The Society for Human Resource Management recently published an interesting article discussing the use of non-compete agreements by businesses throughout the country and a White House paper on the issues raised by non-compete agreements. The article states in part:
Noncompetes may be unpopular among employees, but they’re becoming more common, according to Michael Elkon, an attorney with Fisher Phillips in Atlanta.
As a practical matter, most courts won’t enforce them against lower-level employees, he noted, but their more widespread use is attracting political attention.
The White House paper criticized the growing use of noncompetes, saying that they impact nearly one-fifth of U.S. workers. It cited a 2013 study commissioned by The Wall Street Journalthat found a 61 percent rise from 2002 to 2013 in the number of employees getting sued by former companies for breach of noncompete agreements.
Approximately 14 percent of workers earning less than $40,000 are subject to noncompete clauses, including fast-food employees, warehouse workers and camp counselors, the White House said.
Noncompetes are even prevalent in California, where courts do not enforce them; 19 percent of workers in California report signing a noncompete. Many workers are not aware of the lack of enforcement in California when they sign the agreements, the report noted.
Several states ban noncompete agreements for certain sectors, occupations and time periods. Hawaii banned noncompetes for technology jobs, and New Mexico banned them for health care jobs. Oregon banned noncompete agreements that last longer than 18 months, while Utah has limited them to a year.
Delaware, Illinois, Massachusetts, Tennessee and Texas do not enforce noncompetes against physicians, the White House report noted.
However, some state courts strike offensive clauses from noncompetes if doing so renders the remaining language enforceable under the state’s law. Meanwhile, other courts, most recently the Nevada Supreme Court, reject this so-called blue penciling of noncompetes.