When an employee leaves one job and heads for another, the former employer frequently requires them to sign a non-compete as part of a negotiated severance package. This agreement often states that the employee will not use any position, skills, or contacts acquired in one job to further their career or advance in the next job. According to the terms of a non-compete, a worker who does these things can face a lawsuit – as can a next employer. In 2016, the Obama Administration began to challenge the practice of compelling workers to sign non-competes, encouraging individual states to ban the practice.

This public policy initiative will be in the cross-hairs of an incoming Trump Administration, which, despite its populist tone and tenor, actually is shaping up as one of the most pro-business and least worker-friendly in decades.

The purpose of a non-compete agreement is ostensibly to protect a company from unfair trade practices. The White House’s statement, advocating for the abolition of non-competes, says that many low-wage workers are not in any position to harm the prior employer, and yet many such workers are being pushed into signing, at the risk of losing their severance and other benefits. In addition, there is widespread concern that non-competes limit the mobility and earning potential of employees.

Additional concerns include:

• Many agreements are abusive, unfair, and unenforceable;
• Lots of workers who have been laid off may become unemployable;
• Employment contracts should be transparent so more workers understand the terms of their severance contracts, including any non-compete issues;
• Non-competes disproportionately affect low-wage workers, who have neither the bargaining power not the lawyering strength to get them past their limited opportunities.

Critics of the federally recommended ban claim that some non-compete language is essential, and agreements should not be prohibited out of hand. Those in favor of the ban, including the Obama Administration, believe that eliminating non-competes would encourage appropriate competition and drive wages up.

While employers have the right to protect the unique practices and intellectual property of their own companies, they do not have the right to restrict the employment opportunities of those who are not directly involved in executive-level decisions. Overzealous non-competition among that class of workers is like taking a sledge hammer to deal with a fly: an overreaction combined with a danger of smashed limbs.

Employees need to know their rights, which are protected by the law. If you are suffering from unfair and illegal practices in your workplace, including discrimination, retaliation (including for whistleblowing), wrongful discharge, misclassification, or improper severance conditions, you should call an employment law attorney for workers. At the law offices of Hanan M. Isaacs, P.C., we will listen to your facts, explain the law, and recommend action that will bring you closer to social and economic justice. Call 609-683-7400 or contact us online to make a reduced fee initial consultation appointment in our Central Jersey offices in Kingston. Call today. You will be glad you did.