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In the wake of the COVID-19 spurred pandemic and the resulting recession, finding a job can be difficult in the current economic environment. As a result, law-makers are debating the efficacy and legality of non-compete clauses in employee contracts. Non-compete agreements typically require an employee to agree not to work for a competitor for some amount of time after they end their current employment. Non-compete clauses are not a new idea and have been used internationally as a way to lower risks of hiring new employees for centuries. Recently, the scope of non compete agreements has extended past hiring and training new employees into careers dependent on trade secrets (such as high paid tech workers), to effect low wage and technical workers. It is estimated that roughly 30 million or one in five US workers are subject to non compete agreements and in 2018, 14 percent of workers without college degrees were subject to these clauses. There has been increasing pressure from unions and advocacy groups to ban non-compete clauses all together. Despite this public pressure, 47 of 50 states allow non compete clauses most with little to no limit of scope. This study will examine the effects non-compete laws have on opportunity for employment as well as the economic profitability of the employee in the low wage and technical work sectors. The goal of this research is to help guide policy makers toward solutions that allow businesses to remain risk averse without sacrificing the well-being of the employee.
Utah State University
Economics | Social and Behavioral Sciences
Willard, Ellie, "Non Compete Agreements and Low Wage Workers" (2020). Fall Student Research Symposium 2020. 99.