Non-compete obligations are currently a hot topic due to the growth of digital communication, documentation and increased competition between companies. The clauses are particularly prevalent in areas such as engineering and finance, according to a new working paper by economists at the University of Illinois and the University of Michigan, but also appear in less obvious areas such as lawn care and hairdressing. Non-compete obligations were originally created to protect trade secrets and other confidential information. While still prevalent for well-paid and educated workers, these agreements are increasingly common in underpaid industries, regardless of job duties or access to confidential information. [15] Currently, nearly 30% of non-compete obligations cover workers earning less than $13 per hour. [16] More than 30 million workers – at least 18% of the U.S. workforce – must sign non-compete obligations as a condition of accepting a job. [47] Lisa Nagele-Piazza, are unenforceable during the pandemic, SHRM (October 1, 2020), www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/are-noncompetes-enforceable-during-the-covid-19-pandemic.aspx. Non-competitions are disproportionately harmful to women and people of color and have a history associated with racial injustice.
Protecting companies from possible trade secret violations is not a reason to restrict the mobility of workers, especially when these concerns are the subject of legal remedies. While this Order did not change current laws, it is likely that non-competitors will be subject to further scrutiny in some jurisdictions. More than 30 million workers — at least 18 percent of the U.S. workforce — must sign non-compete clauses as a condition of accepting a job. [6], [7] This includes a wide range of workers, from financial services executives to janitors and dog walkers. Indeed, employers often present non-competitions as a take-it-or-leave-it contract, forcing workers to sign it or give up a job. [8] As a result, less than 10% of workers negotiate these clauses, and 93% of them read and sign them anyway. [9] In addition, 30-40% of employees are asked to sign non-compete obligations after already accepting the position.
[10] Are non-compete obligations enforceable? I mentioned that a lawyer will say, “It depends,” and that`s the boring truth about non-compete obligations. Here are some suggestions. Non-compete obligations should be designed to take into account the best interests of both the employer and the employee. Nearly 30% of non-competitors cover workers earning less than $13 an hour. The following list will tell you whether the obligations or non-compete clauses are enforceable for any, some, or all types of employment relationships governed by the laws of your state. If certain professions are listed, only those professions are exempt from being bound by non-compete obligations in that State, and non-compete obligations are likely to continue to apply to all other professions that are not listed. Note that even if the non-compete obligations are unenforceable in your state or against certain professionals you employ, your state will likely allow you to enter into a non-disclosure agreement to prevent employees from disclosing or using confidential information and trade secrets. There is a growing movement to ban non-competitions at the state level.
During the pandemic, many workers have filed lawsuits challenging the applicability of non-compete obligations. While the courts continue to apply these clauses, some have increased the level of scrutiny with which they are analyzed and expanded their investigation. [47] For example, one court considered the increasing number of businesses that adopted telework practices during the pandemic to determine whether a geographic restriction was appropriate. [48] Another issue facing workers during the pandemic is whether their employer can still enforce their non-compete obligation if they have been placed on leave. In these cases, courts that are reluctant to prevent people from working have generally ruled the non-challenges unenforceable. [50] While the legislative move to eliminate non-compete obligations took place prior to the pandemic, some jurisdictions are creating pandemic-specific safeguards related to the enforcement of the Non-Competition Act.
