Earlier this week, The Keystone reported Connecticut mega-millionaire and GOP Senate candidate Dave McCormick’s defense of Bridgewater Associates’ highly restrictive noncompete agreements. McCormick’s comments come after the Federal Trade Commission (FTC) announced a new rule in April to prohibit such agreements, citing their detrimental effects on wages, stifling of innovation, and hindrance to our economy.
“It’s clear that Connecticut mega-millionaire and former hedge fund CEO Dave McCormick sides with corporate interests. His vigorous defense of Bridgewater’s anti-worker noncompete agreements combined with his unwavering endorsement of making Trump’s tax cuts for the wealthy permanent paint McCormick as a dangerous choice for Pennsylvania’s working families,” said spokesperson for American Bridge 21st Century Nico Delgado.
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The Keystone: Dave McCormick defends forcing his employees to sign restrictive noncompete clauses
Pennsylvania US Senate candidate Dave McCormick finds himself at odds with the Biden administration and the Federal Trade Commision (FTC) when it comes to banning noncompete clauses and protecting workers.
Noncompete clauses prevent workers from switching employers or starting a company in their field in the same geographic area and/or for a certain period of time after they leave their job.
An estimated 30 million American workers are currently affected by noncompete clauses—roughly 18% of the US workforce. These clauses have been shown to lower workers’ pay and restrict their opportunity and mobility.
McCormick, a former Connecticut-based hedge fund manager running against US Sen. Bob Casey (D-PA) in November, served as the president of Bridgewater Associates, one of the world’s largest hedge funds, from 2009 to 2020 and its CEO from 2020 to 2022.
The New York Times reported in 2016 that Bridgewater forced employees to sign extreme noncompete clause that banned them from seeking jobs in the financial services industry for two years after leaving the company.
Employees had to inform the president—McCormick at the time—about new job opportunities, and Bridgewater would let the employee know if they objected to the new job. Bridgwater also tracked their former employees by asking them for updates on their new job up to four times a year for two years to make sure they weren’t working for a rival.
McCormick defended Bridgewater’s use of noncompete clauses at a York Rotary Club meeting last month when he was asked about the Biden administration banning noncompetes.
“I’m not going to give a well thought through Senate candidate answer,” McCormick said.
“I’ll talk about it as a CEO. I thought it was important to have noncompetes as a CEO, at least in our business.”
McCormick explained that employees should not be able to leave their job for another position because of the knowledge and experience they gained while working for their original employer.
He equated that knowledge and experience with “intellectual property, that was a by-product of the company’s innovation,” and argued that the former employee could then “trade the knowledge in their brain onto the market because of the knowledge they gained from employment in the company.”
“That seemed like an unfair trade and very detrimental to competitive advantage in the company.”
McCormick’s stance is sharply at odds with public sentiment and the Biden administration, which banned noncompetes earlier this year.
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina M. Khan said in a statement after the FTC banned noncompetes earlier this year. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”
Published: Jun 20, 2024 | Last Modified: Jun 21, 2024