The Federal Trade Commission (FTC) just proposed a new rule that would ban employers from imposing non-compete agreements on their employees. Having spent the majority of my working life in the radio industry, I can’t remember a broadcasting company I worked for that didn’t have me sign one of these agreements, and I’m willing to bet that like me, you were never a fan of them.
What an FTC Ban on Non-Compete Would Mean
The proposed new rule eliminating non-competes would mean that employers could no longer make signing such an agreement a condition of hiring and that all existing non-competes would sunset within six months of the rule’s adoption. It would also require that employers give notice to their employees that the non-compete clause is no longer in effect and will not be enforced.
Should radio owner/operators be afraid? No, and let me tell you why.
The Day I Tore Up My Employee Non-Competes
Back when I was a general manager in Atlantic City, I had a sales employee walk across the street to my biggest radio competitor. I wanted to pursue this employee in court because I had them under a non-compete contract. However, the new owners of my radio stations said that if a person didn’t want to work for our broadcast company, to just let them leave.
Puzzled by this new operating philosophy, I asked the new owners, if they didn’t intend to enforce employee non-compete agreements, why did they keep them in place when they bought the radio stations from the previous owner. The company president’s response to me was, “darn if I know.” I said then, I’m going to tear them all up, and he said, “go ahead.”
Life Without Non-Competes
I have to tell you, as a young manager, the realization that every employee of my radio stations could walk across the street to my competitors, was scary.
However, something wonderful happened.
People who now worked for me knew they no longer were working under non-competes, and they now worked for me because they wanted to. It also made me realize that I too needed to provide a style of management that made people want to stay with me more than going someplace else. That, I would learn, is the best way to run a business.
Even better, having this type of work environment saw many talented people waiting in line to come work at our stations.
The FTC says the evidence to date suggests that non-competes suppress wages, reduce competition and keep innovative ideas from being birthed.
The rule making on this ban has just begun and the FTC is currently collecting comments from both supporters and opponents, and no timetable has been established for rendering a final decision on this proposal.
You can add your comments to the Federal Trade Commission decision making process by writing “Non-Compete Clause Rulemaking, Matter No. P201200” on your comment, and filing your comment online at https://www.regulations.gov
Today’s Media Environment
Radio today, unlike in 1920, operates in a marketplace that is over-served, and when that happens the basis of competition changes, opening the door for a new type of competitor.
Sadly, while this new media world was being born, the radio industry was focused on consolidation and increasing shareholder value, by replacing its radio personalities with technology and creating a radio medium that would play-it-safe to become predictable and boring.
“Never be boring.”
-Valerie Geller
Programming consultant, John Frost, recently asked this question in his weekly Frost Advisory, “What does your radio station value?” Winning companies value encouragement and teamwork, according to Ken Blanchard, author of books like “The One Minute Manager.”
“Our greatest fear should not be of failure,
but of succeeding at things in life that don’t really matter.’
-Francis Chan
Radio can only win the future by attracting the most talented people to work in our industry, and giving them permission to fail.
DickTaylorBlog 