Summary
The podcast episode discusses non-compete agreements (NCAs) and their impact on workers and competition. The hosts explain that NCAs are contracts that prohibit employees from working for a competitor after leaving their current job, and that they are often used by big businesses to limit competition. While NCAs may be necessary in some cases, such as to protect trade secrets, they can also harm employees and customers by limiting job opportunities and suppressing wages. The podcast highlights the legal challenges of breaking an NCA and the potential benefits of eliminating them.
The history of NCAs dates back to the 15th and 16th centuries when Master Crafts People employed apprentices to teach them their trade. However, by the mid-1800s, the courts started supporting the idea of Freedom of contract, which meant that if both parties agreed to the contract, they should be able to agree to it. In America, there were legal precedents, 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. California was one of the first states to completely ban non-competes, and if non-competes were allowed, they were pretty limited in their enforcement. However, highly skilled laborers who have access to proprietary information and trade secrets still have to sign non-compete agreements.
The podcast discusses the debate around NCAs and whether they hinder or help workers and companies. Those in favor of NCAs argue that they protect companies' investments in their employees and prevent competitors from poaching them. Those against NCAs argue that they stifle innovation and prevent workers from finding better opportunities. Some states, such as California, have banned NCAs, while others have limited their use. However, some companies still use NCAs, and some are even using broad non-disclosure or non-solicitation agreements as workarounds. The Federal Trade Commission (FTC) has proposed banning NCAs altogether, and President Biden has signed an executive order encouraging the FTC to limit their use.
In listener mail, a new mother thanks the podcast for providing educational entertainment during her pregnancy and maternity leave, and hopes that her son will become a fan as well. The hosts are pro-employee and pro-competition, and believe that NCAs are often unfair and limit competition. The podcast provides a detailed overview of the history, impact, and debate surrounding NCAs, and highlights the potential benefits of limiting or eliminating their use.
