Special Report, Science, Americas

[AprpdlNuh]

According to 2020 data published in the Journal of Law and Economics, around one in five American workers are bound by a noncompete agreement. In early July 2021, President Joe Biden signed an executive order calling on the Federal Trade Commission (FTC) to ban or limit the use of noncompete agreements in employee contracts. Evan Starr, an assistant professor of management and organization at the Robert H. Smith School of Business at the University of Maryland. According to Starr's research, nearly 40 percent of 11,505 U.S. 18 percent are currently bound by one. That includes one-third of workers earning $40,000 or less. Another study by the Economic Policy Institute found that 29 percent of employers paying less than $13 an hour required their workers to sign noncompete agreements. Of the folks in the top tier of their study (those earning $22.50 and above), 36.5 percent had signed noncompetes. The classic argument in favor of noncompete agreements is that they take some of the risk out of hiring and training new employees. Companies invest time and resources in training new workers, and part of that training includes sharing inside information, maybe even trade secrets, about how the companies do business. Another argument in favor of noncompete clauses is that workers aren't forced to sign them. They can be negotiated as part of the overall employment contract. If a worker feels like they're giving up too much by signing a noncompete clause, they can ask for a higher salary or walk away. In reality, through, very few people ever pause to consider the ramifications of signing a noncompete agreement and ever fewer are in a position to negotiate. How many of these workers have the wherewithal to fight a legal battle? Ninety percent of the time, these threatening letters tend to resolve the issue.




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