Employment contracts for executives and other top management positions typically contain non-compete clauses prohibiting the person from working for a competing firm within a specified time frame after leaving their position. This is to prevent people with valuable company knowledge from leaving and taking trade secrets with them to industrial rivals. The number of Americans that currently have non-compete clauses in their contracts is estimated at 18 percent. Additionally, nearly 40 percent of those surveyed reported that at some point they had signed a contract containing a non-compete clause indicating that this is the norm far beyond the executive level.
At one time, fast food chain Jimmy John’s required their workers to sign non-compete agreements. The agreement prohibited former employees from working at any company that earned more than 10 percent of their revenue from “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches.” for at least two years after their employment with Jimmy John’s was terminated. For these and similar workers who have no access to trade secrets, non-compete agreements can only serve to restrict their mobility, lower labor market competition, and suppress pay and productivity, as workers are not free to seek better wages and conditions elsewhere. Jimmy John’s was sued by the Illinois and New York State Attorneys General last year and eventually the company agreed to drop their non-compete agreements.
Amazon is another company that restricts where its employees, even seasonal hires, can work after leaving. Amazon employees are prohibited from working for any competitor of Amazon while employed with the company, and for a period of 18 months after their employment has ended.
Every state approaches the issue of non-compete clauses differently. Some, like Georgia and Idaho, have passed legislation that makes it easier to enforce non-compete agreements. Other states like Oregon, Hawaii, and Alabama have made efforts to clearly define and restrict the boundaries of non-compete clauses.
There are numerous federal acts that grant rights to workers and protect them. The National Labor Relations Act says that workers have the right to organize and form unions, the Civil Rights Act prohibits discrimination based on race, gender, religion, and national origin in the workplace, and the Americans with Disabilities Act provides for fair treatment of workers with disabilities. However, currently there is no federal law that protects workers from non-compete agreements. This leaves workers, most of whom are in an at-will relationship with their employer, at a distinct disadvantage. Even though they have the power to end their employment if they decide to do so, non-compete clauses limit their choices as they seek further employment.
At AlpernSchubert, P.C. we have extensive experience in a wide range of employment law issues and can help you resolve your legal matter quickly and reasonably. Arrange a confidential consultation with an experienced Pittsburgh employment lawyer to discuss your rights and legal options. Call us today at 800-243-6095 or 412-765-1888 or contact us online. We serve clients throughout Western Pennsylvania including those in Allegheny County, Washington County, and Lawrence County, as well as those in the communities of Pittsburgh, Washington, and New Castle, Pennsylvania.