One basic principle of the American free market system is that workers have the opportunity for advancement. If that opportunity does not come at your current job, a competitor might see your experience and hire you at a better salary. It is a cornerstone of the economy and something that most people take for granted.
A noncompete clause in an employment contract controls where an employee might work next. Simply put, when an employee signs, he or she agrees not to share trade secrets with the competition. It is done to protect the business and the intellectual property it owns. A recent trend in noncompetes does not just consider trade secrets, but work experience in a much broader sense.
Is it legal?
Put in basic terms, an employer owns the work produced at a job. Many noncompetes are taking this a step further, stating the company owns the work experience and general knowledge as well—that what you learn at work is part of their company’s success. The noncompete says you cannot take that experience to their competition. As The New York Times investigated in depth last year, these contract clauses may help the original employer, but they often leave employees in a difficult situation. Instead of moving to a better paying job in their field, they are forced to move away from their expertise and lose income in the process.
Approximately one-in-five workers is bound to a noncompete, and many of those also include nonsolicitation or nondealing agreements that restrict them further. The contract shift has been gradual and many do not carefully read fine print when signing. Often, employees are in a position where they cannot negotiate in the first place.
There are many caveats to New York law, but workers are not property, nor are knowledge or experience. State law recognizes an employer’s right to protect their business, but it primarily concerns intellectual property like customer lists, patents and trade secrets. Eric Schneiderman has emphasized abuse of the practice in his tenure as New York’s Attorney General.
Know your rights
Even if a noncompete agreement is invalid according to state law, employers will often avoid a lawsuit by cancelling a job offer. This leaves workers in between jobs instead of moving up the ladder, as they had intended. Instead of helping their family, they are in a worse position. It is your right to a better paying job built off your hard work and years of experience. If you are trying to change jobs but your employer is enforcing a noncompete waiver, you should seek legal counsel to get a clear picture of your rights.