WEBVTT - Noncompete Agreements, Come On 0:00:01.440 --> 0:00:11.399 Welcome to stuff you should know, a production of iHeartRadio. Hey, 0:00:11.440 --> 0:00:14.280 and welcome to the podcast. I'm Josh, and there's Chuck 0:00:14.320 --> 0:00:17.080 with me, and that makes this stuff you shouldn't Azzoh 0:00:19.520 --> 0:00:25.599 that's right, mister dog. Yeah, man, what's that one song? 0:00:25.640 --> 0:00:30.360 He had? A sensual seduction? What a great song that was. 0:00:31.200 --> 0:00:32.560 I'm not sure if I know it. Would I know 0:00:32.600 --> 0:00:35.640 it if I heard it? Probably, but it was like 0:00:35.720 --> 0:00:40.040 kind of a weird synth dancy early eighties vibe, much 0:00:40.080 --> 0:00:43.960 more than a rap vibe. He was just expanding out. Yeah, yeah, 0:00:44.120 --> 0:00:47.879 that's Martha Stewart on it. No, which is kind of 0:00:47.880 --> 0:00:50.479 surprising because I heard she got like a huge tattoo 0:00:50.680 --> 0:00:54.760 of him. Really now, it was like a super Bowl commercial. 0:00:55.360 --> 0:01:00.200 Didn't see it? Yeah she could have, though I'm a rube. No, 0:01:00.440 --> 0:01:03.560 you're not, Chuck. You just don't pay enough attention to commercials. 0:01:04.600 --> 0:01:09.120 Should we talk non compete agreements? Yes? I think we 0:01:09.200 --> 0:01:13.959 should because they turn out to be rather onerous. Yeah, 0:01:14.600 --> 0:01:18.399 possibly soon to be illegal, yay, and just kind of 0:01:18.440 --> 0:01:23.000 scummy because, as you'll see, they're frequently used by big business. 0:01:23.640 --> 0:01:27.040 But if you're a free market capitalist, you're not allowed 0:01:27.080 --> 0:01:31.480 to like non compete agreements because it literally hobbles competition, 0:01:31.840 --> 0:01:35.520 which is the point of free markets. And one of 0:01:35.560 --> 0:01:38.920 the great things about competition is that you and me 0:01:39.160 --> 0:01:41.679 and everybody else listening out there who doesn't own a 0:01:41.720 --> 0:01:46.399 business and just buy stuff usually gets better prices, better products, 0:01:47.240 --> 0:01:52.880 more innovation when there's greater competition. And non competition agreements 0:01:52.920 --> 0:01:56.520 non compete agreements do the opposite of that. They stifle 0:01:56.640 --> 0:01:59.280 all those things on purpose for the benefit of just 0:01:59.480 --> 0:02:02.880 one company. It's right there in the name. They even 0:02:03.000 --> 0:02:06.360 they gave away their hand when they called them no competes. Exactly. 0:02:06.680 --> 0:02:09.320 It's pretty flagrant. It is. If you don't know what 0:02:09.320 --> 0:02:13.560 we're talking about about. One in five Americans work under 0:02:13.600 --> 0:02:17.280 an NCA, and a non compete is when and hopefully 0:02:17.320 --> 0:02:19.040 you've never had to sign one of these. Hopefully you're 0:02:19.080 --> 0:02:23.040 not one of the twenties percent of workers in the 0:02:23.120 --> 0:02:26.359 United States. But if you are working under one, then 0:02:26.400 --> 0:02:28.360 you know what it is. It's it's a thing that 0:02:28.440 --> 0:02:31.800 you sign when you get a job. Usually when you 0:02:31.800 --> 0:02:33.720 get a job. Sometimes they can come along a little 0:02:33.800 --> 0:02:35.840 later in the job, if you get like a promotion 0:02:35.960 --> 0:02:39.040 or something, but it's a condition of getting that job. 0:02:39.120 --> 0:02:43.280 Most times that basically says, hey, if you work here, 0:02:43.560 --> 0:02:47.040 you can't go quit your job and then go get 0:02:47.080 --> 0:02:50.040 a job at another company that's a rival of ours, 0:02:51.080 --> 0:02:53.160 or you can't run off. And like if you're a 0:02:54.360 --> 0:02:56.960 if you're a vet, let's say, and you and you 0:02:57.120 --> 0:03:00.640 help out doggies and kiddies and komodo drags or whatever, 0:03:01.520 --> 0:03:03.640 you got to sign one that says, hey, you can't 0:03:03.639 --> 0:03:06.600 go start up your own vet practice. And there's usually 0:03:06.639 --> 0:03:09.880 a certain amount of time, like six months or three months, 0:03:09.919 --> 0:03:13.119 or a year or two years generally where it caps off, 0:03:13.160 --> 0:03:17.560 although I'm sure there's some really draconian ones that stretch 0:03:17.600 --> 0:03:20.040 on for years and years. Yeah, I've seen five is 0:03:20.080 --> 0:03:22.400 the highest i've seen, But I'm sure somebody's pushing the 0:03:22.520 --> 0:03:25.359 mline five years. You can't go make a living and 0:03:25.600 --> 0:03:30.799 doing what you do exactly, So you can hear by 0:03:30.800 --> 0:03:33.320 the tone of my voice how I feel about these things. 0:03:34.000 --> 0:03:36.120 I'm gonna try and be fair. I know you're you're 0:03:36.160 --> 0:03:44.040 with me. We're pro employee. Yeah, also pro competition too, 0:03:44.040 --> 0:03:46.960 but okay, go ahead. We're pro employee. So that's kind 0:03:46.960 --> 0:03:50.840 of where our heart lies. We are employees, so that's 0:03:50.880 --> 0:03:53.280 why that's where our heart lies. For the most part. Yeah, 0:03:53.840 --> 0:03:58.680 but having said that, I do get in certain circumstances 0:03:58.800 --> 0:04:02.760 why businesses draw these up at least as usual, Chuck, 0:04:02.800 --> 0:04:06.080 I'm right there with you, totally agree. Should we talk 0:04:06.120 --> 0:04:08.800 about these few reasons? Yeah, there's one other, there's a 0:04:08.800 --> 0:04:11.160 couple of other things, just to kind of do the 0:04:11.160 --> 0:04:15.680 outlines of these things. In addition to a length of time, usually, 0:04:15.720 --> 0:04:18.120 like you said, that you're prohibited from going and working 0:04:18.160 --> 0:04:25.760 for yourself or competitor, there's also sometimes geographical restrictors, which says, 0:04:25.800 --> 0:04:28.720 you know, you can't work for a competitor in the 0:04:28.760 --> 0:04:31.080 same state or something like that. Right, feel free to 0:04:31.120 --> 0:04:34.400 move completely, upend your life and move time with us, 0:04:34.480 --> 0:04:36.200 but you can't do it in the state. And then 0:04:36.560 --> 0:04:38.640 one of the other times it pops up pretty frequently 0:04:38.640 --> 0:04:41.479 outside of the corporate world, is when say you sell 0:04:41.520 --> 0:04:44.640 a restaurant, you'll usually sign a non compete that says 0:04:44.640 --> 0:04:46.679 you're not going to go down the block and create 0:04:47.040 --> 0:04:49.960 the same restaurant again and compete with the one you 0:04:50.080 --> 0:04:53.520 just sold, because you know, again, like you said, there's 0:04:53.560 --> 0:04:57.080 some instances where it does seem okay, and yeah, let's 0:04:57.080 --> 0:04:59.800 go over some of those. Yeah, one of them is 0:05:00.200 --> 0:05:03.479 guarding trade secrets. I kind of get where they're coming from. 0:05:03.480 --> 0:05:06.479 If you have a trade secret that's really valuable and 0:05:06.520 --> 0:05:09.400 it's something that this company owns or thought up at 0:05:09.480 --> 0:05:13.160 least or as the IP rights, do, I get why 0:05:13.279 --> 0:05:16.120 company would not want to say, like, sure, just go 0:05:16.560 --> 0:05:18.839 quit the job and take those secrets with you to 0:05:19.240 --> 0:05:22.479 a competitor. Yeah. Like, um, do you remember when those 0:05:22.600 --> 0:05:26.279 former Coke employees went to Pepsi and said, Hey, we've 0:05:26.279 --> 0:05:29.280 got Cooke's recipe, you want it? It must have been 0:05:29.320 --> 0:05:31.720 so surprised when Pepsi called Coke and said, hey, you've 0:05:31.760 --> 0:05:34.960 got a big problem. That was pretty interesting. But yes, 0:05:35.080 --> 0:05:37.520 I'm quite sure they signed all sorts of agreements that 0:05:37.560 --> 0:05:41.000 they violated in doing that. Yeah, and we'll get into 0:05:41.040 --> 0:05:45.359 the details later on. But you don't necessarily like you 0:05:45.400 --> 0:05:48.640 can cover trade secrets with by other means rather than 0:05:48.680 --> 0:05:53.440 just signing a noncompete as an employer. Right. What else? Well, 0:05:54.240 --> 0:05:56.480 this one I kind of get to to a certain degree. 0:05:57.080 --> 0:06:00.480 Companies oftentimes will make great investments in their employees to 0:06:00.560 --> 0:06:04.320 keep them around. Like whether it's just the normal training routine, 0:06:04.360 --> 0:06:07.320 which you know, I know from Emily just having her 0:06:07.360 --> 0:06:10.000 small business, it takes a long time to get someone 0:06:10.040 --> 0:06:13.280 really up to speed, and for someone to either not 0:06:13.360 --> 0:06:17.880 work out by just organic circumstances or leaving shortly thereafter, 0:06:17.920 --> 0:06:21.920 it's a big blow, especially to a small business. So 0:06:22.040 --> 0:06:24.560 I get that. Or they may like further your education, 0:06:24.680 --> 0:06:27.320 say hey, we'll put you through grad school or something 0:06:27.360 --> 0:06:29.680 like that, but you got to come take that grad 0:06:29.680 --> 0:06:32.240 school knowledge and help our business with it. Sure. The 0:06:32.320 --> 0:06:34.560 point is that you don't want to invest a bunch 0:06:34.560 --> 0:06:38.360 of time and effort and information into training and employee 0:06:38.360 --> 0:06:40.880 and have them go take it to a competitor. Yeah, 0:06:40.920 --> 0:06:44.120 I get that somewhat. There's another one. I'll bet you 0:06:44.200 --> 0:06:46.680 get this a little less because I do too. Yeah, 0:06:46.720 --> 0:06:48.520 Like I understand it, I just don't agree with it. 0:06:48.560 --> 0:06:51.320 And that is to keep bases of clients right. So 0:06:52.400 --> 0:06:55.400 like if you're if you are, if you cut hair 0:06:55.520 --> 0:06:59.400 at a hair salon, there's especially depending on the salon, 0:06:59.480 --> 0:07:01.760 but there's a really good chance that you signed a 0:07:01.880 --> 0:07:05.200 non compete that says like you probably can't cut hair 0:07:05.240 --> 0:07:08.560 in the same town right anywhere else. That's a pretty 0:07:08.600 --> 0:07:11.160 prevalent from what I understand it. Like hair salons, there's 0:07:11.200 --> 0:07:14.240 other places too that try them, like law firms, sometimes 0:07:14.280 --> 0:07:17.920 try them VET clinics like you you recommended, But I 0:07:17.960 --> 0:07:21.880 believe there's also some industries, including attorneys and fiduciaries, that 0:07:21.960 --> 0:07:24.320 say it's too important for the client to be able 0:07:24.360 --> 0:07:26.880 to choose exactly who they want for us to have 0:07:26.960 --> 0:07:30.760 non compete, so they kind of customarily avoid them. Yeah, 0:07:30.800 --> 0:07:34.200 this is you're on target, because this is the one 0:07:34.240 --> 0:07:35.960 that I have the one of the most problems with 0:07:36.000 --> 0:07:41.360 out of these three, because this basically says we can 0:07:41.440 --> 0:07:45.520 kind of treat you poorly as an employer. Like if 0:07:45.560 --> 0:07:48.280 you're let's say, if you're a hairstylist and you don't 0:07:48.280 --> 0:07:51.400 like your situation, but you've got these clients who love 0:07:51.720 --> 0:07:54.600 the way that their hair is getting cut by you, 0:07:55.400 --> 0:07:57.760 but you've got some terrible boss. It's a bad agreement. 0:07:58.240 --> 0:08:00.679 You should be able to go and have those people 0:08:00.840 --> 0:08:03.560 follow you because they're not there because they like the 0:08:04.160 --> 0:08:07.280 fit of the chair, right, you know, they're there because 0:08:07.320 --> 0:08:09.960 they like the haircut that they're getting. Absolutely, it is 0:08:10.000 --> 0:08:13.360 so hard to find a good hairdresser who charges a 0:08:13.400 --> 0:08:16.680 reasonable rate. It's really important. I'm not joking right now. 0:08:16.760 --> 0:08:19.679 I finally found my guy, and like, if he ever leaves, 0:08:19.680 --> 0:08:23.040 I'm I'm in trouble the same thing with like a 0:08:23.120 --> 0:08:26.720 dog groomer, Like we've lost dog groomers before, just gone 0:08:26.760 --> 0:08:28.960 poof vanished. Then the people won't tell us what happened 0:08:29.000 --> 0:08:31.000 to them or how to get in touch with them, 0:08:31.480 --> 0:08:33.760 because they want us to stay there. And it's it's 0:08:33.840 --> 0:08:39.720 you're not only hurting your former employee, you're also harming 0:08:39.760 --> 0:08:42.920 your customers too, because you might be pairing them up 0:08:42.920 --> 0:08:46.200 with an inferior dog groomer compared to the person who 0:08:46.360 --> 0:08:50.200 just left. You know, yeah, I should shout out my 0:08:50.360 --> 0:08:53.679 hairstylist because it's fairly recent, because I recently in our 0:08:53.720 --> 0:08:57.520 Amorrow podcast talks about our friend Thomas, who is the 0:08:57.520 --> 0:09:01.040 father of one of Ruby's friends. Thomas's wife and Ruby's 0:09:01.040 --> 0:09:05.160 friend's mom is Robin and she is my friend and stylist. Nice. Well, 0:09:05.160 --> 0:09:08.240 then she's great. I'll shout out Michael, my hair stylist. 0:09:09.400 --> 0:09:11.240 And if they went to you know, if Robin decided 0:09:11.280 --> 0:09:14.079 to go to another place, I wouldn't be like, No, 0:09:14.160 --> 0:09:19.760 I'm really super loyal to the walls of that building 0:09:19.800 --> 0:09:22.440 that I was in, right, No, I'd follow Robin where 0:09:22.480 --> 0:09:26.120 she went. Yeah, I agreed, totally. I'd follow Michael to 0:09:26.160 --> 0:09:29.800 the ends of the yearth So there's another way to 0:09:29.840 --> 0:09:33.679 look at all this stuff too, Chuck, You're ready. Yeah. 0:09:33.800 --> 0:09:38.800 People who are pro non disclosure agreements say that these 0:09:38.840 --> 0:09:42.400 things work in the non competes you mean, yeah, yeah, sorry, man, 0:09:42.440 --> 0:09:45.120 I just gave away something we're gonna talk about later. 0:09:45.360 --> 0:09:48.960 People who are in favor of non competes say that 0:09:49.000 --> 0:09:51.800 the opposite holds true too, where if you take away 0:09:51.840 --> 0:09:56.080 non competes, then companies might be less willing to invest 0:09:56.160 --> 0:09:59.600 in their employees because they're going to, um, you know, 0:09:59.600 --> 0:10:04.360 possible walk off. Um. Yeah, that's that's probably the best 0:10:04.400 --> 0:10:07.200 argument they have against them. But it's very similar. I 0:10:07.240 --> 0:10:08.679 was trying to think of an analogy, and the best 0:10:08.720 --> 0:10:11.640 I could come up with is saying, like, because there's 0:10:11.640 --> 0:10:13.439 a chance that some of our guys are going to 0:10:13.520 --> 0:10:16.840 strike out, we're just not going to play baseball, right, 0:10:17.120 --> 0:10:19.160 you know what I mean? Yeah? Yeah. And then if 0:10:19.160 --> 0:10:23.320 the whole inherent unfairness of a non compete agreement, by 0:10:23.320 --> 0:10:27.120 the way, like all the all the pros are done now, Um, 0:10:28.280 --> 0:10:30.240 if it hasn't become clear yet, you can if you 0:10:30.400 --> 0:10:33.880 take the business out of it, it becomes much clear. Right, 0:10:33.880 --> 0:10:37.400 So if you look at your employment between a worker 0:10:37.440 --> 0:10:43.040 and an employer as a relationship, like between a boyfriend 0:10:43.040 --> 0:10:45.800 and a girlfriend or something like. If you break up, 0:10:46.080 --> 0:10:48.960 it's like the boyfriend saying you can't date anybody for 0:10:49.000 --> 0:10:52.000 a year, or you can't date anybody in this state 0:10:52.120 --> 0:10:54.240 for a year. Go ahead and move up, end your life. 0:10:54.240 --> 0:10:56.520 That's fine, but no one in this state you can date. 0:10:56.720 --> 0:11:00.320 And then it can get yes, that's that's a great point, 0:11:00.559 --> 0:11:02.880 and then it can get even worse. The boyfriend can 0:11:02.960 --> 0:11:05.920 dump you and still say you're not allowed to date 0:11:06.000 --> 0:11:08.720 anybody for a year. Right when I thought of it 0:11:08.760 --> 0:11:11.040 like this, like I already knew they were inherently unfair, 0:11:11.080 --> 0:11:13.920 but it really kind of settled in, so I wanted 0:11:14.000 --> 0:11:18.080 to share that with everybody. That's good. What's interesting, especially 0:11:18.120 --> 0:11:21.080 when you look at the example of like a hairstylist, 0:11:21.920 --> 0:11:26.800 is chances are that hairstylist was already a good hairstylist 0:11:26.800 --> 0:11:29.240 when they started working for that place, and it wasn't 0:11:29.320 --> 0:11:31.640 kind of how these things started out, which is, you know, 0:11:31.720 --> 0:11:35.000 segues into the history where you I don't know anything 0:11:35.000 --> 0:11:36.960 about cutting hair, and I'm just gonna apprentice with you 0:11:37.000 --> 0:11:39.240 for a while, and you're going to teach me everything 0:11:39.240 --> 0:11:41.640 I know about how to cut hair, like that's a 0:11:41.640 --> 0:11:44.679 little more understandable. And that's at least in England. That 0:11:44.760 --> 0:11:48.120 was the history of non competes was in fifteenth and 0:11:48.200 --> 0:11:51.920 sixteenth centuries. The way it was set up was there 0:11:51.960 --> 0:11:55.959 were you know, master craftspeople and then they had apprentices 0:11:56.000 --> 0:11:58.079 working for them and they would teach them their trade 0:11:58.400 --> 0:12:00.200 and in turn get a lot of work out of 0:12:00.200 --> 0:12:03.400 this person, and then they could go on and try 0:12:03.440 --> 0:12:06.960 to become a mastercraftsman themselves, start up their own you know, 0:12:07.240 --> 0:12:11.760 habitash or shoe shop or whatever. And early on in 0:12:12.800 --> 0:12:16.199 for quite a long time, even the courts of England 0:12:16.280 --> 0:12:20.480 and the laws of England roundly sided with employees when 0:12:20.480 --> 0:12:23.800 it came to case law, and the very first of 0:12:23.840 --> 0:12:27.720 which was the Dyer's case of fourteen fourteen, yeah, which 0:12:27.800 --> 0:12:31.240 established a precedent that lasted for hundreds of years, which 0:12:31.280 --> 0:12:34.680 is basically there was a dier, you know, fabric dyer 0:12:34.800 --> 0:12:37.880 in London who had an apprentice and the apprentice was 0:12:37.920 --> 0:12:40.560 ready to become a journeyman, no longer an apprentice, going 0:12:40.559 --> 0:12:43.200 off to strikeout and form his own business. And he said, 0:12:43.240 --> 0:12:46.040 you're not allowed to do this business in London, all 0:12:46.080 --> 0:12:49.400 of London for six months, and in the fifteenth century 0:12:49.400 --> 0:12:52.680 it wasn't very easy to move right right, So the 0:12:52.760 --> 0:12:56.160 guy took him to court somehow in the fifteenth century way, 0:12:56.280 --> 0:12:59.319 and the court said, we rule against you, die, or 0:12:59.360 --> 0:13:02.959 we rule in favor of your journeyman apprentice, because they 0:13:03.000 --> 0:13:09.280 reasoned that the law and custom should keep work in 0:13:09.320 --> 0:13:12.440 the public domain, labor should be as free to do 0:13:12.480 --> 0:13:16.520 as much as it can for as many people as possible. Yeah, 0:13:16.520 --> 0:13:20.360 which makes sense, like maybe there aren't enough talented DIYers 0:13:20.360 --> 0:13:23.400 in London right now, and for goodness sakes, like the 0:13:23.440 --> 0:13:30.320 people need their tight eyed frocks, right, Thou blowest my mind. 0:13:33.320 --> 0:13:36.000 It's good. I was waiting for another wavy gravy joke. 0:13:36.040 --> 0:13:38.719 I know he's your gut to. He's the only one 0:13:38.760 --> 0:13:41.640 I can ever think of. And then the other one 0:13:41.840 --> 0:13:43.800 is that And this is a big part of this precedent, 0:13:43.960 --> 0:13:47.160 was that someone should be allowed to go make a 0:13:47.200 --> 0:13:49.560 living doing what they've learned to do, right. And there's 0:13:49.600 --> 0:13:52.560 something inherent in both of those reasonings that set that 0:13:52.679 --> 0:13:58.600 legal precedent in that they recognize that a noncompete favors 0:13:58.840 --> 0:14:02.319 essentially one per in one group, one employer, one company, 0:14:02.360 --> 0:14:07.680 one business owner at the at the expense of everybody else, right, 0:14:08.000 --> 0:14:11.280 and they kept that up for hundreds of years. The 0:14:13.400 --> 0:14:16.319 the what are they called, I guess the guild members 0:14:16.600 --> 0:14:20.720 who were employing apprentices. Over the years, they employed more 0:14:20.720 --> 0:14:22.800 and more apprentices as there was more and more people 0:14:22.800 --> 0:14:25.040 who needed more and more work. So there's more and 0:14:25.040 --> 0:14:27.360 more attempts. I don't think I could say more and 0:14:27.440 --> 0:14:30.880 more any more time, but there are more and more 0:14:30.920 --> 0:14:36.000 attempts I could at creating these um non compete agreements. 0:14:36.040 --> 0:14:40.120 But the courts kept basically saying nine no, no, although 0:14:40.160 --> 0:14:42.680 there was one that kind of went the opposite way, 0:14:42.760 --> 0:14:45.280 which does seem like they made the right decision, but 0:14:45.360 --> 0:14:50.000 it sent another precedent that actually upholds non competes. Right. Yeah, 0:14:50.040 --> 0:14:55.240 this is Mitchell versus Reynolds in seventeen eleven, and Reynolds 0:14:55.320 --> 0:14:59.560 was a baker. This one is. I agree. It's definitely 0:14:59.600 --> 0:15:02.200 an interest in case because it's not like your standard 0:15:02.400 --> 0:15:06.080 employee employer kind of thing. Right. M. Reynolds was a 0:15:06.120 --> 0:15:09.520 baker who said hey, I will lease Hey there, Mitchell, 0:15:09.560 --> 0:15:12.280 I'll lease you my bakery for five years and you 0:15:12.320 --> 0:15:14.800 can do all the baking and make the money, and 0:15:15.000 --> 0:15:17.560 I'm not gonna go start another bakery in this town, 0:15:17.920 --> 0:15:23.000 which is Saint Andrew's Holborn. And I don't know why 0:15:23.040 --> 0:15:27.560 I lost the accent halfway through that. And if I 0:15:27.680 --> 0:15:31.960 violate this agreement, I give you fifty pounds and that's 0:15:32.000 --> 0:15:33.840 exactly what I'll do, though I will go on to 0:15:33.880 --> 0:15:36.680 break this deal. I'm gonna sell my stuff in town 0:15:37.280 --> 0:15:41.040 and my baggetts or what have you. And Mitchell took 0:15:41.680 --> 0:15:45.000 Reynolds to court and the judge sided with Mitchell in 0:15:45.080 --> 0:15:48.400 this case. Yeah, because I'm quite sure I get it though. 0:15:50.760 --> 0:15:52.880 This is this is why, this is why I think 0:15:53.360 --> 0:15:57.160 it makes sense to us too. Mitchell and Reynolds were 0:15:57.640 --> 0:16:01.880 um equal parties to this agreement. There was no power 0:16:02.000 --> 0:16:05.240 position of one over the other. And that's one of 0:16:05.240 --> 0:16:09.320 the reasons why are so unfair. It's a really powerful 0:16:09.480 --> 0:16:15.280 entity taking advantage of the last power of the other person, 0:16:15.400 --> 0:16:18.120 the employee that's on the other side of the equation. 0:16:18.320 --> 0:16:21.000 In this case, they were equal and the guy broke it. 0:16:21.080 --> 0:16:23.240 And yeah, he should pay because he agreed to this 0:16:23.280 --> 0:16:26.000 ahead of time without any kind of of you know, 0:16:26.280 --> 0:16:29.840 coercion or anything like that. Because Mitchell was able to 0:16:31.320 --> 0:16:33.640 run this business and do the baking and make money, 0:16:33.640 --> 0:16:37.960 and Reynolds was getting lease income from Mitchell. Yeah, so 0:16:38.080 --> 0:16:40.920 he Reynolds was trying to have his cake and eat 0:16:40.920 --> 0:16:43.720 it too. Basically exactly, he was a real big jerk 0:16:43.760 --> 0:16:48.080 quad from what I can tell, we bleeped out your 0:16:48.080 --> 0:16:51.040 first take, which was a cuss word, But jerkwad sounds 0:16:51.080 --> 0:16:53.240 grosser than what you said. I think jerkwad was better. 0:16:53.400 --> 0:16:58.080 I made the right decision in retaking that. Things you know, 0:16:58.160 --> 0:17:02.880 started changing when industrial capitalism became a big thing and 0:17:03.160 --> 0:17:07.000 the courts started kind of flipping a little bit all 0:17:07.080 --> 0:17:09.399 of a sudden, they said, wait, this big business and 0:17:10.359 --> 0:17:13.000 capitalism is great, so we should be a little more 0:17:13.720 --> 0:17:18.479 pro employer than employee generally speaking. And I think it 0:17:18.560 --> 0:17:23.200 was basically by the mid eighteen hundreds that they said, hey, 0:17:23.320 --> 0:17:26.760 we believe in freedom of contract, which basically means if 0:17:26.800 --> 0:17:29.520 you're both agreeing to this thing, then you should be 0:17:29.560 --> 0:17:32.040 able to agree to this thing right, which again it 0:17:32.119 --> 0:17:34.560 makes sense if you're Mitchell or Reynolds, who were on 0:17:34.640 --> 0:17:38.240 even footing when entering into that contract. But people still 0:17:38.320 --> 0:17:41.240 use freedom of contract as a defense of non competes. 0:17:41.280 --> 0:17:44.280 And we'll walk down that path a little more later, 0:17:44.600 --> 0:17:47.760 I say, Chuck, for right now, let's just go ahead 0:17:47.800 --> 0:17:50.520 and take a break. Let's do it all right, I agree, 0:17:50.640 --> 0:18:21.960 let's sign a contract agreed. So all this is going 0:18:22.000 --> 0:18:24.639 on in England, and at the same time America is 0:18:24.680 --> 0:18:30.879 doing its thing buying Louisiana, etc. And there wasn't really 0:18:30.920 --> 0:18:35.960 any big non compete rulings until I think eighteen fifty one. 0:18:36.760 --> 0:18:39.280 But leading up to that, there's a legal scholar named 0:18:39.280 --> 0:18:42.480 Aisha Bell Hardaway who Olivia found. Livia helped us with 0:18:42.520 --> 0:18:47.399 this one, and Yisha Bell Hardaway says that there was 0:18:47.480 --> 0:18:50.520 still a bunch of like legal precedents and rulings and 0:18:50.680 --> 0:18:55.160 laws that were established that basically support the idea that 0:18:55.320 --> 0:18:58.639 non competes are unfair and that people should have the 0:18:58.680 --> 0:19:02.320 ability to move about from employer to employer until they 0:19:02.359 --> 0:19:04.960 find a good match um. And that a lot of 0:19:05.000 --> 0:19:08.879 that came from reconstruction era and the Black Codes and 0:19:09.040 --> 0:19:13.760 some of the laws that protected newly freed slaves um 0:19:14.240 --> 0:19:20.520 to from like really um predatory business contracts that like 0:19:20.560 --> 0:19:22.520 they could they could go to jail if they ended 0:19:22.560 --> 0:19:25.439 the business, if they stopped working for the person, you know, 0:19:25.640 --> 0:19:28.160 early they could go to jail for five or ten 0:19:28.240 --> 0:19:31.479 years or something crazy like that. So the UM, the 0:19:31.600 --> 0:19:34.840 US government, the federal government started stepping in and creating 0:19:34.880 --> 0:19:38.080 these laws and including the Thirteenth Amendment that protected people 0:19:38.119 --> 0:19:41.119 from that, and Hardaway argues that that's kind of a 0:19:41.160 --> 0:19:47.560 basis for the America's position on non competes. Yeah, like, 0:19:47.800 --> 0:19:53.040 congratulations on your emancipation. Um, Now you can enter into 0:19:53.080 --> 0:19:56.959 a work contract that's basically the same thing as being enslaved, right, 0:19:57.880 --> 0:20:00.399 except you know, you're you're making money, but if you 0:20:00.440 --> 0:20:04.200 quit your job, you're going to jail, but also making money, 0:20:04.240 --> 0:20:08.040 but you're making just enough to live. Well, you need 0:20:08.080 --> 0:20:12.240 your job so badly you are engaged in what's known 0:20:12.280 --> 0:20:15.080 as wage slavery, where you're so dependent on your job. 0:20:15.280 --> 0:20:18.119 You're essentially stuck, and your employer can treat you however 0:20:18.160 --> 0:20:21.280 they want, because number one, you're disposable because there's plenty 0:20:21.320 --> 0:20:24.040 of other people who need a job. And then secondly, 0:20:24.280 --> 0:20:26.960 they know that you can't go anywhere. You're stuck. You 0:20:27.000 --> 0:20:30.240 need this job, and they often mistreat employees. And it 0:20:30.280 --> 0:20:34.239 still happens today. Yeah, And like in England, early on 0:20:34.280 --> 0:20:37.280 in the United States, the courts generally were siding on 0:20:37.320 --> 0:20:40.720 the side of employees. There are quite a few cases 0:20:40.760 --> 0:20:44.520 that sort of laid out precedent. One was really big 0:20:44.840 --> 0:20:49.560 in eighteen seventy two. California even way backed then said 0:20:50.560 --> 0:20:53.280 we're going to be a bunch of liberal hippies and 0:20:53.440 --> 0:20:56.760 we're going to ban noncompetes altogether. Because here in the 0:20:56.840 --> 0:20:59.119 United States, if you don't live here, a lot of times, 0:20:59.359 --> 0:21:01.640 states are free to make their own laws concerning things 0:21:01.760 --> 0:21:04.439 having to do with their state States Rights, States rights 0:21:04.720 --> 0:21:14.639 and USA are low key mantra. States Rights. In California 0:21:14.720 --> 0:21:17.280 was one of the first states to completely or maybe 0:21:17.359 --> 0:21:20.360 the first state to completely ban noncompetes. Yeah, they said, 0:21:20.359 --> 0:21:22.000 we don't know who he is yet, but in one 0:21:22.040 --> 0:21:26.320 hundred or so years, Wavy Gravy's gonna love this. And 0:21:26.400 --> 0:21:27.960 it went that way for you know, most of the 0:21:28.000 --> 0:21:33.920 twentieth century. If ncas were allowed, they were pretty limited 0:21:33.960 --> 0:21:38.400 in their enforcement and usually covered things like we talked about, 0:21:38.400 --> 0:21:42.720 like trade secret cases and things like that, because you know, enforcement. 0:21:43.320 --> 0:21:45.199 I didn't know about any of this stuff until you 0:21:45.240 --> 0:21:48.560 and I entered the world of like signing contracts as 0:21:48.640 --> 0:21:52.120 podcasters and stuff. I had always just had jobs where 0:21:52.119 --> 0:21:54.800 you could work and get fired and quit and it 0:21:54.880 --> 0:21:57.639 was no big deal. But I think you and I 0:21:57.760 --> 0:22:01.520 learned an awful lot about contract stuff yea, through our 0:22:01.560 --> 0:22:04.080 work and like how to read them and how many 0:22:04.119 --> 0:22:07.920 words there are in them, yeah, and how lawyers charge 0:22:07.960 --> 0:22:13.320 so much money for reading those words imperpetuity, imperpetuity throughout 0:22:13.320 --> 0:22:16.879 the known universe, throughout the universe. That wasn't one of 0:22:16.920 --> 0:22:19.639 them once, right, Yeah, So like we couldn't go to 0:22:19.800 --> 0:22:23.600 Mars and set up of Mars farm and start podcasting 0:22:23.640 --> 0:22:27.280 about it. No, we'd be served on Mars. But anyway, 0:22:27.960 --> 0:22:32.240 we learned, and this was shocking to hear of something 0:22:32.320 --> 0:22:36.240 just called unenforceability of a contract. We kind of thought 0:22:36.320 --> 0:22:39.000 going into this thing like Rubes like, well, no contracts, 0:22:39.080 --> 0:22:41.760 that that means you signed a contract. They're like, no, 0:22:41.840 --> 0:22:44.879 you still got to enforce this. It's just like setting 0:22:44.880 --> 0:22:48.080 a law. Someone can still break that law. You have 0:22:48.160 --> 0:22:51.200 to have enforceability. And a lot of times these things 0:22:51.240 --> 0:22:55.080 were not enforceable in the United States, right, but still are. Yeah, 0:22:55.119 --> 0:22:58.919 that's absolutely true. But if you are somebody who's like 0:22:58.960 --> 0:23:05.040 a highly skilled laborer who has access to proprietary information, 0:23:05.240 --> 0:23:12.439 trade secrets, intellectual property, all just really high level stuff, 0:23:12.480 --> 0:23:15.280 as far as the corporation is concerned. Very valuable stuff too. 0:23:15.600 --> 0:23:18.520 If you're one of those workers and you signed a 0:23:18.600 --> 0:23:22.119 noncompete agreement and you break it, you're probably going to 0:23:22.160 --> 0:23:24.560 get ruled against depending on the state. If it's a 0:23:24.600 --> 0:23:28.480 state that allows noncompete agreements, you're probably going to lose 0:23:28.520 --> 0:23:32.320 that case because the courts have typically said okay. At 0:23:32.359 --> 0:23:35.680 that level, you can probably hire a lawyer who can 0:23:36.080 --> 0:23:40.080 explain to you what you're getting into beforehand. You probably 0:23:40.119 --> 0:23:42.560 have a little bit of leverage where you can say, 0:23:42.600 --> 0:23:44.680 I don't want to sign a noncompete, I'll give this 0:23:44.800 --> 0:23:49.160 up instead. Or conversely, you can say, I'll sign your noncompete, 0:23:49.160 --> 0:23:52.359 but you got my salary by ten percent or something 0:23:52.400 --> 0:23:54.840 like that. And in that respect, it goes back to 0:23:54.880 --> 0:23:58.600 the Mitchell versus Reynolds case. These two people, the employer 0:23:58.640 --> 0:24:03.239 and the employee are on relatively equal footing enough so 0:24:03.280 --> 0:24:06.560 that they're able to negotiate this non compete, and um, 0:24:06.800 --> 0:24:10.400