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1 Non-Compete Reform: A Policymaker's Guide to State Policies 1 (2016)

handle is hein.scsl/ncrpmgst0001 and id is 1 raw text is: Non-Compete Reform: A Policymaker's Guide to State Policies This report provides information on state policies related to non-compete agreements as of October 2016. It is intended as a contextual guide for state policymakers, advocates, and students who are considering non-compete reform and/or interested to learn more about key dimensions of the current policy debate. Introduction Non-compete clauses (NCC) have traditionally been used to protect trade secrets by maintaining a buffer time period before a departing employee may take a job with a competitor. Evidence shows that non-compete clauses, once linked with highly compensated managerial and executive talent, have become more widespread and are shifting to affect more workers. A 2016 U.S. Treasury Department report cited research indicating that 18 percent of all workers and 15 percent of employees without a college degree are currently covered by a non-compete agreement.1 In recent years, these clauses have also become more common in low-wage, low-skilled professions like sandwich makers, temporary warehouse staff, and hairstylists-all of whom are unlikely to possess sensitive information or have access to trade secrets.2 The Treasury report found that 14 percent of workers earning $40,000 or less per year are under non-competes. Due to increased media attention regarding the unfair use and proliferation of non-compete agreements in employment contracts, state laws governing these agreements have come under greater scrutiny. Earlier this summer, following an investigation by the New York State Attorney General, the sandwich chain Jimmy John's agreed to stop using non-compete clauses in its hiring documents, which had barred departing employees from taking jobs with competitors of Jimmy John's for two years after leaving the company, as well as from working within two miles of a Jimmy John's store that made more than 10 percent of its revenue from sandwiches.3 In a statement released by New York State Attorney General Eric Schneiderman, Non-compete agreements for low-wage workers are unconscionable. They limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued.4 A growing number of state legislators are concerned about the spread of non-compete agreements and their potential impact on worker morale, wage growth, job mobility and career development, labor turnover, and economic development.5 While only three states (California, North Dakota and Oklahoma) generally prohibit non-compete agreements, of the remaining 48 (including the District of Columbia), as of August 2016, only 26 have statutes on the books that govern such agreements in whole or in part, and these statutes vary considerably from state to state. For the 23 states that I httfs://www.treasurv.gov/resource-center/econoinic-policy/Documents/UST%2ONon-coMpetes%20Reortxdf 2 https://onlabor.org/2016/05/03/use-and-abuse-of-the-non-compete-when-employers-utilize-non-compete-clauses- to-undercut-vulnerable-workers/ 3 http://www.cnbc.com/2016/06/22/iimmy-iohns-drops-non-compete-clauses-following-settlement.html 4 http://www.ag.ny.gov/press-release/ag-schneiderman-announces-settlement-jimmy-johns-stop-including-non- compete-agreements 5 htlps://wwwbiztimesconV201 6/08/26/milwaukee-biz-blog-how-to-improve-wisconsins-dismal-startay-economv/ - htlp ://www. seattletimescon~nwshowcase/careers/shacled-to-an-old-job-by-a-noncompete-clause/ http:/accomascuet/tnhmete-h-o-oet-gemnsaeufi-okr-a-u-cnv 1

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