Navigating the New Normal: Non-Compete Agreements in Flux

The Old Jarhead is back with career advice on Non-Compete Agreements.

• Non-compete agreements are contracts that restrict an employee's ability to work for a competitor after leaving a job.

• Employers use them to protect their trade secrets and investments in employees, but they can limit job opportunities for workers.

• The US Federal Trade Commission recently ruled that non-compete agreements are no longer legal, sparking debate and potential legal challenges.

• The Old Jarhead has experience on both sides of the issue and offers his thoughts on the ruling.

• He believes the FTC exceeded its boundaries, and the impact may be minimal for junior and mid-level employees but could be detrimental for small businesses with valuable trade secrets.

• Ultimately, lawyers and lobbyists will likely profit from this decision while it is being sorted out.

• Business owners shouldn't panic yet, and employees still constrained by non-compete agreements shouldn't celebrate prematurely.

• To keep growing professionally, he recommends checking out his podcast, "Be the Ultimate," and giving his book, "Find a Job That Fits Your Life," a read.

Transcript

Speaker 1 0:02

All right , folks . Well , it's the old jarhead and I'm back again , as always , to give you some great advice . If I sound a little different today , I have a cold so I'll try not to sniff or whatever . So here's a current one for you . Okay , we're going to talk about , as you can see by the title , non-compete agreements , so very current .

Speaker 1 0:29

So what is a non-compete agreement ? Well , basically it's a contract you sometimes sign when you start a job that says if you leave that job , you can't work for a competitor for a period of time , or sometimes within a certain geographic region . For example , if you leave Acme Company and I just made that up , you are not allowed to work in a similar industry for two years and within 50 miles of Acme's headquarters . That's just an example , right , so it constrains the worker . Do you always get one of these ? No , not , some companies don't , but it's a constraint on a worker . So why do we have this ? I mean , why do workers don't want them , right ? Well , it's because the employer wants to protect things like their trade secrets and processes , et cetera . Employers spend a lot of money developing their product and their concern is that you will take what you learn at the company and their training that they paid for , and go work for a competitor and try to take away their business , their livelihood . So why do employees sign them ? Simply to get the job they want ? What happens when they get that job and it isn't what they want , or a better job comes along contractually , if that job is with a competitor , it leaves them open to legal action by their former employee Employer . Wow , okay , so much for that stuff .

Speaker 1 1:56

Why are we talking about that now ? Well , because the US Federal Trade Commission signed a ruling that non-compete agreements are no longer legal . Employers , with some exceptions , cannot enter into or , after a period , cannot enforce existing non-compete agreements . So this is being held by employees and their advocates and it's being fought by employers and their advocates Great . So what does the old jarhead have to add to this discussion ? Well , a couple of things . I've been on both sides of this coin , and by that I mean I benefit from former employees not being able to take business secrets to my competitors , but I also had to sign one myself and I knew that if I left my company I could be constrained in my next job . So here are a couple of my thoughts job .

Speaker 1 2:47

So here are a couple of my thoughts . First , I think the FTC exceeded its boundaries by making this ruling . I'm not sure why an organization that exists , to quote protect the American consumer , should be allowed to make this rule , except that it's politics and vote buying by the current administration . This will also make challenges to that ruling more likely to succeed , okay . Second , the fact is these things are rarely enforced , especially against junior and mid-level people .

Speaker 1 3:15

There are other laws about not hindering people's ability to earn a living that come into play and there just may not be enough risk to the business to justify the legal cost . That could be different for very senior people who have much more insights into the company's finances and things like that . Third , this could be very bad for small businesses , starting out that if their trade secret , their secret sauce , is given to a competitor , especially a large one , they could be put out of business . That just makes starting a new business and already hard task even harder . And do we want that ? Do we want to end up like some countries and and I just was in one in Europe that it's very hard to start a business ? It's not good , okay .

Speaker 1 4:01

In the end , the ones who will make money on this deal will be the lawyers and lobbyists who will fight this out , with the possibility that it'll all be nullified after the next election . Well , anyhow , that's my take on this . Bottom line is if you are a business , it's not time to panic , and if you're an employee constrained by this , it may be too early to celebrate . Both of you should worry about other stuff while this gets sorted out . All right , thanks for listening and please recommend my Be the Ultimate podcast to your friends and check out my book . Find a Job that Fits your Life . Thanks , bye , Thank you , thank you .