception was carved out for senior executives; the ruling would allow non-competes only for that small group.”

    This only applies to existing non-compete agreements. New non-competes are banned even for executives. Per the FTC press release:

    “Existing noncompetes for senior executives – who represent less than 0.75% of workers – can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives.”

  15. Just a question*

    I am in Mass. My lawyer said most non-competes are invalid because unless they are compensating you for the time you cant work for competitors is null and void

    1. Antilles*

      That’s true in a lot of places, yes. But there’s two problems with that:
      (1) many employees don’t realize that so it still serves as an impediment even if the agreement itself is legally questionable
      (2) if your ex-employer chooses to be a jerk about it, they can threaten your next company or interfere with your job search. So even if the paperwork won’t hold up, there’d be a lot of companies that would just roll over and avoid the risk by passing on your candidacy.

      The point of this new rule is to make it explicitly clear and remove all that ambiguity.

      1. Ally McBeal*

        Yep. And there are some truly egregious NCAs, like at Jimmy Johns, where the corporate fat cats are relying on their minimum-wage employees to be ignorant of their rights. Imagine telling someone who makes sandwiches that their knowledge is proprietary! That’s insulting to all parties.

        1. Kevin Sours*

          The problem is the Jimmy Johns NCAs were probably enforceable. I recall they eventually backed down because of public outrage. Which mostly happened because there was a hook that made it go viral online.

          1. TootsNYC*

            NYState claimed it was “unlawful,” so it might not have been enforceable everywhere. Illinois as well.

            The lawfulness would have been state by state.

            1. Kevin Sours*

              AGs claim a lot of things. I can’t find any reporting on the Illinois action that lays out what grounds the AG had for claiming that. It was settled for a nominal amount and a promise to remove the NCAs after the whole thing blew up and after Illinois passed a law banning the agreements (but before the law took affect). My recollection is mostly of the case that blew up online (mostly because Jimmy John argued in court that a taco was legally a sandwich) where the analysis was that the state of the law was that the agreements were broadly enforceable (because the law sucks to be clear)

      2. TootsNYC*

        “threaten your next company or interfere with your job search”

        They’d be vulnerable for a lawsuit for tortious interference, but the overwhelming majority of employees do not have the resources to file that lawsuit.

    2. NonprofitsAreWeird*

      FYI, the rule also does not apply to non-profits because the FTC has no regulatory authority over them, just for profit organizations.

  16. Bunny Girl*

    Yay! I remember working for a sandwich company and they had a non-compete clause and I thought it was the absolute dumbest thing I’d ever read.

    Your food is bland my dude! No one wants to steal your secrets!

    1. Christmas Carol*

      The purpose was never to steal the sandwich secrets, the purpose was to intimidate the teen help working their part-time after school jobs from jumping ship for a 15 cent wage increase.

    2. Gumby*

      The sandwich secrets can still be considered proprietary which means even if you don’t have a non-compete you can be held liable for sharing the secret recipe.

      Intellectual property rights still exist even w/ this ruling. So they can’t stop you from getting a job with a direct competitor but they *can* sue you if you tell the competitor their trade secrets.

  17. Em*

    Even if this is tied up in court, I expect existing noncompetes will become unenforceable while it goes through the legal system? Right?

    1. Radioactive Cyborg Llama*

      That depends. Sometimes courts issue stays/injunctions for government regulations, which depends on various factors including likelihood of winning and potential harm, among other things.

  18. Just Thinkin' Here*

    The definition of senior executive isn’t as small a group as it would seem. The salary cutoff is above $150K, which isn’t much in high cost of living areas. And the employee is a senior executive if they have influence over policy – whatever that means. Quite frankly, most managers would fall under this type of definition, not just what the public would consider a senior executive / C-suite level type person. Quite frankly, folks at that salary level don’t have the level of negotiation power as the FTC suggested they do.

      1. doreen*

        “Senior executive” requires that the person be in a policy-making position, not a policy-influencing one. Most managers would not fall under policy-making. But the income cut-off is way too low to assume that the person had any real negotiating power and definitely not that they had legal representation (which is something I saw mentioned in one article)

        1. doreen*

          The definition for policy making includes ” “final authority to make policy decisions that control significant aspects of a business entity or common enterprise and does not include authority limited to advising or exerting influence over such policy decisions or having final authority to make policy decisions for only a subsidiary of or affiliate of a common enterprise.”

    1. Ash*

      They certainly have more power than a hairstylist, camp counselor, licensed practical nurse, office cleaner, daycare worker (all examples of individuals who spoke publicly about being under non-compete agreements and how it hindered their ability to get another job). It’s ok to start somewhere, and if we need to start somewhere, we should start with the most vulnerable workers.

  19. Tracy*

    This would make such a positive improvement for veterinary medicine AND help clients and pets! Right now most vets are under extremely restrictive NCAs and need to move to get a new job. When I was an equine vet (an extremely underserved specialty to various reasons these days) I had a NCA that kept me from practicing anywhere within 25 miles of my home. It’s completely unrealistic to drive 45+ minutes to start seeing appointments so I would have had to move to another county. I quit equine medicine instead and work in another sector. I know small animal vets who would could make more money and have better benefits if they could work at a clinic across town, but are instead trapped at a crappy employer. Those vets either stay miserable or quit the industry and make the shortage even worse.

  20. Nilsson Schmilsson*

    I don’t believe this addresses non-solicitations or proprietary confidentiality, which is good. Non-competes were rarely enforceable anyway. Smart companies enforced the non-solicitations and confidentiality agreements.

      1. Broadway Duchess*

        That doesn’t appear to be racist to me, but I’m happy to be educated if I’m missing something. Simply mentioning an ethnicity doesn’t make something racist.

      2. cake*

        name-checking a culturally specific food for pun purposes and the culture it is associated with is … not racist?

  21. Dr. Prepper*

    I follow a few legal blogs. While on its face this ruling seems pro-employee / worker, the reality is that it will immediately be challenged.

    “It is expected that the U.S. Chamber of Commerce will file a lawsuit this week challenging the FTC’s Rule, seeking a restraining order and emergency injunction. A wave of additional lawsuits challenging the Rule will almost certainly follow. It is possible that the Rule’s implementation date will be delayed pending resolution of the anticipated legal challenges.”

    So, it looks to me that the resolution for this will take years, and may have significant modifications, if not outright cancelled with a Supreme Court ruling that the alphabet agencies cannot pass new rules/laws AT ALL as only Congress can pass new law – it seems likely that this generality is likely to pass soon with the 2 EPA actions in front of the Supreme Court right now.

  22. Ash*

    This goes to show why the person sitting in the Office of the President matters. I’m such a fan of Lina Khan and I’m so glad she is in her role. It really seems like she genuinely cares about the us little guys.

  23. AndersonDarling*

    Thank Goodness!
    The last company I worked for had a non-compete for all employees that restricted working for other ‘like’ businesses. This company worked in all sorts of facets, so staff couldn’t leave to work for real estate companies, healthcare (hospitals, clinics, senior living, etc.), sales, or software development.
    The executives thought that every idea they had was a revolutionary trade secret, but they were actually running far behind modern business processes.

  24. Elvis*

    Non-competes are a money-making racket propped up mostly by big law firms, who make a killing on drafting them and litigating them.

  25. Long Time Fan, First Time Caller*

    Amazing news! Does anyone know how this will effect retention offers? (i.e., if you get an outside offer, and the firm moves to retain you, can they prohibit you from seeking other offers thereafter?) All thanks for any thoughts!

    1. I'm just here for the cats!*

      I’ve never heard of anyplace prohibiting you of leaving after you’ve agreed to a retention offer. Maybe this is industry dependent? But that doesn’t seem like a non-compete.

    2. My Boss is Dumber than Yours*

      I’m not a lawyer, but my guess is that they could require payback of a retention bonus—or possibly even the difference in wages if a raise were offered—if the employee left after an agreed upon and reasonably short amount of time. What they likely wouldn’t be able to do is outright prevent departure or make the payback punitive (i.e. repay all salary above minimum wage, or likely even above the employee’s original salary).

    1. Nilsson Schmilsson*

      Historically, nonsolicitations were enforceable, as clients are established on company time, thus clients clients’ information belonged to the company. Non-competes have fallen out of favor, as courts have regularly determined that you can’t be prevented from earning a living.

    1. James*

      There has already been a court challenge in North Texas where lots of these “nationwide injunctions” have been coming from lately. The 5th Circuit will uphold the inevitable injunction. The Supreme Court, which is poised to strike down the ability of agencies to issue these sorts of rules in general, will strike it down.

      Sorry, it sucks, but this is a dead letter.

      1. Insert Clever Name Here*

        Nothing is certain until it’s actually been ruled on, and pretending that we know exactly what the Supreme Court is going to do is not helpful. Be cautious, sure, but unless and until SCOTUS strikes down the case, it is not a dead letter.

        1. James*

          No one should make any decisions about their livelihood in reliance on this actually happening.

          I’m trying very hard not to be political here, but the fact is that this is very unlikely to happen without Congressional action or a different Supreme Court.

          There is a pending case related to what is called “Chevron deference” which is the doctrine that allows these kinds of regulatory interpretations to be issued by executive agencies. This case was argued in January and the decision will likely be handed down by June. There is a broad consensus in the legal community that the Supreme Court is about to sharply constrain what federal agencies can do. The administration has, within the past week, issued this non-compete ban, a sweeping (and delightful) change to force airlines to provide immediate compensation for cancellations, and a broad change in air quality requirements for power plants. In all likelihood, these are EXPECTED to be overturned, but the outrage caused by these popular actions being overturned is useful for educating the public about the consequences of the current judicial climate in an election year.


  26. Wendy Darling*

    Noncompetes are everywhere in tech (except, now, in CA where they are mercifully banned), but they’re very rarely enforced. One of the only enforcements I’ve seen was when an Amazon executive who had worked extensively on Amazon Prime left to go work on an Amazon Prime-like subscription service for WalMart. In that case, the issue was pretty obvious.

    For rank and file workers like me, they seem more like an intimidation tactic — I’ve signed a lot of scarily broad noncompetes and it definitely has a chilling effect when I’m thinking about changing jobs, because what if I take a different job and then they come after me? Like, they PROBABLY won’t, but if they did it would be catastrophic for me even if they lost in court.

    1. NotSoSimple*

      They still impede hiring. I lost a job because of an “unenforceable” non-compete. The new company didn’t want to take the risk.

      1. Wendy Darling*

        Yeah, that’s the other thing I always worried about. A LOT of job applications ask if you have a noncompete that might come into play, and I suspect checking “yes” might just get your application tossed, even if the noncompete is unenforceable.

        Luckily my state adopted a law that sets a minimum salary for noncompetes that rendered most of mine invalid, and I can’t even remember if my current job asked me to sign one.

    2. EJC*

      There are all sorts of horror stories of non-competes being enforced against low-wage workers through lawsuits or through other companies declining to hire the worker once they find out they have are under a non-compete. An office cleaner was sued by a BigLaw firm for getting another cleaning job in the same building (the suit was dropped after media outcry). Other examples include summer camp counselors and fast food workers.

  27. TiffIf*

    “Shortly after the vote, the U.S. Chamber of Commerce said it would sue the FTC to block the rule, calling it unnecessary, unlawful and a blatant power grab.

    “For more than a year, the group has vigorously opposed the ban, saying that noncompetes are vital to companies, by allowing them to better guard trade secrets, and employees, by giving employers greater incentive to invest in workforce training and development.

    ‘This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy,’ wrote Suzanne P. Clark, president and CEO of the U.S. Chamber, in a statement.”

    Anymore all I can do is roll my eyes at the business response (or this case Chamber of Commerce) to these types of things. OR rather, my initial thought is “shut the eff up” and then I roll my eyes in frustration.

    I had a similar response to the US Department of Transportation new regulation cracking down on hidden fees and offering vouchers:

    “The amount of unwanted and unneeded information forced upon passengers” by the new policy would only cause “confusion and frustration,” warned Doug Mullen, the deputy general counsel at Airlines for America. “Very few, if any, need or want this information, and especially when they are initially trying to understand schedule and fare options.”

    1. Elizabeth West*

      Oh, f**k them. :P
      If they want to protect trade secrets, a non-disclosure will suffice.

  28. Ghee Buttersnaps*

    Is anyone aware of whether the new regulations will include non-solicitation agreements? My company currently has one in place that doesn’t restrict where you work, but says that you may not solicit any of our current customers for a period of two years following the end of your employment.

    1. I'm just here for the cats!*

      I don’t think that would count, because they aren’t stopping you from going elsewhere. I think that is pretty standard in some industries. You don’t tell the clients that you are moving to X company or make them come with you.

    2. LaMiAb*

      I doubt that would count. Non-solicitation agreements can usually be enforced because the customer list is a business asset and contains confidential information. In my line of business (healthcare), an employee taking my customer list to solicit would be a HIPAA violation to the Nth degree, and my company would be legally liable for the stolen info.

  29. Mouse*

    I’m starting a new job soon and had to sign a noncompete, but will receive a signing bonus after 30 days of employment for doing so. I’m guessing I shouldn’t count on receiving that bonus?

    1. I'm just here for the cats!*

      I would push back on that. After all, it’s not your fault that the law changed.

    2. Hlao-roo*

      The ruling is scheduled to take place in 120 days, so I think if you sign the non-compete in the next 90 days and get paid out 30 days after that you’re all set (and then the non-compete will be void on day 120, after the pay-out, unless you’re a senior executive).

    3. Wendy Darling*

      I would absolutely raise hell if you don’t get the bonus! You abided by the rules they gave you. Also this will very likely be held up in court for WELL longer than 30 days.

    4. so very tired*

      Same, minus the signing bonus. I asked them if the non-compete would apply for me and cited the FTC ruling, and they said that their legal department instructed them to have all new employees sign the non-compete agreement. I’m a bit concerned because I’m not sure how broadly this can be applied; per a specific industry like automotive or for a wider thing like all software companies that make stuff for the auto industry?

  30. Addison DeWitt*

    Many years ago in advertising… the local Baby Bell had lots of independent operators within the company who would go out and find their own advertising agency/freelancers to work with. I literally did work for the Baby Bell at five places in a row. One of them tried to pull the non-compete BS when they let me go, that I couldn’t work for Baby Bell for a year or whatever. First of all, our state would make that very hard to enforce at the level of a lowly copywriter– a CEO, maybe. But in any case, I just said “Hmm, you know, I worked on Baby Bell at Very Large Agency before I came here, I guess I should alert them and we can sue you together.”

    No more mention of any non-compete…

    1. Kevin Sours*

      Probably requires and act of congress. Which suggests voting for the people generally pushing this sort of policy.

    2. Noncompetes are Dumb*

      It does cover non-profits, but only if the non-profit qualifies as a “corporation” under the FTC Act’s unique definition of that term. It’s a very complicated distinction that the FTC addresses in its lengthy document announcing the new rule.

  31. riverofmolecules*

    I wrote in a Friday open thread months ago about my work trying to get me to sign a non-compete. My coworker quit/was let go over it. I refused to sign and they didn’t fire me over it.

    In the conversation with my manager, he tried to tell me the NC was to protect me and of course they wouldn’t sue me in the various hypotheticals I posed (since the language was very vague and broad). “If this agreement is not going to be enforced, why have it at all?”

    Anyway, I work for an organization now where they explicitly say in the handbook that the default assumption should be you can do whatever work you want as long as it doesn’t interfere with this job.

  32. Fluff*

    Doc here. Non competes are standard and a royal pain. Employers use these no matter the specialty. I think as both intimidation and to keep you in line. Even primary care docs have them despite our area having a major shortage, no matter who you work for.

    The companies already protect themselves from $$ loss by requiring payback for moving expenses, sign on bonuses, etc. So it is not that. Patients are stuck with insurance plans in the USA so it is not so easy for them to up and leave a clinic or system. Physicians are not allowed to “steal” patients anyway.

    I doubt MD’s or DOs will be included since the salary range will cut them off.

    Long winded way of saying – non competes force you stay in a job longer that you want. Companies can put a clinic and more people right next to your office without you having a say. Bargaining is difficult because it is take it or leave it with many non-competes. Unless you go private / owned business- that’s the way if you want to be employed.

    1. NonprofitsAreWeird*

      Most docs won’t be included because the FTC has no regulatory authority over non-profits and technically most hospitals and health systems are non-profits.

      If you work in a for profit clinic or hospital the regular will apply so non-competes should be void unless you work in a policy making position (the salary alone is not sufficient).

  33. Forrest Gumption*

    Does anyone know how this ruling affects those of us who no longer work for the company for which we signed a noncompete, but are still within the three-year “non compete” period specified in the contract?

    1. My Boss is Dumber than Yours*

      As far as I can tell, the contract will no longer be enforceable. It doesn’t matter if you’re still working there or not. To even try to enforce it, your former employer would have to take you to court, and I can’t see the case going anywhere.

  34. Anon in Canada*

    Now, can Canada follow please?

    Ontario banned noncompetes a few years ago, but AFAIK they’re still legal in every other province.

    Canada is falling behind the US on several issues affecting the balance of power between employees and employers. Non-competes, pay transparency, and requests for salary history, to name just those.

  35. Edward Williams*

    This is MARVELOUS news. These non-compete agreements in effect legalize slavery — a company can pay a worker a pittance, knowing the worker can’t afford to quit because he or she can’t work elsewhere.
    And, in addition, I’d like to hear this conversation in court:
    Former company: Your Honor, we want damages. He went to work for a competitor.
    Judge to former employee: Why did you change jobs?
    Former employee being sued: The suing company fired me. To feed my children, I went to work for this new company.
    Judge to plaintiff. You fired him, didn’t you?
    Plaintiff: Yes, Your Honor.
    Judge: I am awarding you $0, the amount your own action of firing him says what you think his work is worth.

  36. Mimmy*

    I’m not sure if this is the same, but the state agency I work for has restrictions for seeking employment with “interested parties”; I think this relates more to instances where a state employee has significant interaction with Interested Party A and, thus, cannot seek future employment with that party. (Weirdly, an Interested Party can solicit an employee, but the employee has the let the ethics office know).

    Assuming the above is the same as an NCA, would this ruling apply to state employees?

  37. VintageLydia*

    My partner is in an interesting position where he signed a non-compete agreement when he was a franchise owner for a service, and since he left that agreement he’s not allowed to perform that service for 18 months. Would that non-compete also be null with this new ruling? He let his license to perform this service lapse in part because of it.

  38. Lusara*

    Dumbest non-compete ever: My daughter got a job last summer for a company that runs soccer clinics for little kids, such as at daycare centers etc. It’s a franchise that’s part of a national company. They made her sign a non-compete that referred to her multiple times as “the employee” but then they classified her as a contractor. She sent in the form to the IRS alleging that she was misclassified and they sided with her. Since she stopped working at the end of the summer and couldn’t submit the form until she got her 1099 at the end of the year, she has no idea if the company has changed their ways or what the fallout might have been.

  39. LaMiAb*

    Don’t forget MA, which allows (allowed?) you to have a non-compete but in order to enforce it, you had to pay the highest salary that the employee earned over the last 12 months of employment for two years, called “garden wages” – as in, you don’t have to work, you can sit and putter in your garden!

  40. Generic Name*

    When will non solicitation clauses be made illegal? My old company sucks and people are asking me about my new job, but I’m telling people not to apply because I don’t want to get sued.

    1. Abundant Shrimp*

      ^ This. I haven’t had to sign one (yet), but other work friends who left my workplace did.

      Those who have left can still poach those of us that are left behind. We’ll just say that we heard about the job by word of mouth, LinkedIn, job ad or whatever. And we are under no obligation to tell anyone at our current place where we’re going. I’ve been poached once and had the CIO himself ask me that, know what I said? “An opportunity came up that was too good to pass up.” and that was it.

  41. Jo*

    Will government be exempt? Are conflict-of-interest clauses viewed differently? (And could those be used in the private sector?) I realize these are not the same intent as a non-compete clause, but it’s a similar restriction of where an employee can work after leaving.

    Our state has legislated prohibitions for some positions preventing them from working for any known vendor for 2 years after leaving government service. For some people this is limited – they might have been involved in negotiations with only a handful. But for others, especially higher up the chain, it practically precludes every vendor in the industry because they had an oversight role over hundreds/thousands of projects and contracts.

  42. SandwichSlinger*

    How far we’ve come from my high school part-time job at Jimmy John’s, when I had to sign a non-compete stating I wouldn’t work anywhere else that served sandwiches for five years!

  43. CheeseHead*

    Would this affect anti-poaching agreements as well? I worked for a company that boxed me out of my field in the entire state for a year by forcing me to agree not to work for any client or vendor.

    Of course the enforcement mechanism wasn’t the courts, it was the threat of black-balling.

  44. bat*

    Will this have any effect on contracts between companies that include things like “you will not hire someone who is employed with us/has worked for us with the last year”?

  45. jr*

    what about doctors? my brother just lost a potential coworker because of a non-compete (can’t join another practice within n miles…his was (n-1) miles away.

    (i think those are called covenants?)

Comments are closed.