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PAUL GREELEY 817-578-6324 | PAUL@NEWSCHECKMEDIA.COM | @TVMarketShare

NAB Tells Congress It Opposes Ban On Noncompete Agreements

The NAB contends that the proposed ban on noncompete agreements is far-reaching and oversteps the FTC’s jurisdiction. Broadcasting presents a unique case for reasonable noncompete clauses due to the substantial investments broadcasters make in promoting on-air talent.

by Paul Greeley March 2, 2023 7:04 EST

The National Association of Broadcasters has joined with numerous state and national organizations in sending a letter to Congress opposing the Federal Trade Commission’s proposed rulemaking banning noncompete clauses nationwide.

The NAB contends that the proposed ban on noncompetes is far-reaching and oversteps the FTC’s jurisdiction. It says broadcasting presents a unique case for reasonable noncompete clauses due to the substantial investments broadcasters make in promoting on-air talent.

The letter reads, in part:

“The FTC lacks the constitutional or statutory authority to issue such a rule and, in attempting to do so, the agency is improperly usurping the role of Congress.

“Moreover, this sweeping rule would invalidate millions of contracts around the country that courts, scholars, and economists have found entirely reasonable and beneficial for both businesses and employees. Accordingly, we ask you to exercise your oversight and appropriations authority to closely examine the FTC’s proposed rulemaking.”

I can understand why the NAB feels the banning of noncompetes could threaten investments broadcasters make in hiring, training and promoting personnel at their TV stations.

Here’s a nightmare scenario for you if you’re a TV station general manager: Late one afternoon, a key employee walks into your office to tell you he’s leaving for another station in the same market.

The employee could be an on-air anchor. Or a sales manager you recently hired and moved from another market. Or a marketing executive who’s been at the station for years.

In any event, he starts tomorrow morning across the street.

Ouch.

The investment in marketing the on-air anchor, the money you spent moving the sales manager and the competitive knowledge the marketing executive has are all suddenly benefiting your competitor.

If noncompetes or personal services contract were banned, these scenarios might be common practice at stations.

Noncompete agreements protect the stability of stations and provide protection and assurance to employees who sign one.

Ideally, the personal services contract needs to be mutually beneficial to both parties.

Usually, the personal services contract is for a set period of time and spells out what the salary will be in each year.

For the employee, the advantage is having some security, knowing the station has made a commitment to the point of stating the salary for each year. However, it’s up to the station to pony up the money to entice the employee to make that commitment and sign the contract.

It should be standard operating procedure for certain new employees to sign a noncompete. To entice current key employees to agree to sign a noncompete, the station should increase their salary.

It doesn’t always have to be about money, although it usually is.

If stations don’t see the need to reward certain employees with a personal services contract, they will spend that money anyway looking for a replacement.

Losing a dedicated, talented, employee to your competition, another station right in your market, is bad business. It hurts. It looks bad. It’s damaging to morale. It’s embarrassing.

Your station is wounded and the competition gets someone who knows your secrets, knows the market and can go right to work.

Noncompete agreements and personal services contracts are essential in many cases to the unique situation local TV stations find themselves.


 

Tags: FTC, Market Share, NAB, non-compete agreements, Paul Greeley, TVNewsCheck

Comments (2)

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  1. timeshavechanged says:
    March 2, 2023 at 10:29 am

    If you can’t create an environment where employees feel fulfilled and see growth opportunities, that isn’t the employee’s fault. That’s your fault. If your employee finds a bitter opportunity either financially or from a career perspective, you should either pay to keep them, show them a career opportunity in your organization, or congratulate them and wish them the best at their new job.

    Do your job better and you will not need to use non-compete agreements to hold onto your employees. There are no secrets in our business that we need to protect.

    Non-compete agreements are a tool for bad companies and bad managers.

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  2. Former Producer says:
    March 2, 2023 at 11:08 am

    Non-competes are unfair and very one-sided. Non-competes force TV news journalists to play a game of nationwide hopscotch in the search for better-paying jobs. It deprives viewers of the institutional knowledge a long-tenured journalist can provide. And I personally know some people who got out of the business, because they wanted to stay in their community and not have to move somewhere else to get around their non-compete.

    If broadcasters actually made “substantial investments” in employees, such as paying better salaries, TV station managers wouldn’t have to worry as much about employees jumping to the competition.

    And Paul, surely you know non-competes go far beyond on-air employees. Even behind-the-scenes employees, such as producers, tend to get locked down by non-competes. And why is that? I don’t recall any TV station featuring a producer in a 30-second topical, a billboard, or a marketing campaign. How do you justify a non-compete for someone other than on-air talent?

    You’re wrong about non-competes. I say, ban ‘em and ban ‘em now. If your business can only hold onto employees by legally shackling them for six months or a year, then you don’t deserve to be in business.

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