The arguments for and against non-compete agreements

President Obama’s final term is coming to a close, and we find an article in Fortune about his October pitch to ban non-compete agreements, which the author says would “make the rich richer.”

The author primarily focuses on low-wage workers:

“Low-wage workers are precisely the group that will benefit from signing agreements not to compete, because they are the ones most in need of the training and life skills that a first job can provide.”

The author’s case assumes a direct tie from training and life skills to the existence of non-compete clauses.

According to this logic, a worker is hired and then trained by his or her employer. After the training period , the worker quickly “jumps ship” to another employer for more pay. There’s no non-compete clause, so the employer is helpless to do anything about it. Therefore, that employer will simply choose not to train new employees.

The trouble with this logic, however, is that employers must train in all new employees for the job they were hired to do. Would employers suddenly forego training and opt instead not to hire? Would the lack of non-compete clauses in employment contracts be that competitively troublesome?

Perhaps.

But it is difficult to see how the absence of a non-compete clause alone would prevent employers from hiring unskilled workers, who must be trained either way.

Dealing with a non-compete clause?

What the author of the article fails to mention is that employment contracts often serve employer interests, not employee interests. This assertion applies to non-compete clauses as it does to other aspects of employment contracts. All too often, a non-compete clause actually unfairly limits the employee’s ability to work. Contact Alan Lescht and Associates today if you’re facing a dispute regarding a non-compete clause.