Insight

Executive Summary

• An explosion of state laws curtailing the use of noncompete agreements (NCA) and President Biden’s July 2021 executive order, which highlighted the negative effects of NCAs, has sparked a renewed interest in addressing the damaging effects NCAs can have – especially on low-wage workers.
• NCAs contractually prohibit employees from actions including working for a competitor, starting a competing business, developing a competing product or service, and hiring former colleagues for a specified number of years in a certain geography upon separation from the employer.
• While employment contracts that include NCAs were historically reserved for C-suite executives and employees with knowledge of trade secrets, these agreements have trickled down the organizational chart to include even entry-level employees – limiting worker mobility and suppressing wages.
• Federal legislation can incrementally or aggressively reform NCAs to promote a more dynamic employment market by removing barriers to employee mobility and fostering competition for talent among employers.

Introduction

Noncompete agreements (NCA) are contracts between employer and employee signed at the onset of employment. These contracts prohibit the employee from competing with their former employer upon separation. Prohibited activity defined in NCAs can include working for a competitor, starting a competing business, developing competing products or services, and hiring former colleagues, among...

Read Full Story: https://news.google.com/__i/rss/rd/articles/CBMiXmh0dHBzOi8vd3d3LmFtZXJpY2FuY...