States Start To Limit Non-Compete Clauses

It is nice to see that states are starting to crack down on the proliferation of non-compete clauses in employment contracts, especially in jobs where trade secrets are not really involved. There is absolutely no reason that summer interns or sandwich shop employees need to be restrained by a non-compete clause. It is hard to believe but nearly one-fifth America’s workers are currently bound by non-compete employment contracts.  Hawaii and New Mexico have banned these clauses in certain sectors of business while Oregon and Utah have limited the time such an agreement can be binding. Now Massachusetts is considering a bill that combines both of those approaches but also requires that companies pay 50% of a salary or a mutually agreed upon higher or lower rate during the length of the non-compete period.  Studies have shown that these agreements have actually reduced technical workers’ salaries in the state by about 7 percent.

Apparently, for many businesses around the country, the idea of a “free market” doesn’t seem to apply to labor market. It’s good to see at least a few states putting some reasonable limits on these restrictive and unnecessary restrictions on worker freedom.