0:01

Employers, on the one hand, are talking about

0:04

more welcoming, cuddly workplaces

0:06

and employee wellbeing, while at the

0:08

same time, these types of legal

0:11

restraints are still so prolific. Hello

0:15

and welcome to Working It from the

0:17

Financial Times. I'm Isabelle Berwick.

0:20

Imagine you've landed a job as a hairdresser

0:22

in the US. On your

0:25

first day, your boss asks you to

0:27

sign a non-compete agreement banning you from

0:29

working for any nearby salons for a

0:31

period of time if you leave the

0:34

job. That may sound

0:36

unlikely, but millions of workers in

0:38

the US are subject to similar

0:40

conditions. Non-competes have typically

0:43

been used to protect trade secrets

0:45

and client relationships in industries like finance

0:47

and tech, but they're now thought to

0:49

affect more than 30 million

0:52

Americans, including low-paid workers

0:54

in hospitality and healthcare.

0:57

Now a US regulator has had enough.

1:00

The Federal Trade Commission, or

1:02

FTC, voted last week to

1:04

ban non-competes. The

1:06

move has been celebrated by workers'

1:09

rights advocates who say non-competes are

1:11

a drag on the economy, but

1:13

industry groups say the ban will

1:15

make American firms less competitive. What

1:18

will the FTC's decision mean for companies

1:20

and bosses? Will the decision

1:22

stick? And could non-competes face similar

1:24

action in other parts of the

1:27

world? To find out,

1:29

I spoke to two people who have followed

1:31

the issue closely. Amelia Pollard,

1:33

who covers corporate finance for the

1:35

Financial Times in the US, and

1:37

Anjali Raval, the FT's management editor.

1:42

Amelia in New York, welcome to Working It. Thanks

1:45

so much for having me. And

1:47

here in the studio I have Anjali. Hi,

1:50

Isabel. Amelia, I wanted to kick

1:52

off by asking you to explain briefly to

1:55

the listeners what we're talking

1:57

about today. What was the FTC's

2:00

decision on non-compete clauses?

2:03

So the Federal Trade Commission

2:05

voted to really

2:07

sweepingly ban non-compete agreements.

2:10

And for the uninitiated,

2:12

non-competes are basically clauses embedded

2:15

in worker contracts that

2:18

put limitations on where

2:20

an employee can work after they leave

2:22

that company. So typically it's

2:25

to prevent a worker from jumping

2:27

to another firm shortly after

2:29

quitting and that

2:31

firm being a competitor. And

2:33

so when the FTC voted

2:36

to ban non-compete contracts, it

2:38

was not a surprise because they kicked this

2:40

off in January 2023 announcing

2:42

that they were interested in enacting

2:44

this ban. But it

2:47

is very sweeping. So basically

2:49

all future non-compete contracts are

2:52

banned if it's enacted. Okay.

2:54

And if we could go back a bit, were

2:57

they originally for people who have paid a lot

2:59

of money moving between professional firms? Today,

3:02

and in recent years, they're thought of

3:04

in the US as basically

3:06

trying to prevent like the most high

3:09

paid tech workers or financiers on

3:11

Wall Street. But Angel and I found

3:13

that many, many more workers in the

3:15

US than just those high paid individuals are

3:18

impacted by non-competes. Angel, can

3:20

you tell us a little bit about what your

3:22

reporting found about non-competes? It's

3:24

really, really interesting. I went

3:27

into this as a complete sort of

3:29

overmind thinking it was just about bankers

3:31

and lawyers. But we

3:33

are talking about millions of low

3:36

wage employees. We're talking about fast

3:38

food workers, people in sandwich shops,

3:40

bartenders, security staff. Usually these are

3:42

the most vulnerable workers out there.

3:44

They don't have a huge

3:47

cash pile or access to lawyers

3:49

to negotiate these contracts for them.

3:52

And often people don't even realize

3:54

they have a non-compete clause Until

3:57

after they've started working. Given

4:00

these agreements to sign on the

4:03

Thursday. And is this an

4:05

American problem or is it the case

4:07

in the Uk and elsewhere To. So

4:10

the focus of the with

4:12

our reporting has been us

4:14

because of this Stc ruling.

4:17

but this is a massive

4:19

problem in Australia and parts

4:21

of your tastes. It's not

4:23

as. Pretty.

4:25

Sick may be here in

4:27

the Uk, but it's definitely

4:30

something that lawyers tell me

4:32

that. They. Do Just. That

4:34

in to contracts as a matter of course,

4:37

if they can. Under

4:39

vote to ban these agreements to

4:41

split three to yes to see.

4:43

And see what's the arguments

4:45

for and on competes the

4:47

arguments for non compete says

4:49

that they help. Companies stay

4:52

more competitive scene. They

4:54

protect intellectual properties. And

4:56

he investments that made in the

4:58

workforce. They protect client relationships and

5:01

it's seen as saying that really

5:03

is a necessity. Amelie. You

5:05

spoke to workers who. Aren't highly paid

5:08

for have been very affected by

5:10

non compete could do. Give us

5:12

a sense of how it's affected their lives.

5:14

And and what this decision might change.

5:18

Yeah. So. One. Sector

5:20

and the U S that's really impacted

5:22

by noncompete right now is the healthcare.

5:24

Sector And so I spoke to

5:26

one nurse, for instance. In

5:29

Wisconsin who are was subject to noncompete

5:31

that prevented her from working anywhere else

5:33

within i think the sixty miles for

5:35

two years and so to that other

5:37

that she had to find a job

5:39

that is a seventy five minute drive

5:41

away across the state quarter Elena one

5:43

and she is a single moms three

5:45

and she described as just being a

5:47

complete nightmare to have that not only

5:49

find the job but the that of

5:52

time that is taken up by this

5:54

can you and on her drives everyday

5:56

to work she passes. Several other

5:58

hospitals and medical centers. She could

6:00

have easily got a job, she says,

6:02

so it will make a radical difference

6:04

for some of these workers. Another thing

6:07

that. I think is important to

6:09

note when it comes to lower wage employees

6:11

is very often it's thought that these. Contracts.

6:14

Are not enforceable so and players to

6:16

the men basically of the fear tactics

6:18

but there is are always a risk

6:20

even if it's five percent fat and

6:22

employer does decide to come after you.

6:25

And there's one instance that we sound

6:27

of a woman in Florida where she

6:29

was working as a bartender mates and

6:31

com dollars an hour and she left

6:33

for a family on. Bar down the street

6:35

to see year after starting at that job.

6:38

And she was sued for thirty thousand dollars

6:40

and equipment out in court for two years.

6:42

She has had to pay loads and legal

6:44

fees, presumably, so there's always the risk and

6:46

I think a lot of Americans have been

6:48

living and and fear of just that. Do

6:51

you have any sense of whether they're going

6:53

to be any legal challenges to this decision

6:55

in it is this likely. To be

6:57

overturned. There. Have already been

6:59

legal challenges, really? With a mere

7:01

hours, one trade group called the

7:03

Us Chamber of Commerce announced their

7:05

intention to sue and the very

7:07

next day on Wednesday, they did

7:10

file a lawsuit and federal court

7:12

in Texas alongside a couple of

7:14

other industry groups. So the question

7:16

really now remains of. How

7:18

this will play out in court. And.

7:20

Honestly, It. Feels hard to fill

7:22

source of bosses but should they be worried? You

7:25

know. aside. From the fact they may have

7:27

to pay people more to the have anything

7:29

else to worry about, how they have legitimate

7:31

concerns here. Is so there

7:33

are legitimate concerns. but it doesn't

7:36

mean it's right to enforce these

7:38

types as agreements you know they

7:40

probably will have to pay people

7:42

more they probably have to train

7:44

people more frequently because they may

7:46

be just way more mobility in

7:48

the labor markets that this is

7:50

an incentive to pay people better

7:52

to train people better and encourage

7:54

them to stay and create work

7:56

environments where maybe they don't want

7:58

to these amelie we've Talked

8:00

about how widespread non-competes are.

8:03

Is there a similar problem with NDAs in

8:05

the US already? Yeah, there is. And when

8:08

we were doing this reporting, we found that

8:11

some of the people we were reaching

8:13

out to, especially lower-earning employees, were not

8:15

able to talk about their non-compete on

8:17

the record or because of

8:20

the NDAs it signed. So there's kind

8:22

of this concoction that a lot of companies

8:25

have formed of ensuring that the

8:27

contracts are basically airtight. And

8:30

some attorneys did describe non-competes as

8:32

a safety net, where oftentimes the

8:35

non-solicit agreements and the NDAs

8:37

basically cover their bases

8:39

on trade secrets or other private

8:41

information. But the non-competes basically is

8:43

this blunt weapon that is used

8:45

at the very end to just

8:47

kind of be a catch-all to

8:49

ensure that there's no risk

8:52

at all of secrets being

8:54

brought from one company to

8:56

a competitor. Andly, did

8:58

anything else strike you while you were

9:00

reporting this story? It's

9:02

really interesting how employers, on the one

9:05

hand, are talking about sort

9:07

of more welcoming,

9:09

cuddly workplaces and employee wellbeing, while

9:11

at the same time these types

9:14

of legal restraints are still so

9:16

prolific. And it's

9:19

almost like these are sort of being

9:21

considered as two separate camps and two

9:24

completely different realms,

9:26

when really this

9:28

is also a conversation about work

9:30

post abuse and employee wellbeing. And

9:33

I think that's how we should be addressing

9:37

conversation, whether it be around

9:39

NDAs or non-compete

9:41

clauses. Thank you both so much for

9:43

coming on Working It. Thank you to you, Amelia, in

9:45

New York. Thank you. And

9:48

to Andly in London. Thanks for having me. Clearly,

9:52

the laws and agreements that stop

9:54

employees handing over sensitive information exist

9:56

for a reason, but when they're used to

9:59

intimidate or... restrict workers unfairly,

10:01

things have gone too far.

10:04

Companies that want to keep

10:06

staff happy will use different,

10:08

positive incentives such as better

10:10

pay, better conditions and more

10:12

flexibility. The importance of

10:14

those shouldn't be understated. If

10:17

your people want to work for you, you don't

10:19

need to worry as much about them leaving and

10:21

joining competitors. Perhaps

10:23

that's something for bosses to think about. Thanks

10:28

to Amelia Pollard and Anjali Raval.

10:31

This episode of Working It was

10:33

produced by Misha Frankel-Daval and mixed

10:35

by Simon Pinai. The executive

10:38

producer is Manuela Saragossa and

10:40

Cheryl Bromley is the FT's global head

10:42

of audio. Thanks for listening.

10:59

Thank you.