A movement is slowly forming around the country to ban or restrict noncompete clauses in employment contracts. Those clauses prohibit workers from joining a competitor for a certain period of time after termination. Both parties should get on board in Illinois, where legislation is coming.
Research indicates noncompete agreements dampen competition for workers and reduce wages. Evidence also indicates states that allow noncompetes suffer from brain drain, pushing workers to leave for less restrictive places. California is among the states that disfavor noncompetes, which helps make Silicon Valley’s a hot market for workers.
A Chicago Tribune opinion piece last week by a University of Chicago law prof nicely laid out the case for getting rid of noncompetes. It was unfortunately titled, “How Chicago can lure Amazon: Ban employment noncompete agreements.” That’s an overstatement, but it would help with the Amazon effort, and getting rid of noncompetes makes sense irrespective of Amazon.
Illinois recently passed the Freedom To Work Act to address the issue, but only for jobs paying less than $13 per hour. There’s no reason to stop there. Yes, there are circumstances where noncompetes are appropriate, such as when companies are sold or employees hold highly confidential information. But other states have worked out those exceptions and the best precedents can be copied here.
–Mark Glennon is founder of Wirepoints. Opinions expressed are his own.