Why your non-compete clause is probably illegal (with Attorney General Bob Ferguson)

Pitchfork Economics with Nick Hanauer

Civic Ventures

Business, Government, News, Politics

4.8 • 1.5K Ratings

🗓️ 19 April 2022

⏱️ 44 minutes

🔗️ Recording | iTunes | RSS

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Summary

Non-compete clauses, and the lesser-known no-poach agreements between franchises, are shockingly common for low-wage workers. Although these contracts were originally intended to protect trade secrets among high-level executives, they have spiraled into an unfair labor practice that keeps wages low, limits employee mobility, and decreases competition. Washington state Attorney General Bob Ferguson explains how non-competes and no-poach agreements violate the law in many states, what his team did to get hundreds of huge employers across the country to cease and desist, and why you should tell your state’s Attorney General if you know of any low- or middle-income workers who are being forced into signing these agreements. This episode was originally recorded and released in May 2021. Bob Ferguson is Washington State’s 18th Attorney General. As the state’s chief legal officer, Bob is committed to protecting the people of Washington against powerful interests that don’t play by the rules. Twitter: @BobFergusonAG Noncompete agreements have pushed U.S. wages even lower, says a new Biden administration report: https://www.fastcompany.com/90729820/noncompete-agreements-have-pushed-u-s-wages-even-lower-says-a-new-biden-administration-report Why aren’t paychecks growing? A burger-joint clause offers a clue: https://www.nytimes.com/2017/09/27/business/pay-growth-fast-food-hiring.html Workers in Washington state win big under new non-compete law: https://www.emeryreddy.com/2019/09/workers-in-washington-state-win-big-under-new-non-compete-law/ Attorney General Bob Ferguson stops King County coffee shop’s practice requiring baristas to sign unfair non-compete agreements: https://www.atg.wa.gov/news/news-releases/attorney-general-bob-ferguson-stops-king-county-coffee-shop-s-practice-requiring AG Report: Ferguson’s initiative ends no-poach practices nationally at 237 corporate franchise chains: https://www.atg.wa.gov/news/news-releases/ag-report-ferguson-s-initiative-ends-no-poach-practices-nationally-237-corporate Website: http://pitchforkeconomics.com/ Twitter: @PitchforkEcon Instagram: @pitchforkeconomics Nick’s twitter: @NickHanauer

Transcript

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0:00.0	Last year we were joined by Washington State Attorney General Bob Ferguson for a conversation
0:05.5	about the ridiculous corporate practice of instituting non-competing agreements on low-wage workers.
0:12.0	You know, like when Jimmy John's made workers sign away the rights to take their sandwich-making
0:17.1	skills to subway or Jersey mics? Give me a break. AG Ferguson is leading the charge to make such
0:24.4	non-competes illegal, but they're still playing havoc on workers' rights and incomes throughout
0:29.6	much of the country. In fact, just this month, a new study from the US Treasury Department found
0:36.1	that anti-competitive behavior, including non-competes, decreases wages by 20% and sometimes more.
0:44.4	So if you know someone who institutes non-competes on their low-wage employees,
0:49.2	I urge you to shame them ruthlessly. And if you know a low-wage employee who is subject to a
0:55.6	non-compet, you should urge them to contact their state attorney general. This timely re-broadcast
1:02.8	will explain exactly why. There are a lot of myths around non-competes. People think, well,
1:09.2	there's not that many and it must be these executives that have all top secret information
1:13.0	about a company and should not go to a competitor. The reality is very different. 30 million
1:17.9	people, nearly one out of every five workers in the United States, are currently bound by non-competes.
1:23.0	There's just been this fantastic way for companies to steal power, to steal wages from their employees.
1:38.0	From the home offices of civic ventures in downtown Seattle, this is pitchfork economics,
1:43.2	with Nick Hanauer, the best place to get the truth about who gets what and why.
1:54.0	I'm Nick Hanauer, founder of Civic Ventures. I'm David Goldstein, senior fellow at Civic Ventures.
2:05.4	So Nick, I can't really describe what it is I do for you, but if I wanted to do this for
2:12.8	another really rich guy, I'm perfectly free to do that, right? You are at any moment, at any time.
2:21.4	Because you never had me sign some non-competer or anything saying that I can't do this thing that
2:28.3	I can't describe for somebody else who I can't describe. Yeah, you can go torture someone else
	...

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