ABSTRACT
Employers have used non-compete clauses to deprive tens of millions of workers of the freedom to change jobs or start their own businesses. In occupations ranging from home health aide to journalist and sandwich shop worker, employers have used this legal power to their great benefit. Non-compete clauses reduce worker mobility, help employers keep wages and wage growth down, deter small business formation, entrench potentially abusive, discriminatory, or hostile work environments, and fortify market power to the detriment of workers, rivals, consumers, and broader society.
The justifications for non-compete clauses are unpersuasive. While employers and their advocates argue that they are necessary to protect investment in workers, such as trade secrets and training, there are at least three reasons to reject that reasoning. First, a broad dissemination of information across firms is often good for society. Second, non-competes are onerous for workers and a flawed means of protecting intangibles. Third, other measures, such as trade secret law and employment contracts, are more effective at protecting trade secrets and other intangibles and also much less restrictive for workers …
Vaheesan, Sandeep and Buck, Matthew, Non-Competes and Other Contracts of Dispossession (November 9, 2020).
First posted 2021-01-14 17:14:42
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