Non-competes – formally known as “non-competition agreements” and, for the purposes of this blog post, “NCs” – are a hot topic due to the recently announced Federal Trade Commission (FTC) rule that bans virtually all existing and future NCs. How will this seismic labor regulatory shift affect women in the printing industry? We explore this question below.

What Are NCs and Why Did the FTC Ban Them?

According to Women in Print Alliance professional advisor Adriane Harrison, VP of Human Relations at PRINTING United Alliance, “Non-competes are restrictive clauses that often appear in employment agreements, severance agreements, and other types of contracts.”

The basic purpose of these “restrictive clauses” is to protect companies by preventing employees (in whom companies have invested knowledge and training) from going to work for industry competitors and/or opening competing businesses within a specified timeframe or geographic territory, or both. It’s estimated that more than 30 million Americans – or 1 in 5 workers – are covered by these agreements.

Critics, including the Biden Administration’s FTC, have long complained that NCs are detrimental to workers by restricting employment mobility, depressing wages as workers are locked into long-term jobs, and stifling market innovation and new business start-ups. They say getting rid of NCs will inject more competition into the labor market, spur entrepreneurship, and allow more companies to access a larger talent pool when hiring.

NCs Have Been Around Forever. Why The Push to Ban Them Now?

Fun fact: NCs have been around since the 15th century when the medieval apprenticeship system relied on master craftsmen teaching new workers without fear that the students would upstart and outshine them.

The April ruling by the FTC is reflective of a growing unfavorable view of NCs, particularly at the state level where legal enforcement of such agreements lie. To date, four states – California, California, Minnesota, North Dakota and Oklahoma – have outright eliminated use of NCs and other states, like New York, are flirting with a ban.

This increasingly unwieldy patchwork of state employment law, plus President Biden’s 2021 whole-of-government executive order that directed the FTC to promulgate the NC ban rule in the first place, have driven the policy to a point where requiring a broad portion of the workforce to sign NCs could well be dead in the water.

Public opinion is also shifting against the concept and use of NCs. Out of the 26,000 public comments received by the FTC during its rulemaking process, over 25,000 were supportive of the ban, according to Politico.

What Does the NC Ban Mean for Women in the Print Workforce?

A growing body of research indicates that requiring workers to sign restrictive NC agreements, impacts women more negatively in the long-term than it does their male counterparts. In 2021, Cornell University professor Matt Marx published key research regarding NCs, gender, and entrepreneurship. This deep dive examined employment histories for all workers in twenty-five states plus the District of Columbia between 1990 to 2015 along with rates of state enforcements of NCs during the same timeframe.

Marx concluded that women governed by strict NCs were less likely to leave their current jobs to start their own companies. His theory rests on the concept of risk aversion. He posits that because women are typically less risk-averse then men, they are more unlikely to take the chance of leaving an employer and starting a rival company – actions that could result in hurtful legal, financial, and reputational costs. Thus, Marx concluded, NCs as an institutional human resources practice, discourages the rate of female entrepreneurship.

Add to Marx’s theory the well-documented gender gap in start-up financing, and it’s easy to see why many women labor advocates believe NCs are harmful – and hope that the FTC’s recent action can bring about positive change.

Scholars like Case Western University law professor, Ayesha Bell Hardaway, believe the new FTC ban may well provide another tool to chip away that the current gender wage gap in print and in the economy overall. According to Hardaway, who points out that women of color are even more negatively impacted by NCs, “We’ve got a long way to go, but removing this unnecessary, this unjust impediment can be helpful.”

But Wait. What About Women Who OWN Print Companies? How Will They Be Impacted?

It is important to note that many economist and legal experts believe there IS merit to the protections NCs afford established print companies – and the women who own or lead them. NCs serve as a means to reduce business turnover, and some say knowing that workers are less likely to leave for a competitor drives employers to invest more in training to ensure their long-term workers are highly skilled, strong performers. Of vital importance, NCs have allowed companies to protect trade secrets. Harrison says trade secrets in the printing industry generally fall into two categories: technical information, such as a specific and unique manufacturing process; commercial information, such as supplier and customer lists or some advertising/marketing strategies.

So, will the FTC ban on NCs empower female workers while presenting a major disadvantage to female company owners at the same time? Not exactly, says Harrison.

“The FTC ban does not prohibit NDAs designed to protect trade secrets,” she explains. “The key, however, is to make sure that the protected information constitutes a “trade secret” and that the rest of the NDA is narrowly tailored so that it does not have the effect of a noncompete.”

In a recent blog post, small-business consultant and frequent cable news commentator Gene Marks  expounded upon ways business owners can do just that (spoiler alert: he suggests using AI to take the first crack at reviewing existing documents before handing them off to an attorney for review).
He surmised, “In the end, I’m not so sure that banning non-competes is such a big deal. That’s because it’s not just about the employee — it’s more about trade secrets that the employee has. Businesses can easily get around this ban by strengthening their confidentiality agreements.”

So Maybe Banning NCs is a Win/Win for Women in Print?

It is very plausible that ultimately the FTC’s action banning NCs can be a win/win in the print industry. Women print employees could enjoy more freedom to pursue new and advanced opportunities (plus higher paying wages), while women print company owners could see a wider talent pool from which to recruit workers in a tight print labor market.

What Else Do Women in Print Need to Know?

The main thing to know is that there is still a LOT to be sorted out when it comes to NCs. The practical implementation of any new federal rule – particularly one as expansive as the NC ban – is rarely smooth sailing. The devil is certainly in the details. To wit, the FTC’s rule may or may not impact related employment policy covenants, such as non-solicit agreements and non-disparagement severance agreements, or contractual agreements, like tuition reimbursement policies.

Such rules also often upend or redefine long-understood definitions and expectations. For example, the FTC carved out exceptions AND redefined terminology for “senior executives” in the context of its new rule.

And when controversial rules such as the NC ban are issued, lawsuits seeking to stay or overturn the rule are common. Like clockwork, the US Chamber of Commerce filed a legal challenge the rule within hours of the FTC’s announcement. Others are likely to follow. This puts the actual effective date into limbo. Do not be surprised to see legal proceedings drag down the implementation process.

Now Is the Time to Stay Informed…

It is critical that BOTH women in print workers AND women in print company owners stay up to date on how the FTC ban on NCs plays out in the coming months. Here are my suggestions on how to do so:

  • Review (and bookmark!) free online legal primers on the FTC rule like the ones from Sullivan & Cromwell and Seyfarth. These are topline, easily digestible summaries, and often the law firms will update these resources as further details, effective dates, or court cases alter need-to-know facts.
  • If you own a company that uses NCs upon hiring, ensure that the team member(s) responsible for HR and/or legal affairs is current on any new terminology or compliance requirements (such as the obligation to notify employees with existing NCs of the new rule).
  • If you are a worker who is currently governed by an NC, don’t throw caution to the wind because of the FTC ban. It is not in effect yet and it may look a lot different once the court system has its say. Use good judgement and seek professional employment law guidance if you are planning to move to a competitor or start your own firm to ensure you are not running afoul of other related restrictive employment agreements.
  • Finally, turn to a trade association or professional group that provides expert HR/employment policy guidance to shepherd you through this period of uncertainty surrounding NCs. It is times like these that you are reminded why you pay to belong to such organizations.

Of course, there is NO substitute for individualized expert legal counsel. This is especially true for companies that must navigate the new employment law path carved by the FTC’s action and/or for covered workers in the midst of switching employers (or becoming their own boss).

…And to Keep Moving Forward

As is always the case, with change comes opportunity for growth. Women in Print Alliance will continue to monitor the landscape following this landmark FTC ruling and its impact on both women in the print workforce and women print company owners.