States Must Act to Protect Workers From Exploitative Noncompete and No-Poach Agreements: A Primer

Despite years of economic growth, many Americans’ pay has not improved. Since the Great Recession, overall wage growth has only slightly outpaced inflation, and the earnings of African Americans have still not recovered. Meanwhile, business startup rates are falling across all industries, and many economists argue that this decline is dragging down U.S. innovation and productivity growth. As a result, policymakers across the United States are interested in reforms to boost worker pay, increase job mobility, and enable Americans to start their own companies. In particular, state lawmakers are debating actions to protect workers from restrictive employment contracts that keep them locked in jobs they do not want but cannot leave.

From fast-food workers and check-cashing clerks to physicians and engineers, corporations are increasingly subjecting workers across income and educational attainment levels to agreements that restrict future employment. One recent survey found that nearly 1 in 5 U.S. workers report that they are currently subject to a noncompete agreement that prevents them from moving to a competing employer, while another found that more than half of corporate franchisors require franchisees to sign no-poaching agreements that prevent their workers from moving between locations.

This article was originally published in Center for American Progress.