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Do Noncompete Agreements Really Reduce Workers’ Wages, Stifle New Businesses And New Ideas, Exploit Workers And Hinder Economic Liberty?

Posted by David P. Martin | Apr 18, 2023 | 0 Comments

The Federal Trade Commission thinks so. Included with this post is a fact sheet documenting the commission's reasons for the proposed rule. What will be the impact of this rule? Will employers more readily shield sensitive information from employees? On the other hand, when an employee is terminated, it hardly seems fair to preclude the employee from working for a competitor, given the employee is very familiar with the nature of that business. It also seems unfair to prevent the employee from starting a business.

The fact sheet documents examples of noncompete agreements harming workers. Certainly, requiring an $11-an-hour security guard to sign a noncompete agreement was taking matters a bit too far. The security guard had to take work with the second employer as a security guard but was let go when his first employer sent the two-year noncompete agreement. So what is the security guard to do? Try to find work in another profession or accept public assistance? Was there really anything that confidential that was divulged to an $11-an-hour security guard?

In another example, the phlebotomist did not have regular hours and had to drive quite a bit for her job. She found another job at a lab in the same occupation, which did not involve any travel. However, she was barred from taking a job with the subsequent employer due to a noncompete agreement. Why is a noncompete agreement used with a phlebotomist? What possible reason could there be?

Clearly, the overly broad and excessive use of noncompete agreements has created much unfairness. I certainly understand companies wanting to have an employee divulge confidential company information or client lists to a subsequent employer, but those situations should have been very limited. The overuse of noncompete agreements may have created this problem.

You can read more @ noncompete_nprm_fact_sheet

About the Author

David P. Martin

Senior & Managing Attorney


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