Noncompete Clauses Are a Growing Concern for Employees

This is part I of a story we are passionate about from the NY Times documenting the growing concern of workers and noncompete clauses.

Have you ever been asked to sign a noncompete clause as part of an employment contract? Though these legal documents were once used exclusively to protect proprietary company data and intellectual property from competitors, they are now being used in a far more insidious way, and it is causing many states to prohibit their use completely.

In recent years, more and more employers have been requiring new employees at all levels of their workforce to sign noncompete clauses. In fact, as of 2014, one in five employees had a noncompete clause restricting their mobility. In many instances the employees are asked to sign the contracts when they first begin working for a company, leaving them little room to say no or to negotiate the points in the contract. Even more alarming, even blue collar workers are being asked to sign these clauses, with little understanding of what they mean or of the restrictions they place upon their mobility. The terms have become increasingly broad, preventing them from moving on to better paying jobs.

According to economists, the noncompete clauses act to restrict employees in two ways. Not only do they prevent workers from moving on to other companies. They also take away all of their employer’s incentive to pay a competitive wage. With no fears that a worker will move on to another organization, employers are able to negate the bargaining power that an employee’s experience, knowledge and performance would normally provide.

As employment attorneys, the stories we’re told by those seeking legal representation in these cases are chilling. In one case that was recently profiled in the New York Times, a man had started working for a construction company at just 18 years old. With only a high school equivalency test by way of education and already a father, he took a $10 an hour job that required him to sign an employment contract with a 3-year, 350-mile noncompete clause. Over four years’ time he earned a promotion to a position operating a drilling rig, then left the company to take a position at higher pay with a competitor. His original employer promptly filed suit against him. Though his new company settled the lawsuit out of court, he referred to it as “slavery in the modern-day form.” In his previous position the man had no leverage to ask for a higher wage because his boss knew that he couldn’t go to another company.

Though noncompete clauses are supposed to protect against trade secrets walking out with employees, the more recent uses have left workers waiting until the clauses expire in order to get better paying jobs. They collect unemployment and use Medicaid for health benefits, or take other jobs that don’t use their accumulated skills.

If you’ve been asked to sign a noncompete clause and you are in need of legal advice, the attorneys at Schorr & Associates, P.C. can help. Contact us today to set up a convenient appointment.

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