Texas court blocks FTC noncompete ban, and you can blame SCOTUS

Regulatory dominoes have begun to fall in the wake of the US Supreme Court's gutting of federal agency rulemaking authority, with the Federal Trade Commission's ban on noncompete agreements the first to be stayed using the SCOTUS decision as justification. A Texas federal judge issued an order [PDF] this week barring the FTC …

[DS999]

"Robust freedom of contract"?

I wonder if they'll seek to bring back apprenticeships in the form of multiple years of indentured servitude based on that logic? I mean, if it is a contract freely entered into, and was common when the country was founded, no one should complain, right?

[Dimmer]

Re: "Robust freedom of contract"?

Re DS

If you want to install cameras in Texas, you have to have 2 years of servitude before you can apply for a license to install.

And heaven forbid that you install a wire that will be used for a camera, you have to have the license for that too.

The only valid use of non-compete I know of is when someone is selling a business and the buyer wants to see the books and customer list.

[Claptrap314]

Re: "Robust freedom of contract"?

There is also the opposite. When I lived in Austin, a local well-regarded heating & AC company was bought out & merged into a parent company. The parent company...quickly failed to meet the expectations of the customers of the old. So...three years later, a new heating & AC company showed up. Using the same voice actors for the commercials, and with an obviously derivative name.

We were much happier with the new company.

So, yeah, so a three year non-compete in the event of an actual merge makes complete sense.

[Groo The Wanderer]

Re: "Robust freedom of contract"?

@see "internship"

[Yet Another Anonymous coward]

Re: "Robust freedom of contract"?

@see "internship"

Lifetime internships in the cotton picking industry combined with free immigration policy from west Africa ?

[STOP_FORTH]

Contradiction

IANAL, I am not even a US citizen, but here's my two penn'orth, for what it's worth.

They have a concept of corporate personhood in the US.

They also have the Fourteenth Amendment which supposedly guarantees equal rights under the law.

So how can there be a law which disadvantages meatbag people versus corporate people with respect to contract law?

[trindflo]

Re: Contradiction

https://www.brennancenter.org/our-work/research-reports/citizens-united-explained

Also not a lawyer, and it seems the decision required legal contortionism and outright lying. If you are familiar with the tobacco companies standing up one by one in congress and claiming "I don't believe cigarettes cause cancer", it is like that. Justices claiming "I don't believe unfettered corporate cash will have a problematic effect on politics". The best government money can buy.

[veti]

Re: Contradiction

The answer is, there's no disadvantage in law. The two "people" are perfectly equal. If the employee wants to insert clauses imposing similar duties on the employer, they're free to do so. (Whether the employer chooses to accept such obligations, or simply go looking for a more pliable employee, is another matter, of course.)

But the disadvantage is purely from economics. Rich people have the advantage over poor. That's natural and normal and by design, but it's not the law that's giving the advantage.

[Dimmer]

Re: Contradiction

How about the reverse?

Customer is required to sign a contract that prevents them from hiring a service tech from their vendor or the other way around.

Used to be the rage in my other life. .

[Anonymous Coward]

Re: Contradiction

So, you are an Apple customer?

[I could be a dog really]

Re: Contradiction

Yes, that is fairly common, but that's a business to business contract so different rules apply.

You can understand it from the provider's PoV. They send a tech to a customer for some job or other - customer sees that tech is actually competent so offers then a job. That's a recipe for the provider to have a constant requirement to find and train techs, only to see all the good ones pinched by their clients which does not make for a viable business.

With a previous work hat on, we had such a term in our contracts - but rather than a "don't employ" which I think is illegal here, it was an "if you employ one of our staff then you have to pay us 6 months of their current salary" type of clause. Mind you, manglement ran the tech side down anyway till everyone either left for a better job or was made redundant.

[heyrick]

Re: Contradiction

"If the employee wants to insert clauses imposing similar duties on the employer, they're free to do so."

Yes, of course, that sort of thing happens all the time...

Meanwhile, in reality, employment contracts are often heavily one sided and anybody who attempts to make them otherwise would rapidly find themselves surplus to requirements.

"That's natural and normal and by design."

By design, yes. Natural and normal? Not so much, especially given the ever-widening gap between the rich and everybody else.

[I could be a dog really]

Re: Contradiction

The answer is, there's no disadvantage in law. The two "people" are perfectly equal.

In theory. But that only holds when there's 100% (or close) employment so that employers have to compete for employees. When, as is normal and especially in unskilled jobs, there's an excess fo people looking for employment there is no equality - the employers have an almost absolute upper hand.

There is a reason that in civilised jurisdictions, there's a general requirement for a contract to have been formed "by a meeting of minds". Where it has not, then there is scope for the disadvantaged party to apply to a court to have terms struck out. We also have certain legal protections in employment - and I'm fairly sure that non-competes are generally not enforceable.

[UnknownUnknown]

Re: Contradiction

Witch burning, British Rule and Slavery pre-dates the American Revolution/Independence though I doubt all but a small minority want any of those reinstated.

Tx fuckwits.

[Yet Another Anonymous coward]

Re: Contradiction

>I doubt all but a small minority want any of those reinstated.

Really ?

You get cricket, scones with Jam and Cream and you get to keep your bizarre measurement systems.

Of course you might have to move the capital to Charleston and rename some of those terrorist cities and states. But we know you are a forward looking nation that doesn't hang onto monuments to historical mistakes.

[StudeJeff]

Re: Contradiction

So instead of Biden we'd have Charles? Not much of a trade, I don't think either one of them is capable of running the drive thru at a Burger King.

[Anonymous Coward]

Slavery

Slavery by any other name

[veti]

Re: Slavery

Don't be ridiculous. A noncompete clause is not slavery, and you demean everyone concerned - plus everyone who was ever a slave - by calling it so.

[Anonymous Coward]

Re: Slavery

As much as I hate noncompetes, veti is quite right. The worker has the right to work for a non-competitor, to retire, etc. Imagine a slave trying either of those.

Also, I understand American law has a number of precedents for overly-broad noncompetes. If the company says the worker can't be employed by anybody else for a year, then they have to pay them for that year. Far more common is being prohibited from working on competing products for a couple months. (Working for a competitor but not on a competing product is fine, under many noncompetes.)

[Not Yb]

Re: Slavery

Most of those precedents were also regulations generated by the FTC. This Supreme Court has also shown fairly regularly that "precedent is meaningless if it impedes Republican policy desires."

[Robert 22]

Re: Slavery

I knew of cases where people working for a body shop had to sign non-compete agreements that prevented them from seeking employment with organizations that the body shop farmed them out to. In particular, one of these people I knew was a junior technologist paid considerably less than the market rate. I'd suggest that this wasn't a great situation for that individual.

[Anonymous Coward]

Re: Slavery

I was given a non-compete that I couldn't work for a customer or another company that served a customer.

So I couldn't work as a Walmart greater if they sold Intel computers

I signed it laughing at how well that would stand up in this state

[bombastic bob]

Re: Slavery

If noncompete agreements are THAT bad, legislatures need to ban them... NOT bureaucrats!!!

And that WAS the point of the Chevron case.

[UnknownUnknown]

Re: Slavery

So …. in exchange for a non-compete how about a non-fuck-you-over offshoring/outsourcing your job to a cheap shithole around the world with few employment rights/benefits or AI.

Fair??

[Jedit]

"A noncompete clause is not slavery"

If someone can't work for a competitor if they quit, what can they do? Unless people completely change career every time they change jobs, they can effectively be compelled to remain in their present employ. It's true that isn't slavery in the letter of the law, but it's bordering on indenture and it definitely creates a massive imbalance of power between employer and employee.

[Paul Crawford]

"The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do."

Except congress knows bugger-all about many of the subjects it is supposed to rule on.

The TL;DR version of SCOTUS is "we don't like rules against business and want more business for lawyers".

[Baird34]

"we don't like rules against business...".

However in many respects it is anti-business as it disadvantages competition. It favours existing large (rich) businesses, but then the whole 'competition' thing has always been known to be a lie.

[skeptical i]

anti-some-business

Was thinking the same thing. If my company wants to hire Employee A from Company Z, it should be up to A to decide whether to stay with Z or to jump to my company given salary, location, and other considerations. Isn't that how the "free market" is supposed to work? Better mousetrap and all that?

[Dinanziame]

Many right-wing people in the US will tell you that the government was deliberately designed by the founding fathers to be dysfunctional, so that only the most commonsense decisions that absolutely everybody agrees with can be made. This makes it very hard for congress to write sensible regulations. This is why agencies have been making rules since much-needed laws were not being written. Alas, this means the government is somewhat efficient — can't have that — which is why agencies are losing their powers to fix the bug.

[John Brown (no body)]

"This is why agencies have been making rules since much-needed laws were not being written."

Or, looked at from a slightly more obtuse angle, Congress makes laws that are so poorly worded, no one knows what they actually mean so the agencies and regulators have to go with their best interpretation, which then gets challenge in the courts such that the lawyers get all the extra work and the judges get to decide what they think Congress meant instead of the agencies and regulators. In effect, the judiciary is making (or least least defining) laws, not the executive branch.

[UnknownUnknown]

Bollocks. They are oversight agencies and regulators - not an admin function.

They have the necessary subject matter expertise and technocratic staff to do the job properly without fear or favour from self-serving lobbyists, inc setting standards, overseeing safety, holding to account and doing the right thing.

[I could be a dog really]

Unless you are the FAA and take a load of Boeing employees on secondment to oversee ... Boeing.

[Gene Cash]

Silicon Valley

The main theory about the huge success of Silicon Valley is the fact that non-competes are illegal there, paving the way for the "traitorous eight" to leave Shockley Semi to form Fairchild, then leave and found "everything else" including Intel.

So yeah, this will hurt the US but it'll be invisible, and nobody will care.

[Yet Another Anonymous coward]

Re: Silicon Valley

Back in my day (when computers were steamed powered and 640k was enough for anyone) there was advice for anyone at MIT not to intern for a local company because MA enforcement of non-competes was so strong that Silicon Valley companies were rumoured to be wary of any new hires that had worked in MA.

This might explain why we still speak about "Route 128" and the continued dominance of DEC, Wang, Prime, and Data General

[W.S.Gosset]

Deflection

>[Chevron Defenestration] significantly complicate rule implementation

No, it simplifies creating rules because they no longer have unbounded scope.

What it does is prevents unelected individuals creating LAW, and extraordinarily worse: law which is immune to judicial review.

As I've pointed out elsewhere, Chevron Deference declared that every govt agency had the same powers (all 3 branches of the separation of powers, in one) as the old Dictators of Rome. But the Dictators were elected and only for 1 year at a time; the govt agencies are unelected.

[W.S.Gosset]

Re: Deflection

In the specific context of non-compete contracts:

So long as appropriate Consideration (eg financially adequate) for the non-compete agreement exists, there's no harm. Consideration is the issue. If consideration is inadequate, if there IS harm: any non-compete is Void for inadequate consideration. It's merely another aspect of IP protection, same as copyright, trademark, patent, but implemented as contract.

Not rocket science. Standard contract law. Been handled like that since they were first thought up in virtually all jurisdictions with essentially no problems.

[Anonymous Coward]

Re: Deflection

> Been handled like that since they were first thought up

>> Non-compete agreements predate the American Revolution

Clearly agreeing with that most rational /s of arguments.

> in virtually all jurisdictions with essentially no problems.

For the holders of power, aka "employers" aka "the ones with all the money"

[graeme leggett]

Re: Deflection

Dictators were appointed (by consuls and not elected) to complete some particular task and gave up their powers once it was completed. To mix the classics, the Augean Stables are not yet clean

[Anonymous Coward]

Re: Deflection

"What it does is prevents unelected individuals creating LAW,"

Which SC is literally doing. Which part of that you decided to forget?

[Anonymous Coward]

Re: Deflection

but he remembered the part where right wing nutters support garbage corrupt judges

[Pascal Monett]

The USA is heading for the wall

Trump's manipulation of the Supreme Court is going to guarantee that the USA will spend the next few decades in turmoil and maybe end in a revolution.

It should be illegal to put biased people into such an institution, but the rules only work when people are ready to respect them.

Trump respects no one and, given the number of criminals he has surrounded himself with, it should be a clear sign that this man needs to be removed from politics.

Oh well, he'll be dead of old age soon. But not soon enough.

[Anonymous Coward]

Re: The USA is heading for the wall

But sadly, the way things are looking, he could soon be in a position to grant himself full immunity for past (alleged) wrongdoings, stuff all the agencies with people who will simply implement what he tells them to do, and he'll probably put measured in place to prevent the sort of uprising that would be needed to fix any of the problems. And of course, he'll be succeeded by his chosen successor when he manages to corrupt the election system to ensure "the right result".

Look back to the 1930s. Hitler was elected and then manipulated the system to suit his desires. Arguably Putin was elected as well initially, but then manipulated the system to prevent opposition. The worry is that the USA will take itself down in a massive implosion - but take the rest of the western world with it.

[Anonymous Coward]

Predate the American Revolution

Good defence that.

Wonder if there are any other practices* from that period which can be revived to help a business improve its profit margins and enrich it's shareholders?

Remember, "predate the American Revolution" covers a wide swath of time, don't limit yourself to the 18thC.

*Bonus points if your idea allows the creation of new jobs in revived trades, such as specific metalwork skills.

Forward to the Old New Thing America.

[Joe W]

Re: Predate the American Revolution

Taxes on tea predate the American revolution...

[Dostoevsky]

Good!

If the FTC would regulate employment contracts, maybe it would also regulate, say, union membership?

Texas is a right-to-work state, where I don't have to deal with union BS if I don't want to. I'll keep it that way, thanks. At least it'll be my state leaders legislating instead of federal reps with a million-person constituency, and their bureaucrat henchmen...

[Boris the Cockroach]

Re: Good!

Quote

"Texas is a right-to-work state, where I don't have to deal with union BS if I don't want to. "

So you want to hire and fire the cheapest employees you can instead of union members who earned their skills and proven their skills in order to be a union member?

Perhaps boing can enlighten you on why that is a really bad idea. unskilled unmotivated employees bolting aircraft together....

Then again if your work site is below a flight path, you could earn extra from the scrap falling off various boing aircraft

Damn my E key seems to stop working when I type boing

[Joe W]

Re: Good!

Right to work? I always wonder about the US.

But then I live in a communist (figuratively, at least compared to the US, and well... used to be quite socialist, moving ever further right now...) monarchy (literally). And unions have real bargaining power here, which is good.

[Robert 22]

Re: Good!

I find the phrase "Right to work" Orwellian - the real meaning is that you employer can fire you for any reason or no reason at all.

[Yet Another Anonymous coward]

Re: Good!

But you can also quit in the middle of an important project and are free to go and work for a direct competitor, taking your entire team with you. Nothing is going to stop you because that would be anti-capitalist

[Anonymous Coward]

Re: Good!

"But you can also quit in the middle of an important project and are free to go and work for a direct competitor"

Which you can do in any Western country, except in USA, because of non-competing clausules. What was your point again?

[Yet Another Anonymous coward]

Re: Good!

>Which you can do in any Western country, except in USA, because of non-competing clausules. What was your point again?

Woosh ....

[Anonymous Coward]

Re: Good!

"Texas is a right-to-work state, where I don't have to deal with union BS if I don't want to. I'"

Right-to-be-fired: No-one has a right to work there. Also unions are the sole reason you have 5 day work week. Do you forfeit that also?

[PhilipN]

A nation run by lawyers

What could possibly go wrong?

[Anonymous Coward]

America

Why almost everyone else does things differently.

[Anonymous Coward]

Two can play this game and FTC can announce that they don't give a f**k what a judge in Texas has been paid to say.

[Anonymous Coward]

but but but the first amendment

The 1st amendment is trotted out every time someone says something and is the holy grail of MAGA defence.

So I'll tell your competitors everything I know and you can do nothing about it. And if they want to throw me a few dollars on a monthly basis for me holding the front door open then what's the harm.

The courts would really be tied up with that argument

[Jimmy2Cows]

Re: but but but the first amendment

First amendment doesn't apply to employment contract clauses. Courts would simply look at what's in the employment contract, and whether a non-compete is legal in the relevant state.

But you could just the trolling the MAGAs, it's a bit hard to tell.