American workers often relinquish rights and face disadvantages negotiating the terms of their new jobs. Employment contracts containing non-compete clauses are being used not only for high-tech or executive jobs, but in work at every level of skill, education and wages.
Recent surveys estimate that 16% to 18%of all workers in this country are governed by a non-competition agreement. Approximately 45% of physicians enter a non-compete. 12% of workers earning less than $20,000 and 15% in the $20,000 to $40,000 range are governed by non-compete clauses.
Workers face disadvantages by having less information and a diminished bargaining position when entering employment agreements. Only 10% of workers seek legal advice. These are signed with little negotiation or benefits for workers. Practically all employees enter non-compete agreements when asked. 70% of workers who entered these agreements were asked to sign after they received their job offer and 47% were asked after they began working with the employer.
Non-competes reduce job mobility and the ability to work for rival firms, especially for executives and workers in technical fields. Workers under these agreements lose the ability to negotiate for better wages and other benefits because they lose the option of seeking other employment.
These effects may even impact workers who have not entered these agreements. Diminished mobility also reduced the flow of information, the creation of start-ups and the ability to attract talent and entrepreneurship.
Even without the filing of lawsuits, non-compete clauses deter employees from seeking new jobs. Workers may stay with an employer, even under an illegal or unreasonable agreement, because they did not receive legal advice, or they do not want to risk the expense and turmoil of a lawsuit and the potential harm to their careers.