If you haven’t heard, President Biden has asked the FTC to ban non-compete contracts for workers. (Click here to read AP’s piece on it). THANK GOD.
I have had a non-compete at almost every job I’ve ever worked at. Retail is probably the only exception. And I think for every job it has been BULLSHIT.
I worked for a company that did helpdesk phone work. With a non-compete. Theoretically, I wasn’t allowed to take any other phone-based helpdesk role. Now, how enforceable was it? Probably not very, but there were a LOT of people hired at this company at 19 or 22 while they were in college or just after and they were extremely anxious that they weren’t allowed to look at other helpdesk roles when they were ready to look for better pay or benefits or commute…. Several took advantage of the “50-mile” rule (if you move more than 50 miles non-competes are harder to uphold?) and I only know of that rule because of the people who said they were using it – I don’t even know if it’s real.
I currently am a contract worker for a Fortune 500 company. I am contracted through another company (I’m going to call it “Sweatshop”) as a W2 employee and I have 2-year non-compete in my contract. Now, why does this piss me off? Well Sweatshop doesn’t offer ANY benefits. Literally, if I wanted to get health insurance I would have to go to the marketplace. I didn’t expect to like working as a contractor when I signed on – I was planning to finding a direct-hire role when I accepted the offer.
Now, I’m stuck. Not 100%. I could take contract with another company. But I like my managers. I like my co-workers. I like the workload. I like the flexibility I’ve found in this role. I’ve heard from other contractors that this is exceptional. I don’t want to leave the contract with the Fortune 500. I would like to get competitive benefits some of the other contractors get from their W-2 providing companies (other Sweatshop-style companies).
Now, why am I locked with a non-compete? Do I know any significant company secrets? Do I have patents which I could carry to a competitor? Am I likely to go work for a direct competitor? No. No. And No.
Let’s be clear, Sweatshop locked me with a 2-year non-compete so I can’t stick with the Fortune 500 company who likes my work and I like working for – but get better benefits. I can’t seek out competitive treatment from the holder of my W2. It isn’t a deal-breaker for me (right now) because my husband’s benefits are pretty good. But God forbid something happen to him or his job… because I can’t pick up the slack.
And not having a 401k does make me a little anxious. I’m locked down to only being able to put away $6k per year into my IRA/Roth IRA (for retirement savings). TOTAL. Over 30 years, that means I’m only adding $180,000. I know that sounds like a lot, but if you have a 401k with a %5 match – $50k a year, you put away 10% ($5k) you are actually getting $7.5k. Over 30 years that’s $225k – and when you add compounding interest… it makes a significant difference. A 401k can max that out to $19k per year – that’s more than 3x what I am allowed to max out at. Oh and employer match doesn’t count towards that cap either.