In contract law, a non-compete clause (often NCC), restrictive covenant, or covenant not to compete (CNC), is a clause under which one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer).
These sorts of contracts are normally associated with high-earning employees in IP rich tech start ups, however there has been a trend of requiring employees in more mundane functions to sign non-competes:
A worker leaked a version of Jimmy John’s employee non-compete agreement to the Huffington Post this week, showing the extent of the 2,000-outlet hoagie chain’s demands on sandwich makers and drivers.
By signing the document, Jimmy John’s workers agree not to work at “any business which derives more than 10% of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches” — so, any deli or lunch spot, essentially, including major chains like Subway and Quizno’s.
The two-year clause is limited to restaurants “located with three miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop.” As the Huffington Post notes, this amounts to a 6,000-square mile blackout area in each of 44 states and Washington, D.C. (Forbes)
In response, the Biden FTV is proposing to outlaw these kinds of contracts:
The Federal Trade Commission proposed a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans. (FTC press release)
What do you think about this proposed rule change? Is it good for American employees and businesses?
submitted by /u/salimfadhley