To Compete or Not to Compete...
To Compete or Not to Compete...
That is the question... whose answer could soon change.
Happy Martin Luther King Jr. Day
Before we get started this week, I wanted to wish you all a happy Martin Luther King Jr. Day, in remembrance of a great and important figure in our nation’s history.
A few decades back, when I was working on my college business degree, I remember learning quite a bit about non-compete agreements and thinking, “Man, what a crazy concept.”
Such agreements prevent a company’s outgoing employees from working for a competing company for a certain amount of time. To be clear, I’ve always understood why they’re a thing. Companies that implement them do so for the purpose of protecting their business investments (as a condition of employment or being released from employment).
Most often, they’re used with highly-paid, highly-skilled workers who have a particular expertise — expertise an employer wants to keep, and that could significantly advantage any competitor who gains it. But non-competes also happen in lower-paying, lower-skilled jobs to deter employees from seeking higher-paying jobs elsewhere.
From an employee’s perspective, they can be a very raw deal. Sure, workers enter into them voluntarily, but sometimes such agreements aren’t presented until after an individual has already taken a job, and has perhaps turned down other offers. Such leverage often compels workers to just comply, rather than going through the hassle of quitting and starting over on their job-search.
A this point in the newsletter, you may be asking yourself, “Why did John choose such a sexy topic to write about this week?” Good question.
The short answer is that it’s been in the news. The long answer is that I’d originally planned to write about something else this week, but felt it best (for a couple different reasons) to postpone that particular essay. Anyway, let’s get back to the news-cycle angle…
You see, the Federal Trade Commission recently proposed banning non-compete agreements nationwide, which would be a pretty big deal. As The Dispatch reported the other day, there’s been a lot of voiced public support behind the move:
There’s the biotech startup cofounder upset that pharmaceutical company non-competes have stifled his headhunting. The veterinarian who says she stuck it out at a poorly managed practice until conditions got bad enough that she found a job outside her non-compete radius—120 miles from her husband, visiting only on weekends. The man who recalls borrowing money from his dad to pay lawyers to fight a non-compete after he was fired during a recession.
That last account in particular caught my attention. As someone whose 16-year job as a systems analyst ended at a long-struggling company in the wake of the Great Recession (at a time when few employers were hiring) its scary to imagine a contractual obligation to your former employer making the quest for gainful employment, in an already tough economic environment (like we most recently saw from the pandemic), many times harder.
Whether the FTC’s proposal will actually be implemented is a real question. It will certainly face a number of legal challenges, including whether the government agency even has the authority to impose such a change. To a small-government, free-market, pro-capitalism kind of guy, that’s a big issue.
From my perspective, much better than the FTC making a change like this would be the U.S. Congress (where bipartisan legislation already exists, but has been stalled for time). Much better than Congress would be the states making these types of decisions (some already have). Much better than the states would be more local government branches (counties, cities, towns, etc). Much better than them would be individual businesses proactively re-thinking their use of non-competes, or at least informing potential hires of that use ahead of time (including explaining to those individuals exactly what the agreements entail). Perhaps best, in conjunction with the previous approach, would be employees or prospective employees taking the initiative to educate themselves on what exactly they’d be getting themselves into by signing a non-disclosure.
Of course, us small-government types (who are on the verge of extinction) rarely get our way. 😉
Regardless, it will be interesting to see what the future holds for non-compete agreements. My sense is that their days are numbered.
Have you ever signed a non-compete agreement? How did it work out? Let me know in an email or in the comment section below.
Comedy in Ice
I wrote about my fondness for comedian Joe Pera in my last newsletter, and also mentioned that I was getting ready to see him, for the first time, perform standup. It happened last Thursday night at the Lincoln Center in Fort Collins, CO, as part of the comedian’s “Comedy in Ice” winter tour, and my son and I had an absolute blast.
I had never seen Pera’s standup act on YouTube or anywhere else, so I was curious how well the character I’d come to enjoy through his television show would present on stage. The answer: remarkably well.
Jokingly introduced as the world’s youngest living World War II veteran, Pera — of course carefully and methodically — brought down the house. To my surprise, a good amount of his act consists of engaging in conversations with the audience, in which he displayed remarkable improvisational skill in parlaying strangers’ musings into smart humor.
If you ever get a chance to check him out live, I highly recommend it.
Remembering Dolores O'Riordan
Yesterday was the five-year anniversary of the passing of Dolores O’Riordan, lead singer of the Irish rock band, The Cranberries. I can’t remember a musician’s death that hit me harder than hers did. Her music always struck me as incredibly sincere, and at the age of 46, she was taken way before her time.
I still contend that the band’s most well known hit, “Zombie,” was one of the best songs of the era. And whenever it was performed live, it arguably sounded even better. O’Riordan was a great talent, and is sorely missed.
The Hullabaloo
On today’s “No BS Zone,” the regular video-cast I do with longtime national journalist Bernard Goldberg, we had our first ever special guest: Kimberly Ross of the Washington Examiner!
It was a fun (and I believe very insightful) conversation about today’s politics, including the 2024 presidential election. I’ve gotten to know Kimberly online over the past few years, and it was great to have her on.
By the way, this regular video-cast is just one of the many features available to BernardGoldberg.com premium subscribers. Yes, that’s a plug. I’d love to have you subscribe and join us. It’s cheap, and the content is thoughtful and smart.
Random Thought
Obligatory Dog Shot
Mondays are hard.
Have you picked up your copy of RESTITUTION?
My latest book “Restitution: A Sean Coleman Thriller” is out now! You can get it on Amazon, Apple, Barnes & Noble, Kobo, Books-A-Million, and wherever else books are sold.
Interested in a signed copy? You can order one (or five) here.
Already read and enjoyed it? I’d love if you could leave a review for the book on Amazon.
Featured Vinyl
“Flash… Ah-ah. Savior of the universe!”
I saw 1980’s Flash Gordon in a movie theater when I was just eight. It was for a friend’s birthday party, and though I can’t remember which friend it was (or who else was there for that matter), three things about the experience remain in my memory.
It was at the Continental theater in Denver, which was the largest, grandest of its time (I only got to go to it on special occasions).
The film’s bright, bold colors… from the clothes, to the makeup, to the props, to the set design.
The blaring rock music.
I didn’t know much about the iconic band, Queen, at the time. I probably didn’t even realize they were the same group that sang "We Will Rock You" and "We Are the Champions" — staple songs in my elementary school gym class (along with “YMCA” and that weird disco version of Star Wars).
But the original music the band wrote and performed for Flash Gordon struck a young John Daly as absolutely savage, especially growing up in a household where the edgiest tunes on the family radio (before I had my own radio, and did some experimenting) came from Peter, Paul & Mary.
It was a real awakening for me, and though I don’t remember if I even liked the music at the time (I probably worried that it was the type of stuff my parents wouldn’t want me listening to), I certainly came to enjoy it (and lots of other music from Queen) later on. To this day, whenever I hear “Flash… Ah-ah,” my mind goes right back to my childhood and that night in the theater (and also that time, many years later, when I met “Flash” himself).
The soundtrack is always a fun listen.
That’s all for now. Thanks for reading today’s Daly Grind.
Want to drop me a line? You can email me at johndalybooks@hotmail.com, and also follow me on Facebook, Twitter, and Instagram. If you haven’t subscribed to this newsletter yet, please click on the “Subscribe now” button below. Doing so will get these posts emailed directly to you.
Also, if you’re not caught up on my Sean Coleman Thrillers, you can pick the entire series up at a great price on Amazon. And if you’re interested in signed, personalized copies of my books, you can order them directly from my website.
Take care. And I’ll talk to you soon!
I have signed non-compete's for my company when working with other companies on a joint customer. And in a few cases I have walked away from customers because of a noncompete. I have never forced employees to sign them but that will change. We can be in competition for a customer from much larger companies and for our new personnel it could take two years to bring someone up to speed in consulting and our product. A lot of expense and training.
A few years ago, I heard from a customer that one of our sales personnel was leaving and was accumulating customer lists and contacts. That person went to a competitor, and it severally impacted our business. It is next to impossible to prove that proprietary information was taken.
This country no longer employs kids in coal mines or in sweatshops. The young woke babies coming out of college need to grow a pair and understand the value of both sides entering into employment agreements. And you can always say, "take this job and shove it." But I suspect this new generation from our educational system hellbent on cuddling and safe spaces never learned and can't comprehend basic negotiation skills.
What other contracts will the government then ban if these proposed ban is successful? IMHO to eliminate them would simply be another sample of unnecessary involvement in private contractual relations. They are under attack because of the perceived imbalance of power that businesses on occasion appear to have over their employees, but their elimination would only reverse that balance of power - an employee could in effect gain the upper hand in negotiations by threatening to join a competitor. I would suggest certain guardrails be legislated ( not adopted by agency rule making ) instead. First, if a non compete is requested of a current employee at any point subsequent to their hiring, if they choose to not sign and are fired that they are required to be paid one year severance pay at the rate of their current compensation, which should allow sufficient time to conduct a new job search without the pressure of having no income stream. Second, if an employee with an existing non compete is fired or furloughed ( which clearly involves an imbalance of power) , that they are entitled to compensation at the ( admittedly arbitrary) rate of 70% of their compensation at the time of the firing for the length of their non compete agreement. That should provide enough of a financial disincentive to the employer to keep the contractual non compete period as short as possible, rather than asking for one of unnecessary length. Third, when possible the employee should request that the specific competitors in whose case the agreement would be invoked are identified by name at the time of execution, and any amendments to that list requested by either party ( since markets evolve over time) that cannot be mutually agreed upon are settled by a defined arbitration process. In my 60 years of employment and business ownership subsequent to college graduation I have never been requested to sign or have required an employee to sign a non compete, but these requirements would seem to me to provide a reasonable balance of the drawbacks and benefits to each side of the agreements. These ideas are suggested with the recognition that a trained lawyer might find tweaks that need to be made to agree with existing legal doctrine.