Federal regulators on Tuesday [April 23, 2024] enacted a nationwide ban on new noncompete agreements, which keep millions of Americans — from minimum-wage earners to CEOs — from switching jobs within their industries.
The Federal Trade Commission on Tuesday afternoon voted 3-to-2 to approve the new rule, which will ban noncompetes for all workers when the regulations take effect in 120 days [So, the ban starts in early September, 2024!]. For senior executives, existing noncompetes can remain in force. For all other employees, existing noncompetes are not enforceable.
[That's right: if you're currently under a noncompete agreement, it's completely invalid as of September 2024! You're free!!]
The antitrust and consumer protection agency heard from thousands of people who said they had been harmed by noncompetes, illustrating how the agreements are "robbing people of their economic liberty," FTC Chair Lina Khan said.
The FTC commissioners voted along party lines, with its two Republicans arguing the agency lacked the jurisdiction to enact the rule and that such moves should be made in Congress...
Why it matters
The new rule could impact tens of millions of workers, said Heidi Shierholz, a labor economist and president of the Economic Policy Institute, a left-leaning think tank.
"For nonunion workers, the only leverage they have is their ability to quit their job," Shierholz told CBS MoneyWatch. "Noncompetes don't just stop you from taking a job — they stop you from starting your own business."
Since proposing the new rule, the FTC has received more than 26,000 public comments on the regulations. The final rule adopted "would generally prevent most employers from using noncompete clauses," the FTC said in a statement.
The agency's action comes more than two years after President Biden directed the agency to "curtail the unfair use" of noncompetes, under which employees effectively sign away future work opportunities in their industry as a condition of keeping their current job. The president's executive order urged the FTC to target such labor restrictions and others that improperly constrain employees from seeking work.
"The freedom to change jobs is core to economic liberty and to a competitive, thriving economy," Khan said in a statement making the case for axing noncompetes. "Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand."
Real-life consequences
In laying out its rationale for banishing noncompetes from the labor landscape, the FTC offered real-life examples of how the agreements can hurt workers.
In one case, a single father earned about $11 an hour as a security guard for a Florida firm, but resigned a few weeks after taking the job when his child care fell through. Months later, he took a job as a security guard at a bank, making nearly $15 an hour. But the bank terminated his employment after receiving a letter from the man's prior employer stating he had signed a two-year noncompete.
In another example, a factory manager at a textile company saw his paycheck dry up after the 2008 financial crisis. A rival textile company offered him a better job and a big raise, but his noncompete blocked him from taking it, according to the FTC. A subsequent legal battle took three years, wiping out his savings.
-via CBS Moneywatch, April 24, 2024
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Note:
A lot of people think that noncompete agreements are only a white-collar issue, but they absolutely affect blue-collar workers too, as you can see from the security guard anecdote.
In fact, one in six food and service workers are bound by noncompete agreements. That's right - one in six food workers can't leave Burger King to work for Wendy's [hypothetical example], in the name of "trade secrets." (x, x, x)
Noncompete agreements also restrict workers in industries from tech and video games to neighborhood yoga studios. "The White House estimates that tens of millions of workers are subject to noncompete agreements, even in states like California where they're banned." (x, x, x)
The FTC estimates that the ban will lead to "the creation of 8,500 new businesses annually, an average annual pay increase of $524 for workers, lower health care costs, and as many as 29,000 more patents each year for the next decade." (x)
Clearer explanation of noncompete agreements below the cut.
Noncompete agreements can restrict workers from leaving for a better job or starting their own business.
Noncompetes often effectively coerce workers into staying in jobs they want to leave, and even force them to leave a profession or relocate.
Noncompetes can prevent workers from accepting higher-paying jobs, and even curtail the pay of workers not subject to them directly.
Of the more than 26,000 comments received by the FTC, more than 25,000 supported banning noncompetes.
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strap in folks it's time for another neopets drama update
some background reading before we begin: back when neopets wanted to introduce customisation (i.e. dressing up your pet) in 2007, they decided to 'convert' all existing pet art to align with a rigid body structure, rather than all having unique poses. it was just not feasible to create new pieces of art for hundreds of different pet poses every single time they released a new clothing them
customisation had been highly requested up until this point. however, the conversion was NOT popular. in some cases, particularly for basic colours, the change wasn't huge, but in other cases.... uh....
you get the idea. the more expensive colours like plushie, faerie, grey, royal and darigan got the worst of it because they had the more unique poses pre-conversion, and therefore it was largely agreed that the change to the stiff 'samey', frankly kinda goofy converted look did not look great
most users did not get a choice in having their neopet converted and it was done automatically, but if you had one of these colours where the change was huge, you were given the choice of converting or retaining the old pose (but not having the option to customise your pet). those pets that retained the old, pre-conversion poses are therefore referred to as 'unconverted', or UC for short
once a pet is converted, there's no returning to UC. you also couldn't create UC pets anymore, making UCs a limited resource that would only increase in value with time, particularly as people abandon their pets, leave the site, get frozen, etc.
i could write an entire dissertation on the drama that UC pets have caused for the pet trading economy, the neopet account black market, and general retention of the userbase, but to sum it up, people REALLY want UC pets. they are the single most coveted status symbol on the site
we skip forward now to 2023
the neopets team are planning to introduce UC pets back to the site, so that people will be able to create their own UC pets again for the first time post-converstion (legally at least)
they drip feed bits of information over the year about what this will look like. the main points are
changing a pet to UC will be done via some kind of item bought with neocash, the premium currency on neopets that you need to spend real money to get
putting this item on your pet will give it the UC art style appearance
so. not much really known. but expected release is set for january 2024
yesterday, they hosted an AMA focusing on the new UC pet system and how this was going to work. noticeably absent is any explanation of how much this is actually going to cost and whether it is going to involve any kind of gatcha mechanic, so that's causing our first lot of concern
second lot of drama is that the new UCs aren't actually going to be COMPLETELY the same as the old art, as they're making some small changes for style consistency, see below (old on top, new below):
the biggest drama, however, comes from how they're dealing with the 'original' UC pets. ALL pets will be getting forcibly converted on the 23rd, with anyone who has a pet that is already an original UC immediately receiving the UC neocash item. there's mention of possibly some kind of trophy or badge recognition for particularly old pets, but it's vague, and generally seems like it won't be possible to distinguish between the original UCs and these new ones
the people who already have OCs are not happy about this
people are allegedly pounding their pets, cancelling their premium, and quitting the site in protest. the boards are flooded with people complaining about the changes and laughing at the downfall of the 'neo-elite' in equal measure
it's t-minus 5 days until the second great conversion goes live. let's all pray for our souls
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