As a lawyer who has practiced employee-side employment law for over 25 years, I've personally seen numerous nightmare scenarios involving noncompete agreements. I've written on this topic many times, encouraging legislative change to stop the abuses. I may be finally getting my wish, because the White House just announced that the president is focusing his attention on abusive noncompete agreements, and he wants your horror stories.
There's a better than one in three chance you've had a noncompete agreement in your lifetime, whether you knew about it or not. A White House study just released on noncompete agreements says that 37 percent of Americans have been subjected to noncompetes, and 18 percent are currently under one.
In a nutshell, a noncompete agreement says you can't work for a competitor of your current or former employer for a period of time after you leave. Noncompetition periods can be months or even years. The ones I most commonly see are one to two years. They are supposed to be for the purpose of protecting a legitimate interest such as trade secrets. But the latest trend is for employers to impose noncompetes on low wage workers who have no knowledge of any trade secrets.
The situation came to a head when Congress and state legislators discovered that Jimmy Johns was imposing noncompete agreements on its sandwich makers. Suddenly, noncompete agreements got some well-needed scrutiny.
The White House wants to hear your stories about how noncompete agreements and wage collusion among employers in your industry have affected you. They have a form online that's easy to use for you to share your horror stories about noncompetes called "How Have Noncompetes And Wage Collusion Affected You?" Now is the time to speak up and tell your story. I've already shared some of mine.
Here are just some of the examples of noncompete abuse I have seen in my law practice:
Data Entry Clerk Noncompetes: I am currently defending against a lawsuit involving a company that has every single employee, no matter the level, sign a noncompete agreement. One of my clients signed when she was a data entry clerk. I have seen three companies so far that impose noncompetes on everyone from the CEO to the janitor.
No Talking To Son: I had one client whose noncompete was very broad. Among other things, it said he could have no communication for any purpose whatsoever with any company customers for two years after he left. His son was a customer. When I asked my opposing counsel if she meant it to be enforced so he could not talk to his son for two years, she said yes. I told her that would make Thanksgiving awkward. The matter resolved, but imagine if it hadn't.
Ha, Ha, You Can't Leave: Abusive employers can use noncompetes as a form of indentured servitude. I have heard horror stories of employees reporting sexual harassment, only to be told they couldn't leave because of a noncompete. Same with discrimination, low wages, unpaid wages/overtime, and just plain bullying. While indentured servitude is illegal, noncompetes can force people into horrible work situations with no way out.
Most Employees Don't Know They Have A Noncompete: When anyone comes to meet with me I always ask if they have a noncompete or nonsolicitation agreement (saying they can't solicit customers or employees of the company). Most say no. About half of those who say no turn out to have them. Employers sneak them into that pile of papers they hand you when you start, in stock option agreements, intellectual property agreements and confidentiality agreements. "I didn't read it," doesn't get you out of your noncompete.
Lies And The Lying Liars: My state, Florida, is a "right to work" state. So are many others. I hear many stories of unscrupulous employers telling employees that they can safely sign because we're a right to work state and the agreement isn't enforceable. That's a flat-out lie. Right to work has zero to do with noncompete agreements. It has to do with whether you can be forced to join a union. Anyone who tells you otherwise is a liar or just ignorant. Don't sign unless you can live with what you are signing.
Sign Or Be Fired: In many states, including my own, continued employment is enough to support enforcement. Your employer can hand you a noncompete and say, "sign or be fired." I've seen many instances where employers handed employees a noncompete knowing the employee was about to be fired or laid off. While that's fraud, it can still be expensive to fight them.
Fire The Employee Or I'll Sue: If you get a new job and have a noncompete, your employer frequently has to spend very little in legal fees to enforce the agreement. They'll usually just send a letter to your new employer and tell them that if they don't fire you they'll sue your new employer and you. The new employer fires you because they don't want to be in the middle of a suit and then you have to fight while unemployed.
One-Sided On Hardship: In my state and some others, hardship on the employee is not a defense to enforcement. But the court must consider hardship on the employer when imposing a remedy. So the corporate non-breathing person is treated way better by the courts and the legislatures than living, breathing, voting persons. I think that's an equal protection violation, but I haven't seen any case law on this issue. Yet. I'm working on it.
Can't Afford To Fight: Most people can't afford to fight a noncompete. It's not like a discrimination case where you're seeking money and so have a contingency. The lawyer can't get a percentage of you being able to work. So they have to charge by the hour. Defense can cost tens of thousands, if not hundreds of thousands, of dollars. Then there are appeals. While the employer can get a quick remedy in the form of an injunction (an order saying you can't work), you can't get a quick remedy and can be bogged down for years, until the noncompete period is expired.
If you've experienced a noncompete nightmare like these, then tell the White House today. They want to change things. They need your help.
If you need specific legal advice, it's best to talk to an employment lawyer in your state. For more general information about employment law issues, check out Donna Ballman's award-winning employee-side employment law blog, Screw You Guys, I'm Going Home and her other employment law articles at Huffington Post.