These days, even janitors are being required to sign non-compete clauses

Sophie Quinton, Pew/Stateline Published 8:28 a.m. ET May 27, 2017

When Krishna Regmi started work as a personal care aide for a Pittsburgh home health agency in 2015, he was given a stack of paperwork to sign. “They just told us, ‘It’s just a formality, sign here, here, here,’ ” he said.

Regmi didn’t think much of it. That is, until he quit his job nine months later and announced his decision to move to a rival agency — and his ex-employer sued him for violating a noncompete clause Regmi says he didn’t know he had signed. The agreement barred Regmi from working as a personal care aide at another home health agency for two years.

Big companies often ask top executives who have access to confidential business information to sign noncompete agreements. But low-wage, unskilled laborers such as janitors, landscapers and entry-level health workers are often asked to sign them, too.

Employers say the agreements help them retain their workers in a tight labor market and protect their business interests — from secret formulas to client lists. And, they say, workers who sign them sometimes get additional training or higher pay in return, because their employer knows they won’t leave for a competitor.

But advocates for workers say it’s ridiculous to ask employees who don’t have specialized skills or secret knowledge to give up their freedom to work for a rival company. They say noncompete agreements reduce social mobility and clog up the labor market by preventing businesses from hiring the workers they want and preventing workers from taking the jobs they want. And for many workers, just being threatened with legal action is enough to make them back away from their career and look for different jobs instead.

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This year, legislation has been introduced in at least six states that would tighten the legal standards the agreements have to meet in order to be enforced, or make certain types of them illegal outright. Four states passed laws on the issue last year, including Illinois, which prohibited noncompete agreements for employees who earn $13 an hour or less.

Bills in Maine, Maryland and Massachusetts would restrict noncompete agreements that involve low-wage employees; New York Attorney General Eric Schneiderman, a Democrat, is pushing for the same change in his state. Proposals in Massachusetts and Washington would also restrict the agreements for other types of workers, such as temporary employees and independent contractors.

Such bills face an uphill struggle, however, often because of stiff opposition from business. “Non-compete agreements are essential to the growth and viability of businesses by protecting trade secrets and promoting business development,” the Maryland Chamber of Commerce said in written testimony opposing a bill Carr introduced that would have voided agreements signed by workers who earn less than $15 an hour. The bill passed the House in February but died in the Senate.

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They calculate that about 38 percent of U.S. workers have signed a noncompete agreement at some point in their careers and 18 percent of workers are currently bound by one. High earners are more likely to sign such agreements, but about a third of workers earning under $40,000 have done so.

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Brendan Lynch, an attorney for Community Legal Services of Philadelphia, says his low-income clients usually have no idea that they agreed to a noncompete clause. They find out after they’ve left a company, when their ex-employer slaps them with a court order or sends a threatening message to a prospective future employer.

Lynch represented a clerk at a home care agency, for instance, who signed a five-page employment contract that, according to court records, prohibited her from serving any of the agency’s clients within a 35-mile radius for five years. It also required her to pay the company’s legal fees if they ever went to court.

Lynch says the noncompete agreements he sees are often written too broadly and wouldn’t survive a lawsuit. But most workers obey initial threats rather than going to court over them, he said. “I think there are people who have been affected by this, and it doesn’t even occur to them to get a lawyer,” Lynch said.

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In recent years, the New York attorney general’s office has reached settlements with three companies over their use of noncompete agreements, including Jimmy John’s, a national fast food chain. Some Jimmy John’s franchises in New York had forbidden employees from working for other sandwich shops in a 3-mile radius for two years after leaving the company. Under the terms of the settlement, the company agreed to stop giving franchisees sample noncompete agreements and to tell franchisees to void existing agreements. Illinois also reached a settlement with Jimmy John’s last year.

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https://www.nytimes.com/2017/05/13/business/noncompete-clauses.html

How Noncompete Clauses Keep Workers Locked In

Restrictions once limited to executives are now spreading across the labor landscape — making it tougher for Americans to get a raise.

By Conor Dougherty
June 9, 2017

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Employment lawyers say their use has exploded. Russell Beck, a partner at the Boston law firm Beck Reed Riden who does an annual survey of noncompete litigation, said the most recent data showed that noncompete and trade-secret lawsuits had roughly tripled since 2000.

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