KNAPP COLUMN: FTC’s Noncompete Rule: A Poor Solution to a Self-Solving Problem

Published 8:30 am Friday, May 3, 2024

On April 23, National Public Radio reports, the US Federal Trade Commission voted “to ban nearly all noncompetes, employment agreements that typically prevent workers from joining competing businesses or launching ones of their own.” The ban is largely retroactive, but does exclude existing agreements for the high-salary “senior executives” most people associate with the idea of noncompete agreements.

It’s a terrible idea, and not just because it’s likely unconstitutional in at least two ways (the Constitution forbids ex post facto legislation and only allows the federal government to control interstate, not local, commerce).

Yes, we’ve all heard the horror stories about low-wage retail workers being told they can’t leave one coffee shop or restaurant to draw espresso shots or make sandwiches for another. In that context, noncompete clauses look less like a way to keep key leadership personnel away from competitors, and more like a tool that lets vengeful, authoritarian managers/owners continue abusing former employees who don’t like working for vengeful, authoritarian managers/owners.

But the existence of vengeful, authoritarian managers/owners is a terrible reason for letting a vengeful, authoritarian Federal Trade Commission seize even more control over how American businesses operate.

If you have a problem with a prospective employer’s demand that you accept a noncompete clause, there’s a simple solution: Don’t accept the job.

Yes, that might make it harder for you to find the job you want or even need.

MANY things can make it harder for you to find the job you want or even need.

Maybe the workplace is 30 miles from your home, and you don’t own a car, and can’t afford one. Should the FTC mandate that all employers buy cars for all their employees? If you answer “yes” to that one, we’re simply not on the same political page and you can probably give up on this column now.

The “problem” of noncompete clauses for low-wage workers is in the process of “solving” itself right now. Unemployment rates are low — it’s a worker’s, not an employer’s, market. When vengeful, authoritarian managers/owners end up working double shifts because nobody wants to hire on, they’ll tone down the vengeful authoritarianism or they’ll go out of business.

Standing up for yourself instead of settling for whatever you’re offered may be hard, but it’s a better solution than turning more control of the American economy over to Lina Khan and Company. Your interests and theirs are not the same.