A recent study conducted by the Economic Policy Institute found that between 28% to 46% of the private-sector workforce are required to sign noncompete agreements in order to keep their jobs. The study found that 49% of employers said they require at least some of their employees to sign noncompetes, while 31% reported that all of their employees were required to sign noncompetes.

Surprisingly, the study found that noncompetes were common even in states like California, where noncompetes are unenforceable under state law. And noncompetes were not limited to highly-compensated employees either. Employers reported that 29% of respondents with an average hourly wage below $13.00 required noncompetes for all workers.

Read or Download the study here.

The use of noncompetes is part of a broader trend of employers requiring their workers to sign a variety of restrictive contracts as a condition of employment. In addition to noncompetes, another common restrictive contract is mandatory arbitration, in which businesses require employees to agree to arbitrate any employment related dispute with the business. This means the employee gives up their right to a jury trial if they are harassed, discriminated against, or wrongfully fired.

The study also found that employers who use mandatory arbitration are also significantly more likely than the average employer to use noncompetes.

BOTTOM LINE:

Given the ubiquity of noncompetes, the real harm they inflict on workers and competition, and the fact that they are part of a growing trend of employers requiring their workers to sign away their rights as a condition of employment, noncompetes can and should be severely limited or prohibited through legislation. However, until that happens it is incredibly important that employees take a close look at the agreements they are being asked to review or sign by their employer BEFORE they sign off on it whenever possible.