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Noncompetes Survive in Maryland - Broadcasting & Cable

Noncompetes Survive in Maryland

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Thanks in part to a nickel coffee cup and the chairman of the Maryland Senate Finance Committee, Maryland on-air talent, as well as some salespeople and GM's, have lost their latest bid for free agency.

The Maryland/DC/Delaware Broadcasters Association (MDCD) was celebrating today after a bill to prohibit noncompetes in broadcast employment contracts failed to pass in the Maryland Senate's rules committee. The bill, backed by the American Federation of Radio & Television Artists, had already passed in the House.

A similar bill outlawing noncompetes was voted down in the Senate finance committee in February 2003.

MDCD Director of Government Affairs Tom Fahy, who led the broadcaster lobbying effort against the bill, said this was the third year in a row the group has succeeded in blocking AFTRA efforts to scrap the noncompete provisions. The D.C. City Council outlawed noncompetes last year. Other states that have outlawed them include California, Illinois, Maine and Massachusetts. Such clauses prevent employees who leave jobs -- sometimes even when fired -- from working for competitors in the same market for a certain period, usually six months to a year.

AFTRA argues that there is no business justification for the noncompete clauses. Although courts have upheld them in other industries, AFTRA Director of News and Broadcast Tom Carpenter says that broadcast talent is different. "They don't have trade secrets, confidential information or customer lists." He says the clauses "put talent in the position of having to accept a lowball offer or uproot their families and move to another market."

Chip Weinman, president of MDCD, sees it differently. "When I testified I had a Starbucks cup with me," he says. "This isn't about bringing in a hairdresser or a coach. This is about our brand. The anchor is the brand. Imagine if you take a five cent paper cup and put 50 cents worth of coffee in it. It is worth 4 bucks because of that Starbucks brand. With the broadcast brand, he says, "it's about years of advertising on billboards and promos on-air."

Weinman says that the people you make that investment in shouldn't be able to "just take it across the street without so much as a 'by your leave.' If we can't protect that," he argues,"we proabaly won't invest that much and we probably won't pay them as much because the brand won't be worth as much."

Weinman says MDCD was willing to compromise, including making clear that noncompetes would not be enforced on employees fired or laid off for other than cause. Pat O'Donnell, executive director of AFTRA's Washington-Baltimore local, countered that "we were unable to compromise because the issue is restraint of trade. They had too many restrictions with respect to allowing people to work."

O'Donnell says that had the bill not been blocked in committee, it would likely have passed. "The bill passed the House 106 to 31," she said, "and that speaks for democracy. In the Senate, the chairman of the finance committee refused to let it be voted on. Had he let the committee vote, we believe there would have been a victory, including in the full senate. The victory for the MDCD was at the expense of democracy."
O'Donnell says AFTRA will try again next year.

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