February 21, 2015

Use of non compete clauses spreading

Washington Post

Now we have actual data on how prevalent non-competes are across the labor force: One in four workers have signed such agreements in their lifetime, according to a new working paper, and 12.3 percent of them are bound by one right now.

The research, by economists Evan Starr at the University of Illinois and Norman Bishara and JJ Prescott of the University of Michigan, took the form of a large-scale online survey. Predictably, it showed that including non-compete clauses in hiring contracts is most widespread in information fields like engineering and architecture, where 30.1 percent of workers had signed one. Non-competes are also more common at higher levels of salary and education, which comports with the theory that the clauses are benign for employees with bargaining power, since they wouldn't sign them if they weren't in their best interest.

But non-competes are also not uncommon for comparatively low-skill occupations, like personal care and services, where 11.8 percent of employees have signed one, and installation and repair at 10.5 percent. The prevalence of non-competes is actually lowest among food service workers, at about 3 percent).

And overall, only about 10 percent of workers who've signed a non-compete ever try to argue over it, with most assuming that it's either not negotiable or that doing so would cause tension with an employer.

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