I heard from two workers being sued by an Iowa company over a noncompete agreement they say is unfairly keeping them from finding other jobs.
Seneca Companies was started in 1972 by Chris Risewick, who sold petroleum equipment. Over the decades, the Des Moines-based business has diversified into selling and servicing fuel equipment, and grown to 10 offices throughout the country.
But it was still family owned until this year, when the company announced it would be “partnering” with “an affiliate” of Trive Capital, a Texas private equity firm. That affiliate, both former Seneca employees told me, was OWL Services, a Michigan company that builds and maintains fuel infrastructure across the US.
The workers requested to be anonymous because they have pending litigation with Seneca. (A message sent to Seneca seeking comment was not immediately returned by the time this newsletter ran; if I get a reply, I will run it next week.)
The workers told me OWL sells and services Wayne fuel systems that are a direct competitor to the Gilbarco fuel systems Seneca sold prior to its acquisition. The new owners at Seneca told longtime workers they’d now have to learn and be certified in an entirely different system.
When dozens of those workers decided to search for work elsewhere, Seneca started filing lawsuits alleging the workers were violating their noncompete agreements—which one employee said prohibited similar work within a 200-mile radius.
There are now lawsuits against 14 former workers and counting, according to the attorney of one of those workers.
“You only have so many options to go elsewhere,” said a former Seneca service tech who quit this spring and is now being sued. “They kind of don’t want me employed by another company. But I don’t necessarily know how I’m a competitor anymore,” since Seneca no longer sells and services that fuel system.
“I know noncompetes are mainly for proprietary knowledge, trade secrets—anything that could cripple a company,” he added. “But, for me, I had no knowledge, no access to anything like that.“
That worker said he was lucky to find other work. But the second worker told me he’s “too old.”
“I cannot afford an attorney or time to going to court, so even if I win this ridiculous noncompete lawsuit, I still lose because of all the money I had to spend and the stress and hardship it places on me and my family,” he told me. “This whole situation is terribly wrong.”
The Biden administration did attempt to crack down on noncompete agreements earlier this year, saying such agreements cost workers jobs and lead to lower wages because of their restrictions. Around 18% of all American workers are subject to such agreements. Many are made to sign the contracts right at the beginning of a job, when it’s harder to say no.
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism,” Federal Trade Commission (FTC) Chair Lina Khan said.
But in August, a Texas court struck down the ban on noncompetes. The FTC says it is “considering” appealing that decision, and says the ruling “does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.”
