It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued.
> In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule.
I've always thought of that as representing a stifling of innovation.
> I've always thought of that as representing a stifling of innovation.
The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.
For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good.
Patents are no longer about protecting R&D investments. They have become more about patenting the vaguest concepts possible, in the hope of making a profit when someone else does an actual invention which somehow stumbles into your patents' wording.
"short lifetime" is relative. Had Apple been granted a patent on the idea of a smartphone the same year they released the iPhone, that patent would only expire in three years.
There are some industries where due to slow-moving markets the 20 year patent period is still sensible, but for most sectors we would be better off with a 5 or 10 year patent period to account for the increased speed of innovation.
In theory maybe, but in practice it seems like the opposite. The current growth of the 3D printer market is in part directly tied to the lapsing of several key patents in the area.
Further, most patents may contain key details, but they also intentionally contain as much broad information as to create a massive exclusionary zone, not to mention burying any legitimately useful information.
20 years is not short! 20 years might be appropriate for capital-intensive innovations (e.g., in pharma), but definitely not for industries where innovations are not typically capital-intensive. E.g., 20 years for cryptography and software patents is a disaster.
not if patents become a weapon against actual innovation - which it has devolved into being today.
Far from being made to progress science and the arts, patents have become a method for which large corporations can add moats to competition. Things like codecs for video/audio, which are purely mathematical expressions, have been patented. Genes and molecules, even tho they might occur naturally, can be patented (a very tenuous form of invention - it's discovered, even if not naturally occurring!).
And not to mention design patents.
I say the entire patent system needs to be abolished, or at least, made such that only applicable to physical mechanisms, and not software, nor biological systems.
Respectfully, how do you define the current patent terms as “short”? Sure copyright is much worse, but innovation regularly happens on the scale of months! The current term of 20 years seems incredibly long to me, and it’s not clear that even at 5 years patents would provide more benefit than harm.
Most of the purported benefits of patents seem based on theories that most people don’t understand. We all take some received knowledge about their supposed operation, and usually proponents of patents know nothing about how powerful innovation in open source and other patent-free spaces can be.
Both things - that the number of patents measures innovation, and that they serve to stifle it, can be true at the same time. Under a fixed patent regime, the more innovation there is, the more individual patents are necessary to stifle it. Of course, if we allow the patent regime to vary, then if it changes to make patents easier to acquire then that means less innovation.
However, it's true that this property - of being a valid measure, but interventions to change it having the opposite effect on the inferred variable - is a very unfortunate one in a metric.
I'd say the number of patents filed and granted by practicing entities of small to mid-size would be a pretty good measure of innovation. I think patent fees and complexity should be progressive, esp if you have working hardware and don't just flip the patent to a troll.
They do stifle innovation when one company locks up a huge portfolio of them. Forcing the employees who came up with the patentable ideas to sign non-compete agreements prevents them from working on anything related to those inventions elsewhere.
Wonder ultimately how this will be handled once the Chevron Deference case is ruled on by the Supreme Court. The interpretations I've seen from other sources is that this will be overturned if the courts decide against the principle
> I've always thought of that as representing a stifling of innovation.
Sadly, over my long career as a tech startup entrepreneur, my experience has been that your assumption is correct the vast majority of the time. Now when I teach or mentor young tech entrepreneurs I'm often explaining why they probably don't want to prioritize filing patents as part of their startup strategy. While there are certain exceptions, especially in pharma, biotech, materials science or medical fields, the years it takes for a patent to become enforceable and then the upfront cost + further years required to actually get a judgement, make patents largely ineffective in most startup contexts. There's also substantial uncertainty as to whether a startup can get the patent granted at all. After that, there's the challenge of getting it granted in a form which remains defensible and can't be easily worked around. Many people don't realize patent examiners can refuse to grant a patent unless the applicant narrows the claims.
Conversely, as a tech startup these days you do need to worry about patents potentially being used against you. The majority of tech patent cases are giant vs giant fighting over turf, a large incumbent trying to kneecap an emerging startup competitor (usually filing suit to make the startup unattractive to investors for a year and never intending to actually go to court) or patent troll vs everyone. Personally, I had both a giant trying to stop my startup's Series A funding and several patent trolls. Despite having no actual merit, the giant's suit did freeze our Series A and we nearly died. After seven months we'd demonstrated we could survive without a Series A so they dropped the suit (of course) but by then they'd cost us more than half our cash in just defending an obviously sham claim. As one investor told me, "Yes, it's clearly a bullshit claim but it will still cost serious money and a lot of founder attention over the next 18 months to get it thrown out and that, unfortunately, tips this deal over our risk threshold." And responding to the constant patent trolls just burns up startup founder attention and scarce cash in nuisance legal fees.
Despite the old-school trope of "garage inventor patents invention, makes fortune", frankly, from the perspective of fostering typical tech startups, you'd probably prefer a world where there were no patents outside of pharma, medical, bio, etc.
I wonder how frequent that is, the "We've pointless patents. And legal budget larger than your last round. Thank for playing, goodbye." It seems a reoccurring theme.
But as for the usefulness of patents to startups, at least with material-science-y hardware, I've heard possession of a defensive patent portfolio described as "table stakes" for existence, with enforceability et al being secondary.
It was interesting watching patents and unicorn dreams shape VR. Instead of years of commercial ferment exploring low-hanging niches, we wait for monoliths to eventually create maximally-hard mass-market consumer tech, and will then backfill easier niches, eventually. An industrial policy optimized for pharma, yielding pharma-shaped industries.
Pardon my language but the patent thing has turned into a **** measuring contest, and serves no useful purpose.
When I worked at FAANG you had a whole class of PE engineer who literally couldn’t build anything to save their lives. But they would constantly file patents with a frenzy like IT guys rack up certifications. Of course when the patent office gets an application from $FAANG they approve it.
And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something, unfortunately.
With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation
This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected
> Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation
I think TC is not included, will still get a base, but benefits seems to be included
Sure, but to some degree bonuses are completely discretionary. A very bad year at some shops or on some desks could land you with a 0 bonus, although when that happens expect everyone to start looking for other jobs.
This seems incredibly important. I know non-compete rules personally held me back at a previous tech job.
I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.
Page 83-84 provides some guidance on garden leave and suggests that it will still be allowed under the new rule:
> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition, because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule
even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.
Doesn't this mean the end of 'at-will' for anyone that a company wants to cover with a non-compete? At present a company can have their cake and eat it, giving you one day notice of end of employment but then enforcing a non-compete for x months.
If this survives the Supreme Court, wouldn't a company would have to put in your employment contract that you/they must give x months notice to end employment if they wanted to restrict you? Otherwise you could give one days notice and they wouldn't be able to put you on gardening leave.
I was denied a job I was well qualified for because, (paraphrased, besides the quoted part): Our CEO and your CEO have a "gentleman's agreement" not to hire people that work at eachother's company.
I have no idea why the recruiter was willing to put this in writing, and thankfully, I was able to find other work instead.
I know it's not a non-compete, but there are other ways that companies can illegally form cartels to suppress labor.
I was subject to one as well, but it was just on my base, not total comp, which was not the majority of my compensation. And while my base was fine, it was more or less explicitly stated that this was meant to make it painful for employees to leave and had almost zero to do with any special information the employee had.
They have other tricks. My comp was about 80% bonus, most of which went into deferred comp for a few years. If I was to go to a competitor without permission (independent of the non compete) I would forfeit the deferred comp.
I'm not sure that I understand. What does it mean for a noncompete to apply only to base compensation? Is the idea that if you join a competing company within X months of leaving your old company, you need to repay your base salary to the old company?
>I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.
If a company wants to pay someone not to work for a year, they're free to do that whenever they want. Maybe without noncompetes, they'll have to pay more to make it worth it for the guy being paid to sit around!
We'll have to see what the finance industry does. My guess is that they will only make sizeable counter-offers to key employees, and the employees will not be forced to accept them and typically won't. In the long run there might not even be sizeable counter-offers to key employees.
EDIT: Er, the FTC explicitly does not comment on garden leave:
> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely
curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.
My guess is that garden leave will be offered, but in right-to-work states there will be no way to enforce that the employee remains employed.
I am currently on one of those deals by working for an HFT, then taking a competitor's offer. It is really very nice. From a wealth-accumulation POV, I am losing out a lot of earning each month I'm not working, but I am still paid a very cushy six-figure salary that covers a comfortable lifestyle for my family plus decent savings. I value my time at prime working age much more than the net worth I potentially lost. I have been able to travel, hone hobbies, start and finish personal projects, just help out my wife, and much more. Honestly I don't want it to end.
It's worth noting that the so-called "garden leave" you're describing usually doesn't come with things like bonuses. That may even be a majority of your compensation depending on the role.
Another interpretation is that the ruling party is bribing people now that election season is ramping up by passing rules it knows has no standing in court, but won’t get shot down until post-election. Imagine all the people who voted for Biden thinking he would absolve them of the contract they willfully entered to pay their student loans. This is not much different. It is another group of people who have contracts they wish they didn’t have relying on government overreach to save them rather than not having put themselves in the position to begin with.
The rule goes into effect 120 days after it gets published in the federal register, and at which point all previous non-competes are unenforceable EXCEPT for senior executives.
Senior executives cannot enter into new non-competes though.
My attorney friends tell me that the FTC doesn't really have the ability to do this, since contract law is part of state law. (My poor paraphrasing, not theirs.)
I've been surprised I haven't seen this mentioned on social media or in the news. Are my friends wrong, or are people celebrating because this is just a step in the right direction even if it may not do anything yet?
> FTC doesn't really have the ability to do this, since contract law is part of state law
The federal government can absolutely regulate both employment and contract law. (Merger agreements are contracts. The FTC was established to block bad mergers.)
Whether the FTC can do this is untested. But that’s more a Chevron issue than a federal powers one.
Relying on a Chevron argument is not particularly wise given the pending Supreme Court cases Relentless Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo where the Court is expected to overturn Chevron:
Generally federal law will preempt state law. See the Court's decisions regarding California's attempt to ban arbitration agreements in employment contracts.
Now, that doesn't mean the Supreme Court won't come up with their own hot take, but at some point appeals and district courts are just going to say no when they send a case back.
What is the Supreme Court going to do? Federal judges can only be removed by impeachment of the House and conviction of the Senate. The Supreme Court has no power to enforce its decisions.
Chances are extremely high that the current Supreme Court nullifies or greatly restricts Chevron. These kind of announcements are fuel for the fire and are likely to accelerate its demise.
They will kill this faster than they killed the COVID vaccine mandate. Govt. agencies can’t make laws, even if we may agree with them (I actually do in this case). However this isn’t the role of an unelected government agency.
Ask your attorney friends if a farmer growing food on their own land to feed to their own animals is "interstate commerce", and ask them to explain that to you.
What I'm referring to here is Wickard v Filburn in which the Supreme Court ruled that a farmer growing food on his own land to feed to his own animals was participating in "interstate commerce" and could thus be regulated by the federal government.
This is a big part of why the federal government can control things like which plants you are allowed to grow in your home.
But when the FTC tries to regulate something like non-competes and protect average workers the corporate attorneys come out of the woodwork, "oh no, the federal government can't do that!"
Is it the same people? It seems like the current Supreme Court is very much against decisions like the weird farmer one and likely to roll such things back.
Your friend may recall that the FTC occasionally acts against "deceptive" conduct in the marketplace. If you read the relevant law, it also can act against "unfair" conduct.[1] Sometimes people forget there are two words there separated by "or".
This would be an example of an "unfair" practice, which mostly are about predation in the context of unequal bargaining position when litigated under "Little FTC Acts"[2]. I don't know offhand whether these similar laws have been used to achieve the same thing state-by-state, but the FTC rule meets the straight face test for sure. So, regardless of what happens next at the Federal level, this is about to become a white-hot area of litigation under state "Little FTC Acts".
Where I am, I know people who are under noncompetes that have a geographical clause. You can’t leave to join a competitor within X miles. In my part of the country, that would include at least three states (maybe more), but other locations would include many more.
So, yeah, seems like at least those non-competes impacts interstate commerce.
If a noncompete agreement between a former employer, and a person who resides in a particular state, purports to prevent that person from taking up an employment contract with another employer - including by one who is located in a different state… well that seems like that could be an unfair restraint on interstate commerce.
The federal government has the constitutional right to regulate interstate commerce, and 100 years ago it discovered that all commerce is now interstate commerce, followed by the supremacy clause which is selectively applied (ie. not for scheduled drugs, but for everything else)
This Supreme Court could be friendly to invalidating that expansive interpretation though
so, big mismatch from the executive branch / agencies with the judicial branch which could completely warp our relationship with the Federal Government and what we find familiar in our way of life
But I dont think its as simple as saying “contract law is part of state law”
The Supreme Court doesn't have any power to enforce its decisions. District and Appeals Courts could just say no to their decisions and there isn't much they can do.
I’m not a constitutional scholar, but I’ll say this —- there’s a reason this one is debated. It seems to me (with around 70% probability) that there are many possible constructions that could emerge which would more or less conform to the (rather contingent) bar for Supreme Court decisions.
I say contingent because the history of the Supreme Court is far from a deductive process of pure interpretation.
I recognize the utility of the Supreme Court while dismissing any grandiose claims of objective morality or obvious legality. It is a body of people after all.
Not agreeing, but just posting the other side of the argument from the US Chamber of Commerce. Not a fan of legislation by fiat, maybe this will prompt Congress to do something. USCoC said they will sue...
>The Chamber and its membership are strongly opposed to the Proposed Rule. It would categorically ban nearly all noncompete agreements—regardless of individual circumstances, such as a worker’s skill, job responsibilities, access to competitively sensitive and proprietary information, bargaining power, or compensation—and require that organizations rescind all existing agreements and provide notice to affected workers of such rescission. Such a proposal fails to recognize that noncompete agreements can serve vital procompetitive business and individual interests—such as protecting investments in research and development, promoting workforce training, and reducing free-riding—that cannot be adequately protected through other mechanisms such as trade-secret suits or nondisclosure agreements. For centuries, courts have recognized the procompetitive benefits of noncompete agreements and balanced those benefits against any negative costs imposed by particular noncompete agreements. As perhaps acknowledged by the Commission’s request for comments on narrower alternatives, the Commission’s categorical ban would sweep in millions of noncompete agreements that pose no harm to competition, and in fact benefit the U.S. business community, economy, workers, and consumers.
Why would you think that? Lobbying organizations exist to advance the interests of their members. Their members in this case are businesses. This will restrict the control businesses have over their former employees. Therefore, they don’t like it.
If the SCOTUS overturns the Chevron doctrine, then this rule and probably all of the FTC's authority is on thin ice until Congress passes an act that says something more substantial and significantly less vague that "unfair business practices".
It'll be interesting to see what happens. It does sound like this clearly falls under interstate commerce, so within the scope of Fed action. Is there something that makes you think otherwise? Beyond court composition, that is.
Yes, it was started by Taft as a business 'union' that the government could deal with. Now they're funded primarily by multinationals and so they place the concerns of those large corporations first and well before upstart startups.
> "‘Robbing people of their economic liberty also robs them of all sorts of other freedoms,’ said FTC Chair Lina Khan, who appeared at a House hearing in 2023."
Should be the motto of every government in the world.
Well if your goal is "freedom" all-around then it would make perfect sense that sometimes that would lead to regulations that prevent things and other times it would lead to regulations that allow things. In each case the regulation does whatever is best for people's freedom?
I seriously can't understand how anyone could be opposed to this. Laws that help people and protect them from people who have power of them are... good. That's what laws are for.
"""
Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions.
"""
Given in tech industry / FANG, most people earn above the $151,164 I wonder how they define "policy-making positions" ?
As I read the above sentence I understand that this is a binary and and not an either you earn that much or are in policy making positions?
Readit News
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...
It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued.
> In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule.
I've always thought of that as representing a stifling of innovation.
The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.
For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good.
Patents are no longer about protecting R&D investments. They have become more about patenting the vaguest concepts possible, in the hope of making a profit when someone else does an actual invention which somehow stumbles into your patents' wording.
There are some industries where due to slow-moving markets the 20 year patent period is still sensible, but for most sectors we would be better off with a 5 or 10 year patent period to account for the increased speed of innovation.
Further, most patents may contain key details, but they also intentionally contain as much broad information as to create a massive exclusionary zone, not to mention burying any legitimately useful information.
20 years is not short! 20 years might be appropriate for capital-intensive innovations (e.g., in pharma), but definitely not for industries where innovations are not typically capital-intensive. E.g., 20 years for cryptography and software patents is a disaster.
not if patents become a weapon against actual innovation - which it has devolved into being today.
Far from being made to progress science and the arts, patents have become a method for which large corporations can add moats to competition. Things like codecs for video/audio, which are purely mathematical expressions, have been patented. Genes and molecules, even tho they might occur naturally, can be patented (a very tenuous form of invention - it's discovered, even if not naturally occurring!).
And not to mention design patents.
I say the entire patent system needs to be abolished, or at least, made such that only applicable to physical mechanisms, and not software, nor biological systems.
Most of the purported benefits of patents seem based on theories that most people don’t understand. We all take some received knowledge about their supposed operation, and usually proponents of patents know nothing about how powerful innovation in open source and other patent-free spaces can be.
However, it's true that this property - of being a valid measure, but interventions to change it having the opposite effect on the inferred variable - is a very unfortunate one in a metric.
https://www.stlouisfed.org/open-vault/2021/june/how-to-measu....
Insane to me that they use this as a measure of innovation, when almost by definition it is the antithesis of innovation.
Sure, for any individual‘s fitness or a company’s “innovativeness” they are useless, but in aggregate they can be revealing.
Sadly, over my long career as a tech startup entrepreneur, my experience has been that your assumption is correct the vast majority of the time. Now when I teach or mentor young tech entrepreneurs I'm often explaining why they probably don't want to prioritize filing patents as part of their startup strategy. While there are certain exceptions, especially in pharma, biotech, materials science or medical fields, the years it takes for a patent to become enforceable and then the upfront cost + further years required to actually get a judgement, make patents largely ineffective in most startup contexts. There's also substantial uncertainty as to whether a startup can get the patent granted at all. After that, there's the challenge of getting it granted in a form which remains defensible and can't be easily worked around. Many people don't realize patent examiners can refuse to grant a patent unless the applicant narrows the claims.
Conversely, as a tech startup these days you do need to worry about patents potentially being used against you. The majority of tech patent cases are giant vs giant fighting over turf, a large incumbent trying to kneecap an emerging startup competitor (usually filing suit to make the startup unattractive to investors for a year and never intending to actually go to court) or patent troll vs everyone. Personally, I had both a giant trying to stop my startup's Series A funding and several patent trolls. Despite having no actual merit, the giant's suit did freeze our Series A and we nearly died. After seven months we'd demonstrated we could survive without a Series A so they dropped the suit (of course) but by then they'd cost us more than half our cash in just defending an obviously sham claim. As one investor told me, "Yes, it's clearly a bullshit claim but it will still cost serious money and a lot of founder attention over the next 18 months to get it thrown out and that, unfortunately, tips this deal over our risk threshold." And responding to the constant patent trolls just burns up startup founder attention and scarce cash in nuisance legal fees.
Despite the old-school trope of "garage inventor patents invention, makes fortune", frankly, from the perspective of fostering typical tech startups, you'd probably prefer a world where there were no patents outside of pharma, medical, bio, etc.
But as for the usefulness of patents to startups, at least with material-science-y hardware, I've heard possession of a defensive patent portfolio described as "table stakes" for existence, with enforceability et al being secondary.
It was interesting watching patents and unicorn dreams shape VR. Instead of years of commercial ferment exploring low-hanging niches, we wait for monoliths to eventually create maximally-hard mass-market consumer tech, and will then backfill easier niches, eventually. An industrial policy optimized for pharma, yielding pharma-shaped industries.
When I worked at FAANG you had a whole class of PE engineer who literally couldn’t build anything to save their lives. But they would constantly file patents with a frenzy like IT guys rack up certifications. Of course when the patent office gets an application from $FAANG they approve it.
And people who aren’t in the know just see patent on the resume and keep hiring these people thinking they are the next Elon Musk or something, unfortunately.
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule...
This would be a game changer. My experience with garden leaves was that the base salary remained but since the bonus and benefits were gone, the total comp was severely affected
> Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation
I think TC is not included, will still get a base, but benefits seems to be included
Deleted Comment
I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.
> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition, because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.
If this survives the Supreme Court, wouldn't a company would have to put in your employment contract that you/they must give x months notice to end employment if they wanted to restrict you? Otherwise you could give one days notice and they wouldn't be able to put you on gardening leave.
I have no idea why the recruiter was willing to put this in writing, and thankfully, I was able to find other work instead.
I know it's not a non-compete, but there are other ways that companies can illegally form cartels to suppress labor.
You passed on a juicy class action lawsuit.
If a company wants to pay someone not to work for a year, they're free to do that whenever they want. Maybe without noncompetes, they'll have to pay more to make it worth it for the guy being paid to sit around!
EDIT: Er, the FTC explicitly does not comment on garden leave:
> With respect to garden leave agreements, as noted previously, commenters used the term “garden leave” to refer to a wide variety of agreements. The Commission declines to opine on how the definition of non-compete clause in § 910.1 would apply in every potential factual scenario. However, the Commission notes that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the definition,350 because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed. Furthermore, where a worker does not meet a condition to earn a particular aspect of their expected compensation, like a prerequisite for a bonus, the Commission would still consider the arrangement “garden leave” that is not a non-compete clause under this final rule even if the employer did not pay the bonus or other expected compensation. Similarly, a severance agreement that imposes no restrictions on where the worker may work following the employment associated with the severance agreement is not a non-compete clause under § 910.1, because it does not impose a post-employment restriction.
My guess is that garden leave will be offered, but in right-to-work states there will be no way to enforce that the employee remains employed.
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Yeah. Remember this when you go to vote in November. Elections matter.
Senior executives cannot enter into new non-competes though.
I've been surprised I haven't seen this mentioned on social media or in the news. Are my friends wrong, or are people celebrating because this is just a step in the right direction even if it may not do anything yet?
The federal government can absolutely regulate both employment and contract law. (Merger agreements are contracts. The FTC was established to block bad mergers.)
Whether the FTC can do this is untested. But that’s more a Chevron issue than a federal powers one.
https://www.scotusblog.com/2024/01/supreme-court-likely-to-d...
Where in Article I Section 8 does the Constitution grant that power?
Now, that doesn't mean the Supreme Court won't come up with their own hot take, but at some point appeals and district courts are just going to say no when they send a case back.
What is the Supreme Court going to do? Federal judges can only be removed by impeachment of the House and conviction of the Senate. The Supreme Court has no power to enforce its decisions.
They will kill this faster than they killed the COVID vaccine mandate. Govt. agencies can’t make laws, even if we may agree with them (I actually do in this case). However this isn’t the role of an unelected government agency.
What I'm referring to here is Wickard v Filburn in which the Supreme Court ruled that a farmer growing food on his own land to feed to his own animals was participating in "interstate commerce" and could thus be regulated by the federal government.
This is a big part of why the federal government can control things like which plants you are allowed to grow in your home.
But when the FTC tries to regulate something like non-competes and protect average workers the corporate attorneys come out of the woodwork, "oh no, the federal government can't do that!"
This would be an example of an "unfair" practice, which mostly are about predation in the context of unequal bargaining position when litigated under "Little FTC Acts"[2]. I don't know offhand whether these similar laws have been used to achieve the same thing state-by-state, but the FTC rule meets the straight face test for sure. So, regardless of what happens next at the Federal level, this is about to become a white-hot area of litigation under state "Little FTC Acts".
[1] https://www.law.cornell.edu/uscode/text/15/57a
[2] https://litigationcommentary.org/2021/06/15/a-fresh-look-at-...
So, yeah, seems like at least those non-competes impacts interstate commerce.
This Supreme Court could be friendly to invalidating that expansive interpretation though
so, big mismatch from the executive branch / agencies with the judicial branch which could completely warp our relationship with the Federal Government and what we find familiar in our way of life
But I dont think its as simple as saying “contract law is part of state law”
I say contingent because the history of the Supreme Court is far from a deductive process of pure interpretation.
I recognize the utility of the Supreme Court while dismissing any grandiose claims of objective morality or obvious legality. It is a body of people after all.
it seems like thats a mixture of the SEC and IRS
https://www.uschamber.com/finance/antitrust/chamber-comments...
>The Chamber and its membership are strongly opposed to the Proposed Rule. It would categorically ban nearly all noncompete agreements—regardless of individual circumstances, such as a worker’s skill, job responsibilities, access to competitively sensitive and proprietary information, bargaining power, or compensation—and require that organizations rescind all existing agreements and provide notice to affected workers of such rescission. Such a proposal fails to recognize that noncompete agreements can serve vital procompetitive business and individual interests—such as protecting investments in research and development, promoting workforce training, and reducing free-riding—that cannot be adequately protected through other mechanisms such as trade-secret suits or nondisclosure agreements. For centuries, courts have recognized the procompetitive benefits of noncompete agreements and balanced those benefits against any negative costs imposed by particular noncompete agreements. As perhaps acknowledged by the Commission’s request for comments on narrower alternatives, the Commission’s categorical ban would sweep in millions of noncompete agreements that pose no harm to competition, and in fact benefit the U.S. business community, economy, workers, and consumers.
https://www.uschamber.com/finance/antitrust/u-s-chamber-to-s...
>The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked.
Edit: it was a dig to the pro-competition façade some pro-business people put forward.
It may be aimed at prodding the Congress into action.
Without anti compete stealing your competitors staff becomes a valid business strategy. Buy up the competitions best people and cripple them.
This favors those with the most capital not the least.
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https://www.uschamber.com/about
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Should be the motto of every government in the world.
I seriously can't understand how anyone could be opposed to this. Laws that help people and protect them from people who have power of them are... good. That's what laws are for.
Given in tech industry / FANG, most people earn above the $151,164 I wonder how they define "policy-making positions" ?
As I read the above sentence I understand that this is a binary and and not an either you earn that much or are in policy making positions?
That plus tax subsidies for third-party insurance and we ended up in the current mess.