In this video, Patrick Bet-David discusses how the recent action taken by the Federal Trade Commission (FTC) to ban non-compete agreements for virtually all companies could potentially destroy American businesses.
The ruling bans new non-competes “with all workers,” including senior executives. It will go into effect 120 days after the ruling is submitted to the federal register. In their fact sheet on the ruling, released on April 23rd, the FTC says non-competes were judged to be an “unfair method of competition” (and thus in violation of Section 5 of the Federal Trade Commission Act).
The FTC holds that the ban will reduce healthcare costs by $74-$194 billion, increase the founding of businesses by 2.7 percent resulting in 8,500 new businesses per year, increase the number of patents each year by 17,000-29,000 over the next decade, and increase workers wages’ by $400-$488 billion or extra earnings of $524 per year per worker.
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But not everyone is happy. The US Chamber of Commerce immediately motioned to sue the FTC over the “unlawful power grab.” The suit was filed in federal court in the Eastern District of Texas and included two other plaintiffs: the Business Roundtable and Longview Chamber of Commerce of Longview, Texas. Ryan, a business tax services firm, filed a second lawsuit in federal court in the Northern District of Texas. Two of the five Commissioners that make FTC rulings voted against the ruling. All of these oppositional parties are concerned that the FTC is strongarming American corporations into accepting guidelines that will hurt American enterprises by making them defenseless against intellectual theft.
The ruling does include exceptions for buyers and sellers of a business. If you sell a business, you are still barred from stealing all the employees from the person you sold it to, otherwise there would be no incentive to purchase businesses.
The ruling permits non-competes to remain in force for senior executives, which are defined as those making over $151,164 annually and who are in a “policy making position.” It estimates that fewer than 1 percent of American workers fall into this category.
Learn more about the possible pitfalls of this ruling by watching the rest of Patrick’s video above.
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