The proposed rule would ban provisions of labor contracts known as
noncompete agreements, which prevent workers from leaving for a
competitor or starting a competing business for months or years
after their employment, often within a certain geographic area.
The agreements have applied to workers as varied as sandwich
makers, hairstylists, doctors
and software engineers.
Studies show that noncompetes, which
appear to directly affect roughly 20 percent to 45
percent of U.S. workers in the private sector, hold
down pay because job switching is one of the more reliable ways of
securing a raise. Many economists believe they help
explain why pay for middle-income workers has stagnated in recent
Other studies show that noncompetes
protect established companies from start-ups, reducing competition
I used to think of noncompete agreements as applying mostly to the tech industry, in the name of protecting trade secrets, but that bit about the practice trickling down even to sandwich shops is no exaggeration.