Skip to footer

Obama encourages ban on non-compete agreements for some workers

Some 20 percent of American workers are currently bound by non-compete agreements. Fourteen percent of them earn less than $40,000 per year, including fast food and warehouse workers, according to the White House.

|
David Goldman/AP/File
In this Friday, Jan. 2, 2015, file photo, a sign advertises hiring opportunities at a Jimmy John's sandwich shop in Atlanta, as an employee walks out to make a delivery. New York Attorney General Eric Schneiderman announced Wednesday, June 22, 2016, that the Jimmy John's sandwich chain has agreed to stop including non-compete agreements in hiring packets used for low-wage workers.

On Tuesday, the White House called on US states to ban non-compete agreements for certain workers, arguing that the contract conditions interfere with their job mobility and suppress wages. 

By seeking an end to non-compete agreements for low-wage employees who are not privy to trade secrets, the Obama administration hopes to make a more competitive labor market, support faster wage growth, and prevent workers from being put in situations where it's difficult to get a new job.

“We have the most dynamic, productive workers in the world, but they can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off,” Vice President Joe Biden said in a statement.

According to the White House, 20 percent of American workers are currently bound by non-compete agreements, 14 percent of whom earn less that $40,000 per year, including fast food and warehouse workers.

In addition to banning non-compete agreements for low-wage workers, the Obama administration’s recommendations also include a ban on non-compete agreements if they are not proposed before the job offer, or if a promotion is accepted by the employee, and a ban on such agreements for workers whose jobs promote public health or safety. In addition, the White House recommends that contracts should become void when workers are laid off or fired without cause, Reuters reports.

Nearly every state currently allows non-compete agreements, leading to frequent legal battles, but New York has led the way in terms of curtailing the use of non-compete agreements.

Eric Schneiderman, the state’s Attorney General, said on Tuesday that he would introduce state legislation next year to limit when such an agreement can be signed. With many of the same stipulations as the White House recommendations, Mr. Schneiderman also aims to require employers to pay additional compensation to employees if they sign non-compete agreements and to limit the length of time the contract is applicable, reports USA Today.

“Workers should be able to get a new job and improve their lives without being afraid of being sued by their current or former employer,” Schneiderman said in a statement.

Previously, Jimmy John's sandwich chain, the legal news site Law360, and medical services company EMSI each agreed to stop requiring non-compete agreements as part of a settlement with the New York Attorney General's office.

However, some businesses may need non-compete agreements in order to prevent employees with inside knowledge of trade secrets from working for rival companies. Therefore, the policy should not be a statewide ban on the agreements for whole sectors of the work force, Beth Milito, senior legal counsel at the National Federation of Independent Business, told Reuters.

"There need to be individualized assessments of the agreements that consider the industry and the geographical location," Ms. Milito told Reuters.

Material from Reuters was used in this report.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Obama encourages ban on non-compete agreements for some workers
Read this article in
https://www.csmonitor.com/USA/2016/1026/Obama-encourages-ban-on-non-compete-agreements-for-some-workers
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe