Back in May, I wrote about the importance of a labor market where workers get a fair shot to compete for higher wages. I pointed out some of the roadblocks to a fair marketplace for workers, including collusion by businesses to hold down wages and non-compete agreements to prevent workers from finding a similar job after they leave a company. Our ultimate goal is to get rid of the barriers to fair competition for workers, so that every single time American workers look at their pay stubs, they know that their pay reflects the value they bring to their jobs.
And I called on all of you to share your stories of times when you weren’t treated fairly; when your wage was unfairly held down because of collusion, or when you couldn’t get a new job because of a non-compete agreement.
I received an incredible response.
- I heard from a teacher in Nebraska who was trying to earn extra money during the summer, but couldn’t take a job selling pet food because of a non-compete from a previous summer job.
- I heard from a salesman in Connecticut who lost almost all his retirement savings because, at 56, he wasn’t allowed to get another job in his field for two years after being laid off.
- I heard from a doctor in North Carolina who couldn’t continue to deliver care to patients after leaving his current job because a non-compete prohibited him from practicing within the same city.
- I heard from a woman in Ohio who, after having the courage to leave an abusive marriage, was threatened with lawsuits for taking an entry-level sales job at a new company.
Folks, no one should have to sit on the sidelines because of an unnecessary non-compete agreement.
We have the most dynamic, productive workers in the world, but they can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off.
In the post, I promised that we’d study this issue, meet with workers and advocates, and put forward a path for workers to get the wage they deserve. And I said that in a few months, we’d put forward a call-to-action to states to address the misuse of non-competes.
Last week, the Department of Justice announced that employers who collude to hold down wages will be investigated and prosecuted criminally. The Department of Justice and the Federal Trade Commission also issued guidance to remind human resource professionals about the line between sharing information on wages and colluding to hold wages down, including a hotline to report wage collusion. Today, we are announcing a new collection of data to prevent abuse of non-competes.
That’s not all we’re doing. Because the federal government has limited jurisdiction over non-compete agreements, we are calling on every state in the country to take a hard look at its laws concerning non-competes. In particular, we are calling on states to:
- Ban non-compete agreements for low-wage workers, people who work in public health or safety, workers without access to trade secrets, and people who were recently laid off.
- Improve transparency of these agreements so that workers know exactly what they’re signing, and they know about it early in the hiring process.
- Give businesses incentives to write contracts that are enforceable under the law, so that workers aren’t tricked into signing an agreement that can’t hold up in court.