US Democrats seeks to prohibit non-compete clauses

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As part of efforts to reform US antitrust laws, the country’s House Democrats are seeking to determine whether inappropriate non-compete clauses should be prohibited.

In a speech before the Open Markets Institute earlier this month, Rhode Island Rep. David Cicilline  said the use of non-compete clauses in everyday employment contracts was a fundamental threat to workers’ economic freedom and mobility.

“These clauses are widespread, even among workers who do not possess trade secrets, such as workers in the fast-food industry,” he said.

According to a report by the US Treasury Department released last year, close to 30 million Americans across all employment levels are covered by non-compete clauses. Less than a quarter said their jobs involve trade secrets, while less than half of non-compete agreements involve work subject to trade secrets.

And yet, the report added that these clauses prevent workers from finding new employment even after being fired without cause.

“[I]n many cases, workers have already accepted a job before they even see the text of an employment contract or are simply unaware that they have agreed not to work for a competing business,” Cicilline said. “When combined with forced arbitration clauses, which immunize unscrupulous employers from virtually any legal accountability, non-compete clauses lock in workers, even when they are in a harmful, discriminatory workplace.”

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