As an employment lawyer, one of the largest hurdles my colleagues and I have observed workers struggling to overcome is that of the noncompete agreement. These agreements prohibit employees from leaving an employer for a competitor for a specified period of time and geographical range. In many instances I have worked with clients who have remained trapped in hostile working environments, have had their job mobility restricted and their career growth inhibited as a result of these agreements.
In a positive stride toward protecting workers’ rights, US states have been taking bold steps to outlaw or restrict noncompete agreements. These agreements are now facing significant challenges as several states across various different geographical regions and political cultures have lead the charge for reform.
California, Minnesota, North Dakota and Oklahoma have recently outlawed such agreements entirely, unless an employer can prove it fits into a narrow set of exceptions. The New York legislature has passed a bill proposing a similar ban with Governor Kathy Hochul widely expected to sign it into law.
In 2021, Oregon enacted a law that significantly restricted noncompetes, making them largely unenforceable. This move aims to promote fair competition and empower workers to seek better employment opportunities without undue restrictions.
The state of Washington has recently passed legislation that limits the use of noncompete agreements for low-wage workers, safeguarding their ability to secure fair wages and pursue career growth.
Various other states have enacted or are in the process of enacting restrictions on noncompete agreements into law. Common restrictions include bans in certain professions, only allowing such agreements for employees with a salary above a particular threshold and prohibiting them in the context of the sale of a business.
The Biden Administration has additionally joined the movement, with the Federal Trade Commission (FTC) recently signaling its support to ban noncompete agreements on a federal level. In July 2021, the FTC unanimously voted to use its rulemaking authority to address the potential anticompetitive effects of these agreements. On January 5, 2023, the FTC issued a proposition to prohibit such agreements at the federal level.
We at Rob Wiley P.C. welcome this trend. Prohibiting noncompete agreements enables employees to explore better job opportunities, fostering healthy competition among employers. This freedom to move between jobs facilitates career growth and allows workers to leverage their skills and experience to secure better compensation and benefits.
In addition, by removing barriers to employee mobility, noncompete reform encourages knowledge sharing, collaboration, and innovation. Workers are more likely to share their expertise and contribute to the growth of different industries, driving economic progress.
Restrictive noncompete agreements disproportionately affect low-wage workers, limiting their options for advancement and hindering their earning potential. Noncompete reform ensures fair treatment for workers at all income levels and promotes greater income equality.
The movement to outlaw noncompete agreements in US states, along with the FTC’s support for a federal ban, marks a significant stride toward protecting worker rights and fostering a more equitable employment landscape. These efforts recognize the importance of employee mobility, fair competition, and innovation in driving a thriving economy. As the push for noncompete reform gains momentum, it is crucial for policymakers, businesses, and individuals to embrace these changes and advocate for an environment that values workers’ rights and empowers them to pursue fulfilling careers.
Many of these laws are likely to be challenged by employers over the coming months and years, placing us in a state of legal uncertainty. In addition, many states including Texas have yet to take notable action to limit the power of noncompete agreements.
We at Rob Wiley P.C. will continue to fight for the rights of workers and against noncompete agreements. Should you have any concerns about your employer, contact me in Austin, or one of my talented colleagues in Houston or Dallas and we’ll fight for your rights.