FTC Proposes Banning Noncompete Clauses for Workers

[linkin06]

The Federal Trade Commission on Thursday issued a proposal to ban the use of noncompete clauses, a move that would allow workers to take jobs with rival companies or start competing businesses without the threat of being sued by their employers.

The FTC said noncompete clauses constitute an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition. Noncompete clauses, which typically bar employees from joining a competitor for a period after they quit, affect nearly one in five American workers, according to the agency. Long associated with higher-paid managers, the clauses have also been imposed on lower-wage workers who lack access to trade secrets, strategic plans and other reasons that could be cited for hampering job switchers, the agency says.

If the FTC eventually votes to adopt the proposal, companies would have to rescind noncompete requirements they impose on workers and let employees know about the change. FTC officials say noncompetes suppress wages, restrain new business formation and hurt the ability of companies to hire workers they need to grow.
“Noncompetes are basically locking up workers, which means they are not able to match with the best jobs,” Chair Lina Khan said on a call with reporters Wednesday. “This is bad for competition. It is bad for business dynamism. It is bad for innovation.”

FTC Proposes Banning Noncompete Clauses for Workers

The agency is moving to ban the clauses, which would allow workers to take jobs with rival companies or start competing businesses without the threat of being sued.

www.wsj.com

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[abolt18]

The Federal Trade Commission on Thursday issued a proposal to ban the use of noncompete clauses, a move that would allow workers to take jobs with rival companies or start competing businesses without the threat of being sued by their employers.

The FTC said noncompete clauses constitute an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition. Noncompete clauses, which typically bar employees from joining a competitor for a period after they quit, affect nearly one in five American workers, according to the agency. Long associated with higher-paid managers, the clauses have also been imposed on lower-wage workers who lack access to trade secrets, strategic plans and other reasons that could be cited for hampering job switchers, the agency says.

If the FTC eventually votes to adopt the proposal, companies would have to rescind noncompete requirements they impose on workers and let employees know about the change. FTC officials say noncompetes suppress wages, restrain new business formation and hurt the ability of companies to hire workers they need to grow.
“Noncompetes are basically locking up workers, which means they are not able to match with the best jobs,” Chair Lina Khan said on a call with reporters Wednesday. “This is bad for competition. It is bad for business dynamism. It is bad for innovation.”

FTC Proposes Banning Noncompete Clauses for Workers

The agency is moving to ban the clauses, which would allow workers to take jobs with rival companies or start competing businesses without the threat of being sued.

www.wsj.com

Don't worry, they'll throw in an exclusion for doctors.

 

[Dr. Rude]

Don't worry, they'll throw in an exclusion for doctors.

Where you stand depends on where you sit. There will be more than a few doctor (owners) who will be quite dysphoric if this actually happens.

 

[TeslaCoil]

Please God. Oh PLEASE yes!

 

[UscGhost]

That will certainly be huge for all those docs outside of California

 

[nimbus]

It’s part of Biden’s socialist, power to the people, left wing, anti-business agenda.

The FTC’s Noncompete Rulemaking is Blatantly Unlawful

Washington, D.C. – Sean Heather, U.S. Chamber senior vice president for International Regulatory Affairs and Antitrust released the following statement today regarding the FTC’s proposed rulemaking on employer noncompete clauses: “Today’s actions by the Federal Trade Commission to outright ban...

www.uschamber.com

 

[TeslaCoil]

It’s part of Biden’s socialist, power to the people, left wing, anti-business agenda.

The FTC’s Noncompete Rulemaking is Blatantly Unlawful

Washington, D.C. – Sean Heather, U.S. Chamber senior vice president for International Regulatory Affairs and Antitrust released the following statement today regarding the FTC’s proposed rulemaking on employer noncompete clauses: “Today’s actions by the Federal Trade Commission to outright ban...

www.uschamber.com

hey im libertarian, but I cant wait for non-competes to die. If anything should be unlawful, it should be a non-compete.

 

[UscGhost]

It’s part of Biden’s socialist, power to the people, left wing, anti-business agenda.

The FTC’s Noncompete Rulemaking is Blatantly Unlawful

Washington, D.C. – Sean Heather, U.S. Chamber senior vice president for International Regulatory Affairs and Antitrust released the following statement today regarding the FTC’s proposed rulemaking on employer noncompete clauses: “Today’s actions by the Federal Trade Commission to outright ban...

www.uschamber.com

Given that the largest economy in the US gets along fine without non-compete clauses...I think the rest of the country would be fine.

If trade secrets are that important, that's what the patent system is for.

Businesses just use them to basically force employees to accept lower wages or else they have to move. Just look at what Florida does to physicians with non competes

 

[narcotics999]

Does it mean that the contract I signed with my hospital to prevent me from practicing within x miles for y years is not valid anymore?

 

[buccsmf1]

Does it mean that the contract I signed with my hospital to prevent me from practicing within x miles for y years is not valid anymore?

one of the articles i read said that yes, it will void non competes in current contracts

 

[Dr. Rude]

Does it mean that the contract I signed with my hospital to prevent me from practicing within x miles for y years is not valid anymore?

IF it goes through. This will undoubtedly be challenged in court. May take years to actually be in effect.

 

[kidthor]

I think this will be a big win for Biden. It's also weird to me that the Republicans are in favor of noncompetes... it seems antithetical to their base.

Is anyone on here actually in favor of noncompetes?

 

[ucladoc2b]

That will certainly be huge for all those docs outside of California

For all its faults, California has some of the best worker protections/individual economic freedom protections in the country.

(I have always wondered why Florida, Texas and other southern states are extolled as bastions of individual economic freedom and great job opportunities. The low wages and individually restrictive laws seem to say otherwise ).

 

[MirrorTodd]

I think this will be a big win for Biden. It's also weird to me that the Republicans are in favor of noncompetes... it seems antithetical to their base.

Is anyone on here actually in favor of noncompetes?

Admittedly that's pretty on par for the current republican party.

 

[Onefellswoop87]

It’s part of Biden’s socialist, power to the people, left wing, anti-business agenda.

The FTC’s Noncompete Rulemaking is Blatantly Unlawful

Washington, D.C. – Sean Heather, U.S. Chamber senior vice president for International Regulatory Affairs and Antitrust released the following statement today regarding the FTC’s proposed rulemaking on employer noncompete clauses: “Today’s actions by the Federal Trade Commission to outright ban...

www.uschamber.com

The lawsuits, if this ban passes, will keep noncompetes in place for a longtime. It’s arguable if the FTC has the authority to make such a ban.

But the argument in that link is laughable. Sean Heather, U.S. Chamber senior vice president for International Regulatory Affairs and Antitrust, said “noncompete agreements are an important tool in fostering innovation and preserving competition.”

Noncompetes foster competition? Don’t compete helps those to compete. Huh?

 

[jwk]

Admittedly that's pretty on par for the current republican party.

Maybe you know different Republicans than I do.

 

[vector2]

Maybe you know different Republicans than I do.

In the trump tax cuts the corporate rate went to 21% along with more favorable pass-through treatment. And the corporate tax cut was permanent.

OTOH, the individual and family cuts were temporary and set to expire in 2025.

I'm pretty sure we know the same Republicans.

 

[UscGhost]

In the trump tax cuts the corporate rate went to 21% along with more favorable pass-through treatment. And the corporate tax cut was permanent.

OTOH, the individual and family cuts were temporary and set to expire in 2025.

I'm pretty sure we know the same Republicans.

But don't worry! Trickle down!!

I am sure all those CEOs are just waiting for the right time to start trickling down that money.

 

[GravelRider]

But don't worry! Trickle down!!

I am sure all those CEOs are just waiting for the right time to start trickling down that money.

Those CEOs that were going to trickle it down are too busy whining that the labor is demanding too much money.

 

[lotsapain]

For all its faults, California has some of the best worker protections/individual economic freedom protections in the country.

(I have always wondered why Florida, Texas and other southern states are extolled as bastions of individual economic freedom and great job opportunities. The low wages and individually restrictive laws seem to say otherwise ).

Well something good has to come out of California except wine I guess.. Indeed having a non-compete is a huge plus in California. I can live with a non-compete in the same hospital (ie pain physicians) but radius and non-competes in hospitals where a company was 2 years ago nonsense.

 

[kidthor]

Lina Khan: Noncompetes Depress Wages and Kill Innovation

 

[ucladoc2b]

Lina Khan: Noncompetes Depress Wages and Kill Innovation

This is part of the reason tech took off here.

 

[Ashers]

I think this will be a big win for Biden. It's also weird to me that the Republicans are in favor of noncompetes... it seems antithetical to their base.

Is anyone on here actually in favor of noncompetes?

I am not in favor of noncompetes. It'd be interesting especially for locum tenens contracts with the 2 years after last working or even being presented to a hospital.

 

[MirrorTodd]

I am not in favor of noncompetes. It'd be interesting especially for locum tenens contracts with the 2 years after last working or even being presented to a hospital.

I'm curious as to how enforceable those are really? I'm getting out of the Army in roughly 2-2.5 years and have been using locums to explore possible locations. It ain't like I have trade secrets of the locums company to bring to the hospital.

 

[Dr. Rude]

I'm curious as to how enforceable those are really? I'm getting out of the Army in roughly 2-2.5 years and have been using locums to explore possible locations. It ain't like I have trade secrets of the locums company to bring to the hospital.

Read the fine print. They have recruiting, vetting, HR costs invested in you….(cough,cough). If one of the hospitals that you have done locums hires you, the locum company may be entitled to a five figure finder’s fee. Makes it a disincentive for them to hire you.

 

[linkin06]

Read the fine print. They have recruiting, vetting, HR costs invested in you….(cough,cough). If one of the hospitals that you have done locums hires you, the locum company may be entitled to a five figure finder’s fee. Makes it a disincentive for them to hire you.

vetting? in this market? seems like they take anyone w/ a pulse

 

[Ashers]

Read the fine print. They have recruiting, vetting, HR costs invested in you….(cough,cough). If one of the hospitals that you have done locums hires you, the locum company may be entitled to a five figure finder’s fee. Makes it a disincentive for them to hire you.

I canceled a contract in San Antonio with one company that I didn't like. Another company wanted me to go to San Antonio. The noncompete basically made it so that I can't go to the city because most of the hospital systems were in my initial contract and it specified a 15mile radius. I told the new company I'd be willing to go if they paid the $32,000 contract buy out for violating the noncompete with the other company. Neither the new company nor the hospital were willing to do it, and that I could buy it out myself. I said "no, I told you I wasn't going to consider San Antonio for 2 years, you were the one pushing it on me."

I know 1 person, a family friend, who bought out her own contract years ago, when she only went to one hospital, and she negotiated with the hospital after finding them with a locums company as an OB/gyn locums. She liked them so much, she just wanted to work there. She bought the contract out, but I guess the pay by working with the hospital made it worth it.

 

[Dr. Rude]

vetting? in this market? seems like they take anyone w/ a pulse

You missed the sarcasm.

 

[kidthor]

I'm curious as to how enforceable those are really? I'm getting out of the Army in roughly 2-2.5 years and have been using locums to explore possible locations. It ain't like I have trade secrets of the locums company to bring to the hospital.

Very enforceable depending on the state. But are you going to spend tens of thousands of dollars and a year or more of your life in court to find out, or just find a job in another location?

 

[linkin06]

FTC Plan to Ban Noncompete Clauses Shifts Companies’ Focus

A partial or full ban could prompt employers to use alternative tools such as deferred pay and nondisclosure agreements.

www.wsj.com

"Mr. Durham and others say they believe the FTC may narrow its rule after hearing comments from the public, including employers and business organizations that have already signaled their opposition to the current proposal. The agency could, for example, allow noncompetes for highly compensated workers."

USAP probably lobbying hard!

 

[coffeebythelake]

Those CEOs that were going to trickle it down are too busy whining that the labor is demanding too much money.

classic CEO mentality. complain that their workers are making a living wage while they collect 6-figures plus bonuses

 

[aneftp]

I see it both ways. For anesthesia where we don’t bring any patients. Non competes are stupid. Just restrictive for w2 who want to switch jobs and don’t want to move out of area.

But practices that do bring in patients. Say pain practice. Say you own the pain practice. Have all those patients. Hire a w2 employee who has immediate access to those patients. How do you protect yourself after you spent years building up the pain practice? Say a w2 new grad who spends 24 months in your practice. He didn’t have to capital money as new grad. Uses all your equipment you spent years saving to build the facility. After 24 months. He’s got some money now to buy his own equipment etc. so is it fair for him to build his own practice next door and take patients with him?

 

[kidthor]

so is it fair for him to build his own practice next door and take patients with him?

Yeah, I think that’s fair for him to do that. You could instead of a noncompete just have an employment package that makes that guy want to stay…. Or have a timed contract, a non-poaching agreement, vested retirement, a retention bonus, etc.

It’s ironic that people suggest having a noncompete allows the employer to…. Compete? But then the worker can’t compete. Weird argument.

 

[UscGhost]

I see it both ways. For anesthesia where we don’t bring any patients. Non competes are stupid. Just restrictive for w2 who want to switch jobs and don’t want to move out of area.

But practices that do bring in patients. Say pain practice. Say you own the pain practice. Have all those patients. Hire a w2 employee who has immediate access to those patients. How do you protect yourself after you spent years building up the pain practice? Say a w2 new grad who spends 24 months in your practice. He didn’t have to capital money as new grad. Uses all your equipment you spent years saving to build the facility. After 24 months. He’s got some money now to buy his own equipment etc. so is it fair for him to build his own practice next door and take patients with him?

You protect yourself by being a better physician than he is.

 

[ambiturner]

I see it both ways. For anesthesia where we don’t bring any patients. Non competes are stupid. Just restrictive for w2 who want to switch jobs and don’t want to move out of area.

But practices that do bring in patients. Say pain practice. Say you own the pain practice. Have all those patients. Hire a w2 employee who has immediate access to those patients. How do you protect yourself after you spent years building up the pain practice? Say a w2 new grad who spends 24 months in your practice. He didn’t have to capital money as new grad. Uses all your equipment you spent years saving to build the facility. After 24 months. He’s got some money now to buy his own equipment etc. so is it fair for him to build his own practice next door and take patients with him?

If you own the practice and are hiring someone that does the same things you do who can potentially be doing them better enough to steal patients, why not offer partnership? Even ask for a lump sum up front as buy-in if you’re nervous about losing him during the track. A lot of the dental practices in my area are like this.

Alternatively, if you own the practice and are hiring a w2, maintain control of who gets which patients if you want to keep the lucrative patients/referral base with yourself. This is very common in small predatory procedural groups, doesn’t get talked about in anesthesia forums much obviously but it’s a big deal for surgeons when they get a job.

 

[MirrorTodd]

You guys forget that this is America...doing it "better" means doing it cheaper. See also: plastic surgery in Florida.

 

[nimbus]

You guys forget that this is America...doing it "better" means doing it cheaper. See also: plastic surgery in Florida.

And that is competition.

Price competition the main thing that the FTC is trying to promote. It’s their job. If a national AMC is getting $140/unit and a group of their employees breaks off and says, “We can do very well charging only $130/unit if we don’t have to pay 20% homage to the mother ship”, that is good for consumers (patients). The FTC doesn’t care about doctors, they do care about lowering prices for consumers. That’s what is driving the movement against “noncompetes”. By definition, noncompetes are anticompetitive.

Let the market decide who is “better” based on price, better outcomes, nicer waiting rooms, free shuttle rides, free coffee, whatever. Of course we live on planet earth so price will matter the most.

 

[nimbus]

I see it both ways. For anesthesia where we don’t bring any patients. Non competes are stupid. Just restrictive for w2 who want to switch jobs and don’t want to move out of area.

But practices that do bring in patients. Say pain practice. Say you own the pain practice. Have all those patients. Hire a w2 employee who has immediate access to those patients. How do you protect yourself after you spent years building up the pain practice? Say a w2 new grad who spends 24 months in your practice. He didn’t have to capital money as new grad. Uses all your equipment you spent years saving to build the facility. After 24 months. He’s got some money now to buy his own equipment etc. so is it fair for him to build his own practice next door and take patients with him?

If the older doctor took years to build something the new grad can build in 24 months, the old guy took a long time to build a very shallow moat. He should have thought about that before taking on a new employee. More than likely, the old guy was taking advantage of the new guy and using a noncompete to keep the new guy under his heel. If the new guy was being treated fairly, he would have no incentive to start a competing practice next door. The old guy made his own bed. Too bad.

 

[aneftp]

If the older doctor took years to build something the new grad can build in 24 months, the old guy took a long time to build a very shallow moat. He should have thought about that before taking on a new employee. More than likely, the old guy was taking advantage of the new guy and using a noncompete to keep the new guy under his heel. If the new guy was being treated fairly, he would have no incentive to start a competing practice next door. The old guy made his own bed. Too bad.

Then the alternative for new anesthesia pains fellowship grad is no pain job. They get to suck it up and get to do general anesthesia for 3-5 years (which is what a lot of my pain friends had to do). Then invest 300k plus into building a practice.

So you are talking 5-8 years before you can really be on your own. This is the normal time frame.

 

[Tramadeezy]

If the only way owners are keeping docs around is because of a ridiculous non-compete then they are doing it wrong. I work for a large pain group, about 20 docs. No one has left in 10 years. Its a great place to work and we get compensated well, its not rocket science. Non-competes need to go away, find another way to incentivize your employees to stay.

 

[jwk]

Then the alternative for new anesthesia pains fellowship grad is no pain job. They get to suck it up and get to do general anesthesia for 3-5 years (which is what a lot of my pain friends had to do). Then invest 300k plus into building a practice.

So you are talking 5-8 years before you can really be on your own. This is the normal time frame.

So you basically think the new guy should have it as easy as possible instead of actually working hard to get where the firmly established person is now?

 

[skypilot]

If the only way owners are keeping docs around is because of a ridiculous non-compete then they are doing it wrong. I work for a large pain group, about 20 docs. No one has left in 10 years. Its a great place to work and we get compensated well, its not rocket science. Non-competes need to go away, find another way to incentivize your employees to stay.

The kid should be a full partner in 2 years anyway and have no incentive to leave and start a practice next door.

 

[HemeOncHopeful19]

So you basically think the new guy should have it as easy as possible instead of actually working hard to get where the firmly established person is now?

Sure why not? Why would you not want to set up your new hires to succeed as easily as possible?

I guarantee you the owner has enjoyed better times in the healthcare field than whoever is newly graduating today.

 

[aneftp]

If the older doctor took years to build something the new grad can build in 24 months, the old guy took a long time to build a very shallow moat. He should have thought about that before taking on a new employee. More than likely, the old guy was taking advantage of the new guy and using a noncompete to keep the new guy under his heel. If the new guy was being treated fairly, he would have no incentive to start a competing practice next door. The old guy made his own bed. Too bad.

Of course the agenda is to become a partner/buy shares into a practice/surgery center. My Georgia pain fellowship friend became partner in 2 years and brought into the surgery center. That’s the way it usually works.

But there are rogue employees as well who want to do their own thing. So you gotta have some protection as employer hiring those employees.

Again. This isn’t a problem with regular anesthesia since we don’t bring patients.