Is The Non-Compete Agreement Dead?

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It is something that most people in the world of Businesses have signed at one point in their career or another.

The Non-Compete Agreement.

I've definitely signed them before.

It is estimated that 30 million employees, from Entry Level all the way to CEOs, are bound by them.

However, we may be seeing the end of these Agreements.

As of Tuesday, the FTC has voted to ban nearly all Non-Compete Agreements which is to take effect later this year.

However, not everyone is happy about this ruling.

Are Non-Compete Agreements Truly Dead?

Or is there more to Consider?

The FTC's Thoughts

The FTC apparently received 26,000 public comments leading up to the vote about people's experiences with Non-Compete Agreements.

Chair Lina Khan said, "We heard from employees who, because of Non-Competes were stuck in abusive workplaces... One person noted when an employer merged with an organization whose religious principles conflicted with their own, a Non-Compete kept the worker locked in place and unable to freely switch to a job that didn't conflict with their religious practices."

Further, she said this, "pointed to the basic reality of how robbing people of their economic liberty also robs them of all sorts of other freedoms."

According to the FTC, this change would also lead to increased wages totaling nearly $300 Billion per year by encouraging people to swap jobs freely.

However, the vote was not unanimous, and some members of the FTC predicted that this would be challenged in court.

It also seems that the prediction was correct, as the Chamber of Commerce stated that they plan to Sue the FTC to block the rule.

The U.S. Chamber Of Commerce's Thoughts

So, what are the Claims of the Chamber of Commerce that are leading them to Sue the FTC?

They have called the ruling a few things.

Unnecessary.

Unlawful.

A Blantant Power Grab.

They also have been opposing such a ban for years, claiming that Non-Competes are vital to companies.

According to the Chamber of Commerce, this Agreement allows companies to safeguard trade secrets.

Further, they claim that it gives employers greater incentive to invest in workforce training and development.

Suzanne P. Clark stated, "This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy..."

So, where do we stand with all of this?

My Thoughts

There is a lot to consider with everything stated.

The fact that 26,000 people "Actively" went on public record to state their thoughts should be an indication of Problems that exist.

What I know is when someone "finally" stands up for something, it is generally safe to say that significantly more people feel the same and are either too afraid to state their thoughts, or are "just" comfortable enough to not "yet" speak their mind.

There is a third category where some employees don't know how it could impact them, as may be true with younger employees.

But those 26,000 would be what you would call "Actively Disengaged", where their workplace is likely so Toxic that they choose to purposefully work against their organizations.

I would not be surprised if Millions of Employees feel similarly.

Indeed, the FTC is citing Abusive Workplaces as a major reason why they are making this determination.

In my determination, I believe that 80%+ of Workplaces are Toxic.

How can I say that Confidently?

Group Burnout.

80% of Employees are in Burnout, and there are more on the way.

Employers are Not making the Environment Less Toxic, and many are actively making it Worse as we've seen with the Return-To-Office "Mandates" that have mostly been Ignored by Disillusioned Employees.

Part of the reason Governments exist is to Protect the People.

What I know for a fact is that "if" Businesses do not clean up their acts, then Governments (not just the US Government) "Will" take action to Protect People, and usually it will be in ways that Businesses do not like.

I'm not a huge fan of Governments having their hands in Businesses, but Poor Leaders may push Governments to do so regardless.

This is part of why I talk about Regenerative Legacy Design so frequently!

If Businesses want to maintain control over their Businesses, they Must "Prove" they are Serving Employees and Customers.

The Reality is right now Businesses are Failing to Accomplish this.

Leaders can either choose to act on their own to Improve the Workplace or will eventually be "Forced" by the Government.

It will happen one of those two ways, period.

From what I have been seeing in the world of Business lately, the Governments of the World are becoming Significantly More Bold in Standing against Companies.

The "Forced" Changes may be sooner than we think.

I also know that Businesses are Failing to increase Employees' Incomes to Match the Increases in Living, and many of these Business Leaders "are" to Blame both for the Low Income and Increases in Costs of Living.

This change with Non-Competes could Force Businesses to Appropriately Pay Employees, instead of Disproportionately paying Executives who are doing Mediocre Jobs... given Most CEOs Expect AI to Replace them.

That is not a testament to AI, but a testament to the Exceptionally Poor Performance of CEOs.

A $300 Billion Yearly Increase would be a great win for Employees.

If Competitors are Free to attempt to Steal/Poach Employees, it will Force Employers to figure out how to better treat Employees.

If Employers don't, all of their Employees may walk out and go to the largest Competitor over grievances, taking Ideas and Processes with them.

However, this does go in favor of something the Chamber of Commerce stated.

It is very possible that the Economy could take a tumble "if" Businesses in other Countries Steal Employees.

Now, I'm not certain how much of an Impact this could have, but I do believe it is worth considering - an Economist may have better Insight.

Really, I believe it would Negatively Impact the US more than any other Country, but that may be reason enough to seriously block this.

This brings me to the other claims of the Chamber of Commerce.

Is it Unnecessary?

I'm not certain about this - it seems there is a large enough set of the population to at least consider how much damage this is causing.

Is it Unlawful?

I'm not qualified to answer that, to be honest.

Maybe?

I'm not a lawyer in any part of the world, nor do I play one on TV.

Is it a Blatant Power Grab?

I don't know if it is a "Blatant" Power Grab, but it would give the Government more Power over Businesses.

How much?

I'm not sure, but again, if Business Leaders do not change their tune soon, this will look like a picnic compared to what the various Branches of the Government "will" instate in the Future.

If Businesses do not Serve their Employees Better, the Employees will "Demand" the Government to Enforce Changes.

That fallout will be Ugly with these levels of Burnout and Active Disengagement.

There is one thing that I have to call out the Chamber of Commerce on.

Noncompete Clauses being "Incentives" to Businesses to Invest in Workplace Training and Development?

Bullshit.

This is Absolutely False.

If anything it "Completely" Deters Employers from providing even "Decent" Training and Development.

Why?

The Employees Can't leave to a competitor!

See, Training and Development is seen as an "Extra" in the Workplace Today.

If Employees want to move up, Businesses leave it "Completely" up to Employees to figure it out on their own.

Very rarely do Businesses put serious effort into it, and for those who do put "any" effort into it the programs are typically useless.

A Business doesn't need to Train its Workforce because they could simply decide to Layoff their Workforce with no real Consequences to them.

They aren't at risk of Employees going to a Competitor when laid off.

In the event of a Layoff, which is becoming more frequent, that Training ends up being an "Expense" that Employers can't recoup.

This means that, Truly, Training and Development are often used as a Sign of Virtue Signaling rather than a Benefit to Employees.

However, if Businesses "can" Lose Employees to a Competitor, it is absolutely in their Interest to Provide "Better" Training than their Competitors.

If a Business Fails to Develop its Workforce, the Employees will just Leave somewhere that "Will" Develop them.

People have an Innate Desire to Grow, and one of the Major Reasons Employees leave Organizations now is a "Lack of Opportunity to Grow".

Want to guess where an Employee will go without a Non-Compete Clause if there is a Real Growth Opportunity?

They will go to the Organization with the Best Potential for Growth, 100% of the Time.

There is no question here, that specific Statement from the Chamber of Commerce doesn't make any sense, and it would play out completely differently in Reality.

I also don't believe that a Non-Compete is "Vital".

When you treat People Extremely well, you don't need to "Coerce" them to be Loyal.

Can a Non-Compete help against Bad-Actors that do exist?

Yes.

But does that make it "Vital"?

No.

Plus, if you have a good Work Environment where Employees can get into Group Flow, it doesn't matter if Bad-Actors give away "Trade-Secrets".

In Group Flow, Innovation is not difficult to attain, so even if another company "did" learn how to do what you do, it wouldn't matter.

You just Innovate Faster than them, have a better Workforce that you treat better, and become the Category King/Queen of the Market.

Category King/Queen Companies own on average 75% of the Market.

Even when others create a supposedly "Better" Product, they still don't overcome the King/Queen unless they Innovate a Completely New Market.

At the end of the day, I think that if this goes through, we are going to see some Major Changes.

Will they all be Positive?

Probably not.

Will they be Negative?

Also, probably not.

It will likely be a mixture of both, though I Believe it will highly Favor Employees over Employers.

But there are things that Leaders could do Now that would aid them and Prevent this from becoming Horribly Detrimental.

Really it is quite simple - Put "Real" Efforts into Improving the Problems.

Forcing Employees into the Office against their Will?

A surefire way to get them to work against you.

Prevent them from having Growth Opportunities?

Another great way to push Employees against you.

Making the Workplace More Toxic?

That's a quick trip to your Competitors.

Do absolutely nothing about the Burnout Problem that 80% of Employees are Experiencing?

Great way to Push Employees to ask the Government to get Involved.

Continue to Treat Employees and Customers as if all they are good for is their Cash?

It won't be long before they find Reasons to Leave, or worse try to Force you out.

Things cannot keep going the way they currently are.

It's a matter of time before things Change, either by Choice or by Force.

Leaders would be Wise to Change by Choice, and the Change they need is to Design a Regenerative Legacy.

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