(By Mike McVay) The recent Federal Trade Commission ruling, appearing to eliminate the Non-Compete, has been met with mixed reviews in the media world. At first blush, it appears to enable talent, sellers, tech team, department heads, management, and really almost anyone, to go wherever they want whenever they want…
Which would be the wrong take in interpreting the FTC ruling.
The elimination of the Non-Compete is not like the opening of the transfer portal in college football. It’s the elimination of servitude. It places a higher value on the employee and their skills. It returns control to one’s life.
I’ve been on both sides of the Non-Compete clause. As a talent, a Program Director, and as an Executive. From the talent and PD standpoint, it concerned me because any elimination of my position or termination meant that I had to cover a gap of unemployment to avoid moving, relocate to find immediate employment, or make a career change.
Being in a position to evaluate any of those three options is not one that’s anything less than stressful. I’ve lived in 8 cities, having moved 10 times during my career and my number of moves is low compared to others of my generation of broadcasters. To be fair, the changes I made took place pre-technology which enabled the ability to work remotely.
Looking at it from the viewpoint of an Executive, Owner/Operator, or in a Corporate position; it immediately engages one’s brain in how to game the system. I’ve seen this in the past where a percentage of the employee’s salary is indicated as “paying for the right to enforce a non-compete.” The way I read this ruling, that won’t work in the future. Existing non-competes for senior executives, who represent less than 0.75% of workers, can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new non-competes, even if they involve senior executives.
Employers will be required to provide notice to workers (other than senior executives) who are bound by an existing non-compete that they will no longer be enforcing any non-competes against them once this rule goes into effect.
This is a concern for management. You have a talent that you’ve invested in, committed to marketing and promoting, building a brand from scratch, or magnifying the already big brand of the personality, and you lose them to a competitor.
The extremely popular talent you built, loved by advertisers and listeners, can now cross the street and compete against you. The Program Director who has successfully competed against your “enemy” is now able to cross the street and join them. The seller who has strong relationships with advertisers will now have the ability to continue those relationships elsewhere. The question becomes, “How do you protect your business?”
The answer is pay them. If you want an employee to sit out for 3-6 months after they finish working for you, then pay them their current salary/wages to work from home for 3-6 months or reassign them to execute different duties. These things have to be negotiated into an agreement before you begin employment, but you can create a window within which you can change direction and alter the strategic plan you’re working from during that window. If you want to terminate someone before their agreement is complete, pay them to sit out or let them compete.
Obviously, terminating someone for cause changes those terms, but what is considered cause needs to be clearer than ever.
The FTC is turning business into a world that’s closer to professional sports than ever before. The best players are rewarded for performance. They have contracts that must be honored, but they control where they play and the team’s name on their uniform. Let them compete. Let’s go.
Mike McVay is President of McVay Media and can be reached at [email protected]. Read Mike’s Radio Ink archives here.
Mike, this is a great take, and a much-needed interpretation from an industry leader. Thank you. As an aside, I once worked for a company that required non-competes. I never signed mine, and the first time it came up was the day I was let go. My GM (who disagreed with corporate’s decision to terminate me) reluctantly informed me that I had a non-compete. I told him I never signed it. He rolled his chair back, laughed, clapped his hands and said “are you fu*#ing kidding me?” He was so happy for me. Three weeks later I was hired as PD of the market’s top rated and top revenue generating station.
Hiya Mike! We met at WABC. I’ve retired from the radio business and retired my air name, but I see you’re still suffering! 🙂
Your words reveal a moral center I seldom if ever encountered in Radio management (and most DJ’s I met were willing to go along to get along, so no heroes there either). Story time:
I worked with a guy in Texas who jumped across the street and my G.M., one Mr. Whiplash, immediately sued for the noncompete. They went to court; the judge, who clearly didn’t have any cronies in the biz so he didn’t know how he was expected to rule [g], looked at the situation and decided that slavery was indeed passé; he actually found for the jock!
Why that was important: due to that case, it immediately became mandatory for a radio station that wanted to give air talents a noncompete to COMPENSATE them specifically for the agreement.
Henceforth (and I can vouch for this), when an air talent was newly signed at a radio station, they got a separate “noncompete” check for, like, a hundred bucks. Crappy pay, sure, but that case was the foot in the door which has finally eliminated these damned things, some 37 years later. In Radio, and everywhere else. Hopefully.
Be well and thank you for your kind friendship back whenever you’d drop in and say hi to the mighty 77!
Thank you for sharing Ross. Sidenote; it was always a joy to walk into the studio where Imus, Rush, Hannity and Levin once did their shows.
Typo; Russ
A bit of a surprise on this Mike. In Canada with a non-compete for say 6 months, you have to pay that person for 6 months while they sit on the sidelines. Seems like in the states that doesn’t happen given what you wrote. Brutal. Maybe that’s why the FTC actually ruled this way. Seems very unfair. Just an aside. I once worked as a PD and the contract did not have a non-compete. But it did have a $100,000 penalty for leaving the station prior to the end of the contract. 100k, payable by anyone, to my station’s owners. Presumably the next employer if they wanted me bad enough was on the hook. First and only time I ever saw something like that. Asked a lawyer, and it was enforceable.
TK: Thank you. Your well traveled career lends great weight to your response. We keep saying that personality is an important part of radios revival. Then pay them.
Hi Mike! What a great well thought out article! You have totally nailed it. Most every noncompete I signed, there was money attached to the period of time I had to sit out. I wouldn’t have had it any other way, but early in my career, I had to move until I learned the hard way. Once again, you have figured out another Rubik’s cube and I applaud you. This is really an incredible article.