Noncompete agreements have historically been the provision of highly-placed execs and critical "knowledge workers" (and even then, fast-growing economies like California have banned them in the interests of encouraging competition and growth) but now employers are routinely making the "agreements" a condition of unskilled waged labor, from making sandwiches to digging holes for $10/hour.
A study from U Maryland concluded 1 in 5 US workers are now bound by noncompetes, and noncompete litigation has tripled since the year 2000.
The -- often successful -- lawsuits don't have to allege that a worker has disclosed any specialized or proprietary knowledge to their new employer, merely that they would "inevitably" do so.
Still, there is evidence that these agreements can reduce wages far beyond the terms of one job or contract. In January, Mr. Starr, from the University of Maryland, and others produced a study showing that technology workers who began their career in a state where noncompetes are strictly enforced made significantly less than their colleagues, regardless of whether or not they left.
“These things slow your ascent up the job ladder,” Mr. Starr said.
Moreover, many burn through their savings and pile up debt while searching for a job from a weakened negotiating position. Several years ago, Patricia O’Donnell, a market researcher in Philadelphia, spent 18 months unemployed after being laid off by a company whose noncompete prohibited her from working for a number of major pharmaceutical companies, thus limiting her prospects in a major local industry. She finally found a job, but only recently got clear of the bills she racked up.
Signing Away the Right to Get a New Job
[Conor Dougherty/NY Times]
(via Naked Capitalism)
California says that non-compete agreements are unenforceable, and that’s been a huge factor in the state’s growth — in particular, it’s the most likely reason that California’s tech economy zoomed past the Route 128 tech economy of Massachusetts — the land where talent goes to die.
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