The Chaos of FTC's Non-Compete Ruling: Enforceability, Carve-Outs, and Political Implications

[00:00:00] [SPEAKER_04]: Oh my goodness, bad touching, harassment, sex, violence, fraud, threats, all things that could

[00:00:10] [SPEAKER_04]: have been avoided.

[00:00:13] [SPEAKER_04]: If you had FAMA, stop hiring dangerous people.

[00:00:19] [SPEAKER_04]: FAMA.io

[00:00:21] [SPEAKER_04]: Alright, I want to talk to you for a moment about retaining and developing your workforce.

[00:00:26] [SPEAKER_04]: It's hard.

[00:00:28] [SPEAKER_04]: Recruiting is hard.

[00:00:29] [SPEAKER_04]: Retaining top employees is hard.

[00:00:31] [SPEAKER_04]: Then you've got onboarding, payroll, benefits, time and labor management.

[00:00:35] [SPEAKER_04]: You need to take care of your workforce and you can only do this successfully if you commit

[00:00:40] [SPEAKER_04]: to transforming your employee experience.

[00:00:43] [SPEAKER_04]: This is where ISoft comes in.

[00:00:45] [SPEAKER_04]: They empower you to be successful.

[00:00:47] [SPEAKER_04]: We've seen it with a number of companies that we've worked with and this is why

[00:00:52] [SPEAKER_04]: we partner with them here at WRKdefined.

[00:00:54] [SPEAKER_04]: We trust them and you should too.

[00:00:56] [SPEAKER_04]: Check them out at isolvedhcm.com.

[00:01:10] [SPEAKER_03]: Hey, this is William Tinkep and Ryan Leary and you are listening and watching the You

[00:01:14] [SPEAKER_03]: Should Know podcast.

[00:01:16] [SPEAKER_03]: We have Greg Brown on today and we're going to be talking about non-competes.

[00:01:21] [SPEAKER_03]: Evidently there's been something that's gone on recently and I can't wait to get

[00:01:26] [SPEAKER_03]: everything explained to us by Greg.

[00:01:28] [SPEAKER_03]: So Greg, would you do us a favor and introduce yourself and your firm?

[00:01:32] [SPEAKER_05]: Sure.

[00:01:32] [SPEAKER_05]: So, yeah.

[00:01:33] [SPEAKER_05]: My name's Greg Brown and I am an attorney in Tampa, Florida with a firm called Tillward

[00:01:40] [SPEAKER_05]: Anderson and for almost my entire inglorious 30-year legal career, I've handled what I

[00:01:52] [SPEAKER_05]: would call sort of roughly business divorce cases which had to do with restrictive

[00:01:59] [SPEAKER_05]: comments or non-competes.

[00:02:02] [SPEAKER_03]: So that's a specialization within specialization right there because it's

[00:02:06] [SPEAKER_03]: no way it's corporate law and people can kind of handle a lot of things in there but

[00:02:10] [SPEAKER_03]: corporate divorce, that's actually a good way to think about it because it is technically,

[00:02:17] [SPEAKER_03]: it is whether one way or another whether or not it's for college or whether you choose

[00:02:21] [SPEAKER_03]: or they choose, it's a divorce.

[00:02:23] [SPEAKER_03]: That's right.

[00:02:24] [SPEAKER_03]: It doesn't really matter.

[00:02:25] [SPEAKER_06]: Yeah.

[00:02:26] [SPEAKER_03]: So, my background, this is I'm on a date myself but .com era, a corporate attorney who

[00:02:34] [SPEAKER_03]: I absolutely loved told me, I guess think of non-competes like this, specific company,

[00:02:41] [SPEAKER_03]: specific role, specific time period and they can't be, you can't not let the other

[00:02:49] [SPEAKER_03]: person work okay?

[00:02:51] [SPEAKER_03]: Yeah.

[00:02:51] [SPEAKER_03]: So it can't be so restrictive that the guy or the guy can't get a job.

[00:02:56] [SPEAKER_03]: Like Oracle, chief revenue officer three months.

[00:03:01] [SPEAKER_03]: Now that might, and he even said it there, it's like 99, that might work.

[00:03:06] [SPEAKER_03]: This is Texas so of course our laws.

[00:03:09] [SPEAKER_03]: We have your own law.

[00:03:11] [SPEAKER_03]: Your own country.

[00:03:12] [SPEAKER_03]: Yeah, pretty much.

[00:03:13] [SPEAKER_03]: We have our own energy grid so at one point we'll just split off but the thing

[00:03:17] [SPEAKER_03]: is, he drilled it into my mind that okay the more specific because people are

[00:03:22] [SPEAKER_03]: riding these you can't compete with our business for three years.

[00:03:28] [SPEAKER_03]: Crazy stuff.

[00:03:29] [SPEAKER_03]: He's like yeah that's never going to hold up so just get it out of your head.

[00:03:33] [SPEAKER_03]: So what was, I mean again that was 20 something years ago, let's say 25 years ago so it's

[00:03:38] [SPEAKER_03]: dated.

[00:03:39] [SPEAKER_03]: So what advice did you give people regarding non-competes pre this ruling by the

[00:03:47] [SPEAKER_03]: FTC that we're going to talk about?

[00:03:48] [SPEAKER_05]: Well that's a great question and it's interesting because you have this Texas perspective.

[00:03:56] [SPEAKER_05]: And in Texas I'm somewhat familiar with Texas law.

[00:04:01] [SPEAKER_05]: Right.

[00:04:01] [SPEAKER_05]: Let me get into a couple cases there.

[00:04:03] [SPEAKER_05]: And for you all, that's true.

[00:04:06] [SPEAKER_05]: I think the law is such that it's kind of restricted in what you can throw in one

[00:04:13] [SPEAKER_05]: of these agreements.

[00:04:14] [SPEAKER_05]: Right.

[00:04:14] [SPEAKER_05]: And in particular if I'm remembering correctly you have to provide like some additional

[00:04:21] [SPEAKER_05]: consideration at the time that thing is signed.

[00:04:25] [SPEAKER_05]: You have people that you know if have been working for three years and you decide oh

[00:04:30] [SPEAKER_05]: now we're going to have everybody sign non-competes so you know it's like alright well you

[00:04:34] [SPEAKER_05]: got to you know throw a little bone along the way you know whether it's like I love

[00:04:38] [SPEAKER_05]: bonus payment or something otherwise the agreement's unenforced.

[00:04:43] [SPEAKER_05]: That's exactly right.

[00:04:44] [SPEAKER_05]: I'll pay for that.

[00:04:45] [SPEAKER_05]: So yeah in a lot of states including Florida we have what's called the blue pencil doctrine

[00:04:54] [SPEAKER_05]: which allows a court to take a restriction you know whether it's a time period whether

[00:05:01] [SPEAKER_05]: it's a geographical restriction and say well that's too broad.

[00:05:06] [SPEAKER_05]: You say you know a person can't work for a competitor in the entire United States

[00:05:12] [SPEAKER_05]: for the next you know five years well we're going to make it two years and we're going to

[00:05:18] [SPEAKER_05]: make it only in the state of Florida so the court has the ability rather than throw the

[00:05:23] [SPEAKER_05]: baby out with the bath water and say we're not going to force the agreement.

[00:05:26] [SPEAKER_05]: Oh wow.

[00:05:27] [SPEAKER_05]: And narrow the restriction.

[00:05:28] [SPEAKER_05]: So frankly in states that has a blue pencil doctrine these agreements are drafted really

[00:05:34] [SPEAKER_05]: broad.

[00:05:34] [SPEAKER_05]: It's like right you know as much time as you can possibly get as much spoke as you

[00:05:39] [SPEAKER_05]: can possibly get and then you're going to court to kind of raise.

[00:05:44] [SPEAKER_03]: Wow that's what I find fascinating about that is then you let the courts decide on which

[00:05:49] [SPEAKER_03]: ones they restrict or if they go back and kind of rewrite each one of them there's still

[00:05:53] [SPEAKER_03]: going to be restrictions.

[00:05:55] [SPEAKER_03]: They don't throw out the ball and compete.

[00:05:57] [SPEAKER_05]: That's right.

[00:05:58] [SPEAKER_05]: That's right.

[00:05:59] [SPEAKER_05]: Wow.

[00:06:00] [SPEAKER_05]: You know it's so these things it's so interesting like you know and even we'll talk as

[00:06:05] [SPEAKER_05]: you know obviously we're I don't want to you know kind of bury the bead here but we'll

[00:06:10] [SPEAKER_05]: talk about this new FTC rule.

[00:06:13] [SPEAKER_05]: The date they you know these there's always this assumption that you know somebody has

[00:06:18] [SPEAKER_05]: signed a non-imperial agreement and oh they've agreed that they're not going to work somewhere

[00:06:23] [SPEAKER_05]: you know for a couple years and it's kind of gravely restricting their right to move

[00:06:31] [SPEAKER_05]: around and stuff like that.

[00:06:34] [SPEAKER_05]: And the truth is these agreements are now such a creature of statue right so you know the

[00:06:43] [SPEAKER_05]: extent to which you can even enforce a non-compete depends on the state in which the person works.

[00:06:52] [SPEAKER_03]: You know I used to think of non-competes now this is actually a little bit forward as

[00:06:57] [SPEAKER_03]: it's similar to patent law in the sense of you can have a patent which is great you should

[00:07:04] [SPEAKER_03]: but your ability to enforce that patent is that's the game.

[00:07:08] [SPEAKER_03]: That's you've got to be able to enforce it and so I kind of put random parallel and

[00:07:13] [SPEAKER_03]: I don't know if it's right or incorrect but I ran the parallel with competes.

[00:07:17] [SPEAKER_03]: You might have a non-compete or whatever but can you enforce it?

[00:07:22] [SPEAKER_03]: That's exactly right.

[00:07:23] [SPEAKER_05]: That's exactly right.

[00:07:25] [SPEAKER_05]: You know it's so funny so you were asking about kind of like what would I tell people you know

[00:07:30] [SPEAKER_05]: if it came to drafting way back when I'd say you know if we're in Florida draft it as broadly

[00:07:36] [SPEAKER_05]: as you possibly can we want to have all the bells and whistles and so forth but then I would

[00:07:41] [SPEAKER_05]: do talks about enforcing non-competes and I'd say you know we're sitting here in Florida

[00:07:47] [SPEAKER_05]: and I would say our non-competes enforce the law to state of Florida how many of you think

[00:07:53] [SPEAKER_05]: that and most people would raise their hands and I'd say the truth is or the correct answer is

[00:07:59] [SPEAKER_05]: almost never right. It used to be you know you really there were very narrow circumstances

[00:08:05] [SPEAKER_05]: in which you can enforce an actual non-competes. That's right.

[00:08:09] [SPEAKER_05]: I hadn't quite a bit recently but that's you know that's just kind of the deal.

[00:08:15] [SPEAKER_05]: I have a non-compete and I'd say I'd look at it and say what do you do for a living?

[00:08:19] [SPEAKER_05]: You know I work the operations that you know a security firm or whatever and I'd say

[00:08:25] [SPEAKER_05]: the chances of you having a non-competes enforce the N2 or slump.

[00:08:30] [SPEAKER_04]: Why do employers waste the effort then to put them together? Is that just a scare tactic?

[00:08:35] [SPEAKER_04]: It's funny. That's a great question.

[00:08:38] [SPEAKER_04]: It is.

[00:08:40] [SPEAKER_04]: Because it's a scare tactic like you're going to work for me.

[00:08:43] [SPEAKER_05]: That's exactly right and that is I think that that is really kind of a saddened justification for a

[00:08:52] [SPEAKER_05]: lot of this FTC ban on them. It's just kind of like deterrent aspects right?

[00:08:59] [SPEAKER_05]: It's like we'll tell you when you've had these 200 people sign them and then you know I deal with

[00:09:04] [SPEAKER_05]: these individuals that you know a company that I represent wants to hire away and they're like

[00:09:11] [SPEAKER_05]: oh I can't you know I can't leave I've got a non-compete.

[00:09:16] [SPEAKER_03]: You read the language in there employment contract and go

[00:09:20] [SPEAKER_05]: yeah well that's right you know but it's there's not indenture asked to it right like okay so

[00:09:28] [SPEAKER_05]: we're gonna keep these people in the old but you know the the most prevalent use of these

[00:09:34] [SPEAKER_05]: things is with sales people like yeah particular industries yeah so you get

[00:09:41] [SPEAKER_05]: yeah you have a commercial insurance broker who's got a $10 million book of business

[00:09:48] [SPEAKER_05]: and they leave and you know the expectation is that whole that client base is going to travel

[00:09:55] [SPEAKER_05]: with them and the company says no you know that's our asset you can't take them and that's

[00:10:01] [SPEAKER_05]: that the client facing roles in a company sales folks and so in particular that's where

[00:10:08] [SPEAKER_04]: before we move on I need to let you know about my friend Mark Feffer and his show

[00:10:13] [SPEAKER_04]: People Tech if you're looking for the latest on product development marketing funding big

[00:10:20] [SPEAKER_04]: deals happening in talent acquisition HR HCM that's the show you need to listen to go to

[00:10:28] [SPEAKER_04]: the work defined network search up People Tech Mark Feffer you can find them anywhere

[00:10:33] [SPEAKER_05]: there non-competes sometimes and non solicitations more prevalent loop

[00:10:41] [SPEAKER_03]: prevalent layer enforced against an employee it seems like that would be more important

[00:10:46] [SPEAKER_03]: than a non solicitation than a non compete like if you got $10 million book of business

[00:10:51] [SPEAKER_03]: if you've got a kind of an ironclad non solicitation they need to work for somebody else

[00:10:56] [SPEAKER_05]: great usually you are right on the line with that because we so even for a period of time

[00:11:03] [SPEAKER_05]: you know back when it was hard to enforce non-competes we would bring an injunction action

[00:11:09] [SPEAKER_05]: you know if I'm on the side of a party trying to enforce one of these things your company what

[00:11:15] [SPEAKER_05]: would end up happening is especially the way the law is framed you can only enforce a

[00:11:22] [SPEAKER_05]: restricted covenant that is reasonably necessary under our statute to protect a legitimate

[00:11:29] [SPEAKER_05]: business interest right so kind of irrespective of what side I was on you know we'd be arguing

[00:11:36] [SPEAKER_05]: that really it's not necessary to keep this employee from working for a competitor only

[00:11:43] [SPEAKER_05]: from calling on their prior customers right so we used to carve these things up we would have

[00:11:49] [SPEAKER_05]: you know you'd make uh you have lists that would get filed under seal in a you know T

[00:11:56] [SPEAKER_05]: subligation with you know here are the 20 customers that you can't call on for that year

[00:12:01] [SPEAKER_05]: or two years whatever the time right was now that seems that seems enforceable and frankly that's

[00:12:08] [SPEAKER_05]: you know when it comes to this FTC rule you know I um I consider myself probably the

[00:12:15] [SPEAKER_05]: middle of the road politically uh this is this is such a political animal oh yeah

[00:12:23] [SPEAKER_05]: yeah oh yeah so even in terms of the commission that just voted on it you know you got three

[00:12:28] [SPEAKER_05]: democratic appointees two right public anything voted for the line yeah this is uh

[00:12:35] [SPEAKER_03]: in their minds this is pro-labor right that's exactly right that's exactly right sorry

[00:12:42] [SPEAKER_03]: let's get into the stat let's let's get into the decision yesterday what what happened

[00:12:47] [SPEAKER_05]: so you know this is uh i'm going to be you know speaking it's somewhat of a derogatory way regarding

[00:12:53] [SPEAKER_05]: this proposed final rule I mean it's such a frankenstein to me and it is um it in and in my view

[00:13:03] [SPEAKER_05]: it kind of invents a problem in order to address it so the whole premise is and and there's

[00:13:10] [SPEAKER_05]: even if you look at some of the early paper that were published by the FTC in connection with

[00:13:16] [SPEAKER_05]: with the proposed rule back in uh January of 20 the justification was like look we've got these very

[00:13:23] [SPEAKER_05]: low-level employees you know and they use the example of a security firm where the actual

[00:13:29] [SPEAKER_05]: security guards had to sign non-competes and they were trying to enforce the the non-competes

[00:13:37] [SPEAKER_05]: against the security guards well in my experience you know 30 years ago that never happened no

[00:13:45] [SPEAKER_05]: no it's this is an executive level that's exactly right that's exactly right so so you know for example

[00:13:51] [SPEAKER_05]: I you know there was a lawyer in town particularly aggressive guy and I have clients that um one of

[00:13:59] [SPEAKER_05]: Conglos of a major league uh baseball manager who got together and they created this kind of high-end

[00:14:08] [SPEAKER_05]: uh pizza shop or restaurant right hired away these two uh pizza cooks or shots from this

[00:14:18] [SPEAKER_05]: smaller pizza place and I ended up getting this nasty lawyer letter you know from from

[00:14:24] [SPEAKER_05]: this guy's like we're gonna see the guys because these pizza guys and I'm confused oh my goodness

[00:14:30] [SPEAKER_03]: do you ever do you ever because I've been sued I don't know if Ryan's been sued I think it's

[00:14:35] [SPEAKER_03]: whether it was an entrepreneur there's two things that make you an entrepreneur at one point you have

[00:14:39] [SPEAKER_03]: to be sued right and the other part is you have to put payroll on a visa yeah do you and I've gotten

[00:14:45] [SPEAKER_03]: another those really really aggressive letters in fact I gotta cease and desist from Salesforce

[00:14:50] [SPEAKER_03]: yeah at one point by Mark Mark Binyov but the do y'all ever get intimidated by the language

[00:14:56] [SPEAKER_03]: or is it just kind of it's no you mean those letters yeah like you know like the letter

[00:15:01] [SPEAKER_04]: like the letters and he writes no he doesn't

[00:15:09] [SPEAKER_05]: sending a non-competing as pizza guys all because you know the cheese on clockwise

[00:15:17] [SPEAKER_04]: exactly oh my god what's the

[00:15:23] [SPEAKER_03]: so so no so the example that they put forth is just it's it's kind of a bs example now if they

[00:15:31] [SPEAKER_03]: if they would have started with hey a VP of sales of an insurance company like we said you know he's

[00:15:37] [SPEAKER_03]: got $50 million book of business right okay now that's a legit that that happens day to day fair

[00:15:44] [SPEAKER_03]: enough right but they didn't they decided is that because of labor is that because of unions well I

[00:15:50] [SPEAKER_05]: mean I just think it's it's just this is such a political creation that so let's think about

[00:15:56] [SPEAKER_05]: this okay so the FD well what is the FTC you know it's this condition that's designed to

[00:16:03] [SPEAKER_05]: you know in connection with the Sherman and the Clayton acts you know to great public

[00:16:07] [SPEAKER_05]: monopolies and prevent all kinds of any competitive behaviors so the FTC relies in large part

[00:16:16] [SPEAKER_05]: section five of the FTC act that is designed to prevent unfair methods of competition

[00:16:24] [SPEAKER_05]: expecting conquest right so so there it is so so isn't it the company level not individual level

[00:16:31] [SPEAKER_05]: well that's the thing is like you have to first like this is what I think will be a kind of a

[00:16:37] [SPEAKER_05]: principle basis of the challenges right right the FTC had any jurisdiction or mandate to actually

[00:16:45] [SPEAKER_05]: you know enter the phrase here because so you'd say all right well assuming that these are

[00:16:52] [SPEAKER_05]: agreements that are really only enforced against kind of high-level sales people or folks with some

[00:16:59] [SPEAKER_05]: you know executive function is it legitimate to protect your you know your customer base and

[00:17:07] [SPEAKER_05]: and that was that that was in part created using your resources of over the course of time

[00:17:15] [SPEAKER_05]: you know and is it is it an unfair competition to say you know we're not going to let somebody

[00:17:23] [SPEAKER_05]: just take their you know ball and go you know play for somebody else at least not right away

[00:17:28] [SPEAKER_05]: so so that so that to me is kind of gets back to this idea of we're inventing a problem so

[00:17:35] [SPEAKER_05]: that we can address it and now there's always in my view you know unenforceable or will be

[00:17:43] [SPEAKER_05]: ridiculously hard to enforce carve outs in this proposed rule for I'm trying to remember how they

[00:17:53] [SPEAKER_03]: phrased it yeah and proposed in a proposed rule your executives senior executive yeah in a proposed

[00:18:00] [SPEAKER_03]: rule if I remember correctly it goes like through a comment period right that's correct so they put

[00:18:07] [SPEAKER_03]: it out and before it becomes kind of a thing then they vote on it but they get everybody to

[00:18:12] [SPEAKER_03]: comment on it and they take advice they have hearing not hearings but places where people can kind of come

[00:18:17] [SPEAKER_03]: and then speak whatever they need to speak it's a common period great they take all that

[00:18:22] [SPEAKER_03]: into account and then they draft a final ruling that's correct okay so when does when would this

[00:18:28] [SPEAKER_03]: rule it's going to be I'm assuming it's going to be challenged but let's just say when is it

[00:18:34] [SPEAKER_05]: supposed to go into effect so they actually voted to promulgate the rule yesterday so now

[00:18:41] [SPEAKER_05]: it will become effective I believe days from when it is put into the federal register yeah

[00:18:49] [SPEAKER_05]: yesterday so you know wow let's go on now no non-competes and this in it and the rule has

[00:18:57] [SPEAKER_05]: these mechanisms including like a proposed letter that employers are supposed to send to employees

[00:19:05] [SPEAKER_05]: to basically retract their existing non-competes oh wow yeah so it's it's it's it's sleeping

[00:19:14] [SPEAKER_04]: because this do you think this stands the test of time does this remain I think it's been a

[00:19:21] [SPEAKER_05]: this will you know and this also will depend in large part on our next administration

[00:19:28] [SPEAKER_05]: kind of a set but yeah but I it's certainly going to be something that you're going to be

[00:19:33] [SPEAKER_05]: hearing about in our you know in in our presidential election process oh yeah I mean

[00:19:39] [SPEAKER_05]: it is but it's just hard for me to imagine that this thing is going to stand up well the

[00:19:47] [SPEAKER_03]: I think it's one of the things that there will be attacked and was it who's who's on the who's on

[00:19:54] [SPEAKER_03]: the side who's on the other side that wants to kind of like okay first of all the FTC doesn't have

[00:19:59] [SPEAKER_03]: they don't they don't have the authority to even create this so why are we this is the point is mute

[00:20:05] [SPEAKER_05]: who's who's who's that group of people you know I'm half a sunny broadly speaking you know dirt

[00:20:10] [SPEAKER_05]: at this point they're calling them the commenters because the FTC received over 26 000 separate

[00:20:19] [SPEAKER_05]: comments okay so this rule so this rule was the proposed rule issued in January 2023 typically

[00:20:29] [SPEAKER_05]: we have a 90 day comment period but FTC got so much they got they received so many comments

[00:20:38] [SPEAKER_05]: that they extended the comment period for you know several more months and you know here we are

[00:20:48] [SPEAKER_05]: roll of 2024 with the rule finally being issued so actually I'm sorry I didn't even really answer

[00:20:56] [SPEAKER_05]: your question I would say that I think and this may be somewhat industry specific but it's the

[00:21:03] [SPEAKER_05]: business community that's saying this is you know right right you can't get behind us

[00:21:11] [SPEAKER_03]: and the vote was three two as we come down party lines yeah line down yeah so now if if the vote

[00:21:17] [SPEAKER_05]: didn't come down party lines is this different do you see this differently I you know I if I

[00:21:23] [SPEAKER_05]: know that some remaining faith and may uh hasn't been completely squeezed out of you yet

[00:21:32] [SPEAKER_03]: all right

[00:21:35] [SPEAKER_04]: he's coming to Texas if it does he's gonna start a new nation it's a right to fire a right to shoot

[00:21:41] [SPEAKER_04]: a right to kill right to whatever now you want to do stay I think you all should succeed to be

[00:21:48] [SPEAKER_04]: at a great country yeah great way off topic but a couple years back I was at Williams Lake House

[00:21:56] [SPEAKER_04]: his family lake house and I got up in the morning trying to be healthy he's sleeping away I go out

[00:22:04] [SPEAKER_04]: I'm right now I should probably why don't you set set the stage of like where this place is it's on

[00:22:09] [SPEAKER_04]: the water 17 miles back off the road yeah there's a couple of properties running down the road just

[00:22:17] [SPEAKER_04]: doing my thing just run him gun signs everywhere guy comes out stops me so what are you doing

[00:22:24] [SPEAKER_04]: back here I had a turnaround and go back he did not walk me there and I think William would need your help

[00:22:32] [SPEAKER_04]: he had that you were wearing an eagles jersey but I mean like they they walk around with guns on

[00:22:40] [SPEAKER_04]: their belly he's just walking on where am I but I thought he was walking oh he was just walking

[00:22:45] [SPEAKER_03]: it is uh getting wilder other than uh other than the folks coming in from California I have to

[00:22:51] [SPEAKER_03]: say Austin it was it's always been kind of purplish yeah because it's the state capital so

[00:22:57] [SPEAKER_03]: it's conservative but they also have the University of Texas there yeah so it's always been kind of a

[00:23:02] [SPEAKER_03]: weird place with with uh a bunch of Californians coming in it's actually I think Austin proper

[00:23:08] [SPEAKER_03]: is going to be more blue like you know what you drive 30 miles in any direction outside of

[00:23:13] [SPEAKER_03]: Austin that is red as you can make red it's the same here same here level I've been there yeah

[00:23:21] [SPEAKER_05]: I've been there twice in the last year it took about four kids oh yeah all different ages and you

[00:23:27] [SPEAKER_05]: took them so we were actually going very Denver in my way said hey let's stop off in Austin for a

[00:23:33] [SPEAKER_05]: couple days can you make I'll make the flight you make the hotel reservations like Sonny of

[00:23:42] [SPEAKER_05]: them I don't know I don't know what's going on so as it turned out we got dumped right in the south

[00:23:47] [SPEAKER_05]: by southwest that's what happened yeah and so we went and saw the bats we had we had a tremendous time

[00:23:54] [SPEAKER_05]: oh yeah and then I was I played golf in the foothills oh yeah oh yeah UT golf clubs actually

[00:24:01] [SPEAKER_05]: Horseshoe Bay oh yeah that's nice it was you are your kids uh college age are they going to

[00:24:07] [SPEAKER_05]: look at the colleges when I have one that's but my oldest is now out of school I get to university

[00:24:14] [SPEAKER_05]: of Florida and my youngest yeah I was a graduate from high school

[00:24:38] [SPEAKER_00]: you know what you should know you should know that you should know podcast that's what you should know

[00:25:00] [SPEAKER_03]: because then you'd be in the know on all things that are timely and topical subscribe to the you

[00:25:05] [SPEAKER_05]: should know podcast thanks go to the army or prison or something I don't know yeah yeah

[00:25:12] [SPEAKER_05]: yeah prison he's gotten him gotten into a few different schools so we'll see oh that's funny

[00:25:19] [SPEAKER_03]: yeah my oldest is making his decision this weekend oh either Texas A&M the core yeah or uh VMI

[00:25:27] [SPEAKER_03]: so yeah he wants to be a military weapons engineer oh wow yeah so so so non-competes as you see this

[00:25:36] [SPEAKER_03]: playing out it's obviously going to be a challenge it's probably already started the process has

[00:25:40] [SPEAKER_03]: probably already started right for it to be challenged what uh how do you see that playing

[00:25:45] [SPEAKER_03]: out because they've got four months to enforce it or four months for it to start yeah well so so

[00:25:51] [SPEAKER_05]: you know the way that I would have mad I mean you're gonna see lawsuits directed at this proposed rule

[00:25:59] [SPEAKER_05]: right all right it will challenge the jurisdiction of the FTC to even issue it right there will be

[00:26:06] [SPEAKER_05]: constitutional challenges to it yeah um you'll still see that and then what you're also going to see

[00:26:13] [SPEAKER_05]: is for folks you know boots boots on the ground like me you know I've got you know I'm sitting

[00:26:20] [SPEAKER_05]: on a couple of cease and desist letters from folks who I expect or how it's file lawsuits in short order

[00:26:29] [SPEAKER_05]: and then there's going to be questions about the effect that this rule will have on the

[00:26:34] [SPEAKER_05]: rights that they're seeking to enforce because again this this appears to be designed to keep

[00:26:41] [SPEAKER_05]: to um prevent the enforcement non-competes but we still have non-solicitations

[00:26:48] [SPEAKER_05]: anti piracy or you know non-solicitation of employees so so there's a host of other kind

[00:26:55] [SPEAKER_05]: of related rights that I think will continue to legate and we'll have some question about

[00:27:01] [SPEAKER_05]: extent to which this rule impacts those case constitutionally is it where we're exactly

[00:27:07] [SPEAKER_03]: in the constitution outside of the like liberty of pursuit of happiness where else does it

[00:27:13] [SPEAKER_05]: where else does it fit now you're now you're sure taking me a little bit outside my wheelhouse

[00:27:19] [SPEAKER_05]: this is like 14th amendment type stuff yeah right right right okay really when I say

[00:27:27] [SPEAKER_05]: jurisdictional challenges that really kind of relates back to right whether or not the FTC

[00:27:34] [SPEAKER_05]: has the jurisdiction to issue a rule like this about this subject matter if it weren't the FTC

[00:27:40] [SPEAKER_03]: who would it be like I was thinking the EOC not the EOC um the labor board what is that called

[00:27:48] [SPEAKER_03]: EO no the NLRB NLRB which again is also fairly politicized yeah as well like who has the authority

[00:27:58] [SPEAKER_05]: I will tell you if it's not the FTC I think it's it's no I think if there's the question

[00:28:05] [SPEAKER_05]: is whether or not this is appropriate to you know federal because look right now and this is even

[00:28:14] [SPEAKER_05]: mentioned in the rule we have a patchwork of different state laws that right for this you know

[00:28:20] [SPEAKER_05]: kind of consistent with our new sort of the abortion laws around the country right right

[00:28:27] [SPEAKER_05]: what the states just said yeah there are some states these are you know and already right right um

[00:28:35] [SPEAKER_05]: and and so that's what we have right now so I think that's going to be the issue is this is the

[00:28:40] [SPEAKER_05]: proper subject of you know federal preemption uh you know in times federal federal law imposed

[00:28:49] [SPEAKER_05]: on states do you see it making to the Supreme Court um yeah I think perhaps I mean it kind of depends

[00:28:58] [SPEAKER_05]: on what happens you know if this doesn't get sort of shut down early in you know right I'll let you

[00:29:04] [SPEAKER_05]: cross us right right this way up yeah and I would imagine you know I mean with the

[00:29:09] [SPEAKER_05]: makeup of the existing Supreme Court right now right again I think this you know if this one

[00:29:15] [SPEAKER_04]: has a have a tough road to oh so great letter already in this process so they've got litigation

[00:29:25] [SPEAKER_04]: happening or they've got cease and desist letters you started to talk about it but where does that

[00:29:32] [SPEAKER_04]: leave them they've left the job they're in that process good point really good question and there's

[00:29:38] [SPEAKER_04]: you know so my mind goes to they just delay delay delay until there's yeah well this this is so the law

[00:29:47] [SPEAKER_05]: but the way they've they're part of the reason I would say this is kind of a Frankenstein is that

[00:29:53] [SPEAKER_05]: you know we have these existing contracts right and there's this notion that you know the you

[00:30:00] [SPEAKER_05]: know the government court since other shouldn't like interfere in private contracts you know

[00:30:06] [SPEAKER_05]: lower level operational workers and so they're saying right now those existing agreements are

[00:30:13] [SPEAKER_05]: unenforceable and you know here's the letter that you need to send to them saying hey now

[00:30:20] [SPEAKER_05]: you're free to go wherever you like and so I'm not sure I'm prepared to say chat to reverse but

[00:30:27] [SPEAKER_05]: there's also this accurate kind of dealing with existing claims right more or less I think the

[00:30:34] [SPEAKER_05]: statute kind of says or the rule rather sort of says we're gonna let you kind of play those things

[00:30:40] [SPEAKER_05]: out so there's what they're what they're generally doing is saying going forward right cannot you

[00:30:48] [SPEAKER_05]: can't enforce non-competes and then with the exception of senior executives we're also now

[00:30:56] [SPEAKER_05]: render unenforceable ones that are in place for you know mid tier and lower level employees

[00:31:03] [SPEAKER_03]: why do you leave the senior executives in you know I mean see that there again like

[00:31:08] [SPEAKER_05]: if Frankenstein this is and this is the um this is where I think there's this kind of disconnect

[00:31:13] [SPEAKER_05]: from reality because the senior executives I mean the one of the instances where I think it's

[00:31:22] [SPEAKER_05]: perfectly fair to enforce a non-compete is when a senior executive sells a business right

[00:31:30] [SPEAKER_05]: you sell the assets of your business that the company that buys it or the person that buys it

[00:31:38] [SPEAKER_05]: should reasonably expect that you're not going to then tell them another company trying to coach

[00:31:43] [SPEAKER_05]: all your old clients right right that's reasonable so I think that this is some effort at keeping

[00:31:51] [SPEAKER_05]: those folks or continuing to kind of allow enforcement of the agreements by

[00:31:59] [SPEAKER_05]: identifying senior executives what I will tell you is the way they define senior executives in

[00:32:06] [SPEAKER_05]: the in the final rule doesn't grab up I don't think those sort of high-level sales people

[00:32:14] [SPEAKER_05]: but these things are typically directed at it's if they say um a senior executive

[00:32:21] [SPEAKER_05]: is someone who is in a policy making position and I sort of think I'll take out a bunch of

[00:32:26] [SPEAKER_05]: bureaucrats you know I try to define it's just but these are just guys that go selling stuff

[00:32:33] [SPEAKER_05]: they're not making policy yeah it was a policy making position uh and received from employment

[00:32:40] [SPEAKER_05]: full annual compensation of a preceding year seems kind of very I feel like that's like

[00:32:47] [SPEAKER_04]: minimum wage today yes especially California and New York that's not even a living wage

[00:32:56] [SPEAKER_04]: I mean I'm in Pennsylvania I went to a gas yesterday it was over four dollars

[00:33:00] [SPEAKER_04]: I said I'm not doing it I'm waiting I'm just gonna have to go grocery shopping to get my 10

[00:33:06] [SPEAKER_05]: cents off a gallon because I'm not there yeah that's fair yeah that's fair you know like

[00:33:11] [SPEAKER_05]: so that there's an example like so yeah now we can still enforce these against senior executives

[00:33:19] [SPEAKER_05]: but not so now we're have to prove up whether they made over a preceding year and we're in a

[00:33:25] [SPEAKER_05]: policy making position I mean it's just it's a most so it's this then it's gonna be the wild west

[00:33:34] [SPEAKER_05]: when it comes to who can be bound if I want to be stank and and to what extent so this is

[00:33:41] [SPEAKER_04]: so this is why I was never going to be a lawyer because one is too complicated two

[00:33:48] [SPEAKER_04]: I just want to shake hands and say hey man it didn't work out I'm I'm I'm out of here goodbye

[00:33:54] [SPEAKER_03]: yeah lady celebrating today who's uh if you could if you're guessing who's who's selling who's

[00:34:04] [SPEAKER_02]: celebrating the ruling hi there I'm peter zolman I'm a co-host of the inside job boards and

[00:34:10] [SPEAKER_01]: recruit newt marketplaces podcast and I'm Steven Rothberg and I guess that makes me the other

[00:34:15] [SPEAKER_02]: co-host every other week we're joined by guests from the world's leading job sites together we analyze

[00:34:21] [SPEAKER_01]: news about general niche an aggregator job board and recruitment marketplaces sites make sure you

[00:34:27] [SPEAKER_05]: sign up and subscribe today you know I I guess the that's a that's a great question I guess

[00:34:36] [SPEAKER_05]: who's I guess labor um right celebrating this ruling now again in my view that would be incumbent upon

[00:34:45] [SPEAKER_05]: you know there being these swaths of people who are like I signed a non-compete it's kept me

[00:34:51] [SPEAKER_05]: employed as you know a janitor or a pizza chef or a security guard and you know now I can't go to

[00:35:02] [SPEAKER_05]: for the you know and to me the problem doesn't really exist I'm not sure there's any

[00:35:10] [SPEAKER_05]: you know huge celebration other than you know so you can fully expect that you know the the

[00:35:17] [SPEAKER_05]: Biden administration is gonna allow this and say it's great now we now you know no longer can

[00:35:23] [SPEAKER_05]: you keep uh you know a housekeeper from moving from you know the Marriott to the Philpin hallelujah

[00:35:32] [SPEAKER_05]: right and if you asked someone boots on the ground that's never really happens anyway so yeah

[00:35:39] [SPEAKER_04]: one so in I mean in our own our space in recruiting in talent acquisition

[00:35:44] [SPEAKER_04]: I could see recruiters being happy with this right if yeah so great I'm I'm assuming

[00:35:50] [SPEAKER_04]: recruiters would be included in that a lot of recruiters get a non-compete they they can't

[00:35:56] [SPEAKER_04]: leave when they leave a company they can't in turn recruit the employees of that company right

[00:36:03] [SPEAKER_03]: that's something like that that's that's solicitation so it's weak scholar recruiting but

[00:36:09] [SPEAKER_05]: that's actually solicitation yeah you're right yeah so and actually I caught a segment I would

[00:36:14] [SPEAKER_05]: call that like anti-piracy like you can't reach out and grab your old employees and unless I'm missing

[00:36:21] [SPEAKER_05]: something here this this rule is really not designed to prevent or you know to prevent that from

[00:36:31] [SPEAKER_05]: it doesn't touch that prevent a green inch like that from remaining in place right so

[00:36:37] [SPEAKER_05]: you know I mean so I will tell you who's who will be celebrating this in part are lawyers who

[00:36:47] [SPEAKER_05]: we're gonna say okay now how do we have to carve these things out what do they have to look like

[00:36:53] [SPEAKER_05]: right now you know they'll become compliance lawyers will be involved in issuing these

[00:36:58] [SPEAKER_05]: letters for the retraction of appropriate employees so I'll hang and make sure that people know

[00:37:04] [SPEAKER_05]: that I'm capable of doing that so your building is just yeah I heard you're saying somewhere in there

[00:37:13] [SPEAKER_03]: you know when you said labor I want to make sure that the audience understands that labor

[00:37:18] [SPEAKER_05]: in general or labor unions um that's a good question I mean I guess I meant to use the

[00:37:23] [SPEAKER_05]: term agree generally yeah that's what I thought that's what I thought but but I but I would imagine

[00:37:28] [SPEAKER_05]: you know that you know that labor unions would be sort of behind this to the right yeah you know

[00:37:34] [SPEAKER_05]: the senses that is keeping their folks from moving around for competitive wages and that sort of

[00:37:39] [SPEAKER_05]: thing I think it's about you know labor and support you know sure you already did uh right

[00:37:45] [SPEAKER_05]: should we pick top and then send that kind of thing so where do we go from here what's the

[00:37:51] [SPEAKER_03]: I mean outside of the wild west and outside of uh lawyers obviously on all sides yeah you

[00:37:57] [SPEAKER_05]: need compliance I just I think we're gonna we're gonna have you know there's just gonna be a lot of

[00:38:02] [SPEAKER_05]: litigation sorts you know uh surrounding you know as I said directly at this law and there's gonna be

[00:38:11] [SPEAKER_05]: a lot of consternation yeah from a compliance standpoint who how can you do this going

[00:38:20] [SPEAKER_05]: forward because again if this if this rule said you know we are banning non-competes non-solicitations

[00:38:29] [SPEAKER_05]: conventiality and anti-piracy protests done you know that would be sort of a different story

[00:38:36] [SPEAKER_05]: we're gonna be left with what do your restricted covenant agreements look like with your employees

[00:38:44] [SPEAKER_05]: and which ones are appropriate for what type of employees right we're gonna have this kind of

[00:38:50] [SPEAKER_05]: compliance uh in my view chaos right um um and and then separately we're gonna have litigation chaos

[00:39:01] [SPEAKER_05]: when we try to determine the effect that this rule has on now you've and now you've got judges

[00:39:07] [SPEAKER_03]: that are going to have to weigh in and have to read all of this frank inside stuff and then say

[00:39:14] [SPEAKER_03]: okay what I believe it's to say is this and then rule and then and then those ruling series are

[00:39:21] [SPEAKER_03]: going to be appealed or appealed or whatever yeah and you know one thing that I didn't think of

[00:39:26] [SPEAKER_05]: is so there's a so there's a part of this rule that basically says to the extent you have state

[00:39:34] [SPEAKER_05]: law that is consistent with this new final rule right then that law remains enforceable to the

[00:39:43] [SPEAKER_05]: extent it is um inconsistent that law is preempted by the federal right so we're also gonna have chaos

[00:39:54] [SPEAKER_05]: by tons to wear this a particular cause of action below does it belong in state court

[00:40:00] [SPEAKER_05]: does it belong in federal court here's just this this in my view is going to be a very

[00:40:07] [SPEAKER_03]: chaotic process if republicans come in power how fast would they undo this i mean how fast could

[00:40:15] [SPEAKER_03]: they undo it i guess one of one thing you kind of broke up there so if republicans become in power

[00:40:22] [SPEAKER_03]: yeah how fast could they undo this i would imagine uh that will happen very quickly um

[00:40:31] [SPEAKER_05]: i mean it's you know i'm assuming you have you know it that would be in coordinating part on how

[00:40:36] [SPEAKER_05]: quickly they sort of remake the federal trade commission and i'll confess i'm not exactly

[00:40:43] [SPEAKER_05]: what the appointment process is and right and uh you know whether you know leon con it's

[00:40:52] [SPEAKER_05]: gonna have a term that allows for it yeah i just i don't even know but i was going to have to net

[00:40:57] [SPEAKER_05]: that it's gonna be about as as quick as it's quick as the the um the republican administration

[00:41:06] [SPEAKER_05]: is that where it is could could get a majority is the commission so even as as fast as that could

[00:41:13] [SPEAKER_03]: be done which is slow it's still going to create a period of chaos for at least let's say a year

[00:41:19] [SPEAKER_05]: two years no no doubt no doubt wow i mean maybe maybe i'll be surprised that this will all be kind

[00:41:28] [SPEAKER_05]: of a seamless transition to to this one of a new day doesn't sound like you believe that though

[00:41:34] [SPEAKER_03]: yeah that's it that's the hope that's left right there you just got all of his hope right there

[00:41:40] [SPEAKER_03]: nice yeah so like this has been fantastic i uh i'd be first of all just timely and uh thank you so much

[00:41:48] [SPEAKER_03]: uh for carving out time in your day and i mean it's just fascinating and again we're gonna get to

[00:41:54] [SPEAKER_05]: see it all unfold right in front of us that that's right happy to uh happy to come back on with you guys

[00:42:00] [SPEAKER_05]: as we watch this time unfold in the coming weeks and months i was gonna say should we just book

[00:42:05] [SPEAKER_04]: them now for june october and january we even do no go after the on at elections perfect he'll

[00:42:12] [SPEAKER_03]: he'll be our cnl give us the this is point that breakdown this is going to be a bit that gets woven

[00:42:19] [SPEAKER_03]: into the politics of november that's right actually right yeah so you'll be hearing about this all

[00:42:27] [SPEAKER_03]: summer long into the fall will you these are going into political ads right now yeah there's

[00:42:32] [SPEAKER_03]: there's people drafting political ads for organs okay all that's just gonna play out yeah

[00:42:37] [SPEAKER_03]: so we're gonna hear about it but again once the elections happen then then the real chaos right

[00:42:44] [SPEAKER_04]: that's correct so greg are you committing now to be our play by play in november

[00:42:49] [SPEAKER_04]: we'll give you the big board and put some graphics up there for you so

[00:42:53] [SPEAKER_03]: you didn't do it happen you did it about yourself bomb you guys

[00:42:58] [SPEAKER_03]: rides in pennsylvania which you can never know what's going to happen there so

[00:43:01] [SPEAKER_03]: you're with that ms mbc then i gotta think about his cnn the guy with white hair oh he's on the big

[00:43:08] [SPEAKER_03]: board yeah he's just pointing stuff over date thapper or no no no no that's uh oh god i don't hear

[00:43:16] [SPEAKER_03]: talking about can't think of his name he's shepherd is the shepherd or no he knows down to the county

[00:43:22] [SPEAKER_03]: and inside the county down into the town it's like dude you need to like get a hobby he doesn't

[00:43:27] [SPEAKER_04]: need to know you see yeah um well it's really it's wolf wolf is it a blitzer yeah yeah and he's

[00:43:37] [SPEAKER_04]: got the guy that does all the uh the analysis and data the younger guy yeah yeah that's going to be us in

[00:43:43] [SPEAKER_03]: november that's that's yeah we're gonna need someone to actually walk us through this brother thank you so

[00:43:49] [SPEAKER_05]: much no i enjoyed being out with you guys nice family