Did you know that noncompete agreements, those things that prevent you from working for another company in the same industry for a certain amount of time, are alive and well in the media industry in Utah?
Media execs from Deseret Management Corporation, Fox 13, Bonneville International and ABC4, along with a handful of others, are lobbying the Utah Legislature hard to kill a bill that would make them get rid of their non-compete agreements, wanting instead to keep their competitive advantage over their employees.
The bill is supported by many journalists, broadcasters and producers, although a number of them are hesitant to go public because of fear of retribution. Those fears are not unfounded.
Ninevah Dinha Madsen, former anchor at Fox 13, describes her experience:
“Here’s how my contract negotiations went.
“General Manager: ’We’d love to keep you here, and are offering to renew your contract. Here’s your pay over the next three years.’
“Me: ‘I’d like to negotiate the terms and conditions of this contract, including higher pay.’
“GM: ‘This contract is non-negotiable.’
“Contracts were always ‘non-negotiable’ by the way. And once, I was told if I didn’t sign the contract they’d just find a ‘cheaper’ Nineveh Dinha.”
Another reporter describes it this way:
“In the beginning of my career, I worked as (an) associate producer/weekend producer they asked me to sign a three-year contract, one-year noncompete after, making $22,000 to start. When I refused, retribution started. I was told I was a terrible producer with no talent and would never be promoted off weekends.”
Rep. Mike Schultz brought forward HB241, Post-Employment Restrictions Amendments, because of the egregious nature of what amounts to indentured servitude for many in the media industry.
As I listened to a very long committee meeting, where person after person talked about their right to continue their anti-competitive, restraint of trade practices when it comes to their chattel, sorry, “assets,” oh, sorry again, their “talent,” it became abundantly clear he’s on to something.
Richard Jones, vice president and general manager of ABC4 and CW30, said flat-out “People are our products.” Of one reporter, he said, “I made him.” Clearly the implication in the testimony was the he could break him, too.
He also argued that he did not want to invest money in “developing their assets,” just to see them “walk across the street” to work for a competitor.
There’s a question that makes the rounds in business circles, attributed to Peter Baeklund. A chief financial officer asks the chief executive officer, “What happens if we invest in developing our people and then they leave us?” The CEO responds “What happens if we don’t and they stay?”
John P. Kotter, professor at the Harvard Business School and author of multiple books including “Leading Change,” has said that organizations that invest in a culture of personal and professional development can outperform the competition by 500 percent or more. Why would Utah’s media market not want more of that?
Bill Gephardt testified in favor of the bill. After 40 years in broadcasting, he now has his own company and does not use noncompete agreements.
“Part of owning and managing a business is training and retaining talent,” he said.
Smart businesses invest in their employees. Period. California — not exactly a bastion of conservative thought — has banned noncompete agreements. Silicon Valley has figured it out. I’m sure Utah’s media market could as well.
At the very heart of noncompetes is the leveraging of power. A New York Times article titled “Companies Compete but Won’t Let Their Workers Do the Same” argues that “Noncompete agreements, like other anti-competitive practices, poison our economy in larger, less tangible ways. There is strong data showing that they reduce employee motivation, entrepreneurship and sharing of knowledge, the fundamental building blocks of innovation and economic growth.”
The conservative think tank the Sutherland Institute testified two years ago: “Every Utahn’s fundamental constitutional right to work is an essential component of the American idea of freedom, and second, because we do not believe that the financial interests of employers in restricting competition justifies undermining freedom by contractually denying former employees of their right to work.”
Debbie Worthen left the industry last January. She testified in favor of Schulz’s bill as well. She knows the playing field is not level. The “top-tier” assets might be able to sit out a year of unemployment but most cannot. “Noncompetes are handcuffs,” she said. “Sitting out for a year means I lose my house.”
The New York Times article mentioned above also points out suppression of wages and inability to have job mobility as a result of noncompetes. “Workers bound by noncompetes cannot rely on outside offers and free-market competition to fairly value their talents. Without incentives to increase wages in-house, companies can allow salaries to plateau. And while noncompete restrictions impose hardships on every worker, for women these restrictions tend to be compounded with other mobility constraints, including the need to coordinate dual careers, family geographical ties and job market re-entry after family leave.”
Once employment ends — or even before it ends — whether willfully on the part of the employee, or on the part of the employer, employees should be free to seek employment elsewhere. That’s how the free market works. Utah is a right-to-work state. Employers are able to hire and fire “at will” but broadcast employees are not free to seek employment at will. That’s not right.
One of the wilder claims promoted by Keith McMullin, president and CEO of Deseret Management Corporation, was that removing non-competes would “interfere with freedom of the press.” Rather, as Rep. Brad Wilson correctly pointed out, these non-competes are silencing voices in the media, voices who have become “interchangeable widgets” for the corporations who “own” them.
Wilson had strong words for the media execs, as he quoted back to them their own language: anti-competitive, unable to compete, owning the “likeness” of a person, owning the “talent” and forcefully preventing them from leaving by using the non-competes as a club.
Speaker Greg Hughes has strong opinions on this bill as well. Just check out his Twitter feed, @GHughes51, and you’ll see what I mean. He did have this to say (among other things): “HB241 honors commitments written into our Utah State Constitution: “It is the policy of the state of Utah that a free market system shall govern trade and commerce..” Furthermore, “[e]ach contract..in restraint of trade or commerce is prohibited.” Article XII, Section 20.”
The media has an important role to play in our society. It’s vital for a free society to also have a free press, and that includes freedom and opportunity for those that work “in the trenches.”
Ninevah Madsen said it well: “Just know for every one of me who is willing to speak out, there are dozens of other current Utah journalists sitting on the sidelines — silenced and unable to exercise the very freedoms they work so hard to protect: the First Amendment.”
That should not be. I hope the Legislature stays true to its commitment to free markets and its opposition to restraint of trade and frees members of the media from their shackles.
Holly Richardson is grateful for the First Amendment and grateful she gets to write for an organization that does not require a noncompete agreement and that does not act like they “own” her but who instead makes her want to keep writing for them because they make her feel valued and worth keeping around.