Lights, Camera, Action: Why Non-Competes Should Be Banned in the Broadcasting Industry
“Imagine getting in your car in the morning and switching the radio to your favorite morning station to listen to the familiar voices of personalities you listened to for years. Inexplicably, you find that they are gone and that switching to other stations feels unsatisfying. You are left driving to work in silence, without the laughter to which you have become accustomed. Now imagine that the reason for your silent drive to work is a few sentences in a contract that prevent these on-air personalities from returning to the airwaves for a year.”
Employee non-competes are a controversial type of agreement present in virtually all industries, with many states outright refusing to enforce them. Non-compete agreements prohibit an employee from joining or starting competing businesses in a certain geographic area for a period of time after their employment ends. Businesses have argued that, among other things, the agreements are necessary to protect their intellectual property from being misappropriated when employees leave the company.
The broadcast media industry is different than others, however, as multiple states have enacted statutes that limit or prohibit the use of non-competes in the broadcasting industry. These agreements can cover both on- and off-air employees. In Massachusetts, the law states that “[a]ny contract or agreement which creates or establishes the terms of employment for an employee or individual in the broadcasting industry, including, television stations, television networks, radio stations, [or] radio networks” that restricts employee’s from obtaining employment in a certain geographic area for a certain amount of time after the end of the employment relationship. This statute is one of the broader versions, with other states passing more limited versions that distinguish based on method of termination or other restrictions.
But how has the broadcasting industry been impacted in states that have enacted such statutes? Prior to implementation of some of these laws, critics were worried that the employers would be harmed by too many of their employees leaving and that non-competes function as an insurance policy. However, there doesn’t seem to be a big impact on the industry with the passage of these bills. In New York, where the Broadcast Employee’s Freedom to Work Act was passed in 2008, there was a 37% increase in film and television employees from 2008 to 2017.
However, for the employees who are no longer forced to sign non-competes, the benefits are clear. The lack of restrictions on their future hiring helps them to better negotiate salaries, both when renewing their contracts at their current positions and when looking for a new job. Additionally, given the competitive job market in broadcasting and the difficulty in finding a job, there is little, if any, room for an employee to negotiate the non-compete clause, as they know that failure to sign means the company will just hire someone else.
The freedom to move to another station is important because of the uniqueness of the broadcasting industry. Due to the nature of the business, anchors and other on-air personalities have the most value in their geographic market. The trust and recognition gained in one city may not transfer to another city – as one reporter puts it, “the fact that I may have great visibility in Boston as a popular sports announcer may have no value to me in St. Louis or Chicago or Los Angeles, because nobody knows who I am there.” When a non-compete is in play, the power lies with the employer, as they know that the employee would have to start over entirely in a new market.
Additionally, employees subject to a non-compete could face additional issues in future employment, such as restrictions on similar types of content even with different media or other unfair competition or conversion claims. In Burke v. Cumulus Media, Inc., No. 16-cv-11220, 2016 U.S. Dist. LEXIS 91880 (E.D. Mich. July 15, 2016), after two on-air employees, one who hosted a radio show and the other who appeared regularly on the show, were fired, they began webcasting a morning audio show via Periscope. The employees sued for wrongful termination and the station countered by suing for breach of the employees’ non-competes and other claims. Although the court did refuse to grant a preliminary injunction against the plaintiff employees since the non-compete didn’t apply to “internet streaming [that] is significantly different from heavily regulated, geographically limited radio activities”, the court also acknowledged that “[p]laintiffs are carrying on a business that is competitive with Cumulus’s business.” If there had been a broader non-compete in place, it is likely that the non-compete would’ve been applicable and would have therefore barred the plaintiffs from continuing to produce their internet show, despite it being a different form of media.
So why do many states still allow non-competes in the broadcasting industry? There is a lack of evidence of harm to the industry in states that have banned broadcasting non-competes. The benefit to the companies of having these agreements is unequal and unbalanced control over their employees. The employees that are subject to these non-competes lose value in their career, freedom to accept a better opportunity in the same market, and may even face additional liability for transitioning to a similar job on a different type of media. Because of all of this, more states need to introduce and pass restrictions on the use of non-competes in the media industry.