Do We Really Need a Law to Ban Non-Competes For Hourly Workers?

By Eric B. Meyer

Here’s a news flash: A new U.S. Senate bill would abolish non-competes for low-wage workers.

The Jimmy John’s thing aside, is that really an issue? The use of non-compete agreements for employees making less than $15 an hour?

Well, it’s called The Mobility and Opportunity for Vulnerable Employees (MOVE) Act.

According to a press release from Sen. Chris Murphy, D-CT, “research” shows that somewhere between 8-15 percent of low-wage workers have to sign non-competition agreements as a condition of employment. So, Sen. Murphy, along with U.S. Senator Al Franken, D-Minn., introduced the Mobility and Opportunity for Vulnerable Employees (MOVE) Act in the Senate.

The MOVE Act would amend the Fair Labor Standards Act to ban the use of non-compete agreements for employees making less than $15 an hour, $31,200 per year, or the minimum wage in the employee’s municipality, and will require employers to notify prospective employees that they may be asked to sign a non-compete agreement.

A “shaming exercise” for employers

Let’s go back to Sen. Murphy’s statistics.

If 8-15 percent of low-wage workers are affected by non-compete agreements, that means that means about 9 out of 10 low-wage workers aren’t encumbered by this form of restrictive covenant. And, how many of those one in 10 have had their former employer seek to enforce a non-compete? Indeed, I imagine that most do not pose a competitive threat.

Plus, the courts disfavor enforcement of restrictive covenants where the employee would be precluded from making a living, or the employer lacks a legitimate business interest in enforcement. So, we’re talking about a really small number of employees truly affected by this so-called “practice.”

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Then, why break out the legislative handcuffs to police a workplace issue that really needs no policing? According to an article from Bloomberg Law’s Chris Opfer, Sen. Murphy described the MOVE Act as a “shaming exercise,” to bring attention to the issue.

Your tax dollars at work, folks.

Solutions in search of a problem

That said, 20 plus states have laws forbidding employers from demanding social media passwords from employees. That’s not so much a shaming exercise as a solution in search of a problem, with not a scintilla of supporting empirical research.

At least the MOVE Act is based on “research.”

This was originally published on Eric B. Meyer’s blog, The Employer Handbook.

You know that scientist in the action movie who has all the right answers if only the government would just pay attention? Eric B. Meyer, Esq. gets companies HR-compliant before the action sequence. Serving clients nationwide, Eric is a Partner at FisherBroyles, LLP, which is the largest full-service, cloud-based law firm in the world, with approximately 210 attorneys in 21 offices nationwide. Eric is also a volunteer EEOC mediator, a paid private mediator, and publisher of The Employer Handbook (www.TheEmployerHandbook.com), which is pretty much the best employment law blog ever. That, and he's been quoted in the British tabloids. #Bucketlist.

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3 Comments on “Do We Really Need a Law to Ban Non-Competes For Hourly Workers?

  1. Eric, interesting topic of conversation.

    I once held a very low paying position (> $ 20 K), which I was willing to accept. Yet, when I decided the job was not going to allow me to grow my skill set as desired and when another employer reached out to me to hire me, I was angrily threatened with being sued. I thought it ridiculous. I didn’t take the job offer. However I quit and
    looked elsewhere.

    Sometimes government is out of control, sometimes it’s employers. Bringing attention to a small problem might not seem worthwhile yet it sends a message in specific cases where a broad language non-compete is overkill. Maybe limit the breadth of such language in lesser-paying jobs.

    Employees would do best by themselves to learn negotiating skills at a very early age. Most non-competes can be negotiated down to very limited reasons, not be so broad in scope.

    Michael Toebe
    High-Value Outcomes
    First Aid for Business Disputes and Anger

  2. I don’t really think it matters that courts largely find that non-competes are unenforceable. What are the chances of an hourly worker making less than $15/hour, or a salaried working making less than $31K (likely an entry level employee) actually knowing the non-compete is hogwash? I once a non-compete at a low paying position, which was absurd because it would have meant as a very junior employee could have quite literally not worked for huge swaths of the industry I was in because most were clients in way or another of the company I worked for. Eventually I realized it was nonsense and I could ignore it, but at first I took it seriously – as did many of my junior colleagues. How many opportunities were lost because we were ignorant and inexperienced? And why the heck did the company even include a non-compete?

  3. By all means, let’s layer on more unnecessary (as described the sponsor of the bill!), regulations. Clearly there is no other method for raising the issue…like social media, or op-eds, or articles, or other traditional media.

    Not everything that warrants discussion should be dealt with by Government. Here’s a novel idea, how about if the member of Congress were to reach out to business leaders in their district and open the dialogue? Maybe even involve, oh, say, SHRM?
    Wake up folks – more Government regulation is rarely the answer. Hell, they aren’t even asking the right questions in this case!

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