Ted Jenkin signed a non-compete agreement when he sold his financial advisory practice in 2019.
Source: Ted Jenkin
When certified financial planner Ted Jenkin sold his financial advisory practice in 2019, he signed a non-compulsory, incomplete agreement that forbade him from taking clients from the firm for five years — or from taking any other job in the industry, anywhere in the country.
“When you sell a company, you’re pretty much selling customers or ideas, but your inability to do the work in that business makes no practical sense whatsoever,” he said. “It’s crazy.”
Bound by this condition, Jenkin, who is a member of CNBC’s Financial Advisor BoardHe remained an employee until the end of last year.
“Now I can abide by the contract or do something in the industry and we will have a legal battle,” he said.
More personal finance:
What does the proposed ban on incomplete clauses mean to you?
3 financial moves you should make this year, experts say
If you want higher wages, your chances may be better now
That is, unless a federal regulatory agency has its way.
Recently, the US Federal Trade Commission Suggest a new rule Banning the use of incomplete clauses in employee contracts in nearly all areas, the agency said, because they reduce wages, hinder innovation and prevent entrepreneurs from starting new businesses.
The proposed rule would require companies with incomplete existing agreements to cancel them and report them to current and former employees cancelledIn this case, Jenkin will be free to continue other work.
“I will be the first person to start working again,” Jenkin said. “I will not be afraid to get into a legal battle just because I am in my profession.”
Nearly one-fifth of American workers sign a “non-compete”
Noncompetitive materials are widely used in industries like finance, but also, increasingly, in many other professions as well, according to the Federal Trade Commission, “from hairdressers and warehouse workers to doctors and business managers.”
There’s often little wiggle room: Less than 10% of workers have any ability to negotiate these clauses, and 93% of them read and sign them anyway, according to the National Labor Code Bill.
appreciate it more More than 30 million workers – or roughly 18% of the American workforce – are bound by such agreements.
“Non-skills are preventing workers from switching jobs freely, denying them higher wages and better working conditions, and denying companies the talent pool they need to build and expand,” FTC Chair Lena Khan said in a statement.
If the practice is stopped, wages could increase by about $300 billion annually, according to the Federal Trade Commission.
Imperfect agreements are an important tool.
Michael Schmidt, a labor and employment attorney at Cousin O’Connor in New York, said there are still several steps to go before the proposed regulation takes effect, including “inevitable litigation” that challenges the FTC’s authority.
“An attempt to outlaw imperfect clauses in all business conditions overrides long-established state laws governing their use and ignores the fact that imperfect clauses, when used appropriately, are an important tool in promoting innovation and sustaining competition,” said Sean Heather, 1st deputy. President of the US Chamber of Commerce for International Regulatory and Antitrust Affairs.
Heather said the outright ban was “flagrantly illegal”. “Congress has never delegated to the FTC anything close to the power it would need to pass this competition rule.”
If she’s tethered in the court system, the sentencing process can take up to a year or even longer, according to Schmidt.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”