If you're reading this blog, there's a high chance that you are one of the 1-in-5 workers who has a non-compete clause hiding in your employment contract. These are clauses that prevent workers from taking other jobs or starting other businesses that "compete" with the employer after leaving the job. I originally thought they were unique to highly-paid tech jobs, but actually they are widespread, even among workers earning less than $40,000 per year.
After some states banned non-competes, the Federal Trade Commission (FTC) was able to quantify exactly how beneficial a ban on non-competes was in those states. The benefits are massive. Non-compete clauses suppress wages, reduce innovation, increase healthcare costs, and even discourage workers from reporting (and escaping from) illegal discrimination and abuse. They published 570 pages of research on this topic, which is a good read, but you can read the 3-page factsheet to get the gist. All evidence points to non-competes being bad news.
Quick note: I am not a lawyer, this is not legal advice.
Thankfully, despite their widespread use and some state-wide bans, non-compete clauses are considered illegal under federal law since 2023. I say "considered", because their illegality rests on shaky ground right now. It rests on two pillars:
- In May 2023, the National Labor Relations Board (NLRB) issued a memo saying they consider non-competes to be a violation of the National Labor Relations Act (NLRA), since non-competes "interfere with, restrain, or coerce employees in the exercise of rights" such as the right to organize. This pillar is still intact.
- They've also issued a memo saying they consider non-disparagement clauses illegal too.
- In April 2024, the FTC announced a a new rule which would have banned non-competes, based on those 570 pages of research I mentioned earlier. But before the rule took effect, a district court blocked it, but the FTC can still address non-competes on a case-by-case basis. This pillar is crumbling, and faces an uncertain future in the Supreme Court.
Both of these pillars could be crushed to dust depending on who ends up controlling the executive branch of government.
Why should I care?
While researching the effects of non-competes, the FTC received over 26,000 public comments, of which 96% were supportive of a ban. In these comments, I believe anyone can find a strong reason to care. (Content warning: abuse, sexual harassment)
I am a journalist who has been forced to move across the country three times, and leave my field entirely for one year, in order to comply with stringent non-compete agreements.... In [one] situation, I was stuck working for abusive management who fostered a toxic and abusive workplace, and I had to work there for more than a year until I could find a job in another city entirely because they had threatened to sue me under the non-compete if I left and worked for another local station.... [E]ven if these clauses are unenforceable, as we've all heard before, who can afford the legal representation to go up against a corporation and their lawyers when the lawsuit threat comes? My life would have been very different if I weren't trapped by non-competes at points in my career.
I am being sued right now for going into business on my own in Boston, Massachusetts, by my former employer who says I signed a non-compete in 2003, 20 years ago.... I am fighting them in court. Hopefully I will prevail.... [The] corporation I worked for is a billion-dollar corporation. And they just keep trying scare tactics to make me back down. They went as far as trying to get a preliminary injunction ordered against me. And the judge refused but I still have to spend $1,000 an hour to defend myself.
In October 2020, I started working as a bartender at a company called [REDACTED] for $10 an hour. On my first day, I unknowingly signed a 2-year non-compete, slipped between other paperwork while my boss rushed me, and downplayed its importance.... At [REDACTED], I was sexually harassed and emotionally abused. I needed money, so I searched for a new job while remaining at [REDACTED] for one year. I was eventually offered a bartending job at a family-owned bar with better wages, conditions, and opportunities. Upon resigning, I was threatened with a non-compete I didn't know existed. Still, I couldn't take it anymore, so believing it was an unenforceable scare tactic, I took the new job, thinking our legal system wouldn't allow a massive company with over 20 locations to sue a young entry-level worker with no degree. In December 2021, I was sued for $30,000 in “considerable and irreparable damages” for violating the non-compete...
I started my first job as a Nurse Practitioner in 2019. All positions I interviewed for required a non-compete.... In my case, I work for an employer that is hostile, discriminated against me during pregnancy and maternity leave and has raised his voice at me in meetings. He told me I was lucky to even have a job after becoming pregnant. I learned after starting at the practice that he has shown this pattern before with previous employees. I say this because all of these above-mentioned reasons are why I have the right to want to quit my job and move on. I desperately want to leave and start another job but I can't because of the non compete. I feel like a prisoner to my job. I feel depressed in my work conditions and I feel like I have no way out.
What can I do about it?
Thankfully, even this crumbling legal basis is one that workers can capitalize on. You see, companies are generally risk-averse and they do not like the idea of potential NLRB charges or potential lawsuits from the FTC. As the FTC found, there's no good evidence to suggest companies are materially harmed by the loss of non-competes, especially since they can protect their interests through NDAs and trade secret laws. So merely asking for the illegal clause to be removed from your (and your coworkers') contracts has a good chance of succeeding! All you have to do is ask.
Here is a template email:
Subject: Remove illegal non-compete clause from employment contract
Hello {name of HR representative},
I noticed that my employment contract includes a non-compete clause which has been considered illegal by the National Labor Relations Board since 2023. The Federal Trade Commission also considers non-compete clauses to be illegal because they stifle innovation, exploit workers, hinder the economy, and even harm employers.
https://www.nlrb.gov/news-outreach/news-story/nlrb-general-counsel-issues-memo-on-non-competes-violating-the-national
https://www.ftc.gov/system/files/ftc_gov/pdf/Non-Compete-Fact-Sheet.pdf
As a result, I'd like to formally request the removal of the non-compete clause from all standard employment contracts, including mine. This action will demonstrate that {company name} values innovation, fair competition, and the rights of its employees.
Looking forward to your response,
{your name}
Tell your coworkers to send this email as well to support your case. Remember that the National Labor Relations Act protects your "right to join together to improve [your] working conditions, with or without a union".
What if they say no?
I'd recommend reminding them of your options for reporting noncompliance with the law:
- Labor rights violations can be reported to the NLRB by filing a charge.
- Violations of the FTC's rule against non-competes can be reported to non-compete@ftc.gov. They can still choose to enforce the rule on a case-by-case basis.
It doesn't have to come to that though. You just need to inspire enough fear to convince a senior employee to look into it, and possibly spend the paltry (FTC-estimated) $670 of lawyer-time to change it.
If they still say no, then this is a good history lesson that merely trying to convince powerful entities like companies to act contrary to their self-interest generally does not work. Change is primarily accomplished through the wielding of power to enact policy changes. Another way to do that is to convince your elected representatives to ban non-competes, who are (in theory) self-interested in helping you. You can find contact information for your representatives here.
- If you live in a state that already has strong bans against non-competes, then contact your senators to support House or Senate bills like the Workforce Mobility Act.
- Otherwise, contact your state representatives to introduce a bill that bans non-competes in your state, or to support existing bills if you see one here.
The world has enough horribly exploitative things happening in it. Let's rid the world of this one.