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The Extinction of the Non-Compete

The recent Federal Trade Commission ruling, appearing to eliminate the Non-Compete, has been met with mixed reviews in the media world. At first blush it appears to enable talent, sellers, tech team, department heads, management, and really almost anyone, to go wherever they want whenever they want. Which would be the wrong “take” in interpreting the FTC ruling. The elimination of the Non-Compete is not like the opening of the transfer portal in college football. It’s the elimination of servitude. It places a higher value on the employee and their skills. It returns control to one’s life.

I’ve been on both sides of the Non-Compete clause.  As a Talent, a Program Director, and as an Executive. From the talent and PD standpoint, it concerned me because elimination of my position or termination, meant that I had to cover a gap of unemployment to avoid moving, relocate to find immediate employment, or make a career change. Being in a position to evaluate any of those three options is not one that’s anything less than stressful. I’ve lived in 8 cities having moved 10 times during my career. My number of moves is low compared to others of my generation of broadcasters. To be fair the changes I made took place pre-technology that enabled the ability to work remotely.

Looking at it from the viewpoint of an Executive, Owner/Operator, or in a Corporate position; it immediately engages one’s brain in how to game the system. I’ve seen this in the past where a percentage of the employees’ salary is indicated as “paying for the right to enforce a non-compete.” The way I read this ruling, that won’t work in the future. Existing non-competes for senior executives, who represent less than 0.75% of workers, can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new non-competes, even if they involve senior executives. Employers will be required to provide notice to workers (other than senior executives) who are bound by an existing noncompete that they will no longer be enforcing any non-competes against them once this rule goes into effect.

This is a concern for management. You have a talent that you’ve invested in, committed to marketing and promoting, building a brand from scratch or magnifying the already big brand of the personality, and you lose them to a competitor. The extremely popular talent you built, loved by advertisers and listeners, can now cross the street and compete against you. The Program Director who has successfully competed against your “enemy” is now able to cross-the-street and join them. The seller who has strong relationships with advertisers will now have the ability to continue those relationships elsewhere. The question becomes “how do you protect your business?”

The answer is pay them. You can keep someone from competing against you by paying them. If you want an employee to sit out for 3-6 months after they finish working for you, then pay them their current salary/wages to work from home for 3-6 months, or reassign them to execute different duties. These things have to be negotiated into an agreement before you begin employment, but you can create a window within which you can change direction and alter the strategic plan you’re working from during that window. If you want to terminate someone before their agreement is complete, pay them to sit out or let them compete. Obviously, terminating someone for cause changes those terms, but what is considered cause needs to be clearer than ever.

The FTC is turning business into a world that’s closer to professional sports than ever before. The best players are rewarded for performance. They have contracts that must be honored, but they control where they play and the team’s name on their uniform. Let them compete. Let’s go.

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