Sometimes breaking up can be hard to do, especially when the current relationship limits future prospects. Toxic relationships are emotionally draining. They can be the source of stress and anxiety; that stress and anxiety can result in health issues.  They can result in a loss of independence; that loss of independence can result in isolation.  This is the relationship that employees have with their noncompete agreements. 

Noncompete agreements, also known as restrictive covenants or noncompete clauses, are agreements designed to be a restriction an employee’s ability to work for a competitor or start a competing business after leaving their current employer. While employers may claim to use these agreements to protect business interests, to protect against losing trade secrets, or to protect confidential information, don’t be misled.  A noncompete are used to hold employees hostage. 

Many employees give little thought to the noncompete when starting employment.  However, when it is time for the employment relationship to end, they can think of nothing but that noncompete. Employees feel trapped and unable to move forward due to the restraints placed on them by the agreement. The restrictions and limitations may cause a person to feel stressed and anxious while trying to figuring out how to move forward with their career.

While employers only have concerns for their interests, employees must have concerns for theirs. Employees must understand the impact noncompete agreements have on the workforce.

First and foremost, noncompete agreements limit an employee’s job prospects and opportunities for career advancement. When employees are bound by a noncompete, they may be unable to accept job offers from competitors or start their own competing business, even if they possess valuable skills and expertise. This can limit a person’s ability to pursue their chosen career path, grow their skills, and seek better employment for higher wages. This is only a benefit for employers.

Second, noncompete agreements limit an employee’s bargaining power and ability to negotiate better wages or working conditions. If an employee is bound by a noncompete, they may be less likely to attempt to negotiate for higher pay or better working conditions. They know that the noncompete they’ve signed has limited their options for alternative employment. This can result in lower salaries and benefits for employees, which can have a significant impact on their financial wellbeing and quality of life. This is only a benefit for employers.

Third, noncompete agreements create a power imbalance between employers and employees. Employers who require employees to sign noncompete agreements hold a disproportionate amount of power and influence over their employees. This is especially true,  if an employee is in a specialized or field with high-demand. This power imbalance can make it difficult for employees to push back against unfair treatment or to advocate for their own rights and interests. Again, a benefit for employers.

Fourth, noncompete agreements stifle innovation and entrepreneurship. If employees are unable to leave their current employer and start their own businesses or work for competitors, this can limit the flow of ideas and talent within an industry. This can ultimately harm the industry as a whole by limiting the creation of new products and services, as well as the growth and development of small businesses. Again, a benefit for employers – mainly big business.

Finally, noncompete agreements are harmful for low-wage earners and entry-level workers. These workers are the most vulnerable and lack the bargaining power or resources to negotiate the terms of their employment, including noncompete agreements. And these days, employers are attempting to get away with noncompete agreement in every form of employment.  As a result, employees may find themselves trapped in lower paying jobs with limited opportunities, making it difficult for them to improve their financial situation. Again, a big benefit for employers.

Have no doubt that noncompete agreements hurt the workforce. While noncompete agreements may be a plus for big business, employees should know that employers using these agreements are not looking out for their workers. The company is looking out for the company.  If you have questions about your noncompete agreement, we have qualified attorneys available for consultations. Before committing to your ball and chain get the answers you deserve.