Although non-compete agreements were originally invented to keep executives from running off to competitors with trade secrets and/or client relationships, many businesses have started taking advantage of noncompete agreements by including them in employment contracts with all their workers – even those at the bottom rung of the corporate ladder.
Workers earning minimum wage (or close to it) doing things like making sandwiches and entering data into a computer system are being made to sign employment agreements that prohibit them from working in any capacity for a similar company. Despite the fact that these are unskilled jobs (often held by people who don’t even have a high school diploma), and certainly don’t include access to any important trade secrets, workers are being made to sign such agreements as a condition of employment. And when agreeing to all the terms of the contract is the difference between getting the job and going without a paycheck, most workers don’t consider it much of a choice.
Although signing the employment contract might get them the job, it makes it much harder for them to move up the corporate ladder because the non-compete agreement often means they can’t leverage their experience to get a better paying position with another company. Their options are to try to move up the ladder in their own company or stay in their position where they’ll continue to earn the same low wage.
If employees try to take a new job in violation of the non-compete agreement, they can be prevented from doing so or even made to leave their new job after they’ve settled into it. In many cases, the clause prevents workers from even looking for new employment or asking for a raise for fear of retaliation from their employer. And when they’re not allowed to seek out a similar position with another company that pays better, they have no leverage to ask for a raise.
This employment practice also hurts other companies by limiting the pool of talent from which they can select qualified workers to fill new positions.
According to a survey conducted by economists, about 20% of all American workers were bound by noncompete agreements in 2014. Research conducted by economists shows that noncompete agreements are a major factor in the reason American wages have remained stagnant. When the economies of states like California (which bans noncompete agreements and has a thriving Silicon Valley) are compared to the economies of states without any restrictions on such agreements, it becomes clear that noncompete agreements are harmful for the overall economy.
Furthermore, when it comes to big chains, such as Jimmy Johns and Check Into Cash, the geographical restrictions on their noncompete clauses, combined with the number and density of their locations, effectively prohibited workers from finding any work at all in which they could use the experience they gained while working for these large chains.
Several states have banned noncompete agreements altogether, and while Illinois hasn’t gone that far, it does have a ban on noncompete agreements for workers earning less than $13 per hour. Although a similar federal law was proposed in Congress a few years ago, it did not pass, despite widespread support for such measures.
If you are an employer seeking to protect your confidential or proprietary information or you are a physician being asked to sign a non-compete agreement, it is always advisable to seek the assistance of an experienced non-compete attorney. The attorneys at Lubin Austermuehle have over thirty years of experience defending and prosecuting medical practice disputes between physicians over ownership disagreements and non-compete agreements and unpaid wages and a wide variety of other business dispute lawsuits arising between physicians in the same medical practice. Lubin Austermuehle a firm of Chicago business litigation attorneys 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.
Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Schaumburg and Evanston restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago and Naperville area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.