"Millions of workers will have more freedom over where they work should a recent Federal Trade Commission ban on nearly all noncompete agreements take effect.
In interviews with The Wall Street Journal, workers largely cheered the new rule. They say they are already thinking about ways a ban on noncompetes could help them and others change jobs and earn more.
Many major employers, on the other hand, are fighting the decision with a challenge in federal court filed by the U.S. Chamber of Commerce and backed by the Business Roundtable, which represents chief executive officers of some of the country's biggest employers.
Some employers are also preparing to change the way they train and pay their workers.
The ban is set to go into effect at the end of August, but could be delayed or struck down by lawsuits.
The new rules shift the balance of power between U.S. workers and their bosses yet again. Employees say noncompetes have kept them tied to bad bosses or unreasonably limited their career mobility.
Businesses say they need noncompetes to protect trade secrets and other confidential information, including customer lists and financial data.
Noncompete clauses in employment contracts have proliferated in recent years. They prohibit people across industries and pay grades -- from fast-food workers to medical doctors -- from easily moving to other employers or starting new ventures of their own.
Under the new FTC ruling, noncompete agreements will become unenforceable, with exceptions for many senior executives in a policymaking position.
"Everybody from the janitor on up is signing a noncompete, and it's just gotten out of control," said Robert Williams, 57, who works in sales in the flooring industry.
A noncompete agreement almost stopped Williams from getting a sales management job in Connecticut. His new employer, he said, ultimately did extend an offer after talking to his former employer and coming to an agreement.
"It created a lot of stress for me and my family," Williams said.
The FTC's ban on noncompete agreements would throw a uniform layer over the patchwork of state laws. Five states -- California, Minnesota, Colorado, North Dakota and Oklahoma -- have already banned all or nearly all noncompetes, according to Mercer, a benefits consulting firm.
Several other states have put restrictions on noncompetes, such as allowing them only for employees who earn over a certain pay threshold. Maryland, for instance, prohibits noncompetes for workers who earn less than or equal to $15 an hour.
One push behind partial bans on noncompetes has been to allow lower-wage workers, such hair stylists, to switch jobs if they can make more money elsewhere.
Noncompete clauses have been effectively unenforceable in California for decades, freeing workers to jump to rivals and allowing companies to poach talent at will. Many leaders in the tech sector have attributed much of the success of Silicon Valley to talent that's unfettered by noncompetes.
Noncompetes have diverted the career paths of lower-level workers and executives, too.
After her employer was acquired by manufacturing firm 3M in 2019, Christine Grogan lost her job as a marketing leader. Her two-year noncompete agreement that she'd signed years prior blocked her from accepting other offers, she said.
The time without work took a financial toll. Grogan patched together consulting assignments, refinanced her San Antonio home and borrowed money from her mother-in-law, while her husband took on work as a handyman.
"I've done all this education, I've worked hard, and I couldn't find a job because of a noncompete," she said, adding that turning 50, and the uncertain job market in the early days of the pandemic, made her search for work even harder.
Eventually, Grogan took a job with another noncompete agreement in St. Louis.
When Matthew Truocchio completed his medical residency, he sought work as an anesthesiologist on Long Island, N.Y. But a major employer there would require him to sign a two-year noncompete within a 25-mile radius, he said. That meant if he needed to change jobs, he would have to move out of the New York metro area.
"If you signed with a place that you don't like, you're kind of stuck," said Truocchio, now 35.
Ultimately, Truocchio followed his wife to Tucson, Ariz., where he took a job with a small medical practice that didn't have a noncompete, a key draw. The trade-off: his pay rate was lower.
At Winton Machine, a roughly 40-person manufacturer based outside of Atlanta, Chief Executive Lisa Winton said she asks her salespeople and senior engineers to sign one-year noncompetes. Those employees have access to confidential information on industrial processes and receive a lot of on-the-job training, so Winton doesn't want them to be able to quit and immediately take that knowledge to a rival.
"These are big, huge investments we're making as a small company," she said. "It'd be very hard for somebody to give you two weeks' notice and to go directly to a competitor."
Winton doesn't have a direct competitor located nearby, but in the remote-work era, it is also easier for an engineer or salesperson to join one several states away.
If the ban on noncompetes remains, Winton expects to be more guarded with how she shares information and data internally: "I would hope it gets struck down."" [1]
1. Noncompete Ban Set to Reshape Job Market. Ellis, Lindsay; Cutter, Chip. Wall Street Journal, Eastern edition; New York, N.Y.. 29 Apr 2024: A.11.
Komentarų nėra:
Rašyti komentarą