Stuff You Should Know - Noncompete Agreements, Come On

Episode Date: March 7, 2023

A noncompete agreement, a pledge not to work for a competitor for a set amount of time, makes sense – when the worker is well compensated and privy to company secrets. But that doesn’t describe the vast majority of workers who’ve signed noncompetes.See omnystudio.com/listener for privacy information.

What's up y'all this is Questlove and you know at QLS I get to hang out with my friends Sugar Steve, Laia, Vontigolo, Unpaid Bill and we you know at Questlove Supreme like to nerd out and do deep dives with musicians and actors and politicians and creatives. People that we feel really deserve that attention. We learn, we laugh, we fall down rabbit holes. Listen to Questlove Supreme on the iHeartRadio App, Apple Podcast or wherever you get your podcast. I am Rosie O'Donnell and I've got a new podcast called Onward with me Rosie O'Donnell on iHeart.

Mostly this part of my life is just about moving forward and I thought what a wonderful way to do it with good friends across a tiny table and just have a heartfelt conversation. Listen to Onward with Rosie O'Donnell a proud part of the outspoken podcast network on the iHeartRadio App, Apple Podcast or wherever you get your podcast. Welcome to Stuff You Should Know, a production of iHeart Radio. Hey and welcome to the podcast. I'm Josh and there's Chuck with me and that makes this stuff you should nizzo. That's right.

Mr. Dogg. Yeah. Me and the guys. What's that one song he had a sensual seduction? What a great song that was. I'm not sure if I know it. Would I know it if I heard it? Probably, but it was like kind of a weird synth, dancey, early 80s vibe, much more than a rap

vibe. He was just expanding out. Yeah, yeah. There's Martha Stewart on it. No, which is kind of surprising because I heard she got like a huge tattoo of him. Really? Oh, it was like a Super Bowl commercial. Oh, okay.

I didn't see it. Yeah. She could have though. I'm a Rube. No, you're not. Chuck, you just don't pay enough attention to commercials. Should we talk non-compete agreements? Yes.

I think we should because they turn out to be rather onerous. Yeah. Possibly soon to be illegal. Yay. And just kind of scummy because as you'll see, they're frequently used by big business. But if you're a free market capitalist, you're not allowed to like non-compete agreements because it literally hobbles competition, which is the point of free markets. And one of the great things about competition is that you and me and everybody else listening

out there who doesn't own a business and just buys stuff usually gets better prices, better products, more innovation when there's greater competition and non-competition agreements, non-compete agreements, do the opposite of that. They stifle all those things on purpose for the benefit of just one company. It's right there in the name. They gave away their hand when they called them no-competes. Exactly. It's pretty flagrant.

It is. If you don't know what we're talking about, about one in five Americans work under an NCA, and a non-compete is when, and hopefully you've never had to sign one of these. Hopefully you're not one of the 20-ish percent of workers in the United States. But if you are working under one, then you know what it is. It's a thing that you sign when you get a job. Usually when you get a job, sometimes it can come along a little later in the job if you get like a promotion or something.

But it's a condition of getting that job most times that basically says, hey, if you work here, you can't go quit your job and then go get a job at another company that's a rival of ours, or you can't run off and if you're a vet, let's say, and you help out doggies and kitties and Komodo dragons or whatever, you got to sign one that says, hey, you can't go start up your own vet practice. There's usually a certain amount of time, like six months or three months or a year or two years, generally where it caps off, although I'm sure there are some really draconian ones that stretch on for years and years.

Yeah, I've seen five is the highest I've seen, but I'm sure somebody's pushing the envelope beyond that. Five years. You can't go make a living in doing what you do. Exactly. So you can hear by the tone of my voice how I feel about these things. I'm going to try and be fair. I know you're with me.

Always. I'm a pro employee, surprise, surprise. Also pro competition too, but okay, go ahead. We're pro employees, so that's kind of where our heart lies. We are employees, so that's why that's where our heart lies for the most part. But having said that, I do get in certain circumstances why businesses draw these up at least. As usual, Chuck, I'm right there with you, totally agree.

Should we talk about these few reasons? Yeah, there's a couple of other things just to kind of do the outlines of these things. In addition to a length of time usually, like you said, that you're prohibited from going and working for yourself or a competitor. There's also sometimes geographical restrictions, which says you can't work for a competitor in the same state or something like that. Feel free to move, completely upend your life and move, fine with us, but you can't do it in the state.

One of the other times that pops up pretty frequently outside of the corporate world is when, say, you sell a restaurant, you'll usually sign a non-compete that says you're not going to go down the block and create the same restaurant again, then compete with the one you just sold, because, you know, again, like you said, there's some instances where it does seem okay, and yeah, let's go over some of those. Yeah, one of them is guarding trade secrets. I kind of get where they're coming from. If you have a trade secret that's really valuable and it's something that this company

owns or thought up at least, or has the IP rights to, I get why a company would not want to say, like, sure, just go quit the job and take those secrets with you to a competitor. Yeah, like, do you remember when those former Coke employees went up, went to Pepsi and said, hey, we've got Coke's recipe. You want it? Yeah. Must have been so surprised when Pepsi called Coke and said, hey, you've got a big problem here.

That was pretty interesting. But yes, I'm quite sure they signed all sorts of agreements that they violated in doing that. Yeah. And we'll get into the details later on, but you don't necessarily, like, you can cover trade secrets with, by other means, rather than just signing a non-compete as an employer. Right. What else?

Well, this one I kind of get to, to a certain degree. Companies oftentimes will make great investments in their employees to keep them around, like, whether it's just the normal training routine, which, you know, I know from Emily just having her small business, it takes a long time to get someone really up to speed and for someone to either not work out by just organic circumstances or leaving shortly thereafter. It's a big blow, especially to a small business. So I get that, or they may, like, further your education, say, hey, we'll put you through grad school or something like that.

But you got to come take that grad school knowledge and help our business with it. Sure. The point is that you don't want to invest a bunch of time and effort and information into training an employee and have them go take it to a competitor. Yeah. I get that somewhat. There's another one. I'll bet you get this a little less because I do too.

Yeah. Like, I understand it. I just don't agree with it. And that is to keep bases of clients, right? So, like, if you are, if you cut hair at a hair salon, there's, especially depending on the salon, but there's a really good chance that you signed a non-compete that says, like, you probably can't cut hair in the same town or anywhere else that's pretty prevalent from what I understand at hair salons.

There's other places too that try them, like law firms sometimes try them, vet clinics like you recommended. But I believe there's also some industries, including attorneys and fiduciaries that say it's too important for the client to be able to choose exactly who they want for us to have non-compete, so they kind of customarily avoid them. Yeah. This is, you're on target because this is the one that I have one of the most problems with out of these three because this basically says we can kind of treat you poorly as an

employer. Like, if you're, let's say, if you're a hairstylist and you don't like your situation, but you've got these clients who love the way that your hair is getting cut by you, but you got some terrible boss, it's a bad agreement, you should be able to go and have those people follow you because they're not there because they like the fit of the chair. Right. You know, they're there because they like the haircut that they're getting. Absolutely.

It is so hard to find a good hairdresser who charges a reasonable rate. It's really important. I'm not joking right now. I finally found my guy and, like, if he ever leaves, I'm in trouble. Same thing with, like, a dog groomer. Like, we've lost dog groomers before, just go and poof, vanish, and the people won't tell us what happened to them or how to get in touch with them because they want us to stay there.

And it's, it's, you're, you're not only hurting your, your former employee, you're also harming your customers too because you might be pairing them up with an inferior dog groomer compared to the person who just left, you know. Yeah. I should shout out my hairstylist because it's fairly recent because I recently, in our Amaro podcast, talked about our friend Thomas, who was the father of one of Ruby's friends. Thomas's wife and Ruby's friend's mom is Robin and she is my friend and stylist. Nice.

Well then, she's great. I'll shout out Michael, my hairstylist. And if they went, you know, if Robin decided to go to another place, I wouldn't be like, no, I'm really super loyal to the walls of that building that I was in. Right. No, I'd follow Robin where she went. Yeah. Agreed.

Totally. I'd follow Michael to the ends of the earth. So there's another way to look at all this stuff too, Chuck. You ready? Yeah. People who are pro non-disclosure agreements say that these things work in... Non-competes, you mean? Yeah.

Yeah. Sorry. Man, I just gave away something. We're going to talk about later. People who are in favor of non-competes say that the opposite holds true too, where if you take away non-competes, then companies might be less willing to invest in their employees because they're going to, you know, possibly walk off. Yeah.

That's probably the best argument they have against them. But it's very similar. I was trying to think of an analogy, and the best I could come up with is saying like, because there's a chance that some of our guys are going to strike out, we're just not going to play baseball. Right. You know what I mean? Yeah, yeah.

And if the whole inherent unfairness of a non-compete agreement, by the way, all the pros are done now, if it hasn't become clear yet, you can, if you take the business out of it, it becomes much clearer, right? So if you look at your employment between a worker and an employer as a relationship, like between a boyfriend and a girlfriend or something, like if you break up, it's like the boyfriend saying, you can't date anybody for a year or you can't date anybody in this state for a year. Go ahead and move up and end your life.

That's fine. But no one in this state, you can date, and then it can get even worse. But I can. Yes, that's a great point. Yeah. And then it can get even worse. The boyfriend can dump you and still say, you're not allowed to date anybody for a year. Right.

When I thought of it like this, like I already knew they were inherently unfair, but it really kind of settled in. So I wanted to share that with everybody. That's good. What's interesting, especially when you look at the example of like a hairstylist, is chances are that hairstylist was already a good hairstylist when they started working for that place. And it wasn't kind of how these things started out, which is segues us into the history where you, I don't know anything about cutting hair, and I'm just going to apprentice with you for

a while. Right. And you're going to teach me everything I know about how to cut hair, like that's a little more understandable, and that's at least in England, that was the history of non-competes was in 15th and 16th centuries. The way it was set up was there were master crafts people, and then they had apprentices working for them and they would teach them their trade and in turn get a lot of work out of this person.

And then they could go on and try to become a master craftsman themselves, start up their own habidash or shoe shop or whatever, and early on, and for quite a long time even, the courts of England and the laws of England roundly sided with employees when it came to case law, and the very first of which was the dyers case of 1414. Yeah, which established a precedent that lasted for hundreds of years, which is basically there was a dyer, a fabric dyer in London, who had an apprentice and the apprentice was ready to become a journeyman, no longer an apprentice going off to strike out and form his own business, and he said, you're not allowed to do this business in London, all

of London for six months, and in the 15th century, it wasn't very easy to move, right? So the guy took him to court somehow in the 15th century way, and the court said, we rule against you, dyer, we rule in favor of your journeyman apprentice, because they reasoned that the law and custom should keep work in the public domain, labor should be as free to do as much as it can for as many people as possible. Yeah, which makes sense. Maybe there aren't enough talented dyers in London right now, and for goodness sakes, the people need their tie-dyed frocks.

Thou blowest my mind. That's good. I was waiting for another wavy-gravy joke, I know he's your go-to. Yes, he's the only one I can ever think of. And then the other one is that, and this is a big part of this precedent, was that someone should be allowed to go make a living doing what they've learned to do. Right, and there's something inherent in both of those reasonings that set that legal precedent in that they recognize that a non-compete favors essentially one person, one group,

one employer, one company, one business owner at the expense of everybody else. And they kept that up for hundreds of years. What are they called? I guess the guild members who were employing apprentices. Over the years they employed more and more apprentices as there was more and more people who needed more and more work, so there's more and more attempts, I don't think I could say more and more any more times, but there were more and more attempts, I could, at creating these non-compete agreements, but the courts kept basically saying, nine, no, no.

Although there was one that kind of went the opposite way, which does seem like they made the right decision, but it sent another precedent that actually upholds non-competes, right? Yeah, this is Mitchell versus Reynolds in 1711, and Reynolds was a baker. This one is, I agree, it's definitely an interesting case, because it's not like your standard employee, employer kind of thing. Reynolds was a baker who said, hey, I will lease, hey there Mitchell, I'll lease you my bakery for five years and you can do all the baking and make the money. And I'm not going to go start another bakery in this town, which is St. Andrews Holburn,

and I don't know why I lost the accent halfway through that. And if I violate this agreement, I'll give you 50 pounds, and that's exactly what I'll do though. I will go on to break this deal, I'm going to sell my stuff in town and my baguettes or what have you, and Mitchell took Reynolds to court and the judge sided with Mitchell in this case. Yeah, because... I'm not quite sure I get it though.

This is why I think it makes sense to us too. Mitchell and Reynolds were equal parties to this agreement. There was no power position of one over the other. And that's one of the reasons why non-competes are so unfair. It's a really powerful entity taking advantage of the less power of the employee that's on the other side of the equation. In this case, they were equal and the guy broke it, and yeah, he should pay because he agreed to this ahead of time without any kind of coercion or anything like that.

Because Mitchell was able to run this business and do the baking and make money, and Reynolds was getting lease income from Mitchell. So Reynolds is trying to have his cake and eat it too, basically. Exactly. He was a real big jerkwad from what I can tell. We bleeped out your first take, which was a cuss word, but jerkwad sounds grosser than what you said. I think jerkwad was better.

I made the right decision in retaking that. Things started changing when industrial capitalism became a big thing. And the courts started kind of flipping a little bit. All of a sudden, they said, wait, this big business and capitalism is great, so we should be a little more pro employer than employee, generally speaking. And I think it was basically by the mid-1800s that they said, hey, we believe in freedom of contract, which basically means if you're both agreeing to this thing, then you should be able to agree to this thing.

Which again, it makes sense if you're Mitchell or Reynolds who were on even footing when entering into that contract, but people still use freedom of contract as a defense of non-competes and we'll walk down that path a little more later. I say, Chuck, for right now, let's just go ahead and take a break. Let's do it. All right. I agree. Let's sign a contract.

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wherever you find your favorite shows. So all this is going on in England. And at the same time, America's doing its thing, buying Louisiana, et cetera. And there wasn't really any big non-compete rulings until, I think, 1851. But leading up to that, there's a legal scholar named Ayesha Bell Hardaway, who Livia helped us with this one. And Ayesha Bell Hardaway says that there was still a bunch of legal precedents and rulings and laws that were established that basically support the idea that non-competes are unfair

and that people should have the ability to move about from employer to employer until they find a good match, and that a lot of that came from Reconstruction Era and the Black Codes and some of the laws that protected newly freed slaves from really predatory business contracts that they could go to jail if they stopped working for the person early. They could go to jail for five or 10 years or something crazy like that. So the U.S. government, the federal government started stepping in and creating these laws, including the 13th Amendment that protected people from that. And Hardaway argues that that's kind of a basis for America's position on non-competes.

Yeah. Like, congratulations on your emancipation. Now you can enter into a work contract that's basically the same thing as being enslaved, except you're making money, but if you quit your job, you're going to jail. But also making money, but you're making just enough to live and you need your job so badly, you are engaged in what's known as wage slavery, where you're so dependent on your job, you're essentially stuck and your employer can treat you however they want because, number one, you're disposable because there's plenty of other people who need a job.

And then secondly, they know that you can't go anywhere. You're stuck. You need this job. And they often mistreat employees and it still happens today. Yeah. And like in England, early on in the United States, the courts generally were siding on the side of employees. There are quite a few cases that sort of laid out precedent.

Education was really big in 1872, California, even way back then, said, we're going to be a bunch of liberal hippies and we're going to ban non-competes altogether because here in the United States, if you don't live here, a lot of times, states are free to make their own laws concerning things having to do with their state, state's rights. State's rights. And that was a very low key mantra. That's right. And California was one of the first states to complete or maybe the first state to completely

ban non-competes. Yeah. They said, we don't know who he is yet, but in a hundred or so years, wavy gravies going to love this. And it went that way for most of the 20th century. If NCA's were allowed, they were pretty limited in their enforcement and usually covered things like we talked about trade secret cases and things like that because I didn't know about any of this stuff until you and I entered the world of signing contracts as podcasters

and stuff. I had always just had jobs where you could work and get fired and quit and it was no big deal. But I think you and I learned an awful lot about contract stuff through our work and how to read them and how many words there are in them and how lawyers charge so much money for reading those words. Imperpetuity. Imperpetuity throughout the known universe.

Yeah, throughout the known universe. That was in one of them once, right? Yeah. So like we couldn't go to Mars and set up a Mars farm and start podcasting about it. No. We'd be served on Mars. But anyway, we learned and this was shocking to hear of something just called unenforceability of a contract.

We kind of thought going into this thing like Rubes like, well, no, contracts, that means you signed a contract, they're like, no, you still got to enforce this. It's just like setting a law, someone can still break that law. You have to have enforceability and a lot of times these things were not enforceable in the United States. Right. But still are. Yeah, that's absolutely true.

But if you are somebody who's like a highly skilled laborer who has access to proprietary information, trade secrets, intellectual property, just really high level stuff as far as a corporation is concerned, very valuable stuff too. If you're one of those workers and you signed a non-compete agreement and you break it, you're probably going to get ruled against depending on the state. If it's a state that allows non-compete agreements, you're probably going to lose that case. Because the courts have typically said, okay, at that level, you can probably hire a lawyer who can explain to you what you're getting into beforehand.

You probably have a little bit of leverage where you can say, I don't want to sign a non-compete. I'll give this up instead. Or conversely, you can say, I'll sign your non-compete, but you got my salary by 10% or something like that. And in that respect, it goes back to the Mitchell versus Reynolds case. These two people, the employer and the employee, are on relatively equal footing enough so that they're able to negotiate this non-compete, and that's why it would be upheld typically.

That's when it actually really makes sense. Yeah. So that brings us to today. Like I said, I think one in five people in the United States work under a non-compete. Employers generally over the 21st century have gained more leverage and more power over workers. Even though I think starting with COVID in 2020, I think there's been, not I think, like it's been pretty well documented, that there's been a shift toward employees gaining

a little more power and leverage. Yeah. Because it went the exact opposite direction. That's what it said. It's 2020. Yeah. It went the opposite direction starting around the 2008 financial meltdown. Yeah.

There's a guy named Evan Starr who Olivia found that's an economist at the University of Maryland. And it's kind of, if you just start researching non-competes online, you'll see Evan Starr's name come up a lot. And if you're like a CEO, or not a CEO, but an executive, let's say, executive level employee, chances are you're working under a non-compete, I think 60 to 80% have to sign them. That thing's low, doesn't it? Yeah.

I would think it'd be more like 80 to 90%. Yeah. Me too. But I mean, who knows where they get these stats? Evan Starr just makes them up as he goes along. He's like 60 to 80 sounds real. I don't think so. But 20%, so 60 to 80 are high level, executive level, but 20% of all private sector workers

are under a non-compete. About 12% of those make under 20 grand a year. And this was really surprising, 17% are in service work in the food and beverage industry. Yeah. And so because there's so many more just like normal everyday employees compared to like higher level executives, and because they've been papering so many employees with non-compete agreements, the average person in the United States working under a non-compete is an hourly worker making $14 an hour, being forced to sign a non-compete.

And I say forced because in the case of like a high level executive who's able to negotiate or Mitchell and Baker, in this case, the employee is not able to negotiate anything. The courts typically say you can sign a non-compete, but the company should give you something in consideration, typically some sort of additional pay or something like that. In the world of $14 an hour hourly worker who's signing a non-compete, the consideration is you get to be employed here. That's your consideration. You get to have this job.

Yeah. That is in no way, shape, or form equal footing. And that's why so many people point to these things and they're like, this is jerk-wad stuff. Yeah. The New York Times had a big sort of expose in 2014 where it was revealed that, and get these jobs, lawn care workers, again, hairstylists, summer camp counselors had all signed non-compete agreements that was just sort of slipped in with their paperwork, not realizing they'd

signed it, not fully explained, or maybe explained even at all by their employers. They're just like, here's your start work, just sign here, here, here, here. And there was a special case, I believe that the Huffington Post sort of exposed from Jimmy Johns, the sandwich shop, where employees had to sign a non-compete that said, you can't leave Jimmy Johns and go work for a sandwich company not to be named. They're like, say it, say it. Really, I'm just going to go take the underground train and leave this meeting. Really any sandwich shop, of course, but I think they mean their main competitor, probably.

Within three miles of any Jimmy Johns, not just the one you worked at. And I don't know about their real estate plan for that company, but I bet you anything part of their strategy is to open their restaurants within three miles of one of those other restaurants. So basically said, I'm sorry if you're a sandwich artist, but you can no longer really do this job. Right. And I mean, people who are sandwich artists typically need a job. There's very few independently wealthy people who go get a job at Jimmy Johns because they

like making sandwiches during the day. It's a good job. Whether it's very fulfilling, but typically when you have that job, you need the job. And so the idea of putting a person in that position into just hobbling them as far as work goes, it's despicable, man. I don't know if it's coming across how I feel about non-competes, but just every single example just gets me riled up. You want to hear something kind of fun?

Yeah. I mean, John Hodgman loves making breakfast sandwiches so much that he spends his summers in Maine and there's a local breakfast place and he makes, he goes there and works occasionally for free just for the love of making breakfast sandwiches. Yeah, but also I don't think you can discount holding court among everybody too. I think that's part of his compensation. Yeah. And the t-shirt money he gets from my egg sandwich was made by John Hodgman.

Yeah. Humorous John Hodgman. That's the sweetest plump. We should point out too though, by the way, that Jimmy Johns did that for a couple of years and then when the state attorney general started investigating, they dropped that practice. Oh, that's good. Sure. Nothing like a state investigation to get you within the bounds of ethics and morals.

Morality and decency. There's also something called a no-poach agreement, which came under fire in the 2010s as well, where if you open a franchise, you would probably sign a no-poach agreement saying that you wouldn't hire any worker from another store in that company, another franchise, say like across town. Right. This is really hard to give examples and not buzz market any companies. I know.

Yeah. I think we're doing it though. We're doing okay. So like if you went to Mr. Sandwich and you didn't like your boss there, so you went to go get hired at another Mr. Sandwich, if they had a no-poach agreement, that second Mr. Sandwich would say, sorry, we can't hire you. Yeah. That's terrible too.

Yeah. Conversely, if you run a Mr. Roast Beef Sandwich place and you have the meat, as an owner, you can't go, geez, the Fred over there at the cross town, Mr. Roast Beef Sandwich, really moves that beef. Like nobody I've ever seen this guy sells beef like a champion, you can't entice this person by saying, hey, I'll pay an extra buck 15 hour to make your beef sales over here. Yeah. That would be poaching for sure.

And then you can thank, again, state investigations for doing away with this largely. Some of the larger chains said, oh yeah, we shouldn't do that. We're not going to do that anymore. You can call off your state attorney's investigations. So we've been sort of peppering in the, I'm against NCA arguments. There are actual statistics to kind of back up some of the stuff that we feel passionately about. In one case in the state of Oregon in 2008, they banned non-competes for most workers.

But one of the categories was low wage hourly employees that we were speaking about. And Mr. Starr comes back in the picture and a gentleman named Michael Lipsitz of the FTC Bureau of Economists. And they did some statistical analysis and found that in Oregon, hourly wages rose two to 3%, not just for people who had signed NCA's, but for everybody in the state. And they reckon that maybe between 14 and 21% of people who signed NCA's had their, well, wait, was it 14 to 21% of workers? No, that's how much their wages increased.

Yeah, their wages increased 14 to 21%. For people who had been working under non-competes after they were banned, it went up that much. That is a, I hate the word whopping so much because I want to do a little tangent here, Chuck. If you use the word whopping in your writing, what you're doing is you're assuming that your reader is too stupid to understand that what you've just said is actually like eye-popping or like really significant or you're spoon feeding them the fact that like, hey, this is a really big deal rather than just letting them figure it out themselves or knowing that

they probably are going to figure it out themselves. So don't use whopping, but the point is this, that statistic is so huge. I will use the word whopping here because it's the true definition of whopping. It's overwhelming, I can barely speak at such a big deal. I think instead of writing whopping though, what you can do is say, get a load of this and then have a little button you click that goes, yeah. How about this for a whopping statistic though to just sort of button up on the stats? The FTC has estimated that if they eliminated NCA's all across the country, I guess federally

or if every state did, it would generate new job opportunities for up to 30 million workers and raise wages by $300 billion. Yeah, for those workers basically, that's not even spillover stuff from what I understand. And there's another little stat from that same FTC study that if you eliminated non-competes for doctors, healthcare costs would go down by about $148 billion too. Which is another problem in and of itself, doctors who sign non-competes can't move from hospital to hospital. And so hospitals can basically hoard medical talent while other hospitals are starving

for it because these doctors have non-competes. They can't just go to this other hospital that really needs their help and that's a problem too. I mean, it's bad enough with franchises of Mr. Sandwich. When it's hospitals preventing doctors from going to heal the sick, that's a huge problem as well. Yeah, if you're arguing against NCA's, California, like I said, was very early to get on that anti-NCA train.

People often point to California and especially the tech industry, like in 2014, the state of Massachusetts said, should we ban non-competes or not? They eventually did in 2018. But they said one of their arguments was, look at California, like back in the 70s, we were on par with, like the Boston area was on par with San Francisco as far as tech development and the fact that we had non-competes really hindered us. And look at what happened in California. It's now the tech capital of the United States, if not the world, Northern California and

Silicon Valley and Boston didn't fall off the map. There's still good tech there, but it didn't become what California did. No, because the NCA's were so efficiently enforced that when you signed on for a company, you're like, well, I'm here for the rest of my career. And ideally, the company would take care of you for the rest of your career. So there was a trade-off for that, but that just meant that there were no people jumping chip and starting their own companies and they were doing that in Silicon Valley. I say we take a break, but I've got two more arguments against non-competes.

So one is that it stagnates job churn and job churn is people being able to move from employer to employer until they find the right fit because ideally every worker and every employer would fit and work together well, which would raise general productivity through the roof if that were able to be done and job churn is how that happens. And then in a related way, if people are allowed to just jump ship from a terrible company, that company is bound to basically say, we need to figure out what's wrong with us and get better or else we're going to not be competitive anymore and our company's going to go under. If you force everybody to stay aboard the sinking ship through non-competes, there's

no way to do it. No, plus, I mean, you're just basically stagnating your company and the careers of the people who are on board. Yeah, you keep people by being a great company to work for. Exactly. You don't by holding them hostage because their name is on a piece of paper. I'm glad you said it, man. That's a great time for a break.

All right, we'll be right back. Learning stuff with Joshua and Charles, stuff you should know. What would you do if a secret cabal of the most powerful folks in the United States told you, hey, let's start a coup? Back in the 1930s, a marine named Smedley Butler was all that stood between the U.S. and fascism. I'm Ben Bullock. And I'm Alex French.

In our newest show, we take a darkly comedic and occasionally ridiculous deep dive into a story that has been buried for nearly a century. We've tracked down exclusive historical records. We've interviewed the world's foremost experts. We're also bringing you cinematic, historical recreations of moments left out of your history books. I'm Smedley Butler and I got a lot to say. For one, my personal history is raw, inspiring and mind blowing.

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In our first season, we heard from Eileen Charlotte, who was love bombed by the Tinder swindler. The worst part is that he can only be guilty for stealing the money from me, but he cannot be guilty for the mental part he did. And that's even way worse than the money he took. I am here to help as a licensed psychologist and survivor of narcissistic abuse myself. I know how to identify the narcissist in your life. Each week you will hear stories from survivors who have navigated through toxic relationships,

gaslighting, love bombing, and the process of their healing from these relationships. Listen to Navigating Narcissism on the I Heart Radio app, Apple Podcast, or wherever you get your podcasts. MySpace was the first major social media company. They made the internet, which up until then had been kind of like a nerdy space, feel like a nightclub and also slightly dangerous. And it was the first major social media company to collapse. Rupert Murdoch lost lots and lots of money on MySpace because it turned out it was actually

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All right, so early on, you said that's the last argument for NCA's. That's not entirely true, but there is one group who would say that NCA's are great. And that is the U.S. Chamber of Commerce. And they say that one of the things that we didn't completely quash, but they say, hey, when you sign a non-compete, that means you're probably getting something good back in return too, which means it's equal footing. And like you said earlier, unless you're a really top tier echelon person who's able to negotiate a 25% bump in salary to sign this thing, then you're probably not getting

nothing in return. Yeah, you're just getting the job and shut up and be happy that you even have a job. Get to work, basically. Another one is that thing that you and I agreed on, that companies would probably be a little more likely to invest in their workers if they have a good sense that their workers aren't going to just leave for their competitors. That holds up, but it only holds up to a certain extent because if you invest in your workers and like really good training, what you're doing is producing an employee who understands

your product, understands how the business goes, understands their department really well. So they're probably really good at customer service. They know what they can and can't promise. They understand what can be replaced with what. They just didn't know what they're doing. And so productivity goes up, which means that by training that worker, you're actually making your money back and then some, there's a return on investment.

And that usually comes pretty quickly after they come on board and are brought up to speed and become productive. So throughout the life of that person's employment with you, you made your money back and say the first quarter of that time, the rest of it is just profit from that higher productivity. So it does hold up, the argument does hold up, but it only holds up so far. And then one other thing is that the Chamber of Commerce likes to do that freedom of contract thing where they're like, Hey, we should not be treading on employees rights as adults. They say this sometimes as adults, assign whatever contract they please and they leave

out of it entirely the imbalance of power. But that's one of their, that's one of their talking points as well, typically. Freedom of contract. Yeah. We mentioned, and you sort of inadvertently teased earlier, other kinds of agreements. And we mentioned these because a lot of these are workarounds to just signing a full non-compete like the trade secret thing that we mentioned. You can sign a non-disclosure agreement or an intellectual property agreement.

In the case of non-disclosure, it means you can't disclose stuff that went on at your company. Like we can't, you know, in the case of like podcast networks, you couldn't jump to another podcast network and say, Oh, well, this is how we do our bad sales or whatever. You can't do that because you signed an NDA, but that's not the same thing as a non-compete. You can still go get that job with IP property or intellectual property agreements. That's obviously if you work for that company and you come up with an idea while you're working for their company, they basically own that idea. Another one is a non-solicitation agreement, which is sort of like a non-poaching thing,

which means you can't go out and like if we went and started our own podcast network, we couldn't just sign all of our friends that we've worked with for 20 years. Right. Or, you know, get all the customers or something that we've been interacting with as sales people for whatever company we work for. Yeah. But here's the thing with some of these like, like I have a friend who worked for someone doing a service as the employee and I don't want to get too specific, but the employer,

like usually when you're like, you know what, I could do this and I'd be, I'm better at it and I could do better at it and the clients will follow me. Usually you're doing that because the situation you're in stinks. You know, like you got an owner that's not treating you right or an owner that doesn't do any of the work and they're just sitting back and collecting checks while you're doing everything. Right. I mean, sometimes people, it's just like, got a great situation and they're like, you

know, I would like to do this myself as well. That does happen. I'm not saying it doesn't. But it's usually because like, it's a bad employer and a bad business to begin with. The other way it's got to be so frustrating too, if you're working under a non-compete, is if you have this great idea and you do what you're supposed to do in that situation as an employee and you take it to your employer and say, let's do this, this is going to make the company a bunch of money and they're like, nah, it's not worth it.

And so your idea just dies, then people like you and me, we suffer for that because we miss out on that amazing innovation or that extra competition that drives prices down a little bit. It has a huge kind of society-wide effect. Yeah, for sure. I guess the last thing we should mention is the pay not to play. It's also called the garden leave. Like you're taking time off to tend to your garden.

This is when an employee leaves and a company might say, hey, don't go work for a competitor for six months, but we'll pay you for those six months. Yeah, it's often something like 50% of the salary that you had over the last two years or something. Yeah, exactly. Which is pretty sweet. And again, that's consideration in exchange for signing a non-compete, which makes sense. Or you might get bought out of a contract or something like, hey, we'll just buy you

out of your contract, but you can't go work for anyone else. So Chuck, if you weren't like, boo, I hate non-competes before, prepare to join the wagon or jump on the wagon. Yeah, the bandwagon. Some companies, including companies in California, still use non-competes. They still make their employees sign them, and they do this because they can still threaten their employees with a lawsuit for breaking this non-compete that's illegal to begin with because they know their employees either, number one, don't know that non-competes are

unenforceable in some states or number two, even if they do know that, don't have the means to defend themselves, to hire a lawyer to defend themselves, even if they're on the right side of the law. That is despicable. It is, as is using saying like, all right, we don't have a non-compete, but we're going to draw up our non-disclosure agreement or non-solicitation agreement so broadly that it's basically a non-compete. Right.

So because of this, because that's becoming more and more common, and apparently also there's a 2022 article in Benefits Pro, the Employment Benefits Trade Magazine of Record, that said that employers are more and more frequently turning to threatening lawsuits over non-competes because they're low on workers because it's a worker's market right now. It's not an employer's market anymore. So to keep people employed, they're threatening to sue their own employees basically. Yeah. And this is, I don't know if you picked this one for this reason, but this is a hot topic

right now, largely because of what's been going on with employees getting more rights and there's a new proposal as of just last month in January 2023 from the FTC that would ban non-competes altogether basically and void the ones that are currently in place, which would be a huge deal, Biden signed an executive order in 2021 that encouraged the FDA to ban and limit them. FTC. Yeah, the FTC. And it basically says that it forbids you from using these and you have to let people

know in the case you were talking about in the California where they basically signed them and didn't know. You have to let these employees know that they're under a non-compete and be really clear with the language. And it's not valid anymore. Right. It's saying you can't have them. Not only can you not sign somebody under a non-compete agreement, you have to let them

know that the ones that you used to have that were valid are not valid any longer. They've been outlawed. Yeah, like they shouldn't have to go pay an attorney to tell them that. Exactly. And it even goes even further. So some of those other types like a non-disclosure agreement that can be so broad, it's effectively a non-compete, those are basically outlawed as well. It's a huge idea and right now they're taking public comments through March 20th.

So if you're like, I- Well, here's ours. Exactly. If you're like, I don't really feel good about non-disclosure agreements or non-competes, then you can go leave your remarks. The Chamber of Commerce said, we're going to sue you, FTC, you can't do this. And the FTC said, oh, yes we can. So we'll see what happens either with the FTC directly doing it or if the FTC finds

out that their hands actually are tied, Congress might actually step in. There was a bipartisan bill that was introduced in 2021 that basically- By what? By partisan. I know if you can believe that. It's weird. It's a very strange sounding word. I'm glad you brought up where I got this idea because it turns out I got this idea from

Yumi. She sent me an article about this FTC proposal and how it would save 300 billion or creed 38, 300 billion in salary. It's just pretty- Was the subject line? No, she said, check out this whopping stat. It's like the old click date. Yeah, exactly.

You won't believe number eight. You got anything else? No, just a listener mail. Okay. Well, since Chuck just mentioned listener mail, that means it's time for listener mail. That reminds me of The Simpsons. Yeah, I know exactly what you're going to say. The Parmentin Syrian.

And now I'd like to introduce your new principal skinner. Principal Skinner. I thought you were going to say, you remember our friend Brian, the sound guy from the TV show? Oh, sure. Every once in a while, he emails me just one line from The Simpsons. Oh, really? They walk into the bar and there's tons of carbon monoxide in the bar and everybody's

passed out and the guy says, man alive, there are men alive in here. Brian texts me every now and then, he's a talented musician in the band, the Georgia Soul Council. Yeah, that's right. He's a great guy too. Go see them. All right. Here we go.

New mom, lifesaver. We just like these little nice emails every now and then. Hey, guys. My now husband introduced me to your show during the infamous spring of 2020 and I've enjoyed hours of educational entertainment since then. We welcomed our little boy, Ronan, into the world in December and I'm working on turning him into a fan as well. Stuff he should know has been part of his life since he was a wee embryo.

We listened to a lot of podcasts during my pregnancy. Certainly some of it made it through all that amniotic fluid. I'm currently on maternity leave with him and we are continuing to listen to the podcast together. I have a lot of fun choosing episodes for us to listen to. I think I'll do a great job sharing information with folks in an accessible and inclusive way and hope that maybe some of this information sticks in his subconscious. If nothing else, hearing else's voices and the positivity behind them is great for his

brain development and mom gets entertainment too so everyone wins. Thank you for making these hectic days and long nights of new parenthood more bearable and for teaching both of us something new every episode. Yours truly. It's a great way to sign an email, by the way. Classic. Heather and Ronan and apparently dad doesn't get any mention except turning her on to this thing to begin with.

This is the OG. That's right. That was an amazing email. Thanks, Heather and Ronan. That was great. Wow. Thanks to Ronan's dad. Yeah.

Big thanks to Ronan's nameless dad. If you want to get in touch with us like Ronan's nameless dad's wife Heather did, you can do it by email. Wrap it up, spank it on the bottom and send it off to StuffPodcast at iHeartRadio.com. If you should know is a production of iHeartRadio. For more podcasts, my heart radio, visit the iHeartRadio app, Apple podcasts, or wherever you listen to your favorite shows. Hi, I'm Rosie O'Donnell and I've got a new podcast called Onward with me, Rosie O'Donnell,

on iHeart. Mostly this part of my life is just about moving forward and I thought what a wonderful way to do it with good friends across a tiny table and just have a heartfelt conversation. Listen to Onward with Rosie O'Donnell, a proud part of the outspoken podcast network on the iHeart Radio app, Apple podcasts, or wherever you get your podcasts. What's up y'all, this is Questlove and, you know, at QLS I get to hang out with my friends, Sugar Steve, Laia, Vontigolo, Unpink, Bill, and we, you know, at Questlove Supreme, like the nerd out and do deep dives with musicians and actors and politicians and creatives.

People that we feel really deserve that attention. We learn, we laugh, we fall down rabbit holes. Listen to Questlove Supreme on the iHeart Radio app, Apple podcasts, or wherever you get your podcasts. What would you do if the secret cabal of the most powerful folks in the United States told you, hey, let's start a coup? Back in the 1930s, a marine named Smedley Butler was all that stood between the U.S. and fascism. I'm Ben Bullitt.

I'm Alex French. And I'm Smedley Butler. Join us for this sordid tale of ambition, treason, and what happens when evil tycoons have too much time on their hands. Listen to Let's Start a Coup on the iHeart Radio app, Apple podcasts, or wherever you find your favorite shows.