I have shared my bias before…I dislike non-compete and non-solicitation contracts with a passion. They unfairly prevent an employee from using his/her skills and knowledge to earn a living and feed their family. Even more, these restrictive employment provisions are bad for our economy and American innovation.
My home state of Virginia passed a new law in 2020 which made these provisions unenforceable for certain employees earning less than $58,000 per year and now the Federal Trade Commission (FTC) is getting in the act. The Wall Street Journal (WSJ) is reporting that President Biden called on the FTC to ban or limit clauses in employment contracts that restrict workers’ freedom to change jobs. According to the report, approximately 32% of U.S. companies include the clauses in all of their employment contracts regardless of position or pay.
By way of example as to how ridiculous the situation can get, the WSJ article recounts the problems encountered by Michael Kenny. In early 2017, Michael Kenny found work as a nighttime security guard at Critical Intervention Services Inc., a Florida housing development. A few weeks after accepting the job, which paid around $11 an hour, his overnight child care fell through. Mr. Kenny, a single father, resigned.
Months later, he took a job as a daytime security guard at a bank making almost $15 per hour. He said that soon after he started, his boss informed him that his previous employer had sent a letter stating Mr. Kenny had signed a two-year noncompete clause as part of his employment contract. His new employer let him go.
Read the WSJ article here.
My Take: Non-compete and non-solicitation contracts have no place in the American workplace.