Last week KJAM's
Matt Groce (the voice of Madison!) pointed out to me the fact that Shawn Cable, like pretty much every other broadcast media personality, was probably bound by a non-compete clause at KELO that restricted him from working for any competing media outlet not only while he worked at KELO but for a year after the termination of his employment. Joe Prostrollo confirmed as much in his
July 26 Viewpoint University interview with Rick Knobe.
Curious, I put myself in Shawn Cable's shoes. I burst briefly into song ("There she is,
Miss South Dakota...."), then considered my career situation:
If I want to work in this industry, I have to commit myself to one company. KELO won't give me a contract unless I promise not to work for a competitor for at least a year after I quit working at KELO. They can choose not to renew my contract and have no obligations to me at all, but they can require me to remain obligated to them for a full year after they stop writing me checks. If a new, exciting job opportunity opens up at another media outlet, I'm out of luck. I could ask another employer to wait a whole year for me, but what good businessman can wait that long? I love my community, and I want to stay here and work, but if something happens and I leave my current employer, I either have to give up a full year of working in the profession I love and am good at, or I have to move my family to an entirely separate media market. Wow -- and I thought we were a right-to-work state.
(I then saw a cloud exhibiting slight rotation and raced after it in my weather Jeep, Dolores.)
Right-to-work state? Seems like some discussion on that topic has arisen lately. MDL's Jon Hunter opined favorably about South Dakota's right-to-work law and lack of unionization as positive factors for economic growth. (Goll darn it! A
search of the Leader archives brings up eleven Hunter editorials, but not the July 8 essay on the joys of powerless labor!) Sioux Falls electrician and union rep Jabez Daniel Bruns offers a strong rebuttal in a July 26 "My Voice" column ["
Right-to-Work Laws Attract Unskilled Labor,"
that Sioux Falls paper that makes me look at ads for sex toys just to get the news, 2007.07.26].
Take your pick on where you stand on unions. The question here is, if we truly value the right of employees to work without undue interference in their participation in the free market, then how can we countenance non-compete clauses? One of the most basic formulations of the free market is, "You pay me money, I do what you say." The logical corollary I follow is, "You stop paying me, you stop bossing me." I am beholden to my employer only so long as he keeps writing checks.
A non-compete clause strikes me as an undue extension of an employer's authority. The employer gets a great advantage in the marketplace, but the workers and the general public suffer. The employer gets exclusive rights to the employee's skills and productivity during the term of the contract, which is fine. But then when the contract is over, the employer gets to deny the employee the opportunity to participate in the marketplace for his own betterment. The employer also gets to deny consumers the opportunity to purchase that employee's skills and productivity for the term of the non-compete clause. Self-interest in the free market system is supposed to serve the general welfare. With non-compete clauses, only the employer benefits; all other participants in the market lose. That's a violation of free-market principles.
South Dakota's labor laws exist ostensibly to grease the wheels of commerce while protecting the rights of all involved.
SDCL 60-8-3 is the right-to-work statute relating to labor union membership. It doesn't apply to non-compete clauses;
SDCL 53-9-11 does:
Employment contract--Covenants not to compete. An employee may agree with an employer at the time of employment or at any time during his employment not to engage directly or indirectly in the same business or profession as that of his employer for any period not exceeding two years from the date of termination of the agreement and not to solicit existing customers of the employer within a specified county, first or second class municipality, or other specified area for any period not exceeding two years from the date of termination of the agreement, if the employer continues to carry on a like business therein.
Ugh --
two years?! It's worse than I thought. Two years out of the workforce can kill one's résumé. How are professionals supposed to stay in their communities and maximize their career opportunities?
This non-lawyer would humbly suggest that SDCL 53-9-11 conflicts with the principles of two other statutes:
- SDCL 60-2-4: "Duties of employee for reward. One who agrees to serve another for a good consideration must perform the service with ordinary care and diligence so long as he is thus employed." Hmm... "so long as he is thus employed." Can a contract provision apply after employment ends?
- SDCL 60-8-4: " Any agreement relating to employment, whether in writing or oral, which by its stated terms, or by implication, interpretation, or effect thereof, directly or indirectly denies, abridges, interferes with, or in any manner curtails the free exercise of the right to work by any citizen of the state of South Dakota, is a Class 2 misdemeanor."
Here Bruns and I find some common ground. We both recognize that "right to work" is a false slogan. SDCL 60-8-3 is less a tool to empower workers than a sop to corporations who don't want unions challenging their power to keep wages and benefits as low as possible. As Bruns points out, the "right-to-work" statute drives away skilled workers and makes it easier for companies to take advantage of unskilled labor.
SDCL 53-9-11, authorizing non-compete clauses, serves companies trying to take advantage of skilled labor. Sure, you can argue that no employer forces an employee to sign a contract. But imagine you're the next Shawn Cable. You want to work in boradcasting in the Sioux Falls market. You'd also like to keep your options open. But every employer says, "You can only work for us if you promise not to work for anyone else in the industry for
two years after you quit or we fire you." Some choice.
The free market is supposed to be free for all participants, capital and labor, buyers and sellers. When it's not, we have something else (oligarchy? plutocracy? communism?).
"Non-compete clause" -- in its very name, such a contract obligation violates the very principle of competition that supposedly makes the free market the best economic system. Prospective employees aren't in any position to fight these clauses -- they need the job, and the law gives their employers the power. We need to repeal SDCL 53-9-11 and put our money and our contracts where our mouths are on being a real "right-to-work" state.
This blog printed on 100% recycled electrons.
Shawn Cable joins KSFY TV
