The end of non-compete agreements is a tech job earthquake

🌈 Abstract

The article discusses the Federal Trade Commission's (FTC) decision to ban non-compete agreements, which prevent many workers from joining rival companies. It covers the following key points:

🙋 Q&A

[01] The FTC's Ban on Non-Compete Agreements

1. What are the key points about the FTC's decision to ban non-compete agreements?

• The FTC, by a 3-2 party-line vote, decided to ban non-compete agreements that prevent workers from joining rival companies.
• Non-compete agreements are often mandatory for employees to accept a job, even for low-wage workers, not just highly skilled workers.
• The FTC argues that non-compete agreements keep wages low, suppress new ideas, and limit economic dynamism.
• The ban will nullify over 30 million existing non-compete agreements, except for executives in high-paying policy-making positions.

2. What are the arguments against the FTC's ban on non-compete agreements?

• Business and legal groups, such as the US Chamber of Commerce, have sued the FTC, arguing that the ban exceeds the FTC's authority and that a categorical ban is not legal.
• Republican Commissioner Andrew Ferguson argued that the ruling "nullifies more than 30 million existing contracts and forecloses tens of millions of future contracts," which is a significant impact.

3. What is the expected timeline for the legal challenges to the FTC's decision?

• The article expects the issue to grind through the court system all the way to the Supreme Court sometime in the late 2020s.
• The key issue is likely to be whether the FTC has the power to make such a fundamental legal policy change, rather than the merits of the non-compete ban itself.

[02] Implications for Employers and Employees

1. What advice does the article provide for employers regarding non-compete agreements?

• The article recommends that employers immediately dump any non-compete agreements and rewrite employment contracts to use non-disclosure agreements (NDAs) and trade secrets instead.

2. What opportunities does the article suggest for top tech talent affected by non-compete agreements?

• The article advises top tech talent to talk to their bosses about keeping them and offering better deals, rather than relying on non-compete threats.
• If employers don't respond positively, the article suggests that it's time for affected workers to get ready to leave and take advantage of the opening doors.