Some states, such as California, North Dakota, Montana and Oklahoma already ban non-compete agreements throughout the state, including agreements that were signed in other states where non-compete agreements are recognized. But now Democratic U.S. Senators are looking to expand such bans all over the country.
Elizabeth Warren, Ron Wyden, and Chris Murphy have come together to propose what they call the Workforce Mobility Act (WMA). If it makes it through Congress, the new federal law would place a nationwide ban on companies writing non-compete agreements into their employment contracts.
Non-compete agreements were first used only with high-level executives and they were designed to prevent those executives from going to work with a competitor and taking trade secrets and/or client relations with them. While such actions would clearly harm their former employer, and many businesses have successfully proven that their non-compete agreements protect only their legitimate business interests, non-compete agreements have become increasingly stringent, while at the same time more widespread, in the past decade or so, further inhibiting employment opportunities for workers.
While the first non-compete agreements included limits on both geography and time (usually six months to a year), companies have continued to extend these limitations, some going so far as to forbid even minimum-wage workers from going to work for any competitor anywhere in the world, thereby purportedly limiting those workers’ ability to find new employment.
Employee advocates have long warned about the unfairness of non-compete agreements and their effect of keeping workers chained to their employer. It inhibits a worker’s ability to grow as an individual and also gives companies more opportunities to take advantage of their workers, especially when such agreements are combined with arbitration agreements, in which any dispute between the company and their employers are required to be settled in arbitration, where the employee is at a distinct disadvantage.
Business advocates claim non-compete agreements are anti-business, but the numbers arguably say otherwise according to employee rights groups. Employee advocates point to the growth of Silicon Valley as the heart of the tech industry in a state where non-compete agreements are banned. Far from inhibiting business, California’s ban on non-compete agreements appears to have attracted all the best talent to the area. In fact, it promotes competition between employers, leading to a healthier marketplace, as well as workers who are happier, healthier, and more productive.
This theory provides evidence for the assessment that employers who try to tie down their workers with non-compete agreements are in fact short-sighted in their search for ways to avoid paying the costs of hiring new talent when their workers leave for better positions at more competitive companies.
In her press release announcing the proposed bill, Senator Warren talked about how non-compete agreements work, not just against employees, but against the market as a whole by prohibiting competition and innovation. They also reduce workers’ bargaining power, leaving them to settle for less interesting, lower paying positions where they’re not as happy or productive.
Business advocates’ assertion that to prohibit non-compete agreements is anti-market also arguably according to pro-employee groups fail to understand how common such contracts have become, not to mention how difficult the job hunt can be. When you’ve been out of work for months and the bills have started piling up, you’ll take whatever job you can get, even if it does turn out to be a life-long sentence.
Our Chicago non-compete agreement attorneys have defended high-level executives in a covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago Business. You can view that article by clicking here.
Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Evanston and Winnetka have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We have successfully represented a number of doctors in non-compete, partnership, and other business disputes. We understand the complexities of physician partnership and non-compete agreements.
Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Our firm has also handled many shareholders and LLC disputes between owners of closely held corporations, and LLCs.
Based in Oakbrook Terrace and downtown Chicago, our Rolling Meadows and Naperville non-compete agreement and business dispute lawyers take cases from Schaumburg and Elk Grove Village and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at (833) 306-4933 today.
Lubin Austermuehle’s Aurora and Naperville non-compete agreement litigation attorneys have more than three decades of experience helping clients unravel the complexities of Illinois and out-of-state non-compete and trade secret theft laws. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners, shareholders, and LLC members as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Deerfield and Northbrook, we serve clients throughout Illinois and the Midwest.