The argument for and against non-compete clauses

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 in employment contracts.

According to this logic, a worker is hired, who is then trained in by his or her employer. After the training period is done, 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 in either way.

Dealing with a non-compete clause?

What the author of the Fortune article fails to mention is that employment contracts in general often serve the interests of employers, not employees. 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. If you’re facing a dispute regarding a non-compete clause, call 202-463-6036 for legal help.