This is the title I chose for my personal blog, which is meant to give me an outlet for one of my favorite crafts – writing – plus to use an image from my favorite sport, golf. Out of college, my first job was as a reporter for the Daily Astorian in Astoria, Oregon, and I went on from there to practice writing in all my professional positions, including as press secretary in Washington, D.C. for a Democrat Congressman from Oregon (Les AuCoin), as an Oregon state government manager in Salem and Portland, as press secretary for Oregon’s last Republican governor (Vic Atiyeh), and as a private sector lobbyist. This blog also allows me to link another favorite pastime – politics and the art of developing public policy – to what I write. I could have called this blog “Middle Ground,” for that is what I long for in both politics and golf. The middle ground is often where the best public policy decisions lie. And it is where you want to be on a golf course.
I had never heard of the issue – “non-compete agreements” — before I encountered it at the State Capitol in Oregon when I was a lobbyist.
On behalf of the Oregon Association of Broadcasters – more than 200 radio and television stations around the state – I had to defend the use of non-compete agreements.
For broadcasters, the agreements were used to protect multiple million dollar investments in top-tier, on-air talent, usually anchors.
What did these agreements mean? That talent was not allowed to leave for another station for several years after the major investment.
At was at that point, that an Oregon legislator expressed his displeasure with broadcast managers. He had been a TV sports reporter before winning an election, so generally disliked radio and TV managers.
To express his angst, also with support from broadcast unions, he proposed a new law that would bar non-compete agreements. It forced me to negotiate a sort-of middle ground position, though with this legislator’s cat-bird seat, the agreement when more his way than mine.
All of this came to mind last week when I read a story in the Wall Street Journal that appeared under this headline:
“Lina Khan’s latest rule instantly invalidates 30 million contracts without Congressional authority.”
Given that headline, the Journal’s editorial board position was clear. Khan, the Federal Trade Commission chair, had exceeded her authority.
More from the story:
“Is there anything that Khan doesn’t think she can do? Apparently not. On Tuesday she and her fellow Democrat commissioners effectively invalidated tens of millions of employment contracts without authority from Congress.
“The FTC’s 570-page rule outlaws so-called non-compete agreements across the economy. Employers use these agreements to restrict workers from joining competitors or starting their own firms for a specified duration after leaving. They protect an employer’s intellectual property and investment in worker development.”
Beyond broadcasting, just think for a minute about technology or medical device companies. They make huge investments in what quickly become “intellectual property.” So, understandably, they move to protect those investments.
Khan doesn’t care.
Acting at the apparent behest of unions, she torpedoed the ability to put such agreements in place.
She said: “…such agreements ‘restrict the freedom of American workers and suppress wages’ and ‘stifle new businesses and new ideas.’”
Disregarding reams of evidence to the contrary, Khan led her agency to bar employers from enforcing existing non-compete agreements for workers who aren’t “senior executives.”
The rule also forbids employers from entering future non-compete agreements with “senior executives” in a “policy-making position” who earn more than $151,164 a year. By the FTC’s estimate, some 30 million workers are currently covered by non-compete agreements, which will now be rendered void.
More from the Journal:
“The fact is that non-compete agreements may frustrate some workers, but they are rarely iron-clad. Employers usually are willing to negotiate less restrictive covenants to protect their trade secrets and training investments. They also usually offer more pay and perks in exchange for workers agreeing to a non-compete.
“According to a U.S. Chamber of Commerce survey, 78 per cent of responding employers said they provide additional compensation that spans the duration of an agreement or longer.”
So, the basic impact of Khan’s ruling will mean that workers will earn less, and companies will invest less in them, if workers can easily take the skills they acquire on the job elsewhere.
The Journal also contends, properly, that Khan proceeded without Congressional authority and, so far at least, Congress, which could also restrict non-compete agreements, has not done so.
This is an issue that could benefit from negotiation to find the smart middle ground. Which means that banning non-compete agreements does not make sense. Nor does simply allowing all of them.
If there were smart operators in the Legislative or Executive Branches, they’d get their act together and find a workable solution that protects companies and workers.
Perspective from the 19th Hole 