The FTC said that employers’ use of noncompete clauses, which typically prohibit workers from moving jobs to competitors within certain time frames, is “a widespread and often exploitative practice.”
of responding businesses use noncompete clauses. Wages are lower in states that allow enforcement of noncompetes, research finds — and, even in states where it is illegal to enforce noncompete clauses like California, employers still use them to pressure workers who may not be aware of the law.
Eliminating the use of noncompetes could have the immediate effect of increasing wages. In Hawaii, for instance,that wages for tech workers rose by 4 percent after the state banned the use of noncompetes; another study of Oregon, which mandated in 2008 that new noncompetes become unenforceable, found that hourly workers’ wages rose by 2 to 3 percent after the new rule went into place.
Even though noncompete clauses have such broad impacts on individual workers and industries at large, workers often view noncompetes as relatively inconsequential, and would rather sign one than negotiate over terms with employers. Employers will also often shuffle noncompete clauses in with long contracts or other paperwork, making them harder for workers to detect before signing them.
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