According to a recent survey by the Economic Policy Institute and the Survey Research Institute at Cornell University, a staggering proportion of the private-sector workforce in the U.S. is bound by non-compete agreements. Specifically, the survey found that anywhere from 28 to 47 percent of employees – in other words, approximately 36 to 60 million people – have signed agreements that restrict them from working for certain employers after they leave their current jobs. These restrictions can cover large geographic areas and span several years, making it difficult for workers to find new employment near their homes and within their industries.
This trend is made all the more troubling by evidence that even legislative action to outlaw non-compete agreements has seemingly been unsuccessful. Indeed, 45 percent of hiring managers in California who were surveyed responded that they subject some workers to non-competes, despite the fact that such agreements are unenforceable in the Golden State as a matter of law.
That said, government agencies and legislators are still exploring new ways to curb this restrictive practice. The U.S. Federal Trade Commission is scheduled to examine whether non-compete agreements suppress competition in violation of antitrust law in January 2020, and members of the U.S. Congress on both sides of the political aisle have discussed drafting federal legislation to limit the scope of such restrictive covenants. In 2016, the Obama Administration issued a formal call to action for state governments to draft similar legislation, though apparently to little effect. It remains to be seen whether new legislative efforts will materialize into changes to existing law and, if so, whether such changes will solve this pervasive problem for employees.
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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Georgia and Pennsylvania.
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About Alex Hartzband
Alex Hartzband's practice is focused on employment litigation. Alex is an associate in the firm's New York office.
Partner at Faruqi & Faruqi, LLP
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