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. Continue reading